A perfect storm

Living and working in Eastern Europe tells me that "to be proactive" is perhaps alien if not offensive. And recently they confirmed with me that in the local language there is no direct translation for the word "proactive". It would remind me of my first cultural edification: "Don't expect Stefan at 9 on the dot every morning." And from then on I would start my day in the cafe next door for my first cup of coffee while surfing the net until my ride to work is all set. Yet even in the US inefficiencies could spoil one's routine, and my wife would have her own litany that is probably longer than mine.

I have understood that these people are more accommodating of less than perfect outcomes. Yet, my friends have realized what is setting them apart: they’ve embraced the imperatives of the 21st century highly competitive, globalized world. After one of our young managers was named the country's manager of the year, I was interviewed by the local business journal: “What is it like in an organization that continues to reap accolades – from the country's top exporter to one of EU's best and fastest growing companies to manager of the year?” And my response: "While it was a struggle, the enterprise has evolved from a "value for money" mantra to one constantly striving to be a "world-beater" – i.e., "start with the end in view". And that worldview has expanded their “comfort zone” and turned the instincts of people from being inward and parochial to being outward and global." [Stefan will shortly earn his second masters’ degree; and today is in-charge of the company’s management information “dashboard". From the basic excel model that I showed him to capture critical day-to-day information to focus managers on the key business drivers and anticipate and proactively solve problems, he has developed a twice-a-day system-generated “dashboard” that pops up in every manager’s laptop. And when I “wander around” through the different floors I would see small groups huddled around; and every now and again would hear cheers of “eureka moments”. They're music to the ear.]

In the case of PHL, we have yet to navigate away from the perfect storm that has held us for decades? And while it may not be uncommon for Eastern Europeans to have a dim view of the future, Juan de la Cruz, for his part, appears unable to move the country forward? Consider: Our hierarchical system and structure and our parochial and inward-looking bias against the demands of a globalized 21st century. For good or ill, we have taken on “the privilege of rank” that was once the exclusive domain of our colonizers – represented by the friars? Thank God Pope Francis was brought upon us, reminding Catholics that the "Renaissance Prince,” by definition hierarchy, does not equate to our faith?

Hierarchical and parochial . . . That has been a continuing theme of this blog, because they are diametrically opposed to a globalized and highly competitive world. Consider: We truly believe that we are creative people yet we rank poorly in innovation. It is no secret that innovation comes from ideas and ideas need a nurturing environment – not one restricted by hierarchy. And in the 21st century competitiveness is defined by leading edge innovation and technology. And since we are deficient in investment, technology is something that we could only mouth? Yet we would rather stick our head in the sand and celebrate OFW remittances, BPOs, oligarchy and Filipino billionaires – while our monetary authorities continue to sing self-praise: "despite the volatility in financial markets, the country's foreign exchange income – linked to remittances from migrant workers and business process outsourcing (BPO) revenues – kept the country's external payments position robust." [Economy weathers financial market turmoil, The Philippine Star, 30th Jun 2013.] Translation: "pwede na 'yan."

And even worse, because of our inability to subordinate our individual instincts and biases, and to come around and pull together for the greater good, we have outsmarted ourselves to the point of inaction, reflective of the crab mentality and the perfect storm holding us hostage? For example, President Aquino appears dismissive of ideas to generate greater FDIs, but how does he propose to solve this nagging problem like that of power: who will do what, when, where and how? “Pwede na ‘yan” is a slippery slope – and we’ve been there and done that? And where are we – bottom of the heap, with Cambodia and Myanmar?

Are we COWs or aren't we?

“Here is the working principle: Crises and major disruptions are not an abrupt departure from what anti-fragile organizations do continuously — solve problems. Rather than being controlled through rigid command structures, employees at all levels are trained every day to be quick problem-solvers.” [Brad Power, Make Your Organization Anti-Fragile, Harvard Business Review, 24th Jun 2013]

“We need to train them in problem-solving!” We were in China and in the newly built factory of my old MNC company 20 years ago; and our American engineer and project manager, pretty distraught, walked into the meeting room where I was with the Chinese general manager of the joint-venture. [Fast forward: those supposedly neophyte Chinese workers achieved the best ever productivity output among all comparable modern facilities we had including those in the West.] And it felt like only yesterday as I read Power’s article in the HBR. [And with my Eastern European friends we recently had a series of classroom sessions reminding ourselves that as managers problem-solving is what we do for a living. And the sessions will move on to other parts of the world where we do business.] Problem-solving, problem-solving, problem-solving – managers live, drink, eat, sleep and even dream problem-solving!

“[M]anagers should not be learning from today's fashionable role models. They should be learning from companies like Ford, GE, IBM, and McDonald's that have successfully responded to challenges and crises over time. The dismissal of yesterday's shining star in favor of today's (which all too often turns out to be tomorrow's flame-out) is very revealing of shallow business school analysis (focused on short-term context and results) and ephemeral journalism (focused on the latest headlines).”

In the Philippines, we are still figuring out what ‘inclusive growth’ really entails? “If we, therefore, want to have inclusive growth, we should not only encourage the establishment of enterprises but prepare and train Filipinos to be true entrepreneurs. . . entrepreneurs who are deliberate and purposive in their strategizing; entrepreneurs who are innovative and have the capacity for creative destruction; entrepreneurs who are whole-brained and have mastery of the self.” [Entrepreneurship: A roadmap to inclusive growth, Prof. Antonio M. Del Carmen, PhD, Business Mirror, 14th Jun 2013]

Is “whole brained and mastery of self” what we sorely miss and thus would explain our “crab mentality,” our tendency to leave things unresolved, say, energy or NAIA 3 to name just two? And that goes back to problem-solving? But whether it is about being deliberate and purposive and innovative or about problem-solving, they still have to be in context? For example, if we remain inward-looking and parochial, all our efforts to have inclusive growth would be limited, stopping at our borders’ edge and precisely why we remain an underdeveloped economy – and unable to stem widespread poverty?

It is that cognitive dissonance – the lack of clarity of what Juan de la Cruz is to the rest of the world – that has cut us by the knees for decades? To be deliberate and purposive starts with Juan de la Cruz being or not being a ‘citizen of the world’? It is what thinking outside the box is versus being inside the box like what we assumed our faith is about – i.e., “catolico cerrado”? Are we, aren’t we surprised that Francis has been adamant: “I’m not a Renaissance Prince.” He did not want “to be trapped” in “a large white throne . . . The most potent symbol to date of Pope Francis’ five-month papacy is an empty chair. The chair — a large white throne — was to seat His Holiness . . .” [A humble pope in an august office, Reuters, 25th Jun 2013]

The Vatican has been the greatest model [when it should have been Christ in the manger?] of a hierarchical system and structure which, unfortunately, we Pinoys have swallowed hook, line and sinker? But we embellished it with ‘nationalism’ to distinguish our brand from that of our colonizers, forgetting that one that walks like a duck and quacks like a duck can’t be different? In marketing parlance it’s called “me too".

Thus: “If we, therefore, want to have inclusive growth, we should not only encourage the establishment of enterprises but prepare and train Filipinos to be true entrepreneurs . . . entrepreneurs who are deliberate and purposive in their strategizing; entrepreneurs who are innovative and have the capacity for creative destruction; entrepreneurs who are whole-brained and have mastery of the self” . . . beyond our parochial confines, by being citizens of the world (COWs)?

Cognitive dissonance

“If we, therefore, want to have inclusive growth, we should not only encourage the establishment of enterprises but prepare and train Filipinos to be true entrepreneurs. . . entrepreneurs who are deliberate and purposive in their strategizing; entrepreneurs who are innovative and have the capacity for creative destruction; entrepreneurs who are whole-brained and have mastery of the self.” [Entrepreneurship: A roadmap to inclusive growth, Prof. Antonio M. Del Carmen, PhD, Business Mirror, 14th Jun 2013] . . . Amen!

“The unemployment problem, John V. C. Nye (economist at George Mason University and executive director of the Angara Centre for Law and Economics, a think tank) claimed, stems from the country’s inability to attract foreign investments and the lack of flexibility in the labor market." [Jobs challenges tagged, Business World, 27th Jun 2013] . . . Amen, again!

But then from clarity . . . we find ourselves in a sensitive area: "We strongly oppose a proposed 100% foreign equity in rice production and supply while allowing for limited foreign direct investments in post-harvest and marketing activities, subject to consultations with rice stakeholders . . .” [Limited farm FDI acceptable, Business Mirror, 27th Jun 2013]

It’s time to call on Mozart? “Mozart helps us cope with cognitive dissonance – the deep discomfort we feel when we realize two of our beliefs are at odds . . .” [To Stay Focused, Listen to Mozart, Pacific Standard, 24th Jun 2013] “The results of [the] experiment [of Nabuo Masataka of Kyoto University and Leonard Perlovsky of Harvard University] reveal that exposure to a Mozart minuet mitigates interference . . . [M]usic can help us see a complex, confusing situation more clearly, and cope with it more efficiently—an ability that facilitates human evolution . . . Music evolved for helping to overcome the predicament of stress that arises from holding contradictory cognitions . . . so that knowledge is not discarded, but rather can be accumulated, and human culture can evolve.” [Beyond economics and poverty we're confronted with another cognitive dissonance, China. In Europe, with the Soviets now history, for example, there is no such dissonance, e.g., wealthy Germany hosts Ramstein Air Base, the headquarters of the US Air Forces in Europe. Wikipedia: “Ramstein AB is part of the Kaiserslautern Military Community (KMC), where more than 54,000 American service members and more than 5,400 US civilian employees live and work . . . There are more than 16,200 military, U.S. civilian and U.S. contractors assigned to Ramstein AB alone.”]

In this blog “to prioritize and to focus” has been a continuing theme. And it simply is a product of the “many culture shocks” I've experienced from living and working in different parts of the world. And now in post-career I am sharing them with friends in Eastern Europe – and also with Pinoys, because they are the motivation behind this blog. But we Pinoys find unsolicited advice offensive? In the West and even Eastern Europe, people are more receptive to ideas – even from younger folks. [I was the least surprised when one of our young Bulgarian managers was recently named the country’s manager of the year by the Vienna University of Economics and Business.] Should we then wonder why PHL is uncompetitive and isn't equated with a progressive trait like innovation?

It is only in the Philippines where I’ve heard “crab mentality,” and it came from a president, President Ramos. MIA in its heydays was ahead of its time. Today, NAIA is an embarrassment. And we can go on and on with many more examples. Que sera, sera? Are we then in a race to the bottom? “Transparency, fair competition and anti-corruption can become habits that are difficult to break, but it helps to have the right laws to underpin them and deliver us from temptation. Passing laws to entrench competition, counter protectionism, and drive forward infrastructure development should in my view be priorities for the next three years.” [Paalam, Pilipinas, Stephen Lillie, British Ambassador to the Philippines, The Philippine Star, 27th Jun 2013

Leadership matters and understandably we expect President Aquino to set the right course for us. He has, with “daang matuwid.” But we also have to ask ourselves the question: Do we in fact want to move forward because that presupposes change – and Juan de la Cruz is so set in his ways, if not "archaic . . . even damaging," to quote Pope Francis, in reference to the Papal Gentlemen office? [A humble pope in an august office, Reuters, 25th Jun 2013]

The common good II

The common good represented by Juan de la Cruz must find its way into our value system or we shall indeed be the laughingstock of the world? It is the 21st century yet our greatest value remains “Filipino first”? It is a great sound bite and an inspiring rallying cry yet is skin-deep as evidenced by our failure to put our house in order, stuck as an underdeveloped economy for decades and unable to stem widespread poverty. Proud Christians we may be yet we can't deny our culture of impunity which comes with our cacique hierarchical system and structure and the resulting lopsided economy that we celebrate. Kennedy’s call to the American people to confront a moral issue despite their proud Judeo-Christian heritage came from the recognition that their problems were man-made? And in PHL, while we’ve invoked nationalism and Christianity crab mentality, undoubtedly man-made, would be manifest in our antiquated infrastructure as well as the absence of an industrial base, an underdeveloped agribusiness, a deteriorating educational system, elevated unemployment magnified by a much grimmer underemployment picture. In short, an ugly picture that won't go away because we would take inaction – i.e., crab mentality that is in fact a race to the bottom – instead of the common good?

PHL is a ship adrift despite claims to the contrary. Granted that the financial services sector has been singing hosannas owing to specific monetary measures, our economy remains consumption-driven that is fueled by OFW remittances – akin to a “house built upon the sand”? A structure, be it an economy or whatever, must have the legs to stand firmly and proudly. And this is the same financial services sector called to task by the US Congress for their role in the great recession, i.e., the housing and credit bubble that brought the global economy to its knees while lining the pockets of bankers? They are opportunistic with no regard to a host country’s economic foundation – i.e., “hot money” can come and go because market investors look at the performance of money managers, the returns they deliver especially every period-end when they are to release investment-performance reports! [Disclosure: my family has been a market investor for decades; and my daughter and son-in-law come from Wall Street.] The harsh reality is the modern world has a wide range of investment options competing for investors. And smart economies like PHL ought to recognize that, not to be lulled by a solitary vehicle like the stock market – try foreign direct investments? The world has to take the good with the bad; thankfully, free will gives us the power to take the good – but no one will spoon-feed us with the good, our sheltered upbringing notwithstanding?

“OFW remittances will remain resilient at 4-5 percent as the 10 million OFWS continue to send money home. The Philippines is currently the third largest recipient of remittances in the world after India and China.” [Phl seen to sustain growth thrust, The Philippine Star, 21st Jun 2013] “For an economy like the Philippines, which has mostly been driven by the Services sector in the past few years, structural changes to the economy are a necessary ingredient in creating employment for millions. Philippine Economic Society President Alvin Ang told the Business Mirror that structural change requires shifting the country’s economic growth to labor-intensive sources like Manufacturing and Agriculture. But this shift in growth sources takes years and even decades to occur.” [Where are the jobs, Business Mirror, 19th Jun 2013]

“What the Aquino administration is waiting for are the actual investments. Once those investments come online and are already on the ground, the government hopes to be able to increase the jobs, particularly in the manufacturing sector.” At the end of the day, what the Aquino administration is waiting for, i.e., actual investments won’t come precisely because of our crab mentality on the one hand and a culture of impunity on the other? “Whether a local enterprise will survive the liberalized and highly competitive AEC market will depend on its productivity, export orientation, foreign equity, and company size . . .” [Filipino Companies, Gov’t Urged To Prepare For AEC, Manila Bulletin, 22nd Jun 2013]

“Kenneth Akintewe, portfolio manager at Aberdeen Asset Management in Singapore, observes that family-controlled big businesses in the Philippines dictate the terms of business in the Philippines: “There is a real hesitancy to allow foreigners to come in and have a major say on how businesses are run. Until that dynamic changes, it is difficult to see foreigners being particularly enthusiastic” about investing in the Philippines.” [Protectionist clauses in the Philippine Constitution restrict the flow of foreign direct investment, Priscilla Tacujan, Ph.D., The Philippine Star, 3rd Jun 2013]

“Little league”

We’re probably right in our GDP forecast that it will “rise 7-7.5 percent this year or higher than the Asian Development Bank and World Bank’s projection of six percent and 6.2 percent, respectively.” [Phl seen to sustain growth thrust, The Philippine Star, 21st Jun 2013] “UAP economist Victor Abola said the local economy is undoubtedly growing with some sectors taking off, driven by robust domestic consumption.” On the other hand, we keep talking about “inclusive growth,” and thus people are wondering why despite the caveats re GDP numbers, we still crow about it: “Last quarter’s growth was the fastest among 11 Asian economies, eclipsing China’s 7.7 percent annual pace.” [Ibid.]

A friend emailed wondering if we’re like little leaguers unable to contain their glee . . . fortunately a couple of news items would put things in perspective: “What the Aquino administration is waiting for are the actual investments. Once those investments come online and are already on the ground, the government hopes to be able to increase the jobs, particularly in the manufacturing sector. [Where are the jobs, Business Mirror, 19th Jun 2013]

“In addition to addressing the critical constraints to private investments, we will also put emphasis on innovation, technology, and research and development. We will facilitate the improvement in labor productivity by investing in human capital and providing the capacity for the labor force to engage in higher-value activities. What all these demands is a greater sense of urgency among us in the government, as well as better coordination between and among the various agencies charged with implementing programs and projects,” Socioeconomic Planning Secretary Arsenio M. Balisacan explained at the briefing on the National Income Accounts in May.”

“For an economy like the Philippines, which has mostly been driven by the Services sector in the past few years, structural changes to the economy are a necessary ingredient in creating employment for millions. Philippine Economic Society President Alvin Ang told the Business Mirror that structural change requires shifting the country’s economic growth to labor-intensive sources like Manufacturing and Agriculture. But this shift in growth sources takes years and even decades to occur.”

“But persistent weaknesses and constraints have caused [the manufacturing industry] to lag behind its ASEAN neighbors, Dr. Rafaelita M. Aldaba [of the Philippine Institute for Development Studies] said in a recent talk entitled “AEC 2015 & Industry Roadmaps.” [Filipino Companies, Gov’t Urged To Prepare For AEC, Manila Bulletin, 22nd Jun 2013] “Whether a local enterprise will survive the liberalized and highly competitive AEC market will depend on its productivity, export orientation, foreign equity, and company size . . . She noted the “hollow” structure of the sector, where medium-size enterprises have a small share not just in manufacturing but also in the overall Philippine structure. This has led to weak linkages between the micro and small and medium MSMEs and the large enterprises, resulting in a subdued MSME performance with limited value added and employment share. The manufacturing front today . . . has not kept up with technological changes, having failed to invest in state-of-the-art technology and human capital.”

“Before 2015 arrives, the government should adopt a three-pronged strategy for a more globally competitive manufacturing industry . . . The first step is to enhance the investment climate by removing growth obstacles and supply chain gaps, efficiently using and expanding capacity, facilitating innovation and technological catch-up, providing access to finance and technology for MSMEs, and encouraging moving into higher value-added sectors. The second is to issue policies that correct market and government failures such as smuggling and corruption, and streamline and automate interrelated business procedures. This stage also calls for government and industry collaboration for continuous industrial and technological upgrading and sustained growth. Taking complementary actions is the third, said Aldaba. These include promoting a competitive exchange rate, open-trade regime, sustainable macro policies, sound tax policies and administration, efficient bureaucracy, and secure property rights. There is also an urgent need to address deficiencies in infrastructure, logistics and power supply.”

A Harvard social scientist preaches that success must be celebrated, even small ones and even before the fact. Yet is it time we treat Juan de la Cruz like an adult? “Our problems are man-made,” Kennedy said in a speech that has been dissected many times over. And not surprisingly, we have become complacent, reinforcing our “fatalism” – in spades? 

The illusion

"We need our siblings from the eastern part of the continent to shake us up old fogies," interjects an EU journalist during a discussion on EU competitiveness. Does it remind us of our elite class, and that if we'd listen to them we would think that we're the greatest nation on earth? Wittingly or unwittingly, it is an illusion that we've created and, not surprisingly, Juan de la Cruz remains hopeful in particular when he's lectured on positive thinking – or faith – among others?

Denial is not positive thinking? And especially when the denial has equated to perpetuating the status quo that is best described as cacique and hierarchical as a system and structure? Recall Rizal and peers brought home from their travels and education what they realized was kept from the consciousness of the Indios. No different from how Marcos made Juan de la Cruz accept a supposed benevolent rule?

Too bad . . . so sad . . . While he no longer has to contend with his colonizers, the psyche of Juan de la Cruz has similarly been held by our elite class – “I know what’s best for you; trust me, I hold the key to your salvation”? Christian doesn’t give us license to be ‘holier-than-thou'? Ditto for our nationalism and what we proudly call our culture and heritage that have justified our tendencies to cling to the past? Thanks to the tsars, they gave Lenin legitimacy? And we strongly believe that we are holistic and adhere to "total systems," for example? And so “to prioritize and to focus” is disconcerting because it violates our definition of “being inclusive”? Or is it simply “crab mentality”? Should we wonder then why we seem unable to figure out what an "ecosystem" is? Economists look at monetary and fiscal policies as levers of economic growth. That is well and good in a developed economy. But in an underdeveloped economy like PHL, we’re faced with the one imperative: to rapidly erect the platform of the economy?

"RP bets on high-end casinos to become top gaming hub," blares a lead article. It falls short of an ecosystem, but “pwede na ‘yan”? Even Singapore benefits from the gaming industry – but that is only true because Singapore has smartly put together an efficient ecosystem, and gaming is gravy? While we are suffering from a double whammy: First, government – or administration after administration – for decades has failed to erect the platform of a strong economic system. And it starts with infrastructure, from energy to the other basics like roads and bridges, for instance. It is not rocket science as our neighbors have demonstrated. But to safeguard our egos we’d rather point to the weaknesses of these countries? That is how we’ve succeeded in creating an illusion such that Juan de la Cruz is neither here nor there?

To add insult to injury, we dig up our sophistication and knowledge of the modern world, and claim that there is a more complex reason – beyond the comprehension of Juan de la Cruz – why PHL higher education lags its neighbors and the world, for example? Yet even the US had to admit that they have fallen behind? We see complexity instead of reality? What about looking at the mirror?

And second of all, in the private sector, with our acceptance if not celebration of oligopoly, we have allowed the few to define our future? And the more we restrict foreign investment, the more we applaud every new project and investment they make – because we badly need investment? And given that oligopoly is our definition of success, we’ve totally surrendered the 21st century to the rest of the world – them that have been doggedly learning, understanding and exploiting what an open and competitive global economy demands? And we think being the top gaming hub would cover for our egregious mistakes – or sins of omissions and commissions? The private sector is yet to appreciate why the first imperative is investment – and beyond local? And especially because of our parochial instincts, we have yet to value technology especially those that others may have – and thus must tap come hell or high water? Sadly, in our heart of hearts, we believe we are as good in developing technology – or that in a hurry we'd get there? It is another illusion . . .

And as the world accelerates innovation, and talent, product and market development, the more the rest of the world is leaving us behind? Are we at the end of the day simply mirroring what losers are like? If an industry icon and best in class like a P&G could produce a couple of losers in recent memory so does everyone else?

Davao airport, 2013: a déjà vu

43 years ago I sat scared with the other passengers after our PAL plane overshot the runway in Davao. Thankfully I got out of the disabled aircraft in one piece with not even a scratch, like everyone else. I recall that like the recent incident, they also were unable to tow the plane away with dispatch . . . That’s how far we've progressed decades later . . .

"There is no such thing as ‘total happiness’ in this country." After decades of Communist-rule, that is not uncommon to hear from a Bulgarian. Arguably, something as insidious could indeed kill the human spirits . . . [We claim that we Pinoys are the happiest people, but is our denial for decades in fact a manifestation of the human spirits having gone kaput?] . . . And precisely, with my Bulgarian friends we've been purposefully building a different environment – and culture – within this once small enterprise. Such that after we've moved from "the middle of nowhere" (housed in an old communist-era facility 400 kilometers from the capital) to what would be adjudged Sofia's "building of the year" designed by Italians, we've made the Italian-look the standard for our offices, wherever – including the latest one we're setting up in Singapore.

I was at home in Connecticut and we were at that time building the factory for our first premium brand, and I wouldn't even look at the equipment brochure attached to an email: "It is not the costs but the margins that we must be looking at. This project must shriek "premium" in its every facet." Today it is our biggest brand next only to the largest one, but which was well ahead in the market. I would chat animatedly with a young man we recently hired (he had worked at the world’s largest consumer products company) after he said that our third biggest brand was moving up even faster in Western Europe: “And what value do you want to add to the business?” And in typical corporate-speak he intoned: “As a matter of fact I have already planned the development of a couple of important tools that I will discuss on my next visit.” He then proceeded to explain the mechanics of his "tools." [Memo to HR: We need more of his kind.]

And so from making for and selling "cheap" products to the locals we're today now selling to a big chunk of the world . . . I recently sat through two hours of presentation from a research firm that we commissioned to test our latest innovation against the biggest brand from a US MNC and the biggest brand from Europe. And the prim and proper researchers, at the end of the presentation, could not contain their amazement that a young enterprise (from a poor country) could outdo two of the world's best: “Could we please use the remaining product samples ourselves?” And that says it all: people will go out of their way to have your product, even in a formal business setting.

Do we in PHL appreciate what an open and competitive market is when we've enshrined oligopoly – and foreign investors know that? Why would we expect them to come then? In the meantime, our infrastructure development has lagged, and the Davao airport is a microcosm of our reality like NAIA is? And not surprisingly, PLDT, a major player from our private sector wouldn't meet the criteria of a Myanmar to bid in their telecoms infrastructure project? Did we not give PLDT an award recently? And this same Myanmar is now poised to rake in more FDIs, and could then be on a faster clip to raise their competitiveness? And PHL would remain synonymous with underdevelopment and widespread poverty? But who cares, we could always scratch each other's back?

And we’re proud because it reflects our value – of family – and that we treat each other like family? [Of course, in a hierarchical system and structure we hide the “culture of impunity” (Solita Collas-Monsod, Phil Daily Inquirer, 7th Jun 2013)?] My late mother was always proud to talk up family members supposedly doing well. And that’s not different from us talking up the PHL economy. First it was OFW remittances and today it is BPOs, and the building boom, etc. But my mother was talking family, not competitiveness or the Philippine economy and poverty. While international institutions have told us what ails us – from our deficiency in energy to infrastructure to the absence of an industrial base to low export receipts to our underdeveloped agribusiness to our inability to attract FDIs, etc. – we’re like a family at the dinner table over Sunday lunch? Sound economic fundamentals mean more than a set of monetary indicators – largely driven by OFW remittances – when the ecosystem that must generate the nation's products and services is flawed at best. And denial doesn’t qualify for positive thinking – especially after counting decades?

With due respect to the leaders of CBCP

In a previous blog I shared my high regard for Cardinal Tagle. But this one could easily be interpreted as being disrespectful to the bishops. And so I beg their indulgence. “The economic improvements of the Aquino administration did not impress leaders of Catholic Bishops’ Conference of the Philippines (CBCP), as they gave President Benigno Aquino 3rd a failing mark for not harnessing growth to wipe out poverty.” [The Manila Times, 9th Jun 2013] “Bishop Broderick Pabillio, CBCP national secretariat for social action, said he rated the President three out of 10 because the vaunted economic growth has not reached the poor yet . . . Jose Palma, CBCP president and Cebu archbishop, said Aquino, rather than boasting the 7.8-percent gross domestic product (GDP) growth, should “tell the truth” in his state of the nation address (SONA) in July.”

The truth, as international institutions have repeatedly told us, is it will take at least a generation for PHL to be a developed economy at a constant 7% annual GDP growth. Simply put, neither this administration nor the next can wipe out poverty?

The best way to describe the PHL economic model is that it mirrors the Philippine church? And that is, it is hierarchical and parochial to boot? From the lands of the friars to the lands of the Ayalas we have retained our cacique and hierarchical system and structure and enshrined it in our constitution and reinforced our parochialism? Not only Pope Francis is demonstrating a contemporary, egalitarian example; the 21st century world is in fact contemporary and egalitarian with parochial giving way to global? Simply, an open and competitive market is a level playing field – and nurtures, as opposed to subservience, innovation, creativity and thus competitiveness.

Of course, “global” doesn’t equate to a perfect system either – but who or what is perfect given the human condition? And to be global doesn’t start with being big and a bully. And precisely, in this blog I talk about investment, technology and innovation as well as people, product and market development from the standpoint of a once small enterprise from ex-socialist Eastern Europe. And it always starts in the mind. One can choose to be parochial or global. There is no barrier imposed on anyone. Of course, we Pinoys would rather invoke that we're "ina-api" and "kawa-wa” – a manifestation of our hierarchical system and structure? I have lived and worked with a group of poor Eastern Europeans that have demonstrated that the human spirits can't be shackled. As President Kennedy famously said, “Our problems are man-made, therefore they can be solved by man.”

And what could man-made mean? “The interest groups that benefited [from the PHL economic model] support protectionism in the Philippines and do not want any form of competition, domestic or foreign, to threaten their almost monopolistic access to market shares and government influence . . . Kenneth Akintewe, portfolio manager at Aberdeen Asset Management in Singapore, observes that family-controlled big businesses in the Philippines dictate the terms of business in the Philippines: “There is a real hesitancy to allow foreigners to come in and have a major say on how businesses are run. Until that dynamic changes, it is difficult to see foreigners being particularly enthusiastic” about investing in the Philippines.” [Priscilla Tacujan, Ph.D., The Philippine Star, 3rd Jun 2013]

We’re well aware that we have had land reform, CCT, etc. and even CSR from the private sector. But the reality is it is not charity that Juan de la Cruz needs . . . but social justice – which means crafting and pursuing a sustainable economic model and activity that does not perpetuate a cacique and hierarchical system and structure. And it demands leadership, like the one demonstrated by Kennedy. And not surprisingly none of our numerous charity efforts have moved the needle. And the above reference to “interest groups” and “family-controlled big businesses” that have “benefited from and thus support protectionism” and “dictate the terms of business” ought not to be unfamiliar to us Pinoys? PHL poverty is not a mystery and the truth about the economy is out in the open? And legislators who found Independence Day the opportunity to talk about our sad reality ought to know that action speaks louder than words?

A forward-thinking “White House Team”

“The White House staff is similar to a holding company with a large collection of offices, each of which has its own set of: (a) responsibilities; (b) constituents and (c) work flows.” [Mitt Romney Inc.: The White House That Never Was, Time Magazine, 2nd Jun 2013] Unfortunately, it was not to be. Still, it’s interesting how the team’s thinking process went. “It is a holding company with three main divisions: (a) “Care & Feeding Offices,” like speechwriting; (b) “Policy Offices,” like the National Security Council, and (c) “Packaging & Selling Offices,” like the office of the press secretary.”

“Among the recommendations for the Romney administration: (a) Corporate-style training seminars were planned for appointees and nominees before the inauguration to teach management skills; (b) A plan to restructure White House operations to suit Romney’s corporate management style, with clear deliverables; (c) Detailed flow charts delineating how information and decisions were disseminated through the administration to achieve “unity;” and (d) Plans to evaluate Cabinet secretaries’ performance by “systematically assessing the efforts of their departments in contributing to [Romney's] priorities and objectives, perhaps by a newly created ”deputy chief of staff for Cabinet oversight.”

In this blog I have been talking about my Eastern European friends and how a once small enterprise in the middle of nowhere “could spread their presence in numerous countries in the relatively short period of ten years” – and, more importantly, that many of the thinking in the private sector could be adapted for the public sector. Romney's presidency could have been "the consultancy presidency" and Bush 44 was supposed to be "the MBA presidency." Except that with Cheney as the quarterback, Bush’s became "the ideology presidency" – and brought the world to what is now regarded as a ‘war of choice.’ In the case of Clinton, Bentsen as the architect (and then Rubin) was able to craft Clinton’s "the economy presidency" – or better known as: “It’s the economy, stupid!”

The bottom line: even the American forward-thinking mode isn’t a guarantee that a presidency would be a success especially when extreme ideology infects the thinking process. It is difficult to dissect a non-existent Romney presidency in particular if he would have been under the influence of the extreme right. And as many had sensed, it was because of his fear of offending this wing that he couldn’t articulate a more centrist posture or, much less, a progressive one like he did when he was Massachusetts governor – where universal health care was the feather in his cap.

But clearly Romney’s team embraced the wisdom of borrowing management systems from the private sector. And what can we in PHL take away from that? When Romney’s team talks of a “White House operations with clear deliverables,” for example, it doesn’t mean doing road shows to attract investors or inviting them over – whether they’re in Switzerland or Myanmar? A deliverable would be: “raising FDIs to PHL to $8 billion each year," for instance. The common misconception is that “an activity” is a deliverable, but it is a tangible outcome that defines a deliverable. Another imperative from the Romney team is “achieving unity” via “flow charts delineating how information and decisions are disseminated.” In the case of the current PHL administration, within the economic cluster, for example, debates between departments are done via press releases, and focused on “activity” as opposed to “deliverables.” For instance, the activity of raising tax collections is a given (granted it demands tough-mindedness) but a predicate is a must – which is precisely what the 7 strategic industries in “Arangkada Philippines 2010” are about; and they are then meant to deliver over $100 billion in incremental GDP.

Once these deliverables are clear to everyone, then as the Romney team has described, there will be “a systematic assessment of the efforts” of the different departments. Yet even before any assessments are conducted, “there must be corporate-style training seminars for appointees and nominees before the inauguration – to teach management skills.” And while Cabinet secretaries may have their respective expertise, they can’t be assumed to function efficiently and operate like a team in support of the president’s agenda – especially when they are a new team. Could we learn something from the Romney team?

"Our problems are man-made . . .”

"Therefore they can be solved by man." We may not have a Kennedy but we are smart enough? "I hope every American . . . will stop and examine his conscience . . . This . . . nation was founded on the principle that all men are created equal, and that the rights of every man are diminished when the rights of one man are threatened . . . every American ought to have the right to be treated as he would wish to be treated, as one would wish his children to be treated. But this is not the case."

"We are confronted primarily with a moral issue. It is as old as the scriptures . . . Who would then be content with the counsels of patience . . . Now the time has come for this Nation to fulfill its promise . . . The fires of frustration and discord are burning . . . It cannot be quieted by token moves and talk . . . It is not enough to put the blame on others . . . Those who do nothing are inviting shame . . . Those who act boldly are recognizing right as well as reality . . . I have recently met with scores of business leaders urging them to take voluntary action . . . But many are unwilling to act alone . . . Therefore, I am asking for your help in making it easier for us to move ahead . . . I ask the support of all our citizens."

These are two speeches [featured by The New York Times, "When presidential words led to swift action," 9th Jun 2013] about peace and civil rights but no matter, shouldn't every self-respecting Filipino relate to and be seriously concerned about our own moral issue? Says Pope Francis: "The wealthy and the powerful are leading the world down the wrong path." “By imposing restrictions on foreign ownership, charter Philippine lawmakers believed they protected the country’s sovereignty from foreign encroachments.” [Priscilla Tacujan, Ph.D., The Philippine Star, 3rd Jun 2013]

“As it turned out, however, these economic restrictions repelled investors and mostly benefitted small interest groups in the Philippines. They are provisions that work against the provision of economic growth and greater employment opportunities. The interest groups that benefited support protectionism in the Philippines and do not want any form of competition, domestic or foreign, to threaten their almost monopolistic access to market shares and government influence." To add insult to injury, our elite class believed that OFWs could use spiritual guidance . . . while they've been laughing their way to the bank from an economy that is riding on the backs of these OFWs? How do we like to call His name in vain? And the then Archbishop Tagle who had looked into the lives of OFWs then shared them during a Lenten retreat organized by some of PHL’s "beautiful people." And to drive home the point, he gave a theological discourse on The Eight Beatitudes which didn't embarrass the retreatants? We could shame even the worst of our colonizers?

My wife and I would later relate to what the now Cardinal Tagle did and why. During the cruise that we took last fall, we shared the dinner table with a handful of Brits; and we were attended by a couple of Filipino waiters and a Filipino headwaiter. More than half of the ship’s crews were Pinoys. And one sheepishly engaged us in conversation: “Please don’t say it to our bosses. This is okay work but the money is not really commensurate . . .” And this was reinforced by two young ladies, a Polish and a Hungarian: “We are very much younger than our Filipino colleagues and we are only doing this for the short-term and taking advantage of the opportunity to travel. Given the cost of living in our country this can’t be a career. To the Filipinos this is their livelihood but away from their families.” And so we were not surprised when another Filipino narrated: “my son just joined the ship; but I did not want my daughter to do it.”

“Kenneth Akintewe, portfolio manager at Aberdeen Asset Management in Singapore, observes that family-controlled big businesses in the Philippines dictate the terms of business in the Philippines: “There is a real hesitancy to allow foreigners to come in and have a major say on how businesses are run. Until that dynamic changes, it is difficult to see foreigners being particularly enthusiastic” about investing in the Philippines.” [Ibid.]

“Our past will always remind us of who we are and who we have become. As my father always quipped, “We were meant for higher things in life. We can do it, if we only relearn to dream, to hope – to dare and to aspire.” [Sara Soliven De Guzman, The Philippine Star, 10th Jun 2013]

The halo effect . . . of success

“On paper at least, P&G . . . has one of the strongest boards in the world with CEOs from six other companies among its 12 members . . .” [P&G all-star board's oversight questioned as CEO departs, Reuters, 29th May 2013] “P&G . . . last year described the board as "highly qualified and each Director brings a diversity of skills and experiences . . . The sudden exit of Procter & Gamble Co's Bob McDonald as chief executive and the return of former CEO A.G. Lafley in his place has raised questions about the vigilance of one of America's highest-profile corporate boards.”

Call it the celebrity halo effect or the halo effect of hierarchy in a hierarchical system. It reinforces the imperative of an egalitarian ethos to make ‘check-and-balance’ work towards approximating ‘the greater good.’ The best example: Pope Francis. “Pope Francis has revealed . . . the reasons for his decision to shun the official papal apartments and instead live in a much more modest Vatican 'hotel'. [The Telegraph, 30th May 2013] The Pope broke with Vatican tradition when he decided . . . not to live in the apostolic apartments. "I didn't want to go and live in the apostolic palace. I go over there just to work and for audiences. I've remained living in the Casa Santa Marta . . . which accommodates bishops, priests and lay people." There he feels "part of a family" he wrote . . . "I'm visible to people and I lead a normal life . . . All this is good for me and prevents me from being isolated."

In PHL, between oligarchy and the elite class, we have a very exclusive group that has called the shots for Juan de la Cruz and, not surprisingly, PHL has remained underdeveloped and uncompetitive and stuck with widespread poverty? [Protectionist clauses in the Philippine Constitution restrict the flow of foreign direct investment, The Philippine Star, 3rd Jun 2013] Or in the words of Francis, "The wealthy and the powerful are leading the world down the wrong path." What are the manifestations? We keep pointing at the faults of others especially our neighbors while deflecting, defending and denying our shortcomings? This exclusive group is the voice of the media, too? And as my Bulgarian friends would explain, "under Communist rule we had no media only propaganda – and thus had no voice – and why we had to resort to self-immolation. And it has become part of our culture and not surprisingly we demonstrated it recently."

When I first came to Eastern Europe ten years ago, people in the industry revered P&G. It wasn’t surprising. They had to live with mediocre personal care products – if they were even meant for human consumption – under Communist rule. “Even life’s simple pleasures were denied us, and to this day happiness is not us – when we say we’re Balkans it says it all. We rank poorly in the happiness index.” And here was a company that taught the Western World how these products ought to be made. P&G represented liberation. Two of my then new friends even bought a share each of P&G stock so that they could display the certificates in their offices. They wanted the affinity with "the best in class." P&G was a ‘rock star.’ Is that far from how we in PHL celebrate oligarchy and the elite class?

“The litany of challenges . . . remains almost unchanged. Growth will most certainly hit the wall, if more robust energy and infrastructure investments are not forthcoming. And the benefits of any growth that does occur will still remain concentrated in the hands of a few if deep structural reforms are not pursued.” [Why PH improves in competitiveness ranking, Ronald U. Mendoza, Asian Institute of Management Policy Center, 30th May 2013]

“Ultimately what the economy may need now is a “big push” to spur investments, promote stronger competition, and trigger massive job creation . . . [I]n spite of the 9.8% growth in net FDI inflows in 2012 and the 42.7% increase in 2011, the Philippines slipped in the international investment sub-factor from 54th to 55th, as other competitor countries raked in significantly more FDI inflows . . . In 2012, the Philippines posted US$2.0 billion in net FDI inflows, much lower than Malaysia’s $9.4 billion, Indonesia’s $ 19.5 billion, and Thailand’s US$ 8.6 billion. The disparity in FDI achievement between the Philippines and its neighbors is better illustrated by figures on FDI stock. The country is not only lagging behind – the gap with its neighbors is also increasing . . .”

And how do we respond – point at the neighbors’ faults instead of owning up? Sadly, for Juan de la Cruz, for us to own up is self-defeating while defending and protecting the status quo is self-preserving?  

Culture matters

“Everything is possible!” I realized that I was smiling as the sales manager of our Romanian team punctuated his spiel about the higher investment we committed to their market. We were in a ski resort (in Brasov) where proudly they had organized the meeting. “Queen Mary had a castle here,” says one and pulls out an iPhone to show me the castle. I then shared that I was putting together a paper – “Culture in the workplace: How culture is created and maintained” – that I will present in September to the culture-management community of Europe, SIETAR (Society for Intercultural Education Training and Research), in Tallinn, Estonia.

This community is apparently keen to hear how a small enterprise in a small ex-socialist country, Bulgaria, could spread their presence in numerous countries in the relatively short period of ten years, overcoming daunting barriers from the get-go: (a) especially competitive pressures from Western behemoths that were flexing their muscles; (b) with neighbors like Greece, Romania and Hungary that showed them no respect; and (c) even in their own country foreign retail chains didn’t want to sell their products. But they wanted to help themselves. They've created a culture in the workplace that they’ve carried across several countries, and are thus confident to push the business across the globe – and bucking and outperforming the shrinking EU economy.

They inspired me to start my blog, four years ago, about how the Philippines could reinvent itself as an economy. A once small enterprise can’t compare to a country, but as I’ve told my Eastern European friends, the US of A was not even in the map when their countries already had their respective histories under their belts. And it always starts in the mind. In the Philippines, how do we help ourselves? Granted that PHL is a young nation and is going through its gilded age, but there is enough knowledge in the world today to leapfrog development barriers. For instance, Vietnam and Cambodia – both once conflict-torn – have overtaken us in rice farming? Or Indonesia able to attract several times more in FDIs (foreign direct investments) than we do? To truly appreciate the 21st century globalized world, must we toss parochialism and hierarchy aside?

“We were naïve optimists [college dropouts] and thought that we could create big companies,” says Gates to Charlie Rose about Jobs and him. And I would say to my Eastern European friends to look at Edison, Jobs and Gates as models – that what they can think they can create. “We’re not here to make cheap products (despite being in a poor country) but to develop products that understand the person of today and tomorrow and their wellbeing." In the Philippines we’re still about the big boys, the big deals they add to their portfolio of businesses? We’re finance- and deal-driven not about creating value for the consumer – reflective of our cacique culture and the one-percent character of Wall Street? [If the administration was pleasantly surprised by the strong Q1 GDP, the real winner is if we surprise Juan de la Cruz and deliver on structural reforms – which, unfortunately, remain pure rhetoric in PHL?]

I was in our Bucharest (Romania) office when I was shown a copy of the first order from Asia that my Bulgarian friends and I negotiated when we were there last February. While the Romanians were interested to hear about Asia, they were also keen to know about their two compatriots that had moved on to assignments in Western Europe. But then I would recall that "made in Bulgaria" did not appeal to these people. Yet today they are proud to be part of a rapidly growing Eastern European enterprise. Clearly they have embraced the workplace culture that the enterprise has successfully carried across several countries. “It is our ‘mentality’ that has evolved and changed.”

They have raised my awareness about the challenge of “learning” and the “process of thinking” – from linear to incremental to lateral to "starting with the end in view" to quantum leap to Einstein’s “the value of education is not the learning of many facts but the training of the mind to think.” And the reality that cultures are dynamic. “The culture of the organization should always be learning and developing.” [Michael Watkins, Harvard Business Review, 15th May 2013] But to us Pinoys, our culture is cast in stone? And not surprisingly, we’re celebrating our 2000 competitiveness ranking in 2013, and masking our reality of having been left behind?

How could Europe be competitive – or for that matter PHL?

Many must have watched Richard Quest on CNN recently moderating a panel composed of the CEOs of Lufthansa and DHL and a journalist from the Financial Times discussing European competitiveness. It was timely especially given the shrinking EU economy and thus the debate whether austerity or stimulus was the right antidote; and, of course, the questions about the future of the euro and the EU itself as well as the different trade agreements in the works.

I’ve spent most of the last 10 years living and working in a relatively new EU-member country while being a US resident over the last 25 years. No doubt that I've drunk more wine the last 10 years than all the years prior, had more cappuccino and spent more time in cafes. Even when I was with my old MNC company visiting our Paris office (or Brussels) meant having the option to have wine over lunch in the company cafeteria. (And the first time I was in our Madrid office I jokingly asked if we'd take midday siesta after being warned to be prepared for the late dinner hour – “that’s why we invented the tapas!”) "In Europe we live to eat, in the US you eat to live." And since my family's first visit to Europe I had wondered how people could spend so much time in cafes – until I became a resident!

Compare that to my wife's first visit to New York. We were staying in a midtown business hotel, and one morning as she was going through the hotel's revolving door on her way out . . . she found herself right back in the lobby – her first lesson in the New York pace of life. And it was repeated when she went to a deli to order a sandwich: "What kind of bread (white, brown, whole-grain, wheat, rye), with mayo or without, what about mustard, any lettuce or tomato . . ." And she just lost track and before she knew it, the woman at the counter yelled: "Next!" [Today she's a New Yorker and scares the wits out of service providers like the cable company, etc., and can make lawyers, doctors, accountants and our neighborhood banker listen to her.]

And so I could only smile as Richard Quest kept probing the panel about European competitiveness. I have learned the last 10 years that "form and style" is European; while American is "function and comfort." And I would break into a grin every time I put on a European shirt, because they are designed to be tight and chic! Culture matters. I'd be proud to see a Steve Jobs come from Europe. But I know there will be more Valentinos and Coco Chanels. Yet there are many areas where Europeans have been pushing technology – in aerospace and pharmaceutical, among others. I recently listened to my Eastern European friends present options to fully mechanize (short of full automation) our newest warehouse – and make it truly fireproof, i.e., nothing can ignite because a big chunk of the oxygen in the air would have been eliminated. But then parking in the city center is such a problem that cars would appropriate the sidewalk to the disadvantage of pedestrians. And open-source software from the US is challenging modules of enterprise-wide systems like SAP.

The Economist in their periodic technology series has reported about European creativity – that while they generate more ideas the US still comes out with more commercially successful innovations. Where could it be coming from? I learned problem-solving techniques in a seminar in the Philippines, but it was in New York where I realized that "problem-solving" was a way of life. Granted that I was in a headquarters environment – but people did problem-solving as though it was fun, and not to be dreaded. "This is fun stuff," one of the best finance folks I'd worked with would quip every time we threw him "what-if" scenarios – and his face would sparkle. And bosses would admit to mistakes to start a problem-solving effort. People all around were forward-looking, which brings Edison to mind: "I want to see a phonograph in every American home." And Bill Gates: ". . . a computer in every home." Or Steve Jobs: "I love music and why not a thousand songs instead of just a few; and who doesn't like music?" And they all come down to: "starting with the end in view."

I sit in endless meetings with my Eastern European friends – and they are very creative people. Yet the "problem-solving is fun" ethos that I lived through was different especially the forward-looking instincts of people – and thus "starting with the end in view" was the norm. How could Europe be competitive – or for that matter PHL?