Monday, December 30, 2013

Our two lives . . .

Women's Rights Advocate Paid Her Nanny Three Dollars An Hour,”, 15th Dec 2013: “An Indian diplomat who championed women's rights is being criminally charged in New York for paying her female nanny $3.31 an hour and lying about it on the woman's visa application. [She] was arrested and handcuffed this week as she dropped her daughter off at a Manhattan school. Although [she] was actually the acting head of the consulate at the time of her arrest, the United States is denying diplomatic immunity, saying that visa fraud isn't covered under the Vienna convention. In addition to the women's affairs part of her job title, [she] has repeatedly put herself out in the press as an advocate for “underprivileged” women’s rights. According to the US Attorney's office, however, [she] was doing the opposite at home. Authorities say she helped her nanny fill out fake visa forms which said [she] was paying her $4,500 per month, or $3,927 a month more than the woman's actual $3.31-an-hour salary, which they documented in a secret contract.”

From, 18th Dec 2013: “The AFL-CIO urged MSNBC hosts Wednesday to defy “fear and concern” and break their silence about NBC’s alleged anti-union “hypocrisy.” None of the five high-profile progressives they’ve targeted – Rachel Maddow, Al Sharpton, Lawrence O’Donnell, Chris Hayes and Ed Schultz – has so far directly and publicly addressed allegations that NBC-owned Peacock Productions exploited fear tactics and legal tricks to avert unionization. NBC and the five hosts did not immediately respond to Wednesday morning inquiries, or to prior requests for comment over the past week.”

“These hosts have a particular responsibility,” AFL-CIO organizing director Elizabeth Bunn told Salon. “They have respect and they have clout that producers alone don’t have, and they’re part of the larger progressive movement.” She said the five anchors were “uniquely positioned to hear the stories of what their parent company is doing to workers, and broadcast that to the larger American public.” She urged them to follow the “inspirational example” of workers at Peacock Productions – a company that produces some MSNBC programming – who’ve chosen to take collective action.”

Indeed, we live our two lives. And every now and again, the two women in my life would remind me that it applies to me too. For example, my daughter’s Christmas letter reads: “A Kantian Christmas . . . Admittedly, with minimum self-examination, I fail Kant's stress test on a daily basis. (And Dan, this letter doesn't change a thing about . . . what I want for Christmas). But please don't allow my personal failings to upset certain facts that remain. Each action has an outcome. Each inaction has an outcome. Can we all act or abstain in the same way and sustain that outcome . . .”

But beyond my wife and my daughter, it has been Pope Francis that has consistently been providing us the mirror to remind us of our two lives. And so he is the first to admit: I am a sinner. Pope Francis doesn’t need us to echo his thoughts. Yet I religiously keep to this blog, soon to be on its fifth year, and my daughter reminded me why – and it could in fact remind freedom-loving people what freedom is about – when she quoted Mandela: "I can rest only for a moment, for with freedom come responsibilities, and I dare not linger, for my long walk is not yet ended."

My family joins me in wishing one and all a blessed Christmas and a joyful new year!

Sunday, December 29, 2013

Just the tip of the iceberg

This is about the increase in Meralco's charges. But I would establish the premise through my favorite third party if only to bring the emotions on the subject a few notches down . . . The one reality with my Eastern European friends that has endured – and where I have a ringside view – is constantly seeing the tip of the iceberg . . . and reminding ourselves that underneath the obvious is something more horrific. To paraphrase Einstein, “I have no special talent, I just stay with a problem longer” – and which we translated to organizing classroom sessions so that indeed we would stay with a problem longer.

But so that the culture in the company doesn’t retract to the command-and-control disease of the formal structure where everyone abdicates because authority has all the answers, a big chunk of a brainstorming session is carried on by the players closest to “where the action is.” And so, for example, I would stand up and leave. In the meantime, we would flash on the screen a PowerPoint template of three engaged gears – with the gears representing the units that, in synergy, must deliver the desired outcome. Yet there are challenges that would unsettle them: “are you not joining us?” “No I am not,” would be my standard reply. And I would add: “do you think my daughter would have taken it kindly if I was there every time she was with friends?” And then almost in a flash the group would get a great sense of relief and confidence as one would intone: “Keep it simple! We must stay with the discipline of the fundamentals.”

We were in a resort in Phoenix, looking out to the desert-golf course from the balcony (my wife wanting to show a visiting brother around and get away from the wintry weather in New York and, of course, to get in at least a round of golf), when I read about the protests against the increase in Meralco's charges. I had been going through my in-box and was still wearing a grin after reading the monthly reports of my Eastern European friends; and despite the turmoil in Ukraine, the business in the region continued to be robust, with a very pronounced upward trend. But the one from Hong Kong gave me the biggest thrill, being the baby in our portfolio. “The discipline and investment in the fundamentals are paying off. We had the highest share of voice (local TV commercials) in the category during the campaign period, and the cost per unit was thus drastically reduced. That is on top of our print advertising, aggressive sampling program and in-store activity. We're also working with Hong Kong University students to evaluate our efforts. In the meantime, the velocity of the business is in an accelerated pace.” [The examples of two different parts of the world say a mouthful: competitiveness is not a function of exchange rates and tariffs and even distances and friends or foes. They matter but are manageable, i.e., great products override barriers. In PHL, competitiveness is still a function of monopolies and oligopoly that thrive in political patronage – and we wonder why we’re in the pits?]

What do they have to do with the increase in Meralco's charges? There are tactical or short-term problems and there are strategic and long-term problems. PHL has been reduced to a reactive being consumed by “retail politics” – some, and they ought to be hanged, even making “pa-pogi” points while people suffered in Tacloban – instead of nation building? We have been conditioned to seek populist solutions and are well down the road in pursuit of “the lowest common denominator” – thus in a race to the bottom, if we’re not there yet – with no sense of the pursuit of excellence, as in the common good! And not surprisingly, a legislator proudly suggested for the government to forego the VAT on the increased Meralco charges. It smacks of our reality: a dole-out culture given our cacique, hierarchical system and structure where paternalism is the yardstick even at the supposed august body that is the Senate? Where is leadership going to come from? Isn't legislation meant to put us on the right course, to attain the common good?

Why do we have an energy crisis – because we’d rather stick our head in the sand? This crisis was a crisis at the time of President Ramos; and every economist interested in the Philippines as well as the international institutions and foreign banks, and analysts and investors, etc., etc. have raised the challenge time and time again. The fallout: we are the least able to attract FDIs! If PHL were a prisoner, we would be in death row – for being recidivists?

I talk about my Eastern European friends because their mindset wasn’t that much different just eleven years ago. When they were first introduced to the discipline of the fundamentals, they thought it was purely a Fortune 500 lingo. Yet from a business model that said “we could only sell products at 50 euro cents because we're poor Bulgarians,” they have evolved to: “only great products will do; we must ‘own the store’; and there will be no compromises.” In today’s fast-changing world, business models must succinctly and sharply communicate the enterprise’s reason for being. It must give the organization and its people the confidence to do what they do for a living. Contrast that to the days of strategic planning when an enterprise would have several 3-inch binders – or bibles – that spelled out their business plans, and where only a select few had the authority to discern their chapters and verses. Unfortunately, the public sector still reflects that model; and, not surprisingly, inefficiency is commonplace thus conducive to compromises – and at its worst, corruption and a culture of impunity?

In fact early on the business model of my friends was simply: “margins, margins, margins.” Because when I arrived they shared their dilemma: we are able to sell our products but aren't profitable – thus the sustainability of the enterprise is suspect. “This is a simple business; we shall make things and sell things. But we shall make not things per se but competitive things that will find markets beyond your shores. We shall learn why Edison said, “I want to see a phonograph in every American home,” or why Gates wanted “a computer in every home,” or how Jobs figured that an “Apple responds to the 21st century lifestyle.”

Unfortunately, in the Philippines, hierarchy rules; and we play by their rules and the outcomes are represented by Meralco's increased charges. And which is just the tip of the iceberg. And so we run around like a headless chicken, clueless that we live in a rigged system.

The evidence: the restrictive economic provisions of the Constitution, the neglect of basic infrastructure, starting with energy and beyond, bypassing industrialization, failure to support the JFC's seven industry winners, among others – while a handful of billionaires prosper in a sea of poverty . . . It brings to mind how dreadful the world viewed oligarchy in countries like former Soviet satellite states, including Putin's Russia – and thus have bailed out from what was once a BRIC economy . . . Can PHL rightly claim moral superiority or the hubris exuded by our elite class? Are we beyond redemption?

Saturday, December 28, 2013

Crab mentality . . . is anarchy

We window-dress it with words like comprehensive, holistic, inclusive and the like yet the outcome for PHL has been anarchy? Google: “anarchy – a state of disorder due to the absence of authority; lawlessness, nihilism, chaos, tumult, turmoil; the absence of government and absolute freedom of the individual . . .” Thus beyond the good intentions of our “kuro-kuro” we have unwittingly brought the nation to a grinding halt? The evidence: the restrictive economic provisions of the Constitution (and thus PHL is the least attractive to FDIs, and technology); neglect of basic infrastructure (from energy onwards); bypassing industrialization; and the inability to support the JFC’s seven industry winners, among others? Question: how can we be other than a poor nation under those conditions? Pope Francis must have asked a similar question:  how can we be true to our faith when we take faith and mercy for granted and are doctrinaire; and thus he “has expressed an intention to reorganize and overhaul the Roman Curia, the bureaucracy that governs the church.” [Pope replaces conservative US cardinal on influential Vatican committee, the New York Times, 16th Dec 2013]

And given our cacique, hierarchical system and structure; and because of the state of lawlessness in our midst, those at the top lord it over Juan de la Cruz – i.e., PHL is a culture of impunity, indeed! News items: Cartelized power; SMC seeks power monopoly in Bicol; Power cost surge to hamper PH economy; House to revisit EPIRA; and 20 lawmakers, 4 govs told to vacate posts . . . 

Why are we poor? Because we have yet to grow up and own up? As my Eastern European friends have learned, freedom and democracy presupposes maturity, hard work – and then some. And just like them, we could use the following prescriptions – instead of dismissing outside views outright and looking elsewhere to lay blame on for our shortcomings?

From: Report| McKinsey Global Institute; A new dawn: Reigniting growth in Central and Eastern Europe; December 2013: “From the early 1990s until the onset of the global financial crisis, in 2008, the economies of Central and Eastern Europe established a record of growth and economic progress that few regions have matched. Emerging from decades of socialism, [these countries] became standout performers in the global economy. Their inherent strengths were unleashed as state-owned industries were privatized and labor reforms implemented, attracting a flood of capital and foreign direct investment that drove productivity improvements and per capita GDP growth.”

“Yet these economies—like the United States and Western Europe—have struggled to regain momentum since the end of the recession. Despite their underlying intact strengths, such as highly educated yet inexpensive labor forces, they need to modify their economic models to restore the . . . annual growth rates of the pre-crisis years. The region must emphasize investment-led growth, expand high-value-added exports, and increase both foreign direct investment and domestic savings. For this strategy to succeed, the nations of Central and Eastern Europe will also need to build the foundation for growth, including infrastructure improvements, accelerated urbanization, regulatory reforms, institution building, investments in labor-force skills, and efforts to encourage R&D and innovation. In addition, these economies must address the aging of the workforce by raising the labor-participation rate of women and younger workers.”

“The new growth model: The global recession exposed certain weaknesses in the growth strategy that had propelled Central and Eastern European economies before the crisis. These weaknesses included very high consumption (on average, about 80 percent of GDP from 2005 to 2008) enabled by unsustainable levels of borrowing. Easy lending standards helped create real-estate bubbles . . . ; prices . . . rose by three and a half times from 2000 to 2007. Moreover, since at least 1995, overall savings in these economies failed to cover investment: national savings rates averaged 19 percent of GDP, while investment generally hovered at around 24 percent. The region depended on foreign direct investment, which collapsed during the crisis and has only partly recovered. In addition, trade was overly concentrated on Western Europe and a handful of categories, such as autos. And despite strong flows of foreign direct investment, outlays on machinery and technology were modest in many sectors.”

“A new growth model would expand exports of higher-value-added goods and services, increase productivity in lagging domestic sectors, and finance growth with renewed foreign direct investment and higher savings . . .”

That is what “the end in view” ought to be for this region of the world. But in PHL we have yet to learn – and practice – to move beyond linear thinking? In the meantime, we have descended into anarchy because we sincerely believed crab mentality is Christian-like – i.e., comprehensive, holistic, inclusive? Wrote a New York Times columnist: “[Pope Francis] had lifted the church ‘above the doctrinal police work so important to his predecessors.’ Well, they didn't get the memo in the suburbs of Philadelphia,” read: the Philippines? [Frank Bruni, The New York Times, 14th Dec 2013] “Don't let the perfect be the enemy of the good,” says Pope Francis.

What about AEC? Where are we? Where do we want to be? How will we get there?

“There we go again” comes to mind after reading a columnist that threw in the glass-is-half-full argument? Didn't we say that with OFW remittances – as we bypassed industrialization? This blog was inspired by my Eastern European friends that have lived through the EU economic integration. And the above McKinsey Report says a mouthful, but nothing about the glass is half full. “Attracting a flood of capital and foreign direct investment” was the first benefit of the EU to these countries because they opened their economies! And where is PHL in attracting FDIs? We remain the least attractive to FDIs and we know the reasons why yet we've kept our head stuck in the sand! But The Lord will provide? We've been taking the name of The Maker in vain since Padre Damaso? That is where we are? We have a handful of companies that are geared to be regionally competitive but Singapore, Malaysia and Thailand control regional trade to the extent of 70%! While we haven't even demonstrated the resolve to support the JFC's seven industry winners, for example! That is where we are? These Eastern European countries have fast-tracked infrastructure development and we have not! That is where we are? 

Where are we, again? If we can't look in the mirror, how can we establish where we are? And how can we figure where we want to be given the chaos and the lawlessness around us? Ergo: we are clueless how to get to where we want to be because we haven't even defined it in the first place?

Sunday, December 22, 2013

“Don't let the perfect be the enemy of the good”

Pope Francis didn't claim originality but could it be one interpretation of Pareto's principle? And the thought of picking and choosing brings to mind the “Serenity Prayer” by Reinhold Niebuhr (1892-1971), an America theologian: “God, give me the courage to accept with serenity the things that cannot be changed. Courage to change the things which should be changed, and the Wisdom to distinguish the one from the other . . .” Acknowledged [c/o Wikipedia] as one of the most influential thinkers (in public affairs) in the 1940's and 1950's, his words have been quoted and compiled. 

In PHL is picking and choosing a no-no? For example, our bias is for comprehensive, holistic and inclusive such that we assumed that we could address inequality via a land reform program that was “comprehensive” as in CARP, only to find out that it wasn't comprehensive after all? My wife and her siblings inherited a rice farm in central Philippines, and for several years now, they've been trying to help the tenants to own their respective shares. Yet, the latter have been unable to commit to any arrangements for one reason or another, their debts owed middlemen being one of them. And my wife could only sigh, “How could they be free from such bondage.”

In fairness, it is human nature demonstrated as early as the biblical times by the scribes and Pharisees, and in more recent times captured succinctly by Niebuhr: “The tragedy of man is that he can conceive self-perfection but cannot achieve it.” While the educational system as we know it has taught the world linear thinking; and not surprisingly, our economic plans, for instance, have been models for their comprehensiveness – such that a neighbor like Thailand adapted them. “Poverty is a complex problem that needs a comprehensive, multipronged, multisectoral solution involving many stakeholders . . .”[Government: Poverty reduction slow, threatens MDGs, Business Mirror, 9th Dec 2013]

Don't let the perfect be the enemy of the good, so says Pope Francis. Translation: Or you will succumb to crab mentality or simply be frozen to inaction – as in the restrictive economic provisions of the Constitution or the neglect of basic infrastructure, starting with energy, or bypassing industrialization or failure to support the JFC's seven industry winners? [And why a consistent theme of this blog is the imperative to prioritize.] And running out of parties to blame, we couldn't help but conclude that the global community especially the developed nations are playing bully in global trade at our expense? Of course they are! Aren’t we going to do the same thing if we were in their shoes – or why do we tolerate social injustice as in the PHL cacique, hierarchical system and structure? But we grew up expecting perfection from the world around us courtesy of Padre Damaso?

My Eastern European friends are a consistent theme of this blog because they're relatively new to free enterprise – and grew up expecting inevitability and helplessness courtesy of their communist masters. And over the last eleven years, they've committed themselves to pursue the promise of a market economy; yet they recognized at the outset that they could trip or unwittingly undermine their own efforts. “We appreciate your praises whenever we deserve them . . . but please tell us whenever we are astray. We are learning and are proud of our ourselves, but we're relative newcomers to free enterprise.” And so while we have mutually defined my role as akin to a navigator, there were times when I had to roll up my sleeves. 

But it was not different when I was with my old MNC company. After a few subsidiary business reviews or even regional meetings, for example, where “action points” were minuted, there was no certainty that the desired outcomes would materialize and so follow up visits were called for – and certainly rolling up sleeves was demanded; and in extreme cases restructuring had to be pursued. And so anticipating challenges became the route to nirvana – meaning, equipping people and the global organization with the skills-set to become truly globally competitive.

What has that got to do with PHL economy? For example, strategic planning, as a tool in the pursuit of an enterprise, has long been discredited and so was management by objectives, among others. And the reason simply is that they became an end in themselves – when it was the thinking not the mechanics that was supposed to be the magic. For example, a business model can't be static and must constantly be challenged and renewed to be relevant to a fast-changing world. Yet in its heyday, strategic planning was construed as bible-making, thus evergreen, until the likes of IBM and Xerox found themselves adrift. [And indeed Einstein was ahead of his time: “the value of education is the training of the mind to think and not the learning of many facts.”]

Still, if we Pinoys could get our act together – i.e., learn to prioritize and overcome crab mentality, which in its strictest sense is anarchy – we could get this nation going. “It matters not how strait the gate, how charged with punishments the scroll, I am the master of my fate: I am the captain of my soul,” so quoted The Economist to profile Nelson Mandela. [“Invictus,” William Ernest Henley (1849-1903)]

Friday, December 20, 2013

Throwing darts or “kuro-kuro” (in Filipino)

It seems “kuro-kuro” goes beyond our confines after foreigners jumped into the fray and gave their two cents about what ails PHL economy? It was like watching a Pacquiao match to read how we Pinoys reacted to a foreigner expressing concerns about a bubble. Still, when all is said and done, despite being the fastest growing economy in Asia, save China, Philippine poverty reduction remains elusive? Not surprisingly, while many of us vehemently disagreed that “our economic growth is a bubble in disguise” [7 reasons why PH economic growth is not a bubble in disguise, Philippine Daily Inquirer, 3rd Dec 2013], there is agreement that “POVERTY reduction in the Philippines has remained slow despite the country’s economic success in the past few years.” [Government: Poverty reduction slow, threatens MDGs, Business Mirror, 9th Dec 2013]

Bubble or no bubble, we remain a poor country? And why is that?

“Poverty is a complex problem that needs a comprehensive, multipronged, multisectoral solution involving many stakeholders. It is a daunting challenge, to say the least, but this is one we are determined to meet head on . . . [T]he country’s growth is not sufficient to reduce poverty . . . It’s a difficult problem but it is quite clear that the problem is inequality, that’s the problem.”

“Other economists agreed and said the slow progress made by the country in reducing poverty is rooted in the lack of decent jobs by millions . . . [T]he slow progress in reducing poverty would likely cause the Philippines to fall short of its commitment to halve poverty by 2015 . . . To improve poverty, job generation is key. To generate more jobs, investments are key. Also, public provisioning of goods and services have to be efficiently targeted . . . [T]he government must strive to increase available jobs [which] could usher in inclusive growth and reduce poverty in the country.  Efforts to curb corruption and inefficiency must also be put in place . . .The NSCB said among the reasons the pace of progress in terms of reducing poverty has been slow is that there were seven major natural disasters that hit the country between 2009 and 2012, which cost the economy some P96.25 billion.” [ibid.]

“Where did the economy’s growth so far this year come from? Where have we done better, and where have we done worse? Is our economy’s growth still too dependent on consumption spending fueled by remittances from overseas? Or is investment becoming a more important source of demand to induce greater production? And finally, was the growth inclusive, that is, did it have wide participation and benefits among Filipinos, especially those with less in life?” [Cielito F. Habito, Latest economics ups and downs, Philippine Daily Inquirer, 9th Dec 2013]

“Has growth been inclusive? The fastest-growing sectors (translation: those where incomes are growing fastest), with growth rates exceeding 15 percent, have consistently been financial services (banks and insurance) and real estate, renting and business activities (which includes business process outsourcing). At the other extreme is agriculture, on which the bulk of our rural population, and on which the jobs of an estimated two-thirds of our workers depend directly or indirectly; here, outputs and incomes shrank. That should be clue enough.”

The litany of our challenges thus goes: how do we address inequality; how do we create millions of decent jobs; how do we curb corruption and inefficiency; how do we attract more investments; how do we make public provisioning of goods and services more efficient and targeted; how do we mitigate the impact of natural disasters; and should we focus on agriculture where the bulk of rural population is and on which two-thirds of our workers depend directly or indirectly? 

But what is “the end in view”? Where do we want to be? It is not the input but the output or the outcome that will determine if we are where we should be? But first things first; our average income (or GDP per person) is a mere fraction compared to developed economies. And closer to home, benchmarking against Malaysia or Thailand should in fact explain why we remain poor? These neighbors opened their economies to foreign investments and technology and thus have, like wealthier Singapore, generated competitive products and services to dominate regional trade – and raised their average income several fold compared to PHL. 

But we have very little appreciation, if it is not altogether nil, of the power of competitive products, including those derived from agribusiness? Yet what economists call the “multiplier effect of investment” could largely be traced to competitive products and the support industries they spawned – and thus forming the network of an ecosystem. In other words, because competitive products win in the marketplace, they nurture and sustain the broader economy.

For decades we were in denial, patting ourselves on the back given our inward-directed consumption economy that was in fact driven by OFW remittances and more recently augmented by BPOs. The reality: we were suffering from our own “Dutch disease” – i.e., we had our head stuck in the sand? 

If “Pinoy abilidad” means taking our eye away from the ball – and indulging in “kuro-kuro" – indeed PHL poverty shall define who we are? And so while agriculture accounts for a big chunk of our population, for example, and where poverty is most pronounced, our real challenge is to focus on generating marketable – spelled competitive – products because producing commodity-type, basic produce does not give us competitive advantage. Every other country does that. And didn't we assume land reform was the be-all and end-all? And it also applies to manufacturing: to simply say we must revive manufacturing doesn't cut it! [And why a consistent theme of this blog is “thinking.” The educational system taught the world linear thinking yet the challenges we face in the real world demand critical-thinking skills, for example.]

But it gets worse given our track record? Didn't we set a very ambitious tourism goal because it was a natural, a no-brainier – that it would create millions of jobs – yet we could not get our ducks (i.e., infrastructure) in a row? Because we could not muster the political will . . . It's the interest of a few rich people against an entire nation, to paraphrase the slotting problem at NAIA? [And if we were a nation where the rule of law resides, that would be criminal? Or why JPMorgan had to cough out $13 billion?] And it extends to our inability to address the restrictive economic provisions of the Constitution; the neglect of basic infrastructure, including power; bypassing industrialization, etc. “Argue less, accomplish more . . . We have a glut of problems to tackle . . . Stop bickering and roll up your sleeves. Don't let the perfect be the enemy of the good . . .” [Pope Francis, The People's Pope, Time magazine, 11th Dec 2013]

There is a season for everything, to paraphrase a biblical passage; and the plight of Juan de la Cruz demands more than indulging in “kuro-kuro”? 

Sunday, December 15, 2013

“These problems are catching up with us”

Reading a column from another paper before this article, one would be inclined to give us Pinoys the benefit of the doubt; that our problems are imposed upon us by others? But this article says a mouthful: “PHL not likely to achieve 2016 tourism targets due to infrastructure woes,” Business Mirror, 5th Dec 2013. “AN airline executive on Thursday said because of the many postponed infrastructure projects of the government, the country’s target of attracting 10 million tourists by 2016 will not be achieved.”

“Seair International President and Chief Executive Officer Avelino Zapanta said the commercial aviation industry has been pushing for a dual-airport system, like using both Manila and Clark . . . After all, in recent weeks, how many flights have been diverted to Clark because of congestion in Manila. So that’s practically telling us there is a need for Clark to supplement and complement Manila. They are now thinking of other sites like Sangley, which will improve reclamation. But [based on] our track records, when we build an airport, it takes decades.” He pointed out that after three decades, the Naia Terminal 3 remains unfinished. If they reclaim in Manila Bay to make Sangley airport, it would probably take half a century to finish.”

“Data from the CAB showed that combined passenger traffic of the six domestic carriers hit 15.42 million, down by about half a percent, from January to September 2012. “That’s even worse than flat. Actually it is a negative growth . . . [B]ecause of the positive outlook in the past years, foreign investors came into the country such as Tiger Airways and Air Asia. However . . . all the local airlines could no longer expand because of the slotting problem at the Ninoy Aquino International Airport (Naia).”

“His short- and medium-term solution to the current problem is to do what is necessary, such as the elimination of the general aviation from Naia, which the administration failed to do because of the lack of political will . . . It’s the interest of a few rich people against the interest of the entire country and the traveling public. Their tiny jets occupy the same time, which is the same time you could have used for a wide-body aircraft carrying hundreds of passengers, instead of a business jet carrying only two or three executives . . . Where’s the economic sense there? They give priority to executive jets rather than commercial jets.”

Why can’t we deal with the restrictive economic provisions of the Constitution or the energy crisis or basic infrastructure, among others? This article says it all: Because of the lack of political will . . . It’s the interest of a few rich people against the interest of the entire country.

On the other hand, reads the Manila Bulletin, 7th Dec 2013, “Manufacturing revival aims to create 4-M new jobs by 2022.” Sounds promising; but didn’t we say tourism was a low-hanging fruit that must be exploited – to create millions of jobs? Why is there no clarity or coherence, much less a vision? Again, the article says it all: Because of the lack of political will . . . It’s the interest of a few rich people against the interest of the entire country. No wonder, "64.1 percent of the economists and businessmen in the country believe that the Philippines is not ready for the ASEAN economic integration.” [Manila Times, 25th Nov 2013, Tough times face Aquino in final half of his term - de Ocampo]

It stands to reason that we’re the laggards in the region; and again, no wonder, we now hear Philippines in the same sentence as Jamaica? Are our problems imposed on us by others? Or is it about time we grow up? Rizal saw it over a hundred years ago and we have yet to prove him wrong? The cards are indeed stacked against us, from our sheltered upbringing to our inward-looking, parochial bias to our non-participation in the 21st century, globalized and highly competitive world, etc. Practice makes perfect but we've been conditioned to operate within our own, confined, sheltered world; is it any wonder we are unwelcoming of extraneous elements? We'd expect our favorite physician to be not only well-trained but, as importantly, up-to-date in his or her field? Is it any wonder these problems are catching up with us?

Saturday, December 14, 2013

Critical thinking, critical problem solving and teamwork

Can we hold the future in our hands? But first things first; and it starts with the ABC or the barriers to problem-solving. They are: (A) our assumptions, (B) biases and (C) our comfort zones. Like families, it is not uncommon for nations to be dysfunctional. But as the accounting concept of net worth says, notwithstanding those barriers, a progressive enterprise could generate a healthy net worth. [And as my Eastern European friends learned, it is not about destiny – the first assumption they had to toss. And which we Pinoys must do likewise?] But that presupposes the ability to deliberately employ critical thinking. And like with most things, practice makes perfect.

A consistent theme of this blog is the folly of hierarchy; and the Vatican, the paragon of hierarchy, can't be exempt if we are to be true to the process of critical thinking. [Precisely because of the import of sensitivity, I didn't use the first person in my blog postings for more than 3 years or until I came out with a book, which then allowed me to personalize my thoughts.] In any case, “rank has its privileges” undermines critical thinking from the get-go. As I explained to my friends in Eastern Europe, it isn't ideal, for example, to emphasize their organization chart because it tells people that they are peons. (Hence management thinkers came out with the flat-organization design, consistent with the concept of high commitment work teams, for example, as opposed to the traditional command-and-control structure.)

An organization chart could indeed fog thinking. And even in the management ranks, those tiny organization-chart boxes could shrink the brain – as in, “that's not my job.” And I would relate the story of the general manager of a renowned hotel in Midtown Manhattan personally meeting me as I stepped out of the elevator and offering to lug my suitcase because the hotel staff had just gone on strike.

Beyond critical thinking (which even university graduates in the West don't necessarily possess) is the imperative of critical problem solving and teamwork. And that is not new, and which progressive global enterprises in fact raised decades ago. And thus many of them invested in an in-house virtual university to address a compelling need. Given that problem-solving is inherent in private enterprise, education and training as an intervention must deliver real-world solutions that can be executed in real time – i.e., they must be simple, not complex.

To illustrate: The simplest definition of problem solving is to get from point A to point B. Establishing point A sounds a no-brainier yet without the process of critical thinking, getting a good handle on the problem or defining it with clarity is undermined thus jeopardizing the problem-solving effort itself. And which in the vernacular goes: “alam ko na 'yan,” meaning, “don't insult me, I know that.” And worse, after we take point A for granted, we jump into formulating solutions without the benefit of defining point B – akin to a headless chicken.

Bearing in mind that the shortest distance between two points is a straight line, problem solving efforts must satisfy the rigor of efficiency and productivity in order to attain the optimum, desired outcome. And in the 21st century world, it means the outcome, say a product, is competitive and replicable; in other words, the enterprise is sustainable. Failing to establish and meet those parameters – of establishing a vision coupled with clarity and coherence – could spell disaster. And because rank has its privileges, teamwork is undercut when everyone defers to and assumes that authority has all the answers. The evidence: we have become the economic laggards of the region; and if it isn't obvious yet, our failings – courtesy of our leaders – are reflected in the restrictive economic provisions of the Constitution; the neglect of basic infrastructure, including energy; bypassing industrialization, among others. The fall out: a well-entrenched elite class – manifested in a system of political patronage and oligopoly – amid a sea of poverty.

What to do? Blame everyone and his uncle except ourselves? And it comes from another set of ABC? For example, we're proud that we raise our children in a sheltered manner because we want them protected from the influence of the secular world; thus exclusive Catholic schools for girls and boys are the norm. And as kids grow up, they see our world even more restrictive and confined as in our parochial bias. But not to worry, our educational system is world-class. Or we send our kids to the best institutions in the West. And once they awoke to the real world and realized that we're economic laggards, who would they blame – everyone and his uncle except ourselves?

And why this blog talks about my Eastern European friends, who eleven years ago knew very little about free enterprise. And they haven’t tired hearing the free-enterprise spiel: “You heard and read peddled lies over decades. But enough is enough, and inspired by the fall of the Berlin Wall, you embraced the pursuit of life, liberty and happiness. It is not about destiny; it is about creating your own future. It is not a cakewalk. Even the West that is helping you to realize your dreams are your friendly competition; friends but competition nonetheless. But you can't be crybabies. No one owes you anything. Freedom and democracy presupposes maturity and demands hard work – and then some.”

“Your accession into the EU means you will have access to the EU infrastructure program. That is job no. 1 in every development enterprise. Infrastructure attracts investments; and especially with you abiding by EU rules on good governance and economic freedom . . . businesses from the West would come. They mean well but, remember, they are your competition. There is no handicapping in this environment and so you must rapidly learn the ropes of free enterprise. You experienced massive devaluation shortly after the fall of communism, but your economic managers did a great job stabilizing your currency.”

“The other good news is all of Europe is your market – with no tariff barriers. But that amounts to nothing if you cannot create competitive products – because even in your country, people would prefer high-quality, state-of-the-art Western products. Exchange rates and tariffs are a necessary evil and the best way to overcome them is to learn and be committed to the mantra of global competitiveness – that means your products are marketable not only in Europe but in all of the world. And that presupposes you are head and shoulders above even those schooled in the West that have not internalized the imperatives of critical thinking, critical problem solving and teamwork. You hold the future in your hands.”

Sunday, December 8, 2013

What the future holds

“It takes courage to accept the problem, and even more courage to address it, with entrenched interests as well as skill gaps in the educational system. But it’s an important fight, if we want to regain both prosperity and balance.” [Michael G. Jacobides (holds the Sir Donald Gordon Chair for Entrepreneurship and Innovation at the London Business School), How Europe Is Betraying Its Children, Harvard Business Review, 28th Nov 2013] “But it just might be something deeper: a reflection of just how hard it is to recognize some uncomfortable truths, especially when we have no ready solution to offer. Yet, what could happen if we keep confusing wishful thinking with optimism? Most probably, a wasted generation and, for sure, further loss of competitiveness. And, on the personal level, the biggest drama for parents in plighted countries, who sacrifice all they have for the education of their children, is the realization that they may be making a bad investment . . .”

“It isn’t just the educational system that’s at fault. A recent BusinessRoundtable study of employers found that most complain that they can’t find the right people. Not because they can’t read, or lack computer or job-specific skills but because they lack critical thinking, critical problem solving and teamwork.  Perhaps worse, they also lack professionalism, adaptability, and personal accountability for work. These are skills that the educational system isn’t geared to deliver but they are precisely what the new generation must necessarily develop . . . [S]chools in many of the Old World countries, and certainly in the European South, still prioritize memorizing over critical thought; we obsess with teaching technical skills as opposed to fostering the ability to adapt, add and capture value in a shifting economic landscape. Universities, in many a European country, are neglecting the realities that graduates will face, producing degrees better suited to a generation ago.”

It brings to mind that even in PHL, our universities, which once had preeminence, have fallen in the rankings. The then president of my old MNC company would proudly refer to his days at UP and Sophia University (in Japan) whenever he’d explain how he explored Asia as a young man after graduating from Dartmouth. He was ahead of his time, and foresaw the Asian century. He had run the company’s European operations early on and once at the end of a visit to Hong Kong, I asked him about Europe and while polite, he said he always thought Asia was the future. 

At the MNC company I was part of the council that created a virtual university; and we tapped every conceivable resource including the academe and renowned consultants. And with some of them, we even had the opportunity to critique their then latest works. That was decades ago, yet the HBR article making reference to the lack of critical thinking, critical problem solving and teamwork in the typical graduate is like déjà vu. And precisely why with my Eastern European friends, our continuing education and training initiative includes a very concerted effort to address said needs: “Tell us the object of the exercise and why; have you tested that for simplicity and clarity, and understanding and acceptance by the team; tell us if your initiative is falling or not falling behind, why or why not; how are you addressing it; how do you prevent a similar occurrence in future, and what are the intermediate control points that will ensure that you are on track; how are you executing and what learnings are you incorporating to ensure delivery of desired outcomes; what is the composition of your virtual team, and why, within and outside the organization; how are you leading and encouraging and motivating them?”

Not everyone gets it right the first, the second and even the third go-around; and which is why education and training is a continuous enterprise, including the use of interventions like, model thinking, lateral thinking, deliberate practice, best-practice models, self-organizing and cross-functional teams, among others. In other words, there is overwhelming evidence that the old command-and-control system undermined excellence and competitiveness, if not the sustainability of the enterprise!

PHL universities are dropping in their global rankings. And in the case of UP, the challenge is for them to have an ongoing partnership with industry. As this blog has raised before, the fact that Philippine industry isn't geared to be globally competitive limits UP’s options? And as Michael G. Jacobides posed the challenge, “It takes courage to accept the problem, and even more courage to address it, with entrenched interests as well as skill gaps in the educational system. But it’s an important fight, if we want to regain both prosperity and balance.”

Saturday, December 7, 2013

Managing complexity

“If you don't know where you are going, any road will get you there,” wrote Lewis Carroll. Clarity, coherence and vision or the lack of them would explain why we've been left behind? As of the latest quoted AEC reported period, Vietnam attracted more than three times in FDIs, for example. And as the JFC has repeatedly told us, we ought to have consistency in our laws, proclamations, rules and regulations, etc. But how can we when even “the rule of law” is foreign to us – given Pinoy crab mentality or “paki” culture? Was Independence Day June 12 or July 4? Or is the national hero Rizal or Bonifacio? Is the organized confusion coming from our “bida” culture? Or how do we square NAIA 3 or the energy crisis or the neglect of basic infrastructure or insidious corruption or political patronage or oligopoly or poverty? Are we coming or going?

I couldn’t help but break into a grin reading The Economist; Management thinkers disagree on how to manage complexity, 23rd Nov 2013: “THERE can be few better places to talk about complexity than Vienna. This was the capital of the most complicated political organization yet seen: the Austro-Hungarian Empire. It was also the center of some of the most convoluted cold-war spy games. On November 14th and 15th hundreds of management enthusiasts converged on the Austrian capital to debate the subject.”

I’ve spent most of the last eleven years in Europe and have lived through the culture; but even earlier – while still in my old MNC company – I thought that Europeans were less object-focused compared to Americans. They would tend to be more scholarly. And it came again recently in Tallinn (Estonia) where I narrated how a once small enterprise in ex-socialist Bulgaria became one of Europe’s best to the cross-cultural management community of Europe. And a British consultant emailed afterward: “Your presentation was really appreciated. There should be more examples like your work at the conference.” Others either requested copy of the presentation or expressed that the Anglo-Saxon culture was more down-to-earth than theirs or agreed that the “object of our efforts must be the betterment of man.”

The Economist, in its periodic technology reports, has in fact looked into why US companies generated more commercially successful inventions even when Europe came out with more ideas time and time again. [And who would think that Siemens even had to figure out why they weren't as profitable as GE, for example; while Nokia had to be sold to Microsoft?] And as I would explain it to my Eastern European friends, the key is to keep Edison in mind: “I want to see a phonograph in every American home.” Keep it simple, start with the end in view. A few years ago, to kick-off the budget-review process, I talked about KISS – keep it simple, stupid. And this year they completed the budget process before the US Thanksgiving, which I said was the unwritten rule in the US. They’ve been constantly pushing to simplify the process even as our portfolio of products and countries has continued to expand.

“It is striking how many of the world’s most successful businesses thrive on simplicity of some sort. German Mittelstand companies are doing well by focusing on narrow niches. Built-to-last companies, such as Coca-Cola, are masters of distilling their corporate identity into a simple formula which employees can internalize and customers can easily recognize. McDonald’s is a global success because its business model is so simple and replicable. Tim Brown, the boss of IDEO, argues that design companies like his are enjoying success by showing organizations how to “design complexity out”. The biggest threat to business almost always comes from too much complexity rather than too much simplicity. The conglomerates of the 1960s crumbled because they tried to manage too many businesses in too many different industries. Enron imploded because the company abandoned old-fashioned command-and-control in favor of fashionable ideas about running energy companies as if they were financial organizations. The banks were so bedazzled by complex mathematical formulae (and corrupted by greed) that they lost sight of the simplest principles of banking. That old US Navy saying, “Keep it simple, stupid”, is not a bad rule for management too, simple-minded though it may sound.” [ibid.]

What can we in PHL learn from all this? To be comprehensive, holistic, inclusive are all fine except that they’ve perpetuated our “crab mentality?” And with no sight of nirvana incoherence rules; paving the way for a cacique and a dole-out culture – and learned helplessness? As I shared with my Eastern European friends when I introduced the virtue of simplicity, there is a biblical and a scientific foundation to the mantra of simplicity – and they are The Great Commandments and Pareto’s principle. But to Juan de la Cruz that is too simplistic and unlearned? So was it to the scribes and Pharisees?

Monday, December 2, 2013

ASEAN integration and the "64.1 percent . . ."

That is, “of the economists and businessmen in the country believe that the Philippines is not ready for the ASEAN economic integration.” [Manila Times, 25th Nov 2013, Tough times face Aquino in final half of his term - de Ocampo] I've spent most of the last eleven years in Europe – and lived through the economic integration of the EU. And it was eleven years ago almost to the day when my wife and I landed at the Sofia airport and welcomed by the first snowfall of the season. And I am again at the Sofia airport, having just pulled out my iPad while waiting for the first leg of my journey back to New York to be home for Thanksgiving. But what a difference! The old Communist-era terminal building is history, replaced by a totally new, modern airport. [Consider: NAIA 3 was planned well before. We take it for granted yet it is a microcosm of the history of our continued inability to pull the nation together and grow and develop?]

Bulgaria is one of the most corrupt countries (ranks no. 75; sadly, PHL is even worse at 105 in the 2012 index) in this part of the world; yet infrastructure projects do get done, like the airport – but not only. [And precisely why when I first arrived, I spelled out the condition of my presence that was not negotiable; and that is, transparency. It was what I represented as part of the efforts of the West (c/o USAID) to bring the values of free enterprise (as opposed to the twin evils of political patronage and oligopoly – that even Pope Francis has condemned as “corrupt and savage”) to an ex-socialist state.] Sofia recently opened two world-class subway lines; and a third is in the works with a station stop right at the airport. And in the bottleneck-intersections of the capital, roundabouts (that are also overpasses) have been built and at least two more are planned. A 400-kilometer highway to the Black Sea has cut travel time to three hours and the construction of the highway to Greece is frenzied. To be sure, these projects were part of the EU infrastructure program and an element of the accession process into the EU.

But still on corruption: The middle-class, joined by the student population, has kept the pressure – via a daily protest rally – on the government to fix corruption and oligarchy. Like in other ex-Soviet satellites, commissars given their access to power for decades took advantage of the “system change” to turn themselves into the oligarchy. The good news is with the oversight role played by the EU, private enterprise is thriving. Still, Bulgaria needs a more robust industrial base although Western companies leveraging their relatively low-cost environment are investing. (Their stock of foreign direct investment stands at $52.99 B; sadly, PHL has less with $30.38 B. And Singapore has $454.9 B., if we Pinoys want to benchmark.) These Western companies learned that low-labor cost is a short-term phenomenon from the garment industry – that migrated to Asia. And so they are of late moving into light industry. Two MNCs, a British and a German, recently invested in the same small town of 80,000 where my friends are from. The big tech companies are also coming. Early on, there was a surge of Western investment in property development, which unfortunately turned into a bubble. And as typical in non-industrial countries, retail is a growing enterprise and attracting greater competition.

Such a development template is not new; it has happened in other parts of the world including the ASEAN region. And not surprisingly, three of our neighbors dominate regional trade. Why? Our parochial worldview while expressed as nationalism in truth values rank in PHL hierarchy, preeminent in our value system? Clearly, this parochial bias sets PHL apart. Instead of embracing foreign investment and technology, we shut them out. Ergo: We were bound to suffer the perfect storm of underdevelopment – as we likewise neglected the development of basic infrastructure while making-do with OFW remittances and BPOs and bypassing industrialization, in the mistaken belief that we could attain economic development through the service and retail sectors while protecting the few and perpetuating our cacique culture.

“We are an island unto ourselves!” And not surprisingly, over 100 years ago, Rizal dreaded that we were backward and anti-progress. Where is community? It starts with family like charity but doesn't end there; and it goes all the way to the community of nations – as in the world being behind us following typhoon Yolanda. And to drive home the point Rizal created Padre Damaso; and today, no less than Pope Francis called the latter a narcissist afflicted with leprosy! And he was not kinder to “the corrupt and the savage.” They give to the church, and even pray and fast but “steal” from the country and the poor. “I beg The Lord to grant us more politicians who are genuinely disturbed by the state of society.” [Pope Francis]

Sunday, December 1, 2013

Trend forecasters

It will be a multi-faceted world, full of ironies; connecting technology and art/fashion; connecting different themes and genres. It will be a world of contrast, not harmony; even conflicting ones – or good and bad – like economies, one part of the world will be wealthier while another could even be in decline. The emerging markets of Asia and Latin America will be wealthier and trendier. Individualism because of the human instinct to be happy will be pronounced; including the desire for luxury even in a mass-market world. The bottom line: progress and development will continue despite the sense of imbalance.

What does it mean for PHL? We have a choice: (a) we could be with the declining economies, with more poverty; or (b) with the wealthier ones, with less poverty? Of course, for the elite class, the third choice is evergreen: the status quo?

Every year for the last several years, my Eastern European friends and I would sit down to listen to trend forecasters. It’s very critical in a business that demands continuous product development. It’s part of our continuing education and training efforts. They weren’t that forward-looking before. Consider: our office kitchen running out of coffee or sugar or milk or our printer running out of paper. And so I commented that at my old MNC company, the pantry was next to the office of the president. And like a light switch being turned on, we don’t run out of any of them anymore.

But one incident affected me personally when the individual (and he was fired) who pays the bills in my apartment missed paying the electric bills (apparently for 3 months.) And as I was coming home from a trip to a neighboring country, a colleague who was driving got a call that my apartment was dark. And after a couple of phone calls: “I have to take you to a hotel, it has been arranged. It’s a Friday night and you won’t have electricity until Monday.” They called it “golyama katastrofa” or a major catastrophe!

It brings to mind typhoon Yolanda? “It takes a village,” as Hillary Clinton would put it. We may need a czar but not only given Yolanda is an add-on to our to-do list: to eliminate the restrictive economic provisions of the Constitution; to fix the power or energy crisis; to get basic infrastructure erected; to get industrialization off and running? It takes a village – to get political dynasties and "savage capitalists" [to borrow from Pope Francis] and their cohort, including in the media, to unshackle their stranglehold on Juan de la Cruz? Hint: The world is moving at warp speed; it won’t wait for us!

First we must have a vision beyond “que sera, sera,” then we must get the basics right, and then we can be proactive? And it is not new; Rizal saw it over a hundred years ago? And it takes a village. Even my Eastern European friends, despite deliberate efforts over the last ten years could still lapse into complacency. And so during our recent session with the trend forecasters, I felt it prudent to separately pull aside a couple of them if only to confirm that we were all hearing the same message.

But being human, despite two Mensa members among them, I'd expect them to be defensive whenever they sensed that I saw a chink in their armor. “I see these things – surprise, surprise – because I’ve been around the block a few times; been there, done that.” But as importantly, it is imperative to appreciate that “constantly raising the bar” is a fundamental given in the 21st century globalized – and very competitive – world. And so not just one has been fired since I arrived. While my role is to assist individuals and the organization, in a culture of transparency and meritocracy that they've embraced, non-performers are exposed. And one rotten apple spoils the whole barrel. And why in this blog I have raised “mistaken compassion” a few times. Which translates to PHL failure in good governance – as in the rule of law – or crab mentality or Bondying culture? Question: why do we have corruption, again?

We Pinoys are very defensive about criticisms and that is to be expected. We’re as human as everyone else. Yet we named Jose Rizal national hero so that he’d be our model? But it appears Padre Damaso is our model instead? Because he’s higher up in the hierarchy and even holds the keys to heaven? How are we going to handle the future given Rizal’s assessment that we’re backward and anti-progress?