Sunday, August 12, 2012

SONA: managing expectations

As President Aquino prepares for the SONA, various quarters – including the bishops – have been busy with their critiquing. And as to be expected, the administration has to stay engaged to ensure that Juan de la Cruz gets a balanced perspective. In fairness, given the hand the administration was dealt, the challenge is way beyond one or two or even three administrations. And the rule of thumb in managing expectations is to under-promise and over-deliver. Unfortunately, in politics, the formula to win votes is to over-promise. But that is why the Clinton more focused model – "It's the economy, stupid" – has been adopted by politicians in other countries, including the hiring of James Carville as adviser, for example.

President Aquino in fact focused his promise on fighting corruption. Except that he raised people's expectations by coupling it to poverty-eradication: "Kung walang corrupt walang mahirap." It made people see a one-to-one relationship. And thus they thought he was not demonstrating the same zeal in the management of the economy as he did against corruption despite throwing tons of money to the CCT (conditional cash transfer) program. What then?

It appears that while the JFC (Joint Foreign Chambers) proposed 7 strategic industries, our economic managers teed up 13. We may need all of them, but there is no harm in breaking it into an A list, a B list and even a C list. The axiom: Make it fewer to increase the probability of execution. “The more the merrier” doesn’t work in major undertakings. And the A list is where the president could focus his attention. Take agriculture, for instance: we already have the agribusiness road map, but the president can then twist the arms of the economic managers to translate it into reality. In one word, execute: who will do what, when, where and how? And it better be acceptable to the president! We need a “CJ Corona moment” or a closure in our agribusiness effort. The president can likewise ramp up the rest of the A list, e.g., infrastructure [with power at the top of the list] and manufacturing and logistics.

Given that the Philippine challenge is generational – it will take a generation to move us from underdeveloped to a developed economy – the CCT is clearly a stopgap. It may be necessary to keep body and soul together (of millions of hungry Filipinos) but it does not measure up to the promise of poverty eradication. And so while the administration must communicate and keep Juan de la Cruz engaged to ensure he gets a balanced perspective, they may have to redefine the administration's fundamental promise. The axiom: No amount of promise and communication can turn an inferior product into a winner – and why successful marketers are a disciplined lot, being faithful to the fundamentals. For example: “We cannot eradicate poverty overnight but we must fix the drivers of the economy by developing strategic industries that will elevate our competitiveness. I personally will supervise 3 and my cabinet will concentrate on 4 and oversee 6 more. You are the boss so we shall keep you updated of progress, good and bad.”

To be unfaithful to the fundamentals could undo even the guys who arguably are among the best in the business. "Procter & Gamble’s 5-year performance has trailed each of their main competitors . . . For the better part of the decade the better performers have been those with more focus . . . You can't turn a $180 billion ship on a dime. It needs a kick in the rear . . . They need an activist to shake things up and effect change . . . They have an awful lot of potential that could be unlocked with the right kind of restructuring [e.g., divest 3 iconic brands.] They may hire a bank to advice on restructuring options and a PR firm [for the requisite communication campaign.]" [Bloomberg, 17th Jul 2012.]

PHL is a bit bigger than P&G with a GDP of $216 billion. But our performance has lagged each of our neighbors for 5 decades – and thus our elevated and long-standing poverty. Ergo: We must step up to the plate and recognize, labor and overcome a daunting task; specifically, to attract, pursue and secure the requisite levels of investment and technology and innovation – and mirror competitive economies. Writes economics professor Edsel L. Beja, Jr., PhD, of Ateneo, "Filipinos should not be deceived with the pronouncement like the Philippines is one of the "break-out nations" because, as the data show, the Philippines is not." [Philippine Daily Inquirer, 14th Jul 2012.]

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