Tuesday, June 21, 2011

Arrogance of success

A CEO at one of the world’s most successful enterprises, but is now retired, once acknowledged to the troops that “arrogance of success” was making them vulnerable – especially in a globalized economy that has become more competitive than they themselves imagined. And so he purposely reversed some of the company’s dogmas. But dogmas don’t just get erased or deleted – and those who ‘grew up’ with them stay wedded, as a friend would explain. Inertia is not confined to physics?

The Philippines doesn’t have such a problem with economic success but individually Filipinos have excelled. How do we stack up against the Western value of individualism? That is not to say we’re not concerned, especially given our falling global rankings (in competitiveness and economic freedom)? But being concerned and . . . moving forward are not one and the same – e.g., the JFC are expressing impatience with our PPP? And that is to be expected from the business community, local or foreign? “A prominent hedge-fund manager . . . has publicly called for a change at the top of the firm [Microsoft], arguing that Mr. Ballmer [CEO] is ‘stuck in the past’ . . . If IBM’s history is the guide, Microsoft may yet end up jettisoning its leader,” reports The Economist, Jun 11th. Given our respect for hierarchy, that would be heresy?

The writer’s Eastern European friends just received an invitation from the European Business Awards to compete in the 2011 International Growth Strategy category in recognition of their explosive growth over the last 8 years. But success in the business must equate to sustainable profitable growth – and it can only happen when they can sustain a clear cut competitive advantage? But separately and within the firm they felt like being stopped dead in their tracks as they were going through the periodic business-review debates. Ergo: the mantra of continuous improvement never ceases? Young marketing managers who have successfully built their businesses may feel they’re invincible . . . until they realize that there are ideas that could not travel outside their home market. On the other hand, Cebu Pacific confidently placed an order for a big number (37) of aircraft given their aggressive plans to go international. Put simply, they have an idea that could travel outside the home market?

A major barrier to Philippine competitiveness is our inwardly-focused economy? Because that is our strength and it is good for the local economy? Unfortunately, precisely because of such rationalization, which for all intents and purposes hasn’t done us proud, we have yet to develop the drivers of competitiveness – e.g., elevated and aggressive investment in technology and innovation, and people, product and market development? And our industry has no bias for R&D investment – and ‘Filipino abilidad’ will not compensate for that? [Writes The Economist, “By 1935 some 95% of its (IBM) profits were generated by innovations introduced in 1917. This effort soon expanded through partnerships with universities and embraced pure research as well as the more applied, commercially driven sort.”]

And beyond our lack of key infrastructure, we have now recognized how much our neighbors have outdistanced us in attracting foreign investments? And when we add how we complicate instead of simplify things (thus breeding insidious corruption – (KISS) keep it simple, stupid?), our ability to attract foreign investment remains suspect? NAIA 3 was, and still is, one pathetic exercise in futility – and we have others, e.g., Ro-Ro ports deal, Laguna Lake rehab, North Rail, etc.? But do we even care? It is another characteristic the writer senses in Eastern Europe: people don’t seem to care much beyond their respective worlds – because they have gone through so much forgettable events and experiences that they would simply take things in stride? [And we explain that as happiness or resiliency?] Instinctively we would recall the past to prove how colonizers took advantage of us; while Eastern Europeans would talk about how they made the wrong bets, like becoming aligned to the Soviets?

In the final analysis, does it boil down to getting over the past? It appears Westerners are more able to take stock and move on – while Easterners seem overwhelmed by the past? But says Medvedev of Russia: “the country must begin to attack the problem [of an oil-dependent economy] immediately to avoid ‘the point of no return’ from the (economic) models that are moving the country backwards . . . Corruption, hostility to investment [among others] are the taxes on the future that we must and will scrap,” reports the NY Times, June 17th. And the operative word is . . . immediately?

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