Kudos to Inquirer.net and Bernie Villegas

(Why the writer started a blog)

It was Holy Week a year ago when the writer started engaging columnists and editors about the Philippine economy. He was driven by the feelings expressed by friends and relations about the sorry plight of the country.

“Thinking Global” is an apt title for new the column of Bernie Villegas, addressed to OFWs – given that everything starts in the mind. And the acknowledgement of the need for us “to think global (even as the OFWs necessarily have to act local”) speaks volumes about the object of the column. (See: http://globalnation.inquirer.net/columns/columns/view/20090715-215555/Greetings-to-All-OFWs)

The writer just spent a week in the San Francisco area and met with Filipino-Americans. (And in these gatherings the Philippines is obviously the topic of conversation.) Two of them were recently in the Philippines to explore retirement options: Love of country was palpable but so was the disillusionment about the way things were done. They were strongly offended by what they learned dealing with government agencies – that it could be a nightmare: “Why is corruption so endemic? Why should people be harassed when paying taxes?” (The writer has heard a similar story.) And so the writer shared that he had started a blog precisely to offer his two-cents, if indeed love of country was strong – we have to help fix it, not simply criticize. (Of course, no one wants to be at the receiving end!)

Since the writer had discussed competitiveness in earlier articles, he would this time talk about competitive advantage: Put simply, it is the most efficient sourcing and use of scarce resources (input) while generating the most preferred products and/or services (output); net, healthy market shares and margins. That is not a quotation; like product ideas or ideas to elevate our GDP, we have to keep defining (e.g., healthy) and redefining (e.g., dominant) our desired output or outcome – but the simpler the better, i.e., to sharpen the clarity of our purpose and facilitate our problem-solving and execution. For example, we are fixated on OFW remittances being the engine of our economy – we have to get past that given our GDP is way below desirable levels. Hence our definition must focus on: (a) efficient sourcing of capital (to access technology, talent, etc.) irrespective of country of origin, and (b) driving business revenues especially exports via the most preferred products & services (in earlier articles the writer talked about product architecture modeling, i.e., beyond industry-scan to leverage creativity); with the caveats: (a) a commitment to balanced-budget (higher business revenues raise tax collection) and (b) efficiency (reduces costs). Economic development is competition at the highest levels – tinkering or playing for survival within our parochial confines will not cut it, i.e., good enough is never good enough at these levels of competition.

The typical business in the Philippines hires agencies – not directly, janitors and security guards. We understand the acid test of “make versus buy” – the imperative of competitive advantage. Apple is very good at it: they buy (outsource) manufacturing as opposed to making their products – but they make (while “buying” open-sourced software) the ideas – from the Mac to the iPod to the iPhone to the Mac Stores . . . and are growing despite the global recession.

“Make versus buy” applies to sourcing of capital and in marketing too. For example: San Miguel sells close to 50% of San Miguel beer to Kirin. GE Capital sells Philippine banking unit to BDO, while acquiring 1.5% equity in BDO with an option to raise holdings to 19%. We can push the envelope further, for instance: BDO and San Miguel partnering with GE Capital and Kirin, respectively, to market overseas. GE Capital and Kirin have established markets overseas, i.e., they have a better shot at competitive advantage in a bigger (international) market than BDO or San Miguel standing alone. (That is the model China adopted when they opened their market to foreign investors that paved the way to what they are today in global trade. Unfortunately, our parochial mindset robs us of the perspective.)

More about competitiveness in future articles. But the point to make is: keeping it simple is key.