I learned it from my grandfather

"You're happy with the bottom line but not the top line?" The fellow didn’t then ask: "When will you ever be pleased?" Instead: "That must be the discipline from your former (MNC) company?" And I said, "I learned it from my grandfather when I was a boy!" [But I’ve also asked them to listen to webcasts of “Earnings Call" of select Fortune 500 companies.] We recently completed the business reviews with my Eastern European friends and every country and business unit was updating their respective plans and budgets for the balance of the year. They know the drill: (a) product plans are pronounced truly competitive in their respective markets; (b) resources moving forward locked in; (c) then execution with a BIG E. Especially countries in the top 20% that will deliver 80% of the results.

After reading the news re PHL poverty and competitiveness (or the lack of it), I looked up two Philippine companies (in the consumer-goods business) that recently reported earnings. If these businesses are to be globally competitive they must deliver double-digit profits! And given that global investors have a wide range of options, they wouldn't be predisposed to bet on these companies. Over ninety percent of Philippine businesses are SMEs. And if even prominent companies don't meet global profitability yardsticks, SMEs, given less resources, will indeed only account for 30% of GDP. There lies our problem, of our widespread poverty – i.e., their ability to grow and thus create jobs is limited. If major companies and SMEs are not pulling their weight in the economy, then indeed oligopoly shall dominate. Ergo: our lopsided economy will be a permanent fixture so long as our SMEs and well-known enterprises are no panacea.

One hundred million Pinoys is a big market, but Indonesia is even bigger with a larger GDP per person to boot. Conclusion: our big population has been negated by Indonesia and no wonder the FDIs (foreign direct investments) they attracted ($7B) during Q1-2013 would dwarf what we do in one year ($2B). Beyond sheer numbers, we need to raise our output if we are to leverage population, like China did.

An undertaking must be designed to be sustainable if it is to make sense, so said my grandfather. And decades later his wisdom is still a big boost to my Eastern European friends. "Rumen and Vladi just called from Istanbul, our new partner just signed up to sell our products in Turkey. You will be happy with both the projected top line and bottom line. And we are already shipping to Lebanon, and my group is also working on the countries we talked to you about." They were a bit jealous that I was with the new Asia team that traveled around the region and was even part of the negotiations. But they also know that Asia is the bigger opportunity – and understand the 80-20 rule.

So how do we in PHL fix our problem? First, do we believe that we must be an egalitarian society? And do we believe that we must shed our parochialism? These are the two most critical commitments we must make otherwise we can just be in la-la land? If we are committed to be egalitarian and global, then the rest would follow. Is this where the church ought to focus – because that is in fact at the heart of Christianity, i.e., respect and brotherhood of people, including our muchachas and muchachos? We are parochial because at home we are royalty? And it follows that our economic model would be skewed to oligopoly – to keep our rank and its privileges? Ergo: we shall indeed keep the economic barriers up despite PHL's dire need for foreign investment. [No wonder the cement industry is critical of our energy-protectionism?]

In the meantime, the business model of our enterprises can't be about making cheap products. Because we Pinoys care for the poor, do we find that virtuous or is that a marketing strategy that in fact falls short of global profitability metrics? The 21st century is about developing products that understand the person of today and tomorrow and their wellbeing. And which is why Edison, Jobs and Gates are the models. The object is to attain the confidence (it applies even to SMEs) and the ability to price products and generate healthy margins – and to aggressively invest in R&D, product development and innovation as well as in developing talent and markets. Understandably that is a lot to chew for Juan de la Cruz. But if we want an alternative to a lopsided economy – that is dominated by oligopoly – and raise the capacity of our enterprises to grow and create jobs, we have to learn what it’s like to be egalitarian and global? We must be equal to the task – we really don’t have a choice?