A ‘success culture’

It’s about time we think success? It’s about time we junk ‘good enough’ – because good enough is never good enough especially in a highly competitive global economy? Thus we shouldn’t blame others or destiny because it is about us and the choices we make? In short, is it about time we embrace dynamism? To turn around a country of over 90 million people with a third of them hungry requires a great dose of dynamism? Not same old, same old?

If President Aquino teaches us a success culture and we respond accordingly then we will succeed? It appears that even doubters are acknowledging that the siren ban is teaching us to be courteous and disciplined motorists . . . and even more profoundly, law-abiding citizens – the core or the lack of which is why corruption is endemic? Sadly, even harmony which we cherish may be at the core of the lack of discipline in our system – i.e., our instinct of compassion and inclusion equates to giving a wink and a nod?

Are we ensconced in our comfort zone that unwittingly we are narrowing our playing field – and by extension our options to pursue success? Does our religion or our history or our culture view progress positively? Progress has its downsides, to be sure – but wasn’t man meant to pursue progress, and conquer his world?

Does it behoove a nation that can’t feed a third of its people to put its values in perspective? What values do we truly hold dear? Do we translate poverty to almsgiving? What about teaching people how to fish? But because we have narrowed our playing field – our fishing ground – there’s not enough fish?

In our hierarchy of needs is expanding our fishing ground an imperative? Put simply, a GDP per person of $3,300 (PPP) is indeed a very narrow fishing ground?

We can’t mirror developed economies’ approaches to economic growth – they have well-developed systems that give them a greater propensity to respond to classical fiscal/monetary tools. (On the other hand, the US has gone full circle, raised productivity and companies no longer need the headcount levels generated by the economic bubble, thus their unemployment issue.) Even in the private sector, not all ERP (Enterprise-wide Resource Planning) initiatives are created equal. Those with more developed, disciplined processes get greater value for their investments! An underdeveloped economy would respond and grow from classical fiscal/monetary interventions; but they don’t necessarily enlarge our fishing ground – we need enormous investments, 21^st century technologies and systems to elevate our competitiveness and productivity, among others? And they require dynamic thinking? But is a ‘dynamic Philippines’ an oxymoron?

Massive poverty won’t go away when our economy is a mere 10% those of developed economies. That is a huge hole we’re in? But we have yet to put our values in perspective and our priorities in order? The narrower we keep our playing field the more we will perpetuate a cacique-like culture? If Aquino pushes success and demonstrates dynamism as opposed to staying glued to our comfort zone, then he/we will succeed?

Success or dynamism demands tossing assumptions that have not moved us forward but in fact nailed us to the past, including being holier than thou – as the only Asian Christian nation, for instance? Could we cast the first stone at the outcast Mary? But there’s a more fundamental point: We’re supposed to be smart people – why can’t we feed a third of our people? This is where we need to call upon our instinct of inclusion and compassion?

Massive poverty does not equate to a success culture; courteous and disciplined driving does; the rule of law does; staying in our comfort zone does not; the inability to pursue progress does not; narrowing our fishing ground does not; ironing out our values and priorities does? ‘Unless our faith is firm, we shall not be firm’?

What to communicate?

It appears the Aquino administration is pressing the right buttons to lead us to a new era? It is reported that with the appointments within the communications team the Administration has completed its core team – that’s great, Congratulations!

The new Tourism secretary said it well: a bad product despite great infrastructure does not sell, e.g., political patronage dictates where airports are upgraded, not where we get the biggest bang? Even an A-Team can’t sell a bad product?

What is a good product? A product that is compelling – that adds value – that is priced right and is presented and communicated right is a good product? In the case of the Philippines, a good product for the Aquino administration is an agenda that is compelling – that adds value – that is fiscally responsible and is presented and communicated right?

What is that agenda? An agenda that clearly and simply articulates its object is a good starting point? Thus: We will start the journey from underdeveloped to developed economy is a good starting point? It is compelling to Juan de la Cruz? It adds value because it spells out what the object is: to drive our GDP per person from $3,300 (PPP) to $33,000 over time – isn’t that what economic development is all about? It is fiscally responsible if it doesn’t blow our deficits sky high? And it is presented and communicated well – in clear and simple terms and is execution-biased? That means there is a well-thought out and coordinated presentation initiative so that Juan de la Cruz could relate to it? It is communicated well if there is a well-thought out and coordinated update efforts so that Juan de la Cruz is well informed? It is execution-biased if it is broken down into a simple set of vital few initiatives that will demonstrate how we will get from where we are to where we want to be? It is execution-biased if the initiatives spell out who will do what, when, where and how?

The devil is in the details? How much do we need to raise our GDP to get to the above GDP per person? We can start with raising exports to the the level of our domestic economy – by an incremental $100 Billion? (It appears government agencies tried zero-based budgeting before and found it too cumbersome and time consuming. It will be if we keep to our ‘inclusion/compassion/perfection’ instinct as opposed to focusing on the vital few, e.g., does it raise revenue or margin or efficiency/productivity?)

What industries do we need to develop rapidly – for example, the 7 strategic industries presented by the Joint Foreign Chambers (JFC) that could generate $75 Billion in foreign investments?

Of course, the following are mandatory given they are a foundation to our development efforts: (1) Power, (2) Water and (3) Rice? On infrastructure – one of the 7 strategic industries identified by the JFC – which ones must constitute the vital few that will ensure the development or the coming to fruition of the these strategic industries? In short, we have to focus like a laser – because these industries would raise our investments to competitive levels; and thus the ability to tap state-of-the-art technologies and elevate the competitiveness of our products and services?

What will happen to the cronies? The Aquino administration must be guided by the ‘level-playing field’ principle if we are to attract the scale of investments that we sorely need – because we are all in this together?

Overarching game plan

The World Bank again pointed at our inability to attract foreign investments! Like it or not a third of us are hungry!

The good news is the new Administration has signaled its desire to focus on the vital few. And the cabinet members apparently are coordinating their efforts to better prioritize initiatives across departments. Hopefully they are developing an overarching game plan to ensure that they are in synch? For example, are they in agreement and thus committed: (1) to raise our revenues as a nation or our GDP; (2) to raise the margins on these revenues; and (3) to raise efficiency/productivity in pursuing their (vital few) initiatives? (MNCs typical develop their plans around these same goals given their bias for clarity, simplicity and execution, not perfection. We’re talking of DMIA as the perfect solution to our airport woes – let’s prioritize, fix NAIA first then talk DMIA?)

Raising revenues substantially requires enormous investments. The key then is to rapidly develop the critical initiatives that will attract foreign investments? For example, the Joint Foreign Chambers (JFC) have effectively started the process by teeing up 7 strategic industries that could raise our competitive advantage. This is a great straw man – the Administration could promptly evaluate them and develop a workable action plan?

They could assess if indeed these industries beyond their requisite inputs would yield the right margins that can flow right through our economy given their multiplier effect; and down to government revenues in the form of taxes? They could likewise figure out how to most efficiently (the Balance Scorecard is a good tool) execute these strategic initiatives?

The former DTI secretary handed over to his successor the Philippine Investments Promotion Plan (PIPP), and left word: “whoever will come in will implement his own policies, but this one is like a black book just like the MNCs where the ones succeeding will implement and hit the ground running.”

Indeed MNCs religiously keep their eye on their product portfolio to ensure that they are in the right business – that the elements of the portfolio will deliver their stated revenue goals and that they optimize margins to fund their competitive efforts, thus constantly drive efficiency/productivity to the hilt. As a nation, we can view the JFC-identified strategic industries as our model product portfolio.

Our traditional practice is to operate within a narrow framework or the revenues the government could raise from taxes, for example? We want to raise our sights beyond this limitation? For instance, even if the Administration can raise tax collections, they don’t substantially raise our GDP per person, the ‘Holy Grail’?

Taking a cue from the former DTI secretary, we could adopt the MNC approach and that is, aggressively drive revenue- or GDP-generating initiatives – for example, industries that can produce competitive products and services to sustain our revenues and margins thus our GDP! One of the strategic industries presented by the JFC is infrastructure; and it goes to the issue raised by the new DTI secretary: Given our high power costs we can’t aggressively pursue manufacturing! That’s how backward we are compared to the Asian tigers, for example; and given a highly competitive global economy! But we don’t have to take that sitting down?

In the meantime local investors are pursuing infrastructure projects – it’s a ‘Greenfield’ – beyond their core businesses. Let’s grant that they want to help in our development efforts. But given poorer Vietnam is investing more than we do, we ought to seek the optimum investment options if we are to accelerate infrastructure development? And for us to attract foreign investments, we must demonstrate that we have a level playing field, that we are focused on what’s good for the economy and country? Our loyalty to our favorite local investors must end where our loyalty to our country begins? Or does our hierarchical culture put that emotional prism – that we miss the third of us that are hungry?

‘Red light means stop’

If that’s what President Aquino is teaching us then he is on the right track! There can be more to the siren ban if as a nation we truly do an examination of conscience: ‘red light means stop’! Red light can mean everything that is wrong and egregious like corruption or illegal gambling and a host of negative things that are plaguing our government, our economy and our country.

And if the first target of Aquino is our hierarchical culture then he is indeed on the right track! And if it also means that we as ordinary Filipinos must obey traffic rules and regulations, then he is on the right track! But then again, there must be no compassion for tricycle or jeepney or bus drivers who violate them blatantly! (Many years ago the writer was a visitor to a poor fisherman’s home in Bulacan; and to this day he has so much respect for that family – a modest but very clean and organized home standing on stilts. And living outside the Philippines – and helping the wife with the household chores – that modest home remains his model because he still remembers like it was yesterday!)

If a Cojuangco was identified with jeuteng then Aquino must demonstrate that ‘red light means stop’. And if he does then he is on the right track! And so if he applies the Caesar’s wife’s test to his appointees! And if he commits and behaves that he is not above the law!

Discipline with small things disciplines us for the big things. Consistent with the Millennium Development Goals of the UN, we have adopted the Balanced Scorecard to instill a performance culture in public service. And that is truly a big undertaking – that needs to be underpinned by discipline! (Disclosure: the writer many years ago in the private sector piloted Balanced Scorecard; and Activity-Based Costing, both developed by the same Harvard professor.)

Discipline is also focusing on key initiatives. And it is encouraging that the new cabinet members are talking of focusing their efforts on the vital few – given our resources are pretty limited – and on product development in tourism, for example.

But we Filipinos don’t like discipline? That is the root of our evils? Whatever initiative we pursue is bound to fail if discipline is something we can’t live with. For example, when inside our gated community we obey traffic rules but that discipline goes away the moment we step out of the gate. In one of the writer’s (family’s) trips back home, the wife was pulling him to cross the street when the ‘walk’ sign appeared; and so the writer said, ‘don’t you remember that those coming out of that gated community don’t see a red light’?

Surprised why we have endemic corruption? It is inside us – because discipline goes against our grain? Or at least that’s what Lee Kuan Yew is thinking?

An editorial piece talks about zero-based budgeting; obviously written by one who knew the subject. But it was a big caveat re the pitfalls of the technique. Of course, in an undisciplined-government entity it won’t work. Then the issue is not zero-based budgeting but discipline!

So we can’t be disciplined? We can if we accept that being a commoner is not a humiliation – it’s character-building? When we visit London or New York we marvel that we are able to commute using the tube or the subway? Commoner isn’t bad?

Focus like a laser - 2

Global competitiveness is our goal; and it is the biggest competition, ever – that only our best efforts would suffice? And as winning teams and athletes know, to be better than competition they must focus like a laser?

Where we need to focus – like a laser – is in raising our GDP per person and aim to be a developed economy? Incremental thinking will give us incremental outcomes because we will take our eye off the ball in the first place? And as we think in incremental terms, we get distracted by our instincts: our hierarchical culture and our desire to preserve the patrimony? And so we keep heaping praises on our tycoons because they are helping our economy . . . while preserving the patrimony? And they do deserve our gratitude!

But if we peel off our emotional prism, we see that we are utterly underinvested. In short, our level of investments cannot drive and elevate our economy from underdeveloped to developed? (In the case of the US, while they honor Edison, they also credit the capital market, thus: “Edison’s contribution might be in the system of industrial invention . . . and then to market the resulting devices – with the deep pools of capital just forming in late 19^th century America”, writes Time magazine, July 5^th.)

To raise our GDP per person tenfold demands enormous investments and technologies. In this day and age, the only insurance against economic failure is competitiveness? And we can’t get there if we don’t have the scale of investments and state-of-the-art technologies that can make us a global player?

It is no different from how our tycoons think and why they are successful in their business ventures? They like to be involved in banking because being in the money business gives access to capital, the source of investments? And with capital they are able to acquire the technologies that can give them the competitive advantage . . . and thus fortify their gains?

Unfortunately, they, like us, are focused inward – to our domestic market. (The $18 B in OFW remittances have been tiding us over. But we can’t stop there knowing full well we haven’t moved the needle forward?) And thus they haven’t aimed their guns at global competitiveness? The global market is very, very competitive but winning in the global arena is what will secure our economic future? Smart global players win irrespective of economic times – even more in bad times because compelling products dominate in a shrinking market, e.g., Apple products!

It’s a free country and local investors can focus on the domestic market. But the reality is between this mindset and our instinct to protect the patrimony we are effectively ceding the global competitive ground to others – making us an island to ourselves? And in that scenario, our hierarchical culture is reinforced reminiscent of the caciques, confining a third of us to poverty?

We don’t have the resources to be a global player – and so the simple route to take is to partner with global players? Whether it is Singapore or Malaysia or Thailand or Taiwan or China or South Korea, they all tapped global players for their financial resources and technologies!

But we prefer our ‘kuro-kuro’, our nonstop political punditry and of course, our religion. There is nothing wrong with them, but we better understand where we need to focus like a laser to address our concerns about poverty and our dire economic straits?

The good news is it appears the new Trade secretary, for example, wants to focus on critical industries and thus avoid half-baked initiatives. If we are getting the right leadership, then it behooves us to respond and behave accordingly!

Inclusion and compassion

At the core of the culture shock between developed and developing countries are their instincts? Developed countries instinctively go for ‘cuentas claras’ (i.e., black or white) while developing countries go for the grey – because of inclusion and compassion? Even the Brits have labeled the Americans heartless – because across the Atlantic the social safety net is far wider than the US unemployment benefits, for example.

When the writer had his first serious conversation with his Eastern European friends about doing business beyond their country, he wanted their assurance: ‘we will be a white enterprise – everywhere we do business, we will be above board’. They assured him that they were but in one country where they’re pursuing the export market, they had to close an eye. And so the writer blurted, ‘No way, Jose’! And the clarity gave them the impetus to do their first acquisition effort – buying an overseas entity; and opened the doors to a market bigger than theirs . . . and to be pure white! It became the standard by which managers are hired – put simply integrity is at the core of this business enterprise, others need not apply! It is a policy of exclusion!

Being white meant the focus of the business had to be on raising margins – international trade is highly competitive and typically stacked up against outsiders to begin with! And margin – from investing in product development to state-of-the-art manufacturing to continuously raising efficiency/productivity, thus drive competitive advantage – is now religion in the enterprise. They’ve seen how it elevated a small cottage industry in the middle of nowhere (in a supposedly poor ex-socialist country) to a competitive regional entity, generating a far greater, more profitable business against local/regional /global players – despite the global recession. (Philippine enterprises focused on low-pricing as opposed to driving margins will find this imperative of global business a daunting challenge? Gearing the mind to be globally competitive is a good starting point? And we can put our creativity to great use if we appreciate the power of focus and prioritization?)

But have they become heartless? Fortunately, not! They still cringe when the writer drives them to keep thinking white – with clarity and simplicity. And as managers from competition join the organization, they are seeing that these MNC-trained folks go for either black or white, no grays! And so the writer ‘holds the pioneers’ hands’ to make them internalize the imperatives of progress and evolution – while calibrating the pace they could take on the change, e.g., asking them to Google ‘managing change’.

The bottom line: President-elect Aquino has his work cut out for him. Populist demands like compromises would test his leadership. And between him and us, we need to understand where leadership must take precedence over inclusion and compassion – and recognize that compromises undermine transparency, the lack of which breeds corruption . . . until it’s endemic?

The goal of leadership is to drive our GDP (PPP) per person from $3,300 to $33,000. And that means enacting legislations to make us truly attractive to foreign investments so that we can acquire state-of-the-art technologies from advanced economies, produce competitive products in strategically defined industries and thus attain competitive advantage – that our products have growing and healthy market shares so that our revenues and GDP are sustainable.

The biggest barrier we face is: unwittingly we’re tied to the past and the inside and the hierarchy? We’re focused on one brick at a time because we’re not to burden our hearts with cares? And growing poverty is our destiny – and should find solace that the broken is blessed, but not the man adorned with gold?

So President-elect Aquino is heartless if he pursues economic reforms? Calling our schools and the Church . . . how can we reshape our culture – who ever decreed that it’s our destiny to be a poor nation?

Focusing on key economic drivers

It appears we’re coming around in our priority initiatives. A private group is talking about their vision to cover our power requirements nationally. Another entity is cited for the excellence of their business model re water – that hopefully can be replicated nationwide? And a columnist explains how to focus our efforts and resources to become self-sufficient in rice. Power, water and rice are fundamental needs that we ought to be addressing – focusing like a laser!

On the other hand, it appears we continue to struggle with major infrastructure initiatives. For example, motorists are reported unprepared to pay for higher toll fees. (But then again, transparency is imperative for credibility!) And the airport was temporarily out of commission because of an equipment malfunction. Like it or not, they reflect on us? Winners think differently? Winners train and train hard and go through pain – no pain, no gain? We like slapping band-aid on our hurts hoping it would drive the disease away? And so compromises become the norm, like subsidies – thus getting deeper into the 21^st century we’re still at square-one: addressing power, water and rice?

The Soviet Empire learned their lesson the hard way – unable to provide subsidized bread, part of the promise of the system. Yet, driving through the wheat farms of Ukraine – and they go as far and wide as those in the State of Washington, for example – one wonders how they could have blown it big? The answer simply is: subsidies don’t work because they’re unsustainable! They couldn’t recreate Eden – nor could we?

The tourism industry, a strategic industry, is being proactive urging the new administration to appoint a strong leader. And they are asking the government to work for the upgrade of our airport’s international rating – which is undermining the industry thus our economy. The reality is we need more than a rating upgrade if we expect to achieve the lofty goals the industry laid out. For example, what are the vital few (20%) tourism-related infrastructure projects that must be done sooner than later that will deliver the bulk (80%) of the industry’s goals soonest?

Aren’t we amazed that infrastructure project bids are reported to fail time and again? We have to clean up our act if we are to successfully pursue priority infrastructure projects that will impact economic activity – and thus our wealth and well-being. It is criminal to undermine economic development projects and 92 million Filipinos should not tolerate it. There are suggestions that we again take the path of least resistance – that we can’t fix corruption so let’s settle for smaller (thus sub-optimized) projects? Aren’t we a proud Christian nation?

That’s déjà vu – decades ago we thought we were unprepared for industrialization so we settled for OFWs? OFW remittances are a major component of our economic activity but the greater multiplier effect of industrialization is what we’re missing, and why we’re underdeveloped: our retail and service industries are active thus our local economy is decent; but our exports are meager – because our products are uncompetitive? And that’s a gaping hole we need to cover! Focus and aggressive action is what we need, beyond compassion – i.e., massive poverty comes with a GDP per person of $3,300 (PPP) like ours, a mere 10% of those of developed economies. The salami is pretty thin, and we keep slicing it – that’s what’s surprising, not the poverty?

Thus we must demand leadership, transparency and competence. For example, the ongoing row at Subic is a classic example of failed leadership? Another déjà vu – from the airport we bring failed leadership to the harbor? And failed leadership can be attributed to lack of transparency? We can assume that our engineers and project managers are competent – or why OFWs are in great demand?

If we are to be a developed economy, we better commit ourselves to better management of infrastructure projects – if we have to put a nun or a team of nuns in every project? The global economic cycle can work in our favor this time, and we better not blow it?

What goes around comes around . . .

. . . That‘s why despite our fatalism, it is not about destiny; it is about the choices we make? And that’s why the US business community is seeking an audience with President-elect Aquino?

Global businesses with a portfolio of products and/or countries are constantly assessing how each element in their portfolio is performing. For instance, why would foreign investors bet more on Vietnam than the Philippines? What goes around comes around? We were once the best friends of America in the region while Vietnam was the enemy; but in their portfolio, it was Vietnam that showed more promise. And then again, it’s the 80-20 rule or the vital few. Vietnam, being a new market economy, had lots of ground to cover and thus would generate faster returns.

We then should not be surprised why Nestlé is expanding their Indonesian operations: their business model is ‘to be close to the trees’ or the raw materials; and the bigger the source and the market for their products, the better geared they are to invest in state-of-the-art manufacturing – to raise margins and reinforce competitive advantage. The lesson for us: competitive advantage. It is important that we appreciate the 7 strategic industries the Joint Foreign Chambers (JFC) teed up – they are looking at industries where we could attain competitive advantage! Competitive advantage translates to healthy, growing market shares thus sustainability! It would help if the JFC put more efforts to edify the public and explain the mechanics and economic impact of their proposal.

We did not help ourselves any while Vietnam’s stock was on the rise. We put up more barriers to foreign investments than our neighbors. And instead of moving up the next tier of development and creating a new playing field for investors – i.e., 21^st century, globally competitive products – we assumed that we knew how and could do it ourselves?

But what goes around comes around: Vietnam is overheating because of the scale of foreign investments and given the global economic slowdown – their market has shrunk since they’re not yet in the league of Taiwan or South Korean or China in product competitiveness. China is sensing a bubble, thus their efforts to curb speculations and the yuan initiative. Thailand is in political limbo. And Eastern and Central Europe are up to their eyeballs with debts – Western financial institutions had seen them as fertile grounds for investments.

What then is the US business community saying: ‘We believe in redemption; we’re not pure and can’t cast the first stone? The ball is in your court; you’ve had it before, and this time you want to play it smart?’

The Joint Foreign Chambers (JFC) presented us a plan: how to move up the next tier of development – i.e., 21^st century, globally competitive products via the 7 strategic industries – or the new playing field for investors. How are we responding?

What goes around comes around? It is not about destiny; it is about the choices we make? The ball is in our court – let’s play it smart?