That’s from John Kay,
“one of Britain’s leading economists, whose interests focus on
the relationships between economics and business.”
[http://www.johnkay.com/about,
5th Sept 2012.] “Narratives of industry evolution often
represent fairy tales constructed by corporate financiers, or
ambitious chief executives. They relentlessly seek rationale, however
spurious, for the next deal. Remember the cradle-to-grave financial
services business that would arise from the merger of Travelers and
Citibank? Or the seamless home-to-destination service that would
follow from United Air Lines’ purchase of car hire and hotel
businesses?”
“So why did they not
come to pass? The explanation can be found in Clayton Christiansen’s
analysis of the innovator’s dilemma. Established companies in an
industry are naturally resistant to disruptive innovation, which
threatens their existing capabilities and cannibalizes their existing
products. A collection of all the businesses which might be
transformed by disruptive innovation might at first sight appear to
be a means of assembling the capabilities needed to manage change. In
practice, it is a means of gathering together everyone who has an
incentive to resist change . . . Economic growth is held back
by industries where established interests are so powerful that
disruptive innovation can be staved off for ever. Financial services
is probably one. And education another. I think often of the contrast
between the power of information technology to transform the process
of learning, and the little progress that has been made towards
actually doing so.”
“They relentlessly
seek rationale . . . for the next deal.” Sounds familiar? Or
why in the Philippines our largest enterprises are conglomerates? And
we give them standing ovations for their successes but unwittingly as
a people we are wedded to bygone days that by default we have been
resisting change? Cobbling together different companies or businesses
under one roof does not, like a magic wand, necessarily create an
innovation culture? Innovation has to be in the DNA of an
organization. It may not be there to begin with. But if there is no
necessity to develop an innovation culture – because growth could
come from the next deal, an acquisition or a new business that will
make the conglomerate dominant in the local market – it won’t be
spawned? Not surprisingly, we have the least patents to show among
the countries in the region. And prospectively are still suspect
since we lag in both gross investment and foreign direct investments.
And thus the successes
that we celebrate can’t travel beyond our shores (and why only one
PHL publicly traded enterprise has made it to the Forbes Asia Fab 50)
meaning “competitiveness” to us is still at the intellectual
level. We are focused on raising our global competitiveness ranking
yet our industry’s success model does not match the demands of the
21st century world! And because of the glaring social chasm we are
witness to and the imperative to make the economy inclusive, we are
pursuing the next best thing: government (e.g., CCT) and corporate
social responsibility (e.g., livelihood projects)? Unfortunately, we
are inadvertently fortifying a way of life and a way of doing
business and an economic model that is designed to benefit the few.
And no wonder the DBM or budget secretary, responding to a Philippine
icon, Washington Sycip, says we need to continue with CARP, despite
its shortsightedness and failed history, to combat our social ills
and communist insurgency. [The Philippine Star, 18th Sept 2012]
Sadly, we seem not to have learned and are still fighting the last
war. Tokenism and condescension cannot address the root of our
problem: a lopsided economy that has stunted economic development and
made us economic laggards.
I often talk about my
Eastern European friends who still can’t figure out why in the
Philippines we talk about communist insurgency. They’ve lived
through the backwardness that characterized communist rule and had to
dig deep into the human spirit to commit to the egalitarian ways of
global competitiveness – because they realized that it is fair and
square with no free lunch. They have embraced the imperative of
investment: in technology, in innovation, in talent, in products and
in markets beyond their shores.
Until we come to terms
with what truly ails us we run the risk of barking at the wrong tree
– if we aren’t yet?
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