Thursday, March 29, 2012

The Chairman and CEO of Ayala speaks up

Companies are the entities that create national wealth and so their productivity, efficiency, and dynamism are central to country competitiveness. An economy cannot be competitive unless companies operating within it are competitive and productive.” [The Manila Times, 11th Mar 2012]

There is no single policy or grand step to achieve competitiveness. It comes from a series of many improvements across all sectors, over long periods of time. Everything matters in improving country competitiveness—education, infrastructure, efficient capital markets, workforce quality, social and political environments . . . But clearly, one sector cannot do it without the other moving in step. It is for this reason that we all have to work together in the public and private sectors to truly improve country competitiveness. We are equal sides to the equation.”

Being the oldest and most successful local conglomerate, it is indeed welcome news that Ayala is stepping up to the challenge of country competitiveness. It brings to mind the US conglomerate, GE, who in the early 90s invited industry friends – who were acknowledged global players generating greater revenues overseas than their domestic US businesses – to speak before their managers. GE was very upfront: “We are a US-centric company. [Left unsaid was: even if we’re bigger than our industry friends.] And so we want to hear from them.” [And the writer remembers a question from a Brit who was the new GE country manager for a South Asian country: “How important is relationship in Asia”?]

GE has since aggressively reinvented itself and is today acknowledged as a major global player, establishing regional and technology hubs around the world. What can we learn from the GE experience? To be competitive the Philippines will have to start somewhere. For instance, we must decide that we will in fact be globally competitive. In one word, we have to learn to be proactive.

It is good to analyze why we’re uncompetitive yet we must be proactive – and not be held back by linear thinking. For example, international agencies have confirmed (the body of knowledge) that manufacturing is critical for an economy especially when the technology and innovation it generates yield a greater multiplier effect (from the investment.) The good news is we have Universal Robina and Liwayay Marketing demonstrating their prowess even beyond our shores; and we need more of them! If they are our ‘best practice’ models our task is to rapidly replicate their efforts. We have to address our sinking rankings in higher education but it doesn’t follow that the private sector must wait. Universal Robina and Liwayway Marketing did not have to wait.

Back to GE: while a conglomerate, it is committed to market leadership, i.e., its nirvana is sustainable profitable growth. And GE defines that by being in businesses where they are either number one or two globally. And that is another lesson for us – i.e., the first lesson is to pursue manufacturing and the second is to be globally competitive. Ergo: we have to unlearn the assumption that competitiveness is strictly defined by local dominance. To be locally dominant per se is synonymous to parochialism and short-sightedness, especially when it mirrors our cacique structure – i.e., singularly valuing capital and missing the 21st century imperatives of technology and innovation.

In sum, we must decide and want to be globally competitive. And that means to be committed to investments at competitive levels; and that the investment will be geared to the acquisition of technology, such that innovation becomes a natural outcome; we must be committed to talent development that is measured by the skill to develop competitive products, and the ability to develop markets beyond our shores.

With that capability in short supply, we must leverage what the global market has to offer. We must overcome parochialism and short-term thinking. We must stop hiding behind fancy words like sovereignty, nationalism and patriotism – when they perpetuate a charade, a nation of haves and have-nots. To be globally competitive is a tangible undertaking: who will do what, why, when, where and how? There is always the first time to step up to the plate.

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