Friday, December 31, 2010

The 3 Rs and beyond . . .

. . . Not a scholar but a practitioner’s take on education: the writer’s worldview is atypical – an indifferent student in his youth; worked and lived at home and abroad doing development work – people, organization, business and economic – mostly in the private sector. He would summarize industry’s perspective of development as: ‘To ensure individuals develop the knowledge, attitude, skills and habit to be productive contributors to an enterprise’. (Man’s superiority is why we’re challenged to teach how not simply give fish?)

In post-career but finds time – his way of ‘giving back to society’ – to do most of the above gratis, including mentoring graduates students and keeping a blog to share his two-cents re the Philippine economy, yet the experience is rewarding. He gains from the giving especially guiding his Eastern European friends navigate their new EU environment. The more he gives and shares the more he gains and learns, coming face-to-face with his own naiveté – e.g., socialism to him was a theory from (browsing) Mao’s Red Book while cutting classes.

He realizes the 3 Rs (with the modern math version given inherent logic) are genuinely fundamental, but the challenges he encounters – in problem-solving and looking into the future, e.g., sustainability and innovation – require a background like liberal education, and collaborative and lateral – starting with the end in view – thinking (introduced by a Filipino educator) while tapping engineers and scientists. The value of education is not the learning of many facts but the training of the mind to think’, as Einstein says. The indifference of his youth is rescued by a traveling job – its hurdles, with the bar constantly rising, bring his education to life yet demand greater inquisitiveness (inculcated by a Filipino entrepreneur). Like with most professionals the work educates him while his formal and continuing education (with a dose of executive education behind ivied walls) reinforces his appreciation of the world and the work, while all the more comprehending that knowledge is beyond his countless lifetimes.

He recognizes that it is imperative to live and let live, thus the basics of our faith – the Great Commandments – are our moral compass or the Golden Rule for others. By extension corruption in all its forms is a no-no – it violates instead of respects people and institutions, country and beyond. But man can’t approximate purity ever hence the must to raise transparency and lower hierarchy. A relatively later realization is that the basics of our faith are the supreme examples of ‘separating the wheat from the chaff’ – and employs them to educate ex-socialists in their chase of the free enterprise. And the corollaries, among them, being Pareto’s 80-20 rule, Euclid’s basic axioms and da Vinci on simplicity. They are central in the initiation and creation of ideas as well as their execution, the keys to leadership – in strategic, creative, or pragmatic pursuits. And as importantly, they bestow congruence and clarity and thus the confidence to invest in the 21st century: the age of competitiveness – in investment, technology, talent, innovation, product, and market.

And he sees that people from different cultures respond positively. So . . . are we Filipinos different – and why we lag the rankings in economic and human development? Contemporary thinkers are investigating different factors to figure out why the West, for instance, developed ahead of the East and why certain individuals and nations could be more innovative. They look at dynamics like biology, sociology and geography as well as nature and culture, among others. Closer to the writer’s experience is the vital role of environment – of encouraging openness as opposed to being restrictive. And the best example being the World Wide Web – i.e., it accelerates progress and innovation at warp speed. His sense of the way of the future comes from: (1) witnessing certain countries adapting to the email ahead of others, for instance and (2) a project with a catchy title – ‘Speed’ – he was involved with sponsored by The Conference Board, a US think-tank. Thus in his blog he talks about our culture, e.g., (a) our parochial instinct and hierarchical structure as opposed to openness; (b) lack of urgency as opposed to speed, e.g., power supply, Terminal 3, and (c) the imperative of sustainability, e.g., versus dole outs.

In reforming education the writer believes that there are fundamentals that must be emphasized for us to be relevant in the 21st century. Among them: the basics of our faith, the Great Commandments or the Golden Rule for others, the 3 Rs/modern math, liberal education, collaborative and lateral thinking, leadership, transparency and integrity, and a global worldview. No nation can claim ownership of sageness – and must raise our consciousness and the bar of progress and innovation, with science and technology at the core?

Tuesday, December 28, 2010

Of models and academic rigor

The real world is full of uncertainties . . . and why the value of education is the training of the mind to think, not the learning of many facts, as Einstein says’ – the writer counsels a doctoral student. She attends a couple of his workshops, demonstrates discipline in her problem-solving. She subsequently requests the writer to critique her proposed published article, a step prior to completing her dissertation. And so he has a big smile reading how she qualifies the outcome of a quantitative model in a predictive exercise – acknowledging the necessity of future studies to dissect the impact of a firm’s competitive efforts. (Two Nobel laureates will always be tied with LTCM that imploded in 1998; the hedge fund had delivered annual returns shy of 40% owing to a model they designed . . . until its demise.)

The thought comes when the writer and the wife are at the daughter’s place chatting with her friends: a Chinese from Shanghai working in Boston, and an Italian and an English chap, both London residents. Two of them share something in common, the highly-rated American university within the financial community. One with a 10-year stint in international investment banking and urged to earn a graduate degree because he is to sit on the board of clients, and needs the credentials – and so the writer adds in jest, because you look like a high school kid! And both he and the colleague start poking fun at their school work. So the writer invokes the Einstein quote. They agree but can’t help give a dig: how quickly they can synthesize and conclude class discussions simply because they have done the real deal at work not simply an exercise! And the writer wants to add: you don’t have to be a New Yorker to be full of yourself!

How do we explain 40-50 years of marginal economic performance? We have well-developed disciplines and very smart people. Is there something in our heritage, history, culture and tradition that influence our worldview? What about the abundance of academic rigor we throw into our problem-solving? One of the lessons the writer recognizes doing business globally is that the value of Western models, just like that of education, is not the models themselves but the training of the mind to think – which he keeps reminding himself when in Eastern Europe. Mistakes do occur and thus the need to stay positive, focused, and to keep the spirit alive . . . and move on. As importantly, problem-solving differs location by location – say, in a small enterprise in Africa, in the US, Canada or even in Puerto Rico.

Yet the model is the same: make the undertaking competitive in order to sustain growth; and consequently the economic impact becomes broader, beyond self-interest. Makeshift, on the other hand, doesn’t cut it thus lateral or creative thinking in both rich and poor countries is an imperative, unfortunately undermined by a restrictive, parochial perspective? Something Medvedev concedes hence criticizes Russia’s economic backwardness and is pushing for greater investment, innovation and relevance to the 21st century beyond entrenched oligarchy (that cuts poor countries in the knees, but are unfortunately clueless) and beyond oil-dependence, OFW-dependence in our case!

Discipline and focus are inherent in world-class athletes, including Jackie Chan playing the role of a kung fu master: he chides the cocky and fresh American turned Karate Kid, ‘Empty your mind and focus’. . . ‘Take off your jacket, put it down, pick it up, put it up; put it on; take it off, put it down, pick it up, put it up, put it on; take it off, put it down, pick it up, put it up, put it on; take it off, put it down, pick it up, put it up, put it on . . .’

Do we want to expand our worldview beyond our borders? Do we want to recognize that the value of Western models is not the models themselves? And do we want to embrace discipline and focus?

The writer’s family joins him in extending best wishes to one and all . . . through the Season and the New Year!

Friday, December 24, 2010

‘OFW remittances . . . shield the elite from pressure to reform’

That’s calling a spade a spade – a point raised in the news report re ‘Arangkada Philippines 2010: A Business Perspective’ to double the pace of the country’s economic growth – and why we can’t move forward no matter how massive poverty is? Where do the elite want to see us move forward – denounce the RH bill, for instance? Do we want to: (a) preach purity, (a) fix the economy? Do we measure up to (a) or (b) or neither?

For a country that is the basket case of the region and the best example of ‘how not to’ in economic and human development, our reactions to ‘Arangkada’ are tepid at best? Many of the recommendations are not radical from what we already want to do’. ‘The recommendations [are] timely because we are going to be discussing the medium term plans of the government’. And the code word to mummify our nonchalance is screaming: ‘We have to study them’? It’s the last two minutes . . . and we’re playing catch up – and we want to play footsies? ‘Execute play no. 3 from either side; hit the center if it opens up’, as Pat Riley would yell in sign language and pointing toward his brain!

And the writer’s wife shares her stream of consciousness: ‘we Filipinos never would want to raise our hands; we look around and try to sense affirmation of what we may feel inside. The reason is we don’t want to be singled out if there is no unanimity or if ever the idea flounders. We are very leader dependent, and couple that with our dislike for change and risk-taking – what Filipino would want to be outside his or her comfort zone? At the end of the day, we probably are missing a sense of community. Why did we build our dream house in a gated community and joined the country club? Remember your mother was stopped at the gate because they didn’t have the village’s pass – but she’s no pushover so the guards called us apologetically? But we care for the poor – we give alms and support worthy causes. Philippine poverty – that’s for someone else to worry about, like public servants who profess to serve the people while winking an eye! We expect the President to address the problems of the country. So long as we mind our own business that’s fine – that’s what’s expected of us.

When we’re outside the country we literally stand proud – because we Filipinos can do what others can do, travel and be part of the global community. (In the meantime at a border control a Filipino OFW-maid is being hassled as though she’s a victim of human trafficking, a teacher by training as she tells us embarrassed as she’s going through the episode.) We even send our children to study abroad. Of course, sometimes they need the ‘yaya’ to give them a hand. And if our kids desire independence, they would live overseas; and those who prefer the safety and comfort of home would come back. It’s family, you know – never community! The Japanese are probably an exception – they could have country and emperor above self. We’re more like the Americans even though we abhor their arrogance. We are for what suits us – their higher education, their 21st century technology; and they are great for holidays. You can drive in America but are less comfortable driving in the UK (because they drive on the wrong side of the road) or Italy (because their drivers are daredevils), for instance.

So we can look foreigners in the eye, the country may be poor but we’re not. We even have a more desirable lifestyle than they do. The economic decline that we’ve seen the last 40-50 years would most likely be repeated – history repeats itself. But our family is exempt from the scourge so who cares? Of course, we’re thankful that our daughter has learned about community – leaving her Wall Street job and teaching in an inner-city school as a volunteer. Other Filipino kids have done similar things. For this generation it’s too late to change our ways – because we’ve achieved what we personally aspired for, the rewards have fortified our ways, casting them in stone. We never imagined being a model for the world because we’re a poor nation to begin with.’

What a coincidence, the writer and the wife are picking up his visiting nun-sister at their New York convent where she had completed a workshop on ‘facilitating change’, to equip her for her Baguio mission – ‘our facilitator was a business consultant out of Boston’, she says. Is it because nuns may aspire purity but being human extends to being human itself, being relevant and real – lifting man through change?

Monday, December 20, 2010

Back to basics

Many bought into the idea that America could go from a technology-based, export-oriented powerhouse to a services-led, consumption-based economy — and somehow still expect to prosper,” Mr. Immelt (GE CEO) said. “That idea was flat wrong.” [The New York Times, Dec 4th] Did we follow the same US model – and so for decades had emphasized a services-led and consumption-based economy? Then we should be able to say,That idea was flat wrong’? (Is integrity – or being honest to one’s self – undermined by deference to hierarchy or the lack of transparency, and thus breeds corruption or abuse, whether in the private or public sector or even the church?)

Among the first words the writer heard from his boss upon moving to corporate headquarters was, ‘I blew it!’ Translation: we go by the hierarchy of ideas – not rank – and constantly raising the performance bar! Now retired and sits on the board of global enterprises, including charity efforts – and introduced the writer to volunteerism; for many years profiled among the most influential businesspersons globally, but would walk 30 blocks to get home in the evening and in the morning like a typical Manhattan resident would commute, by bus. (Mayor Bloomberg, for instance, is driven from Gracie Mansion to a subway station and takes the subway to City Hall.)

In 1992 after GE had unveiled their plans to go global – they were a US-centric business – they invited a handful of global companies (a demonstration of maturity by a firm larger than most of their peers) to speak to their top managers, and the writer represented his company. He doesn’t have the presentation anymore but recalls discussing their own experience: focusing on the basics of ‘making things and selling things’ within a strategically defined set of core businesses – the same model that has put his Eastern European friends in good stead and competitive beyond their borders despite the global recession and slow down of trade. (Or why it’s not surprising that PAL is between a rock and a hard place – their problem is beyond a PR campaign, they need to: (a) get back to the basics and (b) come down to the fundamentals of competitiveness: investment, technology, talent, innovation, product, market!)

[And] so G.E. has revamped its strategy in the wake of the financial crisis. Its heritage of industrial innovation reaches back to Thomas Edison and the incandescent light bulb, and with that legacy in mind, G.E. is going back to basics. The company, Mr. Immelt insists, must rely more on making physical products and less on financial engineering — a path that, he insists, is also necessary for the American economy as a whole . . . The underlying DNA of G.E., going back a century, has been to invest for growth in its technology base . . . So by increasing R.&D. spending and with investments in manufacturing, Jeff Immelt is going ‘back to the future’ at G.E. . . . About 1,000 miles from corporate headquarters, inside a gleaming new plant that is the result of a $100 million, three-year investment, G.E.’s back-to-basics strategy is on display.

Production is organized around the concept of “high-performance work teams,” typically six to 12 workers . . . It’s a bottom-up approach that shuns hierarchy, and places most of the responsibility for continuous improvement on the teams. An egalitarian ethos is reflected in the job titles. The boss, Jeanne Edwards, is the “plant leader.” Line workers are called “production associates.” There are no supervisors here, only “leaders” and “coaches.” [ibid]

There’s so much we could learn – given our standing (embarrassing or pathetic?) in economic and human development – but does ‘Filipino orgullo’ or ‘yabang’ (misplaced pride) get in the way? Simplicity, as da Vinci says, is the ultimate sophistication. What about making things and selling things, investing in R&D, in innovation, in manufacturing, in continuous improvement and shunting hierarchy – and driving prosperity not just for the few but for the many? We won’t get there overnight – and we need a big heart to think and win big?

The US is looking at doubling exports to $2 trillion; while the EDC (Export Development Council) is looking at doubling ours to $100 billion. Our goals are much more modest and it appears the EDC has a game plan to get us there. The reality is we have no choice: our GDP per capita (PPP) of $3,300 – barely a 6th of Singapore’s – can’t generate and sustain the levels of economic growth that will reverse the decline of the last 40-50 years. Competitiveness is the key – not worn-out short-term palliatives that lower instead of raise the performance bar?

Friday, December 17, 2010

Spirit and execution . . . transparency and integrity

It’s delightful that beyond ‘Arangkada Philippines 2010: A Business Perspective’ from the JFC (Joint Foreign Chambers) we’re crafting highly focused and integrated plans spelled out in news reports: ‘Government creates separate PPP units in line agencies’, ‘Export council (EDC) looking to set annual targets for 2011-2016’, ‘Public Relations Society of the Philippines (PRSP) launched its annual intercollegiate competition for best advocacy plan’; and they all seem to support our higher growth targets.

Indeed these initiatives manifest our innate ability to put plans together. Many years ago the writer piloted a couple of planning models from two consultancies: one from the Philippines and one from the West. But developed for his company a much simpler model: with clarity, set up for execution and dynamism, not to be static. And no doubt Filipinos would pooh-pooh the model because of our holistic perspective. But the lesson for the writer under conditions of extreme or global competition was and still is (and why he keeps to a simple model to the amazement of his Eastern European friends) is that without the spirit and bias for execution, ‘all the best laid plans of mice and men’ can come to naught – while a functioning, pragmatic plan can be honed to exploit the competitive arena!

And that model is: ‘to drive revenues, margins and efficiency’ – the key being congruence plus sustainability. For example, he was just given a (39-slide) PowerPoint presentation to raise the market share of a brand by a young marketing manager (who had earlier pushed a great initiative to raise market presence) with an emphasis on a specific variant – backed up by loads of statistics and consumer and market research – and a great model for 360-degree or integrated marketing; and the missing piece? The bottom line: ‘Show me the money!’ The example came to mind reading the news report ‘Academic exercise’ – re PRSP’s annual intercollegiate competition. The winning plan sounds great and perhaps more than meets the parameters of the competition and the writer’s comments in that context is unfair. But the point of this blog is to raise our consciousness about spirit and execution.

The EDC’s annual targets for exports will focus us like a laser – finally we are addressing a gaping hole in our GDP, export revenues of $100 billion. Hopefully we would inject them with the proper spirit and be dogged in execution? For example, why do we think publishing our plans would benefit other countries? For us Filipinos openness has a higher purpose beyond raising the performance bar: to inculcate transparency and develop integrity – which we take for granted and why corruption is insidious; to the writer’s grandfather, it simply is show backbone, not ‘yabang’ [braggadocio]? Other countries would benefit only if we don’t have the spirit and bias for execution?

Highly competitive global companies (where talented people flock because they’re treated like talents not peons; and thus are recognized as preferred employers) are grilled by financial analysts about the specifics of their plans including new, innovative if not breakthrough products and all one needs is to Google them and presto they are for the world to see! Connectivity – not isolation or parochialism – nurtures great ideas, including economics. While it was a Brit (Tim Berners-Lee) who developed the idea behind the World Wide Web, inspired by the record-keeping method of Darwin of connecting one thought after another, it was a US military research efforts that facilitated connecting separate networks. (And despite WikiLeaks the US is not about to turn progress and innovation back!)

The tasks of the PPP (private-public partnership) units in line agencies would be more challenging. There will be competing interests from every conceivable sector that would want to piggy back on their spoils. For example, there are now interest groups justifying a closed-skies policy. If we are proud of how good our plans are why do we worry about open skies – bring ‘em on? Plans that are long-term cannot be judged by short-term impact – i.e., one step backward two steps forward? What it requires is lateral thinking: how do we mitigate the short-term impact? If we can’t then the acid test is: are we building towards a stronger sustainable economy – that we should bite the bullet and take the short-term hits? The road to eternity is not paved with gold – it is straight and narrow? But we can’t shake off our ‘Filipino inclusion and compassion’ – that have characterized our missteps over the last 40-50 years, raised by an ex-NEDA chief? We’re not looking at replicating the last 40-50 years – or does history repeat?

Tuesday, December 14, 2010

‘Arangkada’ may not mind Bloomberg

The ‘Arangkada Philippines 2010: A Business Perspective’ from the JFC (Joint Foreign Chambers) represents our best chance to get on the right path after decades of missteps? Reports the Manila Bulletin (Dec 2nd): “[It] contains measures on how to realize the projected $75-billion foreign direct investments and 10 million jobs in the next 10 years from seven priority industries.

Arangkada Philippines 2010” contains the consolidated 471 recommendations of the JFC from Filipino and foreign businessmen for building a more competitive economy, driven by ethical and sustainable practices, reform by reform, leading to high growth and millions of new jobs . . . The JFC conducted in late 2009 and early 2010 a series of Focus Group Discussions to identify implementable solutions to the challenges to propel each sector forward. Some 300 private sector experts from the Philippine and foreign business communities participated and put forward nearly 300 recommendations to accelerate the growth of these sectors.”

Mayor Bloomberg’s piece in the December 6th issue of Time magazine – talking about ‘Ground Zero: out of the ashes’ – could be an inspiration: “Never before have so many moving parts been required to fit together . . . Never before have so many . . . been involved in a single project. And never before have so many citizens felt such a deep personal connection . . . and taken such an active role in planning its future . . . [It] has not been smooth or quick as anyone would have liked. But today, the progress . . . is unmistakable – and that’s incredibly heartening . . . [It] is an affirmation of [our] sprit – of our faith in our future and in our freedoms . . . [The people behind it] recognize . . . that [what they are working on] symbolizes the openness and opportunity that have always defined [us]. . . And most important, they are helping . . . fulfill . . . our . . . principles and values.”

We have had decades of missteps – and as Bloomberg talks about Ground Zero, ‘sprit, principles and values’ matter especially in a mammoth undertaking. And we would not want to be defined by parochialism, hierarchy and condescension?

Has our instinct of parochialism and hierarchy blindsided us – that while we sincerely believe we care we are in fact patronizing to the poor? Translation: poverty is only a subset (a modern math concept we teach grade school kids) of a deficient economic engine – it can serve the purposes of a few and thus it has its champions while unsurprisingly perpetuating a charade? Says an ex-NEDA chief: ‘[Given] the development track that the Philippine economy has treaded in the past 40 to 50 years, there is now no more room for resorting to old and tried and tested policies that only make matters worse.’

Bottom line: unless the few who are perhaps unwitting active participants of our pretension take on the spirit – and embrace the requisite principles and values – that will put us on the right path, ‘Arangkada’ could join the countless derisory efforts we’ve had in the past?

CSR, CCT and OFWs are subsets of a GDP that in its entirety is unmistakably underdeveloped, i.e., at a measly 10% of developed economies per capita GDP. They would only become robust and impactful if they are subsets of a GDP that is plainly well-developed. (Or as President Ramos succinctly puts it ‘the pie is too small’.) And a developed economy is driven by investment and innovation, thus highly competitive. But investment and innovation are outside our psyche and why our ‘taipans’ became the pillars of the economy – not Filipino ‘old families’?

The good news is ‘Arangkada Philippines 2010’ is in front of us – and so let’s not be the horse that is brought to water but cannot be made to drink?

Saturday, December 11, 2010

Innovation and product development

Investment generation and strategic investments driven by government and innovation in product development driven by industry are the gaping holes in our competitive capabilities? Clearly we need to ramp up our response in order to close these gaps. And we can take a confident posture if we live in the present and call upon our spirit, instead of living in the past? Not easy given our tendency to look back as opposed to forward?

The good news is President Aquino is pushing investments – and hopefully stepping up execution of strategic-industries initiatives in partnership with the private sector – and so we can then turn to the challenge of product development in industry? It is something we need to embrace fast – in order to confidently compete regionally if not globally? And we have to move beyond Filipino ‘abilidad’?

A financial channel profiles the Ford Motor Company and talks about an ‘aha moment’ for the rejuvenated company . . . The new CEO hauls the leadership team to a ‘reality session’ with a third-party product reviewer and rater. And as expected (of humans) the leadership team is in absolute, total and unequivocal denial as they’re presented a point-by-point review and rating of their products. But the CEO demonstrates no-nonsense leadership and gets the team to take the first step in their journey into reality. Happily, following great efforts, it appears that even without a bailout from US taxpayers Ford is now a much stronger and confident enterprise.

What about our reality? Do we recognize, for instance, that beyond inadequate investments we have yet to develop a product-development skill set? We may have a well-developed advertising industry but don’t have a track record in product development? Advertising agencies talk about ‘brand architecture’, which is geared to develop a communication campaign; while manufacturers talk about ‘product architecture’, or how the product can generate its inherent power – although both require visualization and lateral and creative thinking.

For example, when admiring an accessory-jewelry a friend could say, ‘lovely’, ‘charming’, ‘beautiful’. But when she’s describing a gemstone like a diamond would focus on its 4Cs: cut, color, clarity and carat weight. Product development is about the attributes of the product – rational, emotional and experiential. Net, a great product drives the communication or advertising while a marginal product has to rely on the communication campaign. Which one is the more competitive and sustainable is obvious? But we need to go beyond our ‘bida’ culture and develop our ‘IQ’ or innovation quotient?

Innovation is not about ‘materiales fuertes’ of ‘the good old days’ – it is dynamic not static. Yet it does not have to be a breakthrough idea all time – not even Steve Jobs can do that. But what he is . . . is dynamic. He is able to visualize the 21st century lifestyle and create products for that lifestyle, which is changing all the time – e.g., people like free music downloads yet will pay if it’s simple and easy. For Jobs it’s visualize the simple and easy; for Michael Jordan it’s visualize the movements of the players on the court no matter how fluid and fast-paced the game is. Visualization is how we learned high school geometry and physics, for example – and used by Da Vinci (Mr. Simplicity!) and Einstein.

Likewise, we need to move beyond pricing; it has narrowed our playing field and our perspective – and why lateral or creative thinking does not allow itself to be held hostage by such narrowness. And it works beyond gemstones: P&G and J&J’s day-to-day consumer products are simply that, day-to-day products. Yet both have market capitalization greater than our GDP. To drive revenues their portfolios are constructed to distinguish and optimize the dynamics between: price-, communication- and product-driven power. And their product architecture goes across the value chain, say, from cleaning to brightening to protection to bundling all benefits, with liberal variants for each; and has 3 tiers of the same structure: entry-, mid- and upper-level price points to ensure global reach, economies of scale and healthy margins.

Bottom line: we need to rapidly internalize the imperatives of competition – investment, technology, talent, innovation, product and market. These aren’t the ‘good ole days’; it’s the 21st century – it’s about the present not the past?

Wednesday, December 8, 2010

The best advice

There has been a tremendous uniformity in policy and strategy since 1962. In other words there has been tremendous consistency, tremendous continuity from 1962 to now. Now, at the end of that period, we are now worse off than we were. We are now less industrialized than we were in 1985, we’ve been selling textile equipment as scrap,” Dr. Sixto K. Rojas said. “So my advice is, Dondon (NEDA and Socioeconomic Planning Secretary Dr. Cayetano W. Paderanga Jr.), if the program looks familiar, discard it, it’s been tried, it failed. Look for the unfamiliar.” (Business Mirror, Nov 28th) Amen!

Finally . . . there’s candidness in our view of ourselves – a breath of fresh air and indeed, simply mature – especially coming from an ex-NEDA chief, in ‘a rare occasion, [when] five former economic managers gathered’. Net, it’s time we stop rationalizing our failings – let’s be dialled up . . . be no-nonsense?

Three other news items brightened the morning: ‘Asian connectivity for competitiveness’, ‘Funding Innovation’ and ‘Pres Aquino to adopt R&D plan’. And Sen. Angara’s budget sponsorship goes to the heart of education, science & technology and industry; while the R&D plan sounds confident covering ‘food and agriculture, health, energy, environment, disaster management and risk reduction, electronics, and manufacturing’.

What do the four reports have in common? They are reflective of the need for structure – and there is form and function, there is structure and spirit? ‘And the Lord God made man from the dust of the earth, breathing into him the breath of life: and man became a living soul.’

Precisely what Dr Rojas talks about – for decades we had the structure? But where was the spirit? A spirit has to be anchored on the greater good for the greater number, not the few? For example, we can’t erase graft and corruption overnight but the writer admires Dr Estanislao’s efforts to raise efficiency in public service. But then again, those in public service are demanded to imbue the Balanced Scorecard with the proper spirit? It cannot come from thin air or from wherever; it has to come from Juan de la Cruz – but when?

And we have a laundry list of challenges: politicians, influence peddlers, oligarchy and beyond? Thus not only the ex-NEDA chiefs must confront our folly – given that we’ve been digging ourselves into a black hole for decades? Until we, Filipinos, are able to slay ineffectual beliefs we would be held hostage to lapses?

For instance, there is one lesson the writer’s Eastern European friends had to learn but with great difficulty: ‘’Don’t fall in love with an idea or a brand’. Thus they were shell-shocked when the writer told them to kill a brand: ‘You cannot keep throwing good money after bad. It’s a great lesson to learn early – everyone can dig a hole but don’t dig it to bury yourself. And so from here on we always go through the basics with the innocence of a child’ – to be a global gladiator you must learn when to prick your ego’.

Structure is something widely held in the East while in the West – because of established institutions – they’ve moved to being guided by simple themes, e.g., ‘It’s the economy, stupid’. For example, Filipinos would readily quote Michael Porter and he is one who preaches ‘innovation’ as a theme instead of the old strategic planning model. (Disclosure: the writer did strategic thinking in an MNC and his ‘claim to fame’ was moving the budget process from a financial exercise to goal alignment – i.e., structure, not terribly sexy but vital to clarity and execution especially in a large enterprise; and thus begets confidence – i.e., spirit, the ‘be all and the end all’; and continues to preach it [not strategic planning, which can be counterproductive when structure or form becomes too demanding] to his Eastern European friends.)

Sunday, December 5, 2010

President Aquino is dialing up

It appears President Aquino is dialing up demonstrating hard-nosed leadership – that to achieve sustainable economic growth we need enormous investments? Hopefully we’re responding positively – instead of manifesting tentativeness? Pacquiao has won eight championships because he has the ‘mindset of a winner’ – every time he climbs the ring he is positive and confident?

But there are downsides to the PPP, to trade agreements, to second-guessing the judiciary? We can’t expect the road to economic growth to be paved with gold – the path to eternity is straight and narrow? Every major initiative will generate a new set of challenges – that must be addressed . . . with our God-given intellect? Translation: if all we have is a hammer everything looks like a nail – the practitioner’s definition of ‘lateral or creative thinking’ (likewise a critical skill set in innovation and product development that we can use).

We wouldn’t want to protest against the automobile like when it was first introduced – because road accidents would rise? Of course it did! And thus relatively small as it is we are celebrating our growing car market – because we wouldn’t want to retard progress? Backward thinking . . . yields a backward economy – i.e., we don’t want to be too big for our breeches lest we won’t be able to lift our own economy?

The writer and family were on a flight from Manila to Davao and a few seats behind were two very eloquent passengers dissecting the problems of the world. He wouldn’t have noticed except for the non-stop tête-à-tête. The writer grinned realizing that between our ‘bida’ and ‘kuro-kuro’ culture we’re expected to dissect the problems of the world? Unfortunately, given where we are in our economy, it appears our ‘bida’ and ‘kuro-kuro’ culture hasn’t worked – because we’re not predisposed to action? Is it our holistic perspective which makes us tentative? Or do we measure everything against our own yardstick – is it a belief or an ideology? But whatever it is, it would not be perfect – i.e., who can cast the first stone?

The world has a long and dreadful experience from extremist views and ideologies – and we’re still living with it. Of course it’s the fault of the Americans with the Brits aiding and abetting the misguided war on terror? That even us peaceful Filipinos are thrown into the fray in Mindanao? (The US or Obama himself was rebuffed in their bid for a bilateral trade agreement by the South Koreans yet sent the aircraft carrier George Washington and its accompanying ships to Korean waters; a globalized world can unite to fight extremism?) We pride ourselves with the longest aggregate coastline, but are we able to protect ourselves from without – and from within, especially ourselves? For example, because of our parochial instinct, we keep shooting ourselves in the foot re globalization – winning in the global arena has nothing to do with size (e.g., Singapore; while we keep underestimating ourselves thus instinctively protecting uncompetitive industries, i.e., replicating zillions of ‘Bondyings’)? It has all to do with competitiveness – but which is still foreign to us?

So where are we? We care for poor Filipinos and want to defend human dignity as the Catholic Church preaches? Fact: the number of Filipinos who’ve lost their dignity – which is worse than death – is far greater than what we lost in WW II, twice as many as the total casualties from WW I and over half that of WW II. Human dignity for a third of us Filipinos can’t come from dole outs. Granted that CSR and CCT are not exactly dole outs – but the reality is poverty and OFWs are two sides of the same coin? Both are marginalized by a frail economy designed, wittingly or unwittingly, to preserve a ‘cacique-like culture’ – with investments more than sufficient for the few but wanting for the many? And to add insult to injury they – the marginalized OFWs – are the engine of the economy? But we’re not ungrateful – we celebrate their successes? What’s ours is ours, what’s theirs is ours?

Bottom line: let’s sweep away the cobwebs in our head and be positive and confident. President Aquino hopefully would stick to his guns and drive economic growth focused like a laser? Oh . . . that doesn’t belong to our lexicon but it’s about time it does?

Friday, December 3, 2010

The Philippines as a brand

The writer remembers attending the awarding ceremony (in an Eastern European city) where the business community honored the Best Brand Managers of the Year. There was a similar buzz when a Western marketing guru – who wrote the marketing 101 textbook – came to town to preach marketing. In the ‘take-away sessions’ with friends, the writer saw a bunch of happy, confident people – ‘they confirmed why we’re beating the hell out of competition’! (Disclosure: the writer trains them periodically; among them a PhD candidate who tapped the writer as mentor – ‘Brand Loyalty’ was her dissertation topic.)

Tourism ads are plentiful in Europe; and among the campaigns that come close to what the CEO of Pepsi or Colgate would call 360-degree or integrated marketing is the one from Macedonia. Beyond TV spots, a Western financial channel had an entire program devoted to the investment opportunities they offered – which was aired several times, TV programs being normally rebroadcast. While India says that their ad campaign worked. Bottom line: campaigns generally work especially in a globalized world because people are curios what other countries can offer? But they also generate negative word-of-mouth. Two friends separately related to the writer how they were ‘fleeced’ (like him, but the raw oysters were to die for!) in this one country (also airing an ad) that has gained global attraction recently.

The Philippines is lovely indeed – that tourists must seek! And we can mirror a 360-degree campaign even if it’s not to the extent global brands do. For example: Is the campaign simple, focused and congruent? ‘Nice’ is not the acid test! Starting with the product: In tourism the product is ‘the experience’ – which attractions will generate the greatest number of experience seekers? And Pareto’s 80-20 is the rule of thumb – to achieve cost-effectiveness not every conceivable destination should make ‘the experience’ yardstick. In one word, focus! This is where influence peddling or our bias for inclusion could again undermine our efforts? The first words from Steve Jobs after rejoining Apple that had acquired his venture, Next: “What’s wrong with Apple? The product sucks – because you’ve lost focus”!

The Philippine experience is to die for! That can be an apt platform (not yet a slogan; the thought process has to proceed and identify our strongest differentiating facet, e.g., ‘beauty ‘plus’ what?’) upon which to build a 360-degree communication campaign. But even the best destinations can’t stand alone – a banana peel may not really cover its blemishes, i.e., deficient airports, interisland transport and logistics and even unkempt restrooms can spoil ‘the experience’? And Secretary Lim himself has made the point. (Disclosure: the Lims are family friends.) ‘Beauty ‘plus’ what?’ As a ‘differentiating positioning’ it must capture ‘the ultimate experience’; and thus we must strive to live out the image. We don’t want corruption and trade barriers like closed skies to undermine the message and the campaign?

The pricing: We are still lower-cost than many. But the challenge is how to segment the market: which ones are 5-star and which ones are not and who are the target groups – what is that experience they seek that we can offer? Pricing is not low-pricing per se. Pricing is value – the value we offer must be consistent with the quality of the destination and responsive to the respective target groups.

The promotion: Not just who but what are they, our target groups? Because we have to design a 360-degree campaign around them and thus the media to utilize – i.e., ‘intrusively capture’ their senses – that indeed ‘the Philippine experience’ is to die for – and employ the media that will best, optimally, reach them.

Marketing goes beyond branding; it is about: (a) the bottom line‘show me the money’; and (b) leadership – to inspire bottom-line delivery. Have we set realistic revenue goals so we could ascertain the investment levels to pour into tourism? What is our competitive advantage in product, pricing and promotion that will raise probability of meeting these goals? There is no certainty in business but the key is to keep raising . . . raising . . . raising success probability! (Or why we’re economic laggards – i.e., we keep rationalizing our missteps instead of being dialed up and no-nonsense?)

And if tourism is a strategic industry because of revenue size, then the leadership, from President Aquino down the line, must indeed live up to the message, ‘take ownership’ and commit to delivering the bottom line? Marketing may sound challenging, but we can always find refuge and comfort in: ‘Simplicity is the ultimate sophistication’! [Da Vinci]

Monday, November 29, 2010

‘The widow’s offering’

‘The problem with solving the [economy] is it involves painful choices. And people reward politicians who say they are worried about [it] much more than politicians willing to [take specific actions]. All of us would prefer what [suits us].’ That’s the gist of an editorial about the US economy.

And some Bible reading Americans reacted with a quote: “Jesus sat down opposite the place where the offerings were put and watched the crowd putting their money into the temple treasury. Many rich people threw in large amounts. But a poor widow came and put in two very small copper coins, worth only a few cents. Calling his disciples to him, Jesus said, “Truly I tell you, this poor widow has put more into the treasury than all the others. They all gave out of their wealth; but she, out of her poverty, put in everything—all she had to live on.” And wealthy Americans responded: ‘For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you [Pres Obama] allow tax cuts on incomes over $1,000,000 to expire at the end of this year as scheduled . . . ‘

We’re not the US, with a GDP per capita of $46,000 (or $14.26 trillion GDP), against our $3,300 (or $161 billion GDP). But they have a deficit of $1.345 trillion that is unsustainable and must be cut ‘from the 2030 budget . . . when the boomers start to weigh heavily on the budget’.

We also have a deficit issue: given revenues of $23.56 billion against expenditures of $29.82 billion (2009). But we’re a developing nation (while the US is fully developed with more limited options) and thus have plenty of room to grow, but require tons of investment. And which is what developing Vietnam is doing with gross investments of 42.5% of GDP against our 14.3%, or why Thailand is growing faster than we are with investments at 24.4% of GDP.

Government and industry are the drivers of investments, and both are able to tap foreign sources. And that is where our problem starts? By design (or by law) and by actuations (including oligarchy and insidious corruption?) we have driven them away and starved foreign sourcing? Hopefully President Aguino turns this around? And beyond that his other big challenge is to overcome bureaucracy – which in the case of the US translates to wrongheadedness and incompetence? What about us? We can’t start with less than a positive, confident outlook – and Pacquiao is our model – given our meager GDP and massive poverty? The writer talks about his Eastern European friends: they tossed the past and want to make their own destiny – and their model is a Fortune 500 – and the writer’s role is to show them how that cloth is woven.

What about our biggest investors – San Miguel, PLDT, Ayala, and Meralco, among others? What state-of-the-art or contemporary products and services have they developed and are global leaders? Investments are meant to generate products and services that drive a country’s revenues or GDP. And in a globalized economy – and at the higher-end of the value chain – that means from the global market? With the exception of Ayala these major enterprises have had different owners owing principally to the oligarchic nature of our economy and culture? Thus we won’t have an Apple that can be the biggest technology company and soon even bigger than industrial behemoth Mobil Exxon? Translation: we value deference to hierarchy instead of nurturing creativity and dynamism? And PLDT, San Miguel and Meralco, among others, represent our respect for hierarchy, i.e., conglomerates if not monopolies? It’s too bad so sad – because respect was meant for elders, not the way we are living it? Or where is the coherence?

Who will give until it hurts? Who will reform and restructure our feeble economic model? The ADB is not omnipotent but is articulating something fundamental: that investment in technology and manufacturing generates far greater multiplier effect – and that BPOs and OFWs don’t make for a 21st century economic model? And that holds if indeed we want to address poverty – not to preserve the status quo or our hierarchical culture?

Friday, November 26, 2010

‘‘I wouldn’t worry about why you haven’t gotten there . . .

“ . . . I would worry about what kind of basic ideas that would be driven home to get you where you wanna go because you can do that. There’s no doubt in my mind about that,” Clinton said [to us at the Manila Hotel].

That’s typical ‘looking forward’, not ‘looking back’? It’s what dynamism is about? And Clinton talks about ‘basic ideas’ – basic or simple, and they really work? And Pareto’s Principle (or the 80-20 rule) and Euclid’s ‘basic axioms – that generate an impressive body of compelling results’ – come to mind. (And he didn’t have to repeat what Hillary had to say to President Aquino about the oligarchic nature of our economy?)

Net, his message is for us to be dynamic and simple yet confident? (And we can take it or leave it?) But do we continue to sound clinical about our challenges, not action-driven? The world is moving forward, and progress is moving at warp speed – but the word ‘dynamic’ or dynamism is something we don’t talk about? It’s not top of mind – it’s not in our lexicon? What is the evidence – to continue with the Clinton thought process?

As a politician he’s one of the great communicators because he could distill his topic into a few points – what he would call ‘evidence’, a throw back to his legal training? Dynamism is not at the top of our mind – and is not even in our lexicon? How come we’ve lived through many years with such meager investment levels – how could we move forward? How come we haven’t developed winning product ideas for years – how could we compete outside our shores?

But the biggest evidence could be our ‘holistic perspective’? We seem unable or uncomfortable to pursue major undertakings unless we’ve done a dissertation in our head? Unfortunately, there are times when one stops asking and starts telling, like when a third of Filipinos are hungry? It was Clinton who presided over the longest economic boom in US modern times – driven by a simple agenda: ‘It’s the economy, stupid’!

And Fortune 500 companies likewise embrace a simple mantra – i.e., the bigger they are, the simpler they are because they valuethe be all and end all’: clarity and execution. (They are holistic in execution driven by a simple strategy – there is nuance!) But we’d nit-pick and point to their negatives – because Americans are ‘too dialed up’ (or ‘suplado’)? They’re out to protect their interests? (And we haven’t been undermining our own interests and squandering opportunities, e.g., allowing new-market economy Vietnam to aggressively drive investments when we were first at-bat?) Or they’re just not holistic? And Clinton himself isn’t perfect? (And so was the good thief – while the bad thief was so full of himself that he fell under his own weight?)

The writer went through a similar experience with the Eastern Europeans – but they came around sooner than later. For example, margins are the key to sustainable, profitable growth! Of course it’s not just margins; but if margins are at the core of the strategy, the corollary pieces will come into place. For instance, to be dynamic in product development while ensuring new products are designed to meet margin hurdles would sustain success over the long-term. And so the writer’s Eastern European friends now live with the simple mantra: ‘Drive turnover, margins and efficiency . . . and you beat the hell out of competition’!

And . . . so the writer restates a point: We want to be a developed country . . . And to get there we need enormous capital that will buy us strategic investments in strategic industries, technology, innovation, products, talent and market . . . We value capital, not cronies – and matching if not outdoing the Chinas of the world in incentives; we value strategic industries, not favors to friends; we value technology, not fielding our OFWs effectively as ‘muchachos’; we value innovative products, not low-value commodities; we value talent, not relations; we value markets – the bigger the better, not simply to corner the local market.’

But do we suffer from NIH – or ‘not invented here syndrome’? Or is it simply the absence of experience – we haven’t been a developed country yet? Young JFK’s Bay of Pigs’ trauma turned on his wisdom, overnight?

Tuesday, November 23, 2010

Our mental model . . . and assumptions

Do they explain why we take it for granted, and live with low investment levels in our economy and industry?

The writer’s Eastern European friends weren’t perfect – had a ‘less-than-progressive mental model’ and yet could provide some insights? It’s budget time and he’s overseeing their budget process. And that includes benchmarking against global behemoths and a sprinkling of local ones. And the writer, while reading a Philippine business periodical, also compared them against three Philippine companies: two were at least 50 years old and the other 25. They were a cottage industry 8 years ago and today are more profitable than all three Philippine businesses. Over the next few years, they could be well ahead – reminiscent of how our neighbors went ahead as economies? We know all about benchmarking – and so let’s use it to our advantage? (What we don’t know won’t hurt – but can sink – us?)

Just like us, the Eastern Europeans did not think big although in fairness, dreamt big. For example, their entry into the market was via very low-priced products. And as they got their products into store shelves they started dreaming big. Not so fast – first they had to be profitable or they could run aground! What did they need to change? (We have a well-developed marketing discipline in the Philippines and know that fundamental in marketing and business . . . is the product. Or why product development has to be top of mind. Yet product development and low investments are the biggest negatives of the Philippine economy and industry?)

The Eastern Europeans had to understand the business they were in – their reason for being. And that their dreams would come from the products they develop. Thus their next lesson was to grasp the fundamentals of a product architecture; that Maslow’s hierarchy of needs is the platform of market segmentation; and that lateral thinking is a tool to translate ‘moving up the value chain’ into reality. For example, IBM met a dead-end with big box computing and had to move lateral into software, storage and servers while leveraging scale – before it regained its footing, its market cap.

(If an IBM isn’t ‘entitled to deference’, what does it say of our model? Consider: We value hierarchy – e.g., monopoly, being one of its highest forms; it reinforces oligarchy – instead of honing the nation’s competitive instinct; it encourages deference – instead of nurturing dynamism; it could take generations to undo – while undermining our global competiveness; and worse, foreign investors could sense that the deck is stacked against them? Why do we have pitiful investment levels, a third-world GDP and massive poverty, again? And our best shot is CSR? That’s to start an exercise in lateral thinking, not to discourage us!)

Just like us, the Easter Europeans were thinking: low investment . . . low prices . . . cheap equipment and factories. And so they had to ‘go to school’ – to learn about business drivers. For example, where the consumers are mostly low-income or poor develop the appropriate product, and optimize volume and pricing dynamic. And if the financials still are unfavorable, to develop higher value-added products for the pricier consumers; but then again optimize volume and pricing dynamic . . . And to do the exercise until the length of the value chain is adequately covered – meaning, the company is able to compete across several segments and is more competitive. And when the home country has limited purchasing power, the goal is to target the region and then the world! (But the value chain is not static because of ‘man’s ever changing want’, i.e., product development is dynamic! Or why Silicon Valley is home to venture capitalists.)

The same thought process applies in R&D and manufacturing. Hire the best talent to run R&D – and in the case of the Eastern Europeans, a talent from the West. And with manufacturing they had to continue their ‘schooling’: ‘run the numbers and tell me if you really want to invest in cheap equipment’. And lo and behold, they proudly told the writer they would be acquiring state-of-the-art equipment from the West – i.e., it would generate the best margins, which they have done across four business units. The Christian growth model – be an agile competitor not a domineering oligarch?

And the thought process continues. They had to invest heavily in marketing and distribution – which has become affordable because of healthy margins. (Or why values like investing are critical in an economic activity!) But in fairness, these people had the talent to create great advertising.

Our business education is not mediocre – but what about our mental model . . . and assumptions?

Saturday, November 20, 2010

‘Every time we point a finger . . . at others, 3 are pointed at us’

That’s a favorite line of sales and marketing managers to their troops. And global competitors are well aware of it too! The bottom line: You paddle your own canoe or you sink to oblivion? Can we take a similar posture looking at our dismal economic performance?

We have a well-developed accounting and finance discipline and know that net worth is the net of one’s assets against their liabilities. Thus, while we are proud of our background – from our culture to history to tradition to religion, we have to discount all of them by our shortcomings. For example, our murky economic performance has translated to massive poverty?

Is Congress, in looking at legislating CSR for companies, for instance, again missing the structural problem we face? Is it ‘patronizing’ the poor yet again – i.e., yes, it sounds compassionate but until we fix the fundamentals of our economy, we would constantly be pursuing palliatives and be mired in ‘making-do’?

The fundamental challenge of industry is that they are not globally competitive – we can’t continue with the rhetoric: ‘our banks would encourage credit and support SMEs’! We’re not hitting the nail on the head – credit has to be efficiently and effectively used! Ergo: The starting point is to pursue product development? It’s not enough to celebrate local successes – the bigger market and the bigger returns come from being globally competitive. For example, while a local consumer-goods company should celebrate a doubling of profits, a profitability of less than 10% does not make it capable to compete regionally or globally! Hopefully, local firms are working in that direction?

Competitive products generate pricing flexibility that would raise margins and thus the ability to market competitively beyond our shores. For instance, a gross margin of less than 50% (in the case of consumer-goods companies) does not generate sufficient marketing firepower. Healthy margins are a mandatory to market and distribute and compete regionally or globally. They are fundamental competitive metrics that the Chinese, the Vietnamese and ex-Soviet bloc countries have learned. (While we’d be stuck as a craven, parochial economy if we’d stick to parochial – as opposed to global – yardsticks?)

Our current export levels are insignificant by global standards, and when compared to our neighbors. And while an appreciating peso could be an issue, our lack of competitiveness is the bigger challenge. Yet, commonsense says it presents an opportunity – given that the size our local economy is at par with our neighbors’. How? Local businesses must invest in product development aimed beyond the local market – from market research to product architecture modeling to R&D, and beyond.

Until we invest accordingly, our ability to raise the hurdle for manufacturing would be limited – which is why we have zero confidence in attaining manufacturing competitiveness. If we can spell out new-product parameters (the key to innovation) from such investments, we would be able to correspondingly draw up the specs for the manufacturing technology that we require. And countries like Germany and Japan if not the US would be able to supply us such technology. In short, we don’t have to reinvent everything from the nail to the jet engine – we need to get out of our shell because we’re not an island to ourselves; and tap best practice if not technology so that we could ante up and compete in the global arena. And which our friends from South Korea are encouraging us to do!

Do we really know who we are, what we are and how we are to find our place in the sun? For example, is the administration taking its own sweet time re pending trade agreements? Filipino mañana will ensure that the train leaves us behind for the umpteenth time? Or are we setting our sights and performance standards . . . oh so low? It’s too bad, so sad – for a people proud of their heritage and natural abilities?

Wednesday, November 17, 2010

Sense of purpose

Sometime ago, the UK wanted to consider a national sense of purpose and made reference to the American ‘pursuit of life, liberty and happiness’. The context: it’s not unusual for a Brit to keep a bed in the UK but work in another EU country and thus may have divided loyalties. And from across the pond President George H.W. Bush comes to mind – and his beef against ‘the vision thing’, and why he stumbled with his ‘read my lips, no new taxes’?

In the case of the Philippines, could our sense of purpose be ‘all over the board ‘especially given our ‘kuro-kuro’ culture? But with hierarchy we have no qualms? Thus, it is no surprise that leading the pack in the government’s infrastructure program are our conglomerates. Are they committed and able to drive and elevate our competitiveness or are they out to boost their portfolio – not characterized by best practice or what they know but whom they know? There are hurdle questions we must ask and answer if there is clarity in our purpose and values? We take it as gospel truth that our conglomerates can succeed in any business; but as a country we accept that we’re preordained to fail in manufacturing, for example? How can a conglomerate’s capacity be greater than the country’s? (Do we need more Fr. Bernas to clarify our value system – for one, our faith respects pluralistic societies?)

It appears within the administration that there is a lack of clarity which industries we would provide incentives to and why and how? Intel, for example, is building its largest and most efficient semiconductor fabrication facility in China because of aggressive Chinese incentives. The writer had experienced this first hand many years ago while representing an MNC. We keep thumping our breast over the $20 billion OFW remittances and the taxes we could collect via our current economic model? Yet our GDP shortfall if we are to raise our standard of living is north of $100 billion, a magnitude we have yet to internalize? Put simply, we have a structural problem – and are a disaster waiting to happen unless we become stout-hearted men and women?

We want to be a developed country . . . And to get there we need enormous capital that will buy us strategic investments in strategic industries, technology, innovation, products, talent and market. We need a simple ‘purpose’ so that we can craft a crystal clear value system – that will give us the strength of character to doggedly forge on? Sadly, politics, vested interests and a lack of sense of urgency can conspire to undermine resolve? And given our soft heart, we keep tolerating them and thus are unwittingly creating a monster: how do we develop a bias for efficiency, productivity and ultimately a competitive nature? Failure means relegating ourselves to a mere exotic South Pacific island chain – i.e., life imitating art like The Flintstones?

What could be our (economic) value system? We value capital, not cronies – and matching if not outdoing the Chinas of the world in incentives; we value strategic industries, not favors to friends; we value technology, not fielding our OFWs effectively as ‘muchachos’; we value innovative products, not low-value commodities; we value talent, not relations; we value markets – the bigger the better, not simply to corner the local market.

The thought process to develop a sense of purpose and value system could be the outcome of education – e.g., ‘The value of education is not the learning of many facts but the training of the mind to think’ (Einstein). But it doesn’t have to hold us hostage until we develop the equivalent of a Stanford or a Yale or a Harvard? Industry should provide education and training to its employees? We should partner with world-class universities to put their stakes in the country? We should upgrade our educational system – but that will not happen overnight? And so let’s not be frozen in time? But in truth we want to restrict foreign influence in education for Juan de la Cruz; while we send our kids to be educated overseas – reinforcing hierarchy? And we extend the restriction to foreign investors; while we profess dislike for oligarchy? The writer’s Jesuit friend (deceased) would call that ‘plastic’, i.e., are we for real?

Oh . . . we don’t need to read the negative in the American ‘pursuit of life, liberty and happiness’ – because we’re the chosen people? Like the UK, we need to establish our own ‘purpose’ – and others would cheer us on, not read the negative?

Friday, November 12, 2010

Privileged upbringing, poor outcomes

Just like in the Philippines, family events in the New York metro area bring extended families together. And almost always gut-level conversations especially about ‘the kids’ are at the core. The writer’s wife had major back surgery. And so he was in the middle of these chats while she was unable to play her hostess role. Yet it was a gratifying experience – beyond the outpouring of well-wishes and prayers were loads of great Italian cooking: ‘We know you’re not a kitchen person and like Italians we know Filipinos would come and you have to serve food’.

‘This neighborhood is not wanting of ‘privileged upbringing, poor outcomes.’ (And the writer recalls George W. Bush, who claims to be Texan but grew up in the neighborhood; in fairness, he became president.) ‘I know my son and so I wanted him to attend private school; my husband is a product of the public school system (in the Midwest) but they all walked to school, life was simple. Discipline to me is a mandatory. Do you know that even at West Point, a friend says, that it takes a year before they could reshape American kids?’

Obviously the extended family is delighted with the way ‘the kids’ turned out but the consciousness of the abundance of risks always remains. The writer remembers his father who always counseled to fortify his values and not fall into complacency. And when the father of his son in-law (both come from Wall Street like his daughter) talked about the subject using practically the same words, he realized that parents would always be parents.

We Filipinos can’t be guilty of being less than parents to our children. Unfortunately, we continue to struggle with corruption and underdevelopment, for instance? How are we formed – by the family, the school, the church, the community? As Hillary Clinton says, ‘it takes a village’?

One of the criticisms leveled on Americans is that they are ‘too dialed up’ or in the vernacular, ‘suplado’. But beyond the US, notable in the writer’s experience dealing with successful institutions is the clarity in their purpose and value system. The writer remembers growing up hearing elders talk about ‘business is business’. He was too young to comprehend, but now realizes that it was preaching ‘sense of purpose’ and clarity in one’s value system. For example, it is universally held that inherited businesses could run aground by the third generation when values take a back seat?

The extended family and the church and the school and the community ought to pull together to educate kids to develop clarity in their value system? Arguably, we have not done a good job? There is country first before family or friends? But public service in the country is synonymous to graft and corruption, fairly or unfairly? And so the writer is delighted to read Fr. Bernas’s piece, Religion and the RH bills (, Oct 25th), because it effectively talks about country first? The President is not defying Catholic teaching because Catholic teaching, for a pluralist society, requires that government interpret the common good of the country not only according to the guidelines of whatever religion may be the majority, but also according to the effective good of all the members of the community, including those belonging to minority religions. For that reason it is good that the President has invited other religions to the dialogue . . . We who have not experienced massive religious persecution must learn from the lessons of history.” As a resident of ‘Terry Schiavo (and Scott Roeder) country’, the writer can relate to the admonition.

We have a gigantic challenge: Can we do a self-critique of our value system? Until we recognize that our assets are discounted by our liabilities, we would always assume that to be critical is to be unpatriotic – and which explains why we seem unable to dig out of the pits?

Tuesday, November 9, 2010

The cost of entry

Hopefully as a people we recognize that the 21st century – characterized by a globalized economy and by extension a highly competitive environment – has an inherent cost of entry? Simply put, we can’t expect to walk into the arena as though we write the rules of the game – we don’t and the sooner we internalize reality the better we could gear up and play? Nor can we keep invoking victimhood – a lesson Obama tells black people and minorities? A lesson we can learn from (‘small’) Singapore too?

It would be pathetic if we’d consider that the whole world is wrong and we’re right – that we could play by our own rules, culture, history, tradition? That would be too bad, so sad for a people well-informed and well-traveled? (Of course our rules work for businesses benefiting from OFW remittances; but that is classic ‘thinking small’? And we can be people of big minds, and ‘lift all boats’?) The global economy is not perfect. But we’re not about to write a dissertation to prove a point?

And it’s not a theoretical argument – the global economy, warts and all, has lifted millions from poverty and made once poor China and India, Brazil, Russia and more recently Indonesia, major economic forces. Or why ideology has become moot? In fact the aftermath of Western greed – that brought about the ‘debt and housing bubble’ and the collapse of the global financial system – highlighted the reality of a competitive world. How? Singapore and Germany demonstrated how competitive economies would regain their footing. And the inverse, unfortunately, is: uncompetitive economies would slide down the scale?

What should be our end view? In a globalized and highly competitive economy, we must see ourselves as truly competitive? We have local teams that are truly competitive – how do they do it? Their mindset is to excel, not to ‘make-do’? Will the coach of Ateneo or La Salle field players because of compassion or because of the imperatives of competition?

It is encouraging that the Aquino Administration has become more discriminating. It is eliminating subsidies to uncompetitive industries. It is cancelling export promotion drives for low value-added products. It must in fact draw up a roadmap – and provide the leadership – that will spell out every major element of competitiveness – e.g., from capital and investment to technology to talent to products to market? Not friends, not relations, not cronies, not hierarchy – which, unfortunately, are preeminent in our value system?

Our challenge is to understand, accept and buy into a value system that brings out our animal spirits – so that we are all behind, adrenaline pumped up, what could be our best chance to raise our standard of living? We have to move on and not be distracted, justifying our mistakes and/or dissecting the mistakes of others – despite the human need for company? We can ill afford distraction in a highly competitive global environment? And everyone else is irrelevant to our cause – something to learn from athletes?

And we can’t afford to outsmart ourselves: there are notions that may ring nicely but it doesn’t mean they’re absolutes; nor are they representative of reality? How could China and ex-communist countries become competitive when they had no inherent competitive advantage in manufacturing, in product development, in global competition? Because they recognize what it takes to be competitive? And as importantly, they believe in themselves – determined to call upon their strengths while vigorously overcoming their shortcomings? The past is there to learn from, not live in? Let’s not undersell ourselves?

Friday, November 5, 2010

The greater good

A recent report argues that the Japanese seem to have lost their animal spirits. That they’ve gone beyond the ‘lost decade’: ‘For nearly a generation now, the nation has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought [though an exaggeration?] in the global economy.’ (The New York Times, Oct 16th)

Over a generation ago, we were seen as the fastest growing Asian country. Today, not unlike the Japanese, we appear to be disheartened instead of being dynamic – i.e., mired in ‘making-do’? Fortunately, the private sector has stepped up to the plate and is engaging the Aquino Administration to pursue an industrialization initiative.

But old habits die hard? It would be gut-wrenching if we’re still clutching our life-support, i.e., OFWs? What about our animal spirits? Our tendency to look back as opposed to look forward seems inbred? Are we distracted, can’t pursue the way forward because we want perfection, cross the t’s and dot the i’s? Does hierarchy distract us and turn us passive? Is our instinct to personalize (i.e., our compassionate heart) distracting us from recognizing the greater good? Major economic undertakings demand a laser-like focus?

If we keep looking back, we would find the continents configured differently; and the Alps would be nowhere? The US and Australia would be inhabited by natives and aborigines? And we would be a pristine Pacific chain of islands speaking Bahasa if not Chinese; or a combination of modern metros and rural farms speaking Japanese? The writer remembers a Jesuit friend (May he rest in peace!) who spoke at length about reality; but the writer, unfortunately, was dense.

The Pharisees and the scribes aspired to be models of perfection – but as we know they were off base? Or why Clinton, among many, calls the American system an experiment, its imperfection for all to see. Hierarchy has long been discredited by the imperatives of competitiveness, i.e., layers of authority are anathema to productivity and thus ‘high-commitment work teams’ came into being. And even before that, royalty has long been in decline. Even the Vatican has started to demonstrate a bit of transparency – because integrity suffers when hierarchy rules, i.e., abuses are not uncommon. But we won’t part with our señorito-muchacho culture?

As in any journey, it is important that we establish a baseline; and fortunately the private sector has done that precisely – via the initiatives the PCCI and JFCs have presented to the administration. And that baseline says we are lacking in infrastructure and strategic industries that could only be had if we amass enormous investments – both local and foreign. In one word, we need to pursue industrialization.

That ought to be our starting point? So that we can look forward and together create the animal spirits that major endeavors exact? And we could only take a new, positive posture if we seek the greater good – instead of personalizing our challenges? Over a period of more than a generation we erred by leaps and bounds – we blew it? And so we need to start afresh? We don’t want to personalize that – because ‘we’re all parties to the crime’, i.e., we’re like seeds that fell on the wrong spot?

Monday, November 1, 2010

‘People are funny’

Which explains, according to a New York Times article (Oct 16th), ‘the rise in popularity of behavioral economics, an effort to account for the slippery, indefinite nexus of money and humans’. And it continues: ‘The entire question of how emotion will change people’s behavior is pretty much outside the standard model of economics’.

The writer from early on has raised the impact of our culture on why we are where we are as an economy. Not that he is a behavioral economist – far from it – but having done business over 4 decades, and in many parts of the world, he is witness to how people could indeed be funny.

The writer, earlier in his career, benefited from the perceived sophistication of Filipinos given our access to developments in the West. And his task was to share these developments first with people in the region and later globally. The writer had watched in wonderment how in the region they scrupulously absorbed ideas apparently foreign to them; while Filipinos, on the other hand, demonstrated nonchalance – pride, indifference, lack of esprit de corps, whatever?

The writer is then the least surprised why we are where we are today as an economy; and why our neighbors are where they are! Sadly our attitudes haven’t changed all these years? Is our self-image fragile? Could we be objective and pursue something outside our comfort zone if it would do us good? For instance, in the 21st century when the world including those unschooled in capitalism have embraced (e.g., aggressively tapping and driving investment) the fundamentals of the free market, we are still celebrating our OFWs; and the businesses that are flourishing because of them? Our OFWs live abnormal lives away from home, and despite best efforts won’t raise our GDP beyond third-world levels. Shouldn’t they be the object of our compassion – beyond facilitating their needs like remittances, they need an economy and industry that would let them take their lives back? They could relate to our ‘muchachos’ – at work practically 24/7 and away from family, i.e., ours is a señorito-muchacho culture?

Compassion seems to turn our sense of values upside down? For instance, how much do we feel compelled to protect an inefficient and unproductive industry, forgetting that the interest of the country is far greater than the interest of one sector? In the process, we have dispersed and dissipated scarce resources to the detriment of the greater good. Fundamental to economics is the optimum allocation of resources – and we have a well-developed economics discipline. Why? Our culture or ideology gets in the way? The writer has lived and worked with ex-socialists; and observed them adopt a system totally opposed to their up bring. Bottom line: there are fundamentals that can’t be overturned by compassion and/or ideology nor by ‘kuro-kuro’ – that we have yet to internalize, and why we are where we are as an economy, i.e., crab mentality?

The Aquino Administration ought to be encouraged given its apparent commitment to do good. But will culture undermine their efforts – i.e., why can’t they be straightforward about their value system? If the CEO of HP was dispensable, how could friends be above country – even Nixon and Clinton had to account for their follies?

We are embarking on a major industrialization initiative; and more complex choices between what’s good for one interest against others and country would collide. How would the administration handle these complexities? The simple answer or why successful institutions are thriving is because there is clarity in their value system. But given our instinct to personalize, do we miss the import of the greater good, and instead misread it as the absence of compassion – and being imposed upon, i.e., ‘suplado’?

The writer has raised the lesson of Eden before. Our faith has compassion at its core but not of the selfish kind – or Eden would still be around? The compassion (and the love) had come earlier – being made into the image and likeness of the Creator, i.e., we possess the capacity to excel?

Friday, October 29, 2010

Executing ideas with confidence

Ideas are only as good as they are executed with confidence. Reading news reports from the 36th Philippines Business Conference and Exposition, the writer was figuring out – perhaps unfairly – if the takeaway from the gathering would come down to ‘executing ideas with confidence’.

Rightly so, President Aquino proudly articulated the administration’s efforts to aggressively tap foreign direct investments. And the business sector (PCCI) for their part offered an excellent agenda: ‘to adopt an industrialization and an integrated infrastructure program as part of a long-term economic plan to boost growth’.

The PCCI deserves plenty of credit for stepping up to the plate. And recognizing how much effort they expended to distill their proposed agenda, they do deserve our praise. The writer had early on talked about the JFC’s (Joint Foreign Chambers) efforts to define 7 strategic industries where we could be competitive; and for which we could attract foreign direct investments, of $75 billion. These two initiatives could represent the best chance for the Philippines to move its economy forward. And thus the key is to execute them with confidence. And that means the public and private sectors solidifying the partnership that they appear to be forging, recognizing that partnerships aren’t necessarily perfect.

The global economy demands the highest levels of competition – and it starts in the mind. We can’t afford to be tentative nor lacking in resolve. We have other challenges and issues but we can’t afford to dissipate our efforts either. That may not be easy because of our compassionate heart and our instinct to be inclusive? But if indeed we are compassionate, we need to recognize that until we have the means, our compassion would be toothless.

For instance, there is a fly in the ointment: ‘The European Union (EU) has warned that if the Philippines continues to drag its feet on a possible Free Trade Agreement (FTA), the EU might not be able to accommodate the Philippines anymore because it is processing several agreements with other Asian countries . . . This comes at a time when even Vietnam has already overtaken the Philippines in terms of exports of manufactured goods to the EU.’

And what’s our response? ‘We have already said that the FTA with the EU may take between four to six years to complete . . . It entails a lot of work for all of us . . . FTAs should not be entered into lightly. In fact, the current FTAs of the Philippines have been underutilized . . . Our own business sector has not been taking advantage of the opportunities with FTA . . .’ (The Philippine Star, Oct 16)

Is this another one of those where we seek perfection? Perfection is not of this world? Analysis-paralysis, is that what it is? In business the mantra is: the organization first – because it serves a large and diverse constituency and thus a force for good when so committed; and in our case, it is the country first – not friends, not relations, not cronies, not hierarchy? Country first – or is that Greek to us?

Or are we again protecting an industry – which is why we’ve been failing the country for so long? Of course nothing is simple, but when we are the basket case of the region and there is a market to be tapped, what is the excuse? Mañana? In the private sector, that kind of attitude and foot-dragging is simply unacceptable – and so it is in nation-building? (‘Needs to be studied’ seems to be the code to justify our foot-dragging, as the tax row raised by KLM suggests – even when ‘the Philippines is the only country that charges airlines these taxes, Tourism Secretary Alberto A. Lim said’.)

Leadership is about ideas executed with confidence. We now have nearly fine-tuned ideas but the challenge remains: can we prioritize and execute with confidence?