Thursday, March 22, 2012

Intuition and loss-aversion

Intuition (or in the vernacular 'pakiramdam') and 'loss-aversion' are instincts that people take for granted? How do they match the 21st century reality of an interconnected world – which has spurred competition and thus innovation? The writer appreciates that Juan de la Cruz is at home with his intuition. His Eastern European friends in many respects manifest it too. And both attribute their inherent creativity to their intuitiveness.

"How was your first week back?" That's from one of the business unit managers that the writer bumped into as he was waiting for the lift [they use the British word] as the workweek ended. People see the writer 'wandering around' especially when he had just been away. After decades in large organizations the writer has learned that 'the test of the pudding is in the eating.' And so after chatting with the head honcho his agenda is always to test the pudding: does the organization satisfy the 'straight-line rule.' ‘The shortest distance between two points is a straight line’ – yet organizations violate this simple rule all the time, i.e., what the boss is saying must be reflected in what the people are doing!

And it’s not only in the Philippines, but because of intuition or 'pakiramdam' execution does not match the thinking at the top. And so a Pinoy manager would say, "I know what the boss is saying but I have to be sensitive to the reality in our work setting. And it explains why the Philippines is uncompetitive – and why President Aquino's "daang matuwid" (or straight path) remains elusive? The status quo is always powerful and a manager may not be prepared to tell his people why things must be done differently. The status quo represents stability and thus the thought of creating instability is perceived as a potential loss, and should be avoided. And loss-aversion comes in many forms. In short, we let our intuition to matter-of-factly take precedent over the ‘common good’ – and it explains why the world has left us behind?

It is our parochial and short-term needs that we value most – thus our history of short-sightedness? Unfortunately, nation-building presupposes that people would come together to establish a vision that they would subscribe to – and accordingly join hands to get them there? Whether it is the challenge of import-substitution or investing in power generation, our motivation is to insist on the parochial and the short-term? For example, our parochial and short-term needs said that we must ban the Chinoys from retailing; but who controls the retail industry today? The world moves on and forward; and which is what progress is all about. And thus a people must learn that the parochial and the short-term are a formula for short-sightedness. Unfortunately for Juan de la Cruz, the 21st century has crystallized and sharpened the reality of progress – and it is an interconnected world, driven by competitiveness and innovation!

And so the writer responds just before the lift opens: “I am truly delighted; confidence across all the business units is palpable.” The writer knew what was going to welcome him; the company’s intranet monitors daily sales and the running margin numbers. And that over the first couple of months the 2012 target was being delivered with lots of surplus to spare – just in case the global economy would prove a challenge this year. And the writer has heard from everyone: “We are going through the budget year with our eyes open because we did our prep work pretty thoroughly; but which as you know took us time to recognize as an imperative. Our investment in product development and innovation has become visible not only to the trade but to the consumers as well – and it is across the region. And the further away we market, the more our assumption is being confirmed: that only premium brands with truly healthy margins would give us the firepower to compete at the aggressive levels like we do in the home market.”

These are ex-socialists speaking to the writer. They went through their own struggles yet today are simply committed to the common good, not their intuition or parochial and short-term interests. They keep driving towards the future – because they have defined their ‘nirvana’ as being truly way out into the future, thus avoiding short-sightedness.

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