Saturday, March 30, 2013

Assumptions we take for granted

When Ford first came out with the Model T there was a loud protest because people felt motor vehicles would change road convention and thus their ways; and more disconcerting was that road accidents could dramatically increase. Over the years the world has seen how driving and road convention has evolved. Yet in the Amish world they still use the horse-drawn carriage.

When Romania and Bulgaria were in the process of satisfying EU accession rules, and as the EU highway system was extended to these countries, there was a big uptick in road accidents. And the EU had to adopt Western driving and road convention – including imposing hefty fines on violators – in order to minimize road accidents. But to the police it became a source of "grease money" which the EU had to battle. It was a struggle for many to observe safety regulations despite people experiencing road accidents themselves, even deaths. People are a product of their experience, but gradually they are getting used to the new convention. For example, in Bucharest stopping at a pedestrian crossing is mandatory like in university towns in the US. [Both Romania and Bulgaria have struggled in their journey to free enterprise – which they sought with feet on the ground – while they witnessed former commissars turned into oligarchs and took control of major industries. Sounds familiar? Except that PHL has no supervision; and Brussels has its hands full exercising its oversight role which has given Western investors some degree of comfort to pour investments in these former Soviet satellites. But with the EU in recession, everyone has their hands full.]

As a boy I understood that jeepneys, especially those designated as AC, had flexibility on their routes as well as the freedom to stop and/or pickup passengers at will. Decades later this convention still holds: jeepneys would be converging at the foot of overpasses and flyovers – at will – thus creating a bottleneck and adding to the chaos on our streets. (Or is it the bigger issue of the absence of the rule of law like the indiscriminate issuance of franchises to buses, among others?) And we assume that is normal, if not compassionate, because these poor drivers are simply earning a living?

Politicians steal, businesses are greedy, development undermines the environment – so what is the beef? We live with our assumptions believing they are what make us who we are? Aren't we free to embrace our own ways? We are proud of our ways. And so whenever we hear criticisms – from others like Lee Kuan Yew or Mahathir or whoever – we resent them and would push back with a litany of their own faults. Unfortunately, the shortcomings of others wouldn't erase the challenges we face ourselves. What is crucial is that we examine our assumptions instead of taking them for granted – or to simply be committed to self-improvement (to which I was clueless when I was a lazy student to the frustration of my parents.)

The Amish community chose to stay with the horse-drawn carriage. But our jeepneys don't have to have the freedom to stop and/or pickup passengers at will if we recognize that driving and road convention has evolved? It is what prudence is; it is what the common good is. And until we make such kind of choices – and demonstrate political will [or is it simply missing in Juan de la Cruz?] – we shall be stuck where we are as an economy, as a nation and as a people? The evidence: our inability to provide even the very basics like power and infrastructure in general and consequently our failure to develop basic industries that can be the foundation of a developed economy – thus widespread poverty.

In the same manner that jeepneys must recognize prudence and the common good, politics and businesses must do likewise. And so must our institutions (and not even the church is above reproach?) if we are to be truly proud of Juan de la Cruz. We can't simply accept the assumption that we are a failed economy if not a failed nation?

Tuesday, March 26, 2013

Infinite wisdom

The Western World has time and again been reminded of it. "In impasse, New York Would Face Steep Cuts," reports the New York Times, 24th Feb, 2013, with sequestration taking effect 1st of March with blanket budget cuts. One's faith may be absolute but man's wisdom isn't. And where we (in PHL) are as an economy and as a nation today would likewise remind us of that reality. While a 6.6% GDP growth, besting our neighbors, has given us bragging rights, we’re still markedly underdeveloped. And we can’t overcome decades of underdevelopment on a dime. But we need a confidence boost so we’re celebrating our latest record levels of OFW remittances – our recurring “Dutch disease”?

Unfortunately, as a former NEDA chief had reminded us, despite crafting development plans for decades, they got us nowhere. Thankfully President Aquino’s “daang matuwid” is giving the rest of the world reason to give us the benefit of the doubt. But same old, same old isn’t the way forward – garbage-in, garbage-out. We're stuck with the same worldview and so PHL power structure remains the same while we are left to embrace our optimism, hopeful that something would break. Sometime ago a friend – yes, a foreigner – rather incredulously wondered how we could turn from driving Marcos out to electing more Marcoses? In our heart of hearts we're a compassionate people. Unfortunately, because of our hierarchical culture – and our acquiescence – we have nurtured political dynasties. [Juan de la Cruz wouldn't have taken down the czars especially Peter the Great for being a reformist?] And in the case of Marcos the dynasty has extended to cronies. And it's a great honor in our hierarchical structure and so we have dynasties at the national and local levels.

It boils down to power! And the higher one is in the hierarchy the greater the power and the influence. The evidence: oligopoly, dummies, behest loans, expanding political bases, "jueteng", small-scale mining, police and/or military protection, etc. The outcome: an uncompetitive PHL! Because of the absence of coherence, a national agenda and the common good! Surely there is economic activity but the classic sub-optimal model – lopsided and perpetuates the 1%-rule or the rule-of-the-few. And it has become our success model that we’ve equated to infinite wisdom? And so there is a sector laughing their way to the bank, except that government is still revenue-starved. And so we need an inclusive economy given poverty continues to claim half of our households. And we believe the missing piece on top of entrepreneurship or MSMEs is Christian charity – which we've translated into CCT or CSR or micro-finance. The reality: our economic pie is pitifully minuscule with a GDP per person barely a tenth that of developed economies!

Clearly we need a major effort in infrastructure development to elevate and strengthen the foundation of the economy. And we've realized that PPP needs a lot more work if we are to translate foreign interests in PHL into real, tangible FDIs. And the restrictive economic provisions of the Constitution, we are reminded once again, need to be revisited. In short, we must be a truly open economy if we are to develop our competitive instincts and raise our competitiveness as an economy. [And I have yet to hear the last of the follies of a closed economy from my Eastern European friends – and why I talk about them.] Even MSMEs must look beyond partaking of our consumption economy and gear up to be globally competitive especially with ASEAN opening our borders to more foreign goods. It is foolhardy when we are to open our borders to imported goods yet restrict the entry of foreign investment and technology. We may believe we have infinite wisdom but underdevelopment also meant we’ve lagged in technology and can’t on our own overcome the disadvantage. As the quality movement mantra goes, "we must 'shamelessly steal' technologies and ideas from wherever" – and why "open-source" came about! We can't be an island unto ourselves – and simply aspire to be higher up in the hierarchy.

It is no secret that the same half-dozen entities have been the ones first in line with those PPP projects. And it’s been how we’ve played this broken record for decades as we sought protectionism in its many guises and turning it into an economic policy founded on the primitive cacique culture. Only Juan de la Cruz is paying the price.

Saturday, March 23, 2013

Starter building blocks for PHL development

Beyond "daang matuwid” we need to focus on a set of starter building blocks for PHL development if we are to translate foreign interests in PHL (generated by "daang matuwid") into tangible foreign direct investments. They won’t constitute a master plan but we need a good start – and signal to the world, including foreign investors, that we are pulling the country together. [Fearful of autocracy post-Marcos we've moved to the opposite extreme unwittingly nurturing local lords – from dynasties and influence peddling to gambling and massacres or killings. The evidence: our inability to forge a national agenda and develop critical industries while perpetuating oligopoly.]

These building blocks can be as basic as power, coconut and fisheries. The JFC or Joint Foreign Chambers through "Arangkada Philippines" proposed seven (7) priority industries that will attract $75 billion in foreign investments, generate over $100 billion in incremental GDP and create millions of jobs – and after two years of prodding we haven't yet embraced them as our national priority. There is disbelief especially by foreign investors in our failure to craft a power or energy master plan when power is basic to industrialization. Some of us would even debate and argue the importance of agriculture over industrialization. But in a globalized and a highly competitive world, competition is the true measure of development efforts. A nation's output must find a wider market if they are to be sustained. There is no free lunch.

We haven't viewed power from the measure of competitiveness – or even to raise our economic output in a major way – but rather as a challenge of affordability. That given our widespread poverty we cannot pursue an energy master plan especially when RE is not yet fully developed. And similarly we view agriculture as a priority not from the measure of competitiveness but as poverty alleviation since poverty is more pronounced in rural Philippines. While we keep saying that our economic pie isn't big enough, has our compassion for the poor subsumed the imperatives of development? We can't be penny-wise and pound-foolish?

Is it any wonder why PHL is uncompetitive? And consequently our economic output or GDP has remained at Third-World levels – as though we've been in a race to the bottom? It's about time we learn to look forward and up. We have missed the forest being too closed to the trees. Beyond coconut and fishing we need manufacturing if we are to move up the value chain. And that is precisely why we need an energy master plan. And given coconut and fishing are major industries, they can be the building blocks of an agribusiness – i.e., it is more than agriculture. And NestlĂ© is a good example. Their business starts with coffee farming, for example, but goes farther like George Clooney promoting their Nespresso brand of premium coffee – one in the portfolio of products they'd developed and manufactured. [That is a simple illustration of the imperatives of global competitiveness this blog has discussed: Investing in technology, innovation as well as people, product and market development. They are why progressive MNCs are world-beaters.]

That is how we can view our coconut and fishing industries. The government can flex its muscle and signal to the rest of the world that we are creating NestlĂ© lookalikes in these two industries mirroring the PPP. That means private enterprise stepping into the value chain with government accountable for economic land use and infrastructure. We need more that a "flavor of the month" like coconut water exports, for example, and it starts with a sustainable source of basic product – employing world-class technology – as well as bringing innovative end-products to the consumer, beyond intermediate industrial products.

Government may not have the competency to develop the agribusiness blue prints for the coconut and fishing industries like we've struggled to put the PPP initiatives together. We must tap the right expertise from wherever. We should similarly tap the best expertise to craft the energy blue print even if that means working with foreigners. We have an underdeveloped energy industry and can use lots of help. We can’t just defer (“pwede na ’yan”) to local lords whether in politics or industry or oligarchy. "Bayan muna" – or country first! I would like to thank Dr. Flor Braid who raised the question: If it is important to focus and prioritize, how should our leaders do it?

Tuesday, March 19, 2013


To "start with the end in view" isn't instinctive. And which is why those aspiring to be creative- and/or forward-thinkers look up to Edison or Jobs or Gates. It is also why despite their inherent creativity, Europeans are measuring themselves against the commercial success rate posted by the US (as The Economist reported in its technology series.) It is also not surprising because education as we know it is linear. Yet we recognize "the vision thing" – and the greater its clarity the sharper the identification of "the vital few." Unfortunately, while we can quote Pareto we have yet to internalize the 80-20 rule – because our instinct "to be holistic" unnerves us if we’d miss crossing the "t's" and doting the "i's"? The evidence: The 1987 Constitution that we now want to revisit? Other examples: the land reform program, the party-list system, etc. But Juan de la Cruz wanted to write a "holistic" constitution full of infinite wisdom? Infinite wisdom is not of this world, problem-solving is? But it demands political will and, then again, "starting with the end in view"! [And the Brits have been figuring out how to craft a constitution similar to the US, where “the pursuit of life, liberty and happiness” seems to attract people from most every nation and the most FDIs.]

But can Juan de la Cruz be dispassionate? How long did it take us to accept that OFW remittances and consumption can’t replace investment and technology – i.e., being a poor nation we assumed “low-pricing” was the “be-all and end-all” but it practically killed PHL inquisitiveness, innovation and global competitiveness a la Nokia? We’ve also recognized that ours is a "personalistic" [recently on display in the august halls of the Senate] or “informal” as opposed to a "formal" culture. And precisely because "the personal" is not dispassionate, getting to the bottom or defining a problem can be elusive? Because we value compassion, for example, to make "efficiency and productivity" a guiding principle is thus a no-no? Not surprisingly PHL is not known for efficiency and productivity and our competitiveness rankings would only confirm that sad reality? [A garment industry veteran explained how low productivity, radical unions and export quota restrictions to the US conspired to undo the industry. What we need instead is to move from a low-value to a higher value-added undertaking?]

In progressive MNCs, even in their subsidiaries with supposedly intractable conflicts with their unions, adhering to a guiding principle that is credible and designed to seek the common good would bring unanimity. And in truly challenging circumstances that would require "educating the parties involved.” And it also applies in Communist China. Even if in the communist system production is centrally planned as well as distribution – i.e., what is missing is sustaining a virtuous cycle like establishing pricing levels according to market forces and managing accounts receivables, among others. [A manufacturer in China, when they first opened their economy, would assume his responsibility ends after he has produced and delivered his products according to centrally planned levels. And so accounts receivables or unpaid bills of even over 365 days didn't raise a red flag – despite the risk of being unable to sustain the economic activity or why the Soviet system came to a halt. To unlearn this practice demanded educating people on a credible guiding principle. One MNC learned the lesson the hard way. Because the company's credit policy disqualified numerous key distributors, they effectively lost precious time in building their trade infrastructure. The moral of the story: it is about problem-solving. And in this particular MNC's case the company policy had "the halo effect" that undermined the problem-solving.]

Every problem is an opportunity, but the converse also holds true: every opportunity is a problem. That is, if we don’t recognize that Juan de la Cruz ought to “subject himself to fairly merciless self-examination [to] prompt reinvention of [his] goals and the methods by which [he] endeavors to achieve them”? (Which Chris Argyris, professor emeritus, Harvard Business School, called double-loop learning, i.e., question every aspect of our approach, our methodology, biases and deeply held assumptions; “Secret Ingredient for Success,” by Camille Sweeney and Josh Gosfield, NY Times, 29th Jan 2013.)

Saturday, March 16, 2013

Organized confusion

"Government urged to focus on agriculture and tourism," reads a news report. And it's a challenge for the "economic cluster" in the cabinet? There are numerous departments and agencies in government and it wouldn't be surprising, given each one has its own charter, if "organized confusion" would reign notwithstanding efforts to align functions like those involved in economic development? Take the MMDA as another example. Whatever happened to the efforts to align services and service delivery in Metro Manila? Organized confusion can take away our sense of efficiency and productivity – and no wonder progress and development has eluded us?

So what to do – beyond promoting gambling, after OFWs and the BPO? Like it or not we have to play the game of today's globalized and highly competitive world. And it demands learning to pursue the common good – the converse of oligopoly. But are our institutions, including the church, failing us? But we are the institution, like we are the church?

A Filipino business leader promoting foreign investment had shared with folks in government what foreigners have repeatedly said: "Putting up a manufacturing facility is the easy part. But the success model of our business like everyone else relies, beyond manufacturing, in the efficiency of the broader supply chain." In short, it's about (hard and soft) infrastructure once again. And that chain can go as far back to raw-material sourcing (as well as the various inputs including service-related like power that must be put into the "hopper" in order to generate the desired product or output) and as far forward as getting products shipped or transported (and ideally put on the store shelf and where the consumer has the purchasing power to take them home.

In sum, a foreign investor would assess how much of the chain can be provided and supported by a market or a country like PHL. And while few countries could take on the entire chain, investors would opt for the country that can cover the most. For example, Ford (Motor Company) figured that Thailand would be preferred over the Philippines – and so they left! It was a similar exercise my Eastern European friends did when they decided to market in Asia. Hong Kong, for instance, has only a fraction of the Philippine population and is a very high-cost location. Yet the advantages of Hong Kong as a market are unmistakable – i.e., the key is developing innovative and higher value-added products that can command healthy margins even in high-cost markets.

Efficiency and productivity (which we have to come to grips with) are critical when investors look at the bottom line. For example, it typically takes 60 minutes from the moment the plane lands at the Hong Kong airport to when a businessperson checks in at a hotel – notwithstanding that the plane has to taxi to the gate, baggage offloaded, go through border formalities, take the express train to the city and finally a taxi to the hotel (taking limousine service takes 10 minutes longer.)

And the vaunted Hong Kong efficiency and productivity – ergo, competitiveness – would be noticeable even to newcomers. Do they cost money? Of course they do, but it is not the costs but the bottom line! For an enterprise it presupposes investing in technology and innovation – e.g., with marketing and R&D working side-by-side and aggressively engaged in product development – as well as in talent and market development. It is what global competitiveness is about.

We can't be in a state of organized confusion, shut out the outside world and don't measure ourselves against a higher performance bar? The only ones it benefits are the few – not surprising in a culture characterized by influence peddling and oligopoly on one hand and bureaucratic inefficiency and corruption on the other?

Tuesday, March 12, 2013

Political and economic institutions

Underdevelopment is an albatross in our neck especially when the hierarchy in our institutions can dictate and preserve the rules that perpetuate underdevelopment – and that is the story of Juan de la Cruz? And beyond our political and economic institutions we have to recognize the role and influence the church has played in our life and history as a people? The poor have no choice and find the church a haven if not provider, e.g., Catholic Charities – together with government, e.g., CCT – even of their basic physiological needs. But as we get more exposed to the outside world, including the realization that our neighbors enjoy greener pastures, the weaknesses of our institutions come to the fore? For example, is the passage of the RH law a manifestation of the waning influence of the church? [In Eastern Europe they came to the conclusion that Soviet rule had played such a mind-game on them – that reality was lost to them – when they finally understood that neighbors were more progressive and developed. Early on inequality had brought about socialism and communism to Europe that later spawned the Soviet empire.]

For good or ill it's again an election year and that means 2013 will see continued higher levels of consumption. We know full well that beyond direct-election spending that elevates consumption, vote-buying also does? And then, again, the poor have no choice but to be subservient? But what is the source of the "pot"? For incumbents access to government coffers is one source and for candidates in general the goodness of industry is another? And when all is said and done, we’re back to normal: our hierarchal system and structure is reinforced and perpetuated. Simply, the people especially the poor – comprising roughly half of our households – would be subservient to the political institutions with the latter beholden to their benefactors. Wittingly or unwittingly we have turned our institutions inherently weak to even expect good governance to thrive and flourish – nor for industry to be world-beaters and strongly drive a free-market system.

We have nurtured a system that is characterized by influence peddling and oligopoly and thus a very narrow and limited (political and economic) establishment. Until we break the back of this establishment we are only paying lip service to what we like to call an "inclusive economic system." An economic environment that is inclusive must be broad based to begin with – especially in the 21st century where the world has been globalized and thus the wide latitude available to nations and people that (through their own design) can leverage those options.

Unfortunately, Juan de la Cruz would rather invoke the myriad parameters he has carried through time – and proud of "Pinoy abilidad" which translates to equivocation or "having our cake and eating it too"? And for good measure these parameters have been woven into the banner of nationalism and patriotism and dyed with our unequivocal faith? Confusing? Precisely, because we equivocate when we shouldn’t yet are dogmatic like the curia – that even a cleric and trained theologian could sound less Catholic than Juan de la Cruz?

Nations fail when political and economic institutions have become well entrenched to protect the interests of the few. And if we continue to hedge on what an inclusive economic system demands, we would perpetuate a lopsided and shameful economy. To be sure, certain changes demand circumspection. But if we don't demonstrate political will, the rest of the world shall continue to leave us behind – especially that ASEAN is upon us. We are deluding ourselves, for example, if we celebrate election spending for its contributions to the economy instead of denouncing vote-buying.

Politics is meant to create strong institutions that would then pave the way for progressive economic institutions. But the kind of politics that consumes us is self-serving and what is institutionalized is influence peddling that comes hand in glove with oligopoly – and consequently not an inclusive economic system – thus the widening gap between the haves and the have-nots.  

Thursday, March 7, 2013

Be authentic to keep it simple

"What you see is what you get" presupposes authenticity. Simply put, keeping it simple demands authenticity. For the longest time we hailed OFW remittances and more recently the BPO phenomenon as feathers in our cap forgetting we were trapped in our "Dutch disease"? Was it unwittingly turning a blind eye on our failure to industrialize – as we trumpeted that our "consumption economy" has shielded us from the Great Recession?

And what is surprising is everyone is surprised that "what we see isn't what we get" – that a 6.6% GDP growth would even produce a big unemployment number? International institutions have said that the arithmetic shouldn't be lost to us – that it would take a generation at 7% annual GDP growth for us to become a developed economy. The problem is we – not only our politicians – have been caught up in these numbers mixing the short- and the long-term. We can't be mixing apples and oranges. Meanwhile we haven't discarded our worldview that has undermined decades of development efforts? As one businessman laments, “Instead of training ourselves to become competitive, we would take the easy way out whenever we sensed a threat: protectionism!” We've kept to long-held biases that ignored the imperatives of industrialization especially in these contemporary times – a globalized and highly competitive world where far wider and greater options are available to nations and people who have embraced these realities? While we cannot undo the restrictive economic provisions of the Constitution overnight, we have to seriously revisit our mind-sets that have informed our policies and actuations reflected in our poor standing in the global community – from competitiveness to governance to economic freedom, etc.

And as the JFC (Joint Foreign Chambers) have constantly reminded us, we must focus on a handful of initiatives – i.e., basic infrastructure starting with power and the seven strategic industries they offered – if we are to attract investments and technology and raise our economic output in a big way. Same old, same old will continue to yield frustrating outcomes like widespread poverty. And that same old is unmistakable in what the world reads about us: the same political and economic dynamics that have for so long defined us, i.e., influence peddling and oligopoly on the one hand and bureaucratic inefficiency and corruption on the other?

It's been 15 years since my decade-long Asia Pacific regional-management role ceased and to be back in Hong Kong with my Eastern European friends negotiating a partnership [to expand global reach] would confirm why Hong Kong is at the top-tier in competitiveness. By mid-afternoon (following a quick "dim sum” lunch) the parties had signed the agreement despite a couple of sticking points that our side had put on the table. Early on, after my Bulgarian friend explained the concerns we had, the opportunity was there for me to explain why a consultant (from New York which they read on my business card) was at the table. "What you see is what you get. Yet there is something behind the "great product" [fundamental to global competitiveness] that you claim is why you want a partnership. This enterprise is founded on the values that have been passed on from the parents (of my friend) and handed on to the next generation and that likewise have defined the company. We don't pay lip service to "partnership." It is established on integrity, and precisely why we are very open with our concerns. Once these concerns go away, partnership to us means the two of us "planning together" and "executing together." We will have only one business plan. And together we shall commit only on winning. We are here for both of us to succeed unmistakably . . . together."

Moments after the deal was signed the two parties stitched together the most critical success drivers: who will do what, when, where and how. And the Hong Kong partners swiftly demonstrated their commitment and efficiency. The next day they emailed the agreed detailed project elements and timelines. They won't play second fiddle to other successful partnerships my Eastern European friends have wherever in the world. What you see is what you get.

Monday, March 4, 2013

Competition is people

Recently I was invited to sit through a half-day of training session (about how companies can attract and retain the best and the brightest) by a seminar organizer who has read the book I recently published, "Learning to Reinvent Ourselves: How to Make the Philippines a Winner in the 21st Century." And the two who led the session both had worked for Japanese companies and had an "outward-looking” (not parochial) perspective. There is no question that we are up-to-date with management techniques and that our enterprises are keen to train and develop their people and raise the caliber of their organizations.

I was later tasked to integrate the session. Instead of repeating the sound bites I heard, I asked the group of around 30 two questions: (1) who has never ever been to Starbucks, and (2) who does not have an Apple product. And in both cases no one raised their hands. The conclusion simply is both Starbucks and Apple are highly competitive. Because the 30 participants couldn't ask the group the same questions about their respective companies and get a perfect score like those two global brands. And I asked a couple of more questions: (1) does your typical employee know your organization's reason for being, and (2) can your enterprise claim competitive advantage. And again in both cases no one raised their hands.

And it applies to PHL. If competition is people Juan de la Cruz cannot claim competitive advantage? Because we keep looking at others instead of ourselves whenever we talk about our underdevelopment? We are underdeveloped because we are uncompetitive? What did our business community tell the NCC (National Competitiveness Council) is the challenge to our competitiveness – that it takes too much time to register a business or obtain business licenses and permits? What about Juan de la Cruz – is he the challenge to our competitiveness? Competition is people? We’re proud being among the happiest people on earth – but the widespread poverty and being stuck as a Third-World nation is our destiny?

Shooting the breeze with some of the participants, it wasn’t surprising to hear that people have yet to share the optimism of the administration though there was a unanimous vote of confidence re the uprightness of the president. But someone from the energy sector would declare: "We don't have the political will to address the power crisis. It looks as though we are champions of free enterprise but the reality is we don't have an energy master plan and don’t have the political will to craft one and doggedly pursue it.” How can we then focus on industrialization – like the 7 strategic industries from the (JFC) Joint Foreign Chambers?

Competitiveness remains abstract to us because a number of our enterprises haven’t defined what success or what winning is – because our culture has defined it for them by rewarding influence peddling and oligopoly? And so PHL is not synonymous to a dynamic economy and nation? Entrepreneurship is opportunistic yet even a Starbucks demonstrates dynamism in its business model. When a couple of entrepreneurs sought advice about an opportunity, I asked a series of questions to guide them sketch a simple business model – and they readily realized the gaps in their thought process. I also discussed the fundamentals of product architecture modeling and encouraged them “to stay ahead of the innovation curve" – and be forward-thinking. And they thought it was what many old-Filipino businesses missed and thus are no longer around.

But another business group would give reason for optimism – when the family owners had decided to leave the business to one family member and with the collective decision to professionalize the organization. When I first heard about it I was skeptical until I was introduced to one of the foreigners they had hired. "We mean what we say, we cast a global net to find the best talents, and you will meet a few more of them.” In the previous life of two of the professional managers, I had consulted with their then company (that was the industry leader) and in this new environment one is the president, the other his deputy; and the owner confines himself to the monthly board meetings, where the president reports on his efforts. If indeed this family has reinvented itself, this is the kind of political will we need to reinvent PHL. And we can start with the power crisis.

Friday, March 1, 2013


Checking out books at a popular local-chain outlet a few years ago I noticed that we Pinoys were buying Rick Warren’s, “The Purpose Driven Life.” It is not surprising. Warren is a New York Times bestselling-author and the book is reported to have sold over 30 million copies. It came to mind after I read a Philippine Star article on 28th Jan 2013, “P-Noy questions perks granted to Thai firm.”

President Aquino has questioned the Board of Investments (BOI) for granting a foreign firm a six-year tax holiday, aside from a 30-percent incentive for the importation of corn and other raw feed as industry pioneer . . . The President himself raised the question of how does one define pioneering status. How can the BOI grant the Thai company pioneering status when we have been raising hogs and chickens for so long?” Alcala said in a television interview . . . [Agriculture Secretary Proceso] Alcala, who was not consulted by the BOI on the matter, noted that the board only considered its required minimum capitalization of $200 million in granting pioneering status to CP.”

We want foreign investments yet we continue to send mixed signals to the rest of the world? Because ours is a “transaction-driven” as opposed to a “purpose-driven” environment? Does it also characterize our enterprises big and small – granted that entrepreneurs are opportunistic by nature? Unfortunately, our success model no longer fits contemporary times. Enterprises may be giddy about the number of deals they pursue, big or small, but are we missing the overarching purpose of these efforts?

For example, coconut juice/water is now the “flavor of the month.” And we are celebrating the recent growth of the industry. Yet as an investor was reminding himself, “we’ve had ‘flavors of the month’ for the longest time and invariably no one would see the forest. And so before we knew it we had ruined the industry because of a lack of standards – and thus undermining our credibility in the global community – and/or for failure to put the right infrastructure to sustain the undertaking.”

And it brings to mind the many road maps we’ve been developing. But then, again, we are celebrating these efforts when we have yet to match them with rigorous execution commitments, including the requisite infrastructure? Because we celebrate the activity (e.g., transaction) as opposed to the outcome (i.e., purpose) even our overseas ventures are targeted to Pinoys and thus parochial – not gaining any new consumer insights beyond our own? Is it why we struggle with global competitiveness? “How do you get to Carnegie Hall – practice, practice, practice”?

We want foreign investments yet we keep sending mixed signals? Is it the bureaucracy once again? Or is it vested interests that get in the way? Or is it what we mean by “inclusive”? And that when we are not part of “the deal” like that with the Thai investors we kick up a storm? Whatever it is where is the common good? (This blog is on its fourth year – and some have been offended by its critical views. Two have questioned my patriotism and another two my credentials. In fairness, many also see value including over 35K “Likes” in Facebook even when the blog is not on Facebook.) Hopefully Juan de la Cruz would have finally realized that we are economic laggards not because it is our destiny but because we simply blew it? And that we must indeed keep fighting "que sera, sera”?

Specifically, because we have the least ability to attract foreign investments we have the lowest levels of investments – and thus the least in infrastructure development and are behind in industrialization. Not surprisingly our technological capability is suspect as well as our innovation quotient. We need to step up talent development to meet 21st century demands and be able to expand our market reach. Otherwise we shall indeed struggle with global competitiveness and, by definition, economic development? The fiscal and monetary policies that economists are pushing must still be pulled together by an "overarching purpose" so that the elements come together in synergy and, as importantly, prioritized . . . and executed.