Sunday, December 28, 2014


“‘To be honest, nothing like this has ever happened before'. Cardinal Giovanni Lajolo, the former Vatican governor and foreign minister, does not hide his surprise. ‘It is the first time this has happened; never before had a Pope set us in the Curia a series of pathologies that we must examine ourselves on.’ All along, says the cardinal who has been head of some of the most important offices of the Holy See for many years, ‘the exchange of Christmas wishes has been a customary occasion, that follows a usual pattern.’” [Pope Francis: the fifteen 'diseases' of the Curia, Vatican Insider, 23rd Dec 2014]

“‘A curia that does not practice self-criticism, does not keep up to date, does not try to better itself is an infirm Body.’ The Pope mentions that a visit to cemeteries could help us see the names of many who ‘maybe thought they were immortal, exempt and essential!’ It is the disease of those who 'turn into masters and feel superior to everyone rather than in the service of all people. It often comes from the pathology of power, the ‘Messiah complex’ and narcissism.’”

In other words, we as a people better examine our conscience – or in secular terms, where are we? If we are to be like a Singapore being more competitive than the US, for example, every time the latter drops the ball, how should we react? In a highly competitive and globalized world, as I would explain it to my Eastern European friends, it is a vulnerability that must be exploited. And in concrete terms, it means ratcheting up their efforts in innovation and creativity. And that is how they are able to beat Western behemoths in their own game.

We Pinoys, on the other hand, don't have to assume that we're feeble and would catch a cold when Uncle Sam sneezes, if not blown away. And if they drop the ball, that ought to be an opportunity for us to assert ourselves. But we can't do that if we keep shooting ourselves in the foot, perpetuating a culture of impunity and celebrating an oligarchic economy. For example, I didn’t have to ask my friends if they wanted to eschew socialism or communism because from the get-go they asked for help – to learn and thrive in a free market.

It isn't about embracing an ism. It is about being mature enough to know what one wants having recognized and acknowledged their shortcomings. “Manila lags in information technology maturity,” Amy R. Remo, Philippine Daily Inquirer, 22nd Dec 2014. There are two legs that keep our economy going, OFW remittances – that put our gross international reserves ahead of foreign debts, yet taken as brownie points by the CB when 10 million Pinoys deserve the credit; ergo failing to recognize and acknowledge PHL’s shortcomings – and the BPO industry. If we are to exploit our competitive advantage in the BPO industry, we must not lag in information technology maturity!

Juan de la Cruz cannot be about me and myself! “In a speech titled ‘A Paradigm for the Happy Life,’ Senator Miriam Defensor Santiago writes that ‘every day, many people pursue their self-interest at the expense of others,’ and argues further that ‘self-interest becomes a moral evil when selfish politicians make our people suffer in hunger and poverty.’” [Structural injustice in PH, Christopher Ryan Maboloc, Philippine Daily Inquirer, 23rd Dec 2014]

We cannot afford such self-inflicted wounds and then some. In the latest Economic Issue of the Day release of the Philippine Institute for Development Studies (PIDS), author Claudette S. Malana said lifting restrictions on foreign ownership will be necessary in order for the country to fully participate in the Asean Economic Community (AEC).” [‘60-40 rule to limit PHL’s development under AEC’, Cai Ordinario, Business Mirror, 21st Dec 2014]

“Malana said limits to foreign equity in the exploration, development and utilization of natural resources; public utilities; build-operate-transfer projects, operation of deep-sea commercial vessels, land ownership, mass media, and the practice of professions have kept the country’s FDI low. To sustain the growth of the Philippine economy, these restrictions need to be examined and amended, as they have constrained FDI . . . Under the AEC, Asean companies, Filipino firms included, can own 100 percent of companies in other Asean countries and should be able to own at least 70 percent of services companies . . . Malana’s data showed that the Philippines’s FDI only increased to $2.8 billion in 2012, while Singapore, was at $56.65 billion and Indonesia $19.62 billion.”

But President Aquino does not see that as a priority? “I teach a course on ethics at the McCombs School of Business and have run the McCombs Speaker Series on Ethics and Corporate Social Responsibility for the last seven years. I have had many speakers share their stories with our community, including people convicted of very serious corporate crimes. Despite a popular conception of governmental and corporate crime as stemming either from rampant greed throughout the ranks, or from the solitary crimes of a few misfits, in my experience unethical behavior in organizations almost always is caused by belief in and too much loyalty to a ‘great leader’ who turns out to be morally compromised.” [Loyalty to a Leader Is Overrated, Even Dangerous, Julie Irwin, Harvard Business Review, 16th Dec 2014]

“For example, take the experience of one of my most popular guest speakers, Egil ‘Bud’ Krogh, one of the Watergate co-conspirators. In his excellent book about his crimes and his prison time, Integrity: Good People, Bad Choices, and Life Lessons from the White House, Bud recounts the 1970 spring day when President Nixon left the White House to reflect at the Lincoln Memorial, and ended up chatting with a number of student anti-war protestors while sitting on the lawn. Bud writes that, ‘the profound quiet of the Lincoln Memorial blended beautifully with the changing morning colors,’ and that he felt ‘a sense of amazement and awe that I had just witnessed one of history’s most extraordinary presidential visits.’ It is clear in his prose that Nixon held enormous heroic sway over his young employee. The chapter in the book that directly follows this tableau is entitled, ‘Ensnared in Watergate by Blind Loyalty’: as often happens, somehow Bud’s belief in the specialness of Nixon got tangled up with belief in the need to do whatever Nixon asked, even if what he asked for was in retrospect pretty ridiculous and definitely unethical (i.e., approving the burglary of Daniel Ellsberg’s psychiatrist).”

And it’s not limited to the West, even Deng Xiaoping acknowledged to his daughter that he should’ve called Mao’s Big Leap Forward a folly. And not surprisingly, Pope Francis talked about The disease of deifying the leaders. It is the disease of those who ‘court their superiors,’ becoming victims of ‘careerism and opportunism’ and ‘live their vocation thinking only of what they must gain and not of what they must give.’ It might also affect the superiors ‘when they court some of their collaborators in order to gain their submission, loyalty and psychological dependence, but the final result is real complicity.’”

Sadly, we in the elite class are a big part of that complicity. In the name of love of family and to secure their future, we’ve put up with, if not partaken of the spoils of, our cacique hierarchical system and structure that nurtures a culture of impunity . . . and perpetuates political patronage, crony capitalism and an oligarchic economy.

“In fact, the 2014 Fragile (formerly Failed) States Index ranks the Philippines fifth among ten whose situations alarmingly worsened from 2013. Rated by Fund for Peace, the country slipped to 52nd, from 59th last year, among countries susceptible to disintegration (see” [Phl among Top 10 worsened states, Jarius Bondoc, Gotcha, The Philippine Star, 24th Dec 2014]

We as a people better examine our conscience – or in secular terms, where are we?

Tuesday, December 23, 2014

“We got ourselves into this . . .”

That’s a quote from Prime Minister Matteo Renzi of Italy. “ITALY has long suffered from inertia, its individual vitality smothered by the bureaucracy and opacity of the state. Italians are rich, prudent savers. Their state is poor, profligate and inefficient. For 30 years now, since I was a correspondent in Italy, I have watched the country deploy its ingenuity to evade modernization, culminating in the orgy of baroque escapism known as the Berlusconi years.” [Trying to Reinvent Italy, Roger Cohen, The New York Times, 13th Dec 2014]

“So it was with some astonishment that I found Prime Minister Matteo Renzi sweeping in to meet me the other day in jeans and a white open-neck shirt (‘I hope you don’t mind, it’s casual Friday!’), without the obsequious retinue of past Italian leaders, bearing a message of change. His aim: the creation of ‘un paese smart’ — a smart country — that has ‘stopped crying over itself.’ ”

“‘Here a lot of people have accused Merkel of being the guilty one in the crisis,’ Renzi said. ‘But the fault is not hers. It’s ours. We got ourselves into this. If we had done labor reform 10 years ago, when Germany did it, we would have been a lot better off.’”

“We got ourselves into this.” Is that something we Pinoys have to learn to say and mean? Where are we again?

“Indeed, if people’s initiative is our passport to a new Philippines, the Churches are our passport to a successful people’s initiative.”[People’s initiative: Our passport to a new Philippines, Norman V. Cabrera, The Manila Times, 12th Dec 2014] “The first may be difficult to undertake but, if we as a people shall succeed, the next ones should be easy.  What Filipinos need to do is to exercise this right, to make the Constitution and implementing law work for them, and to take affirmative action where Congress has failed, then, now and will in the future. Otherwise, expect us to remain what we are today for a long, long, long time – a country with a great number of poor and powerless people.”

“For me, the main context has to do with the manner in which the country’s American colonial past has shaped the politics and the economy of the country. This was pursued further under the post-colonial state particularly during the Cold War era in the 1950s and 1960s whereby the United States needed to prop up Southeast Asian states as a ‘bulwark against communism.’” [Interpreting Marcos’ ‘chief technocrat’, Teresa S. Encarnacion Tadem, Philippine Daily Inquirer, 7th Dec 2014]

“One way of achieving this was through an economic development model guided by professionals with the ‘technical expertise’ and the development vision compatible with American economic interests. As noted in his coedited book ‘After the Crisis: Hegemony, Technocracy and Governance in Southeast Asia,’ Japanese historian Takashi Shiraishi said: ‘American intellectual hegemony was built into the economic policy-making structure of its Asian allies through a technocracy,’ with emphasis on liberalization, i.e., incentives for foreign capital.”

“The ‘technical expertise,’ gained through their acquisition of US graduate degrees, made technocrats like Virata a prize catch for the Philippine business elite who were either expanding into the manufacturing sector and/or were involved in joint ventures with or servicing the needs of American multinational corporations in the country.”

“It was also this ideological tripartite merger of the United States, the technocrats and the state, as represented by Marcos, which assured the technocrats’ ascension into the power elite during the martial law period.”

So, we didn’t get ourselves into this? What about the Americans dropping the atomic bomb on Hiroshima and Nagasaki? And the Malaysians kicking out the Chinese? The euro zone continues to fumble, if not running around like a headless chicken; should they recall the pioneers back and leave America to the Indians? Do we turn back the hands of time or step up to the plate: who are we, really? Isn't the world one in saying that this is the Asian century? But as things stand, that would mean our neighbors not us? In short, why have they prospered? The science of the mind says the hardy mindset sees self as the one in need of change, and not to wait for others to change. Call it an ideology or a bias or an assumption or a belief or a value, yet man since being driven out of Eden has demonstrated the ability to play the hand he’s dealt. But we Pinoys unwittingly want to live in the past and aren't predisposed to change? And it explains why ours is not a problem-solving culture? And why we lag in innovation and creativity?

This blog isn’t about preaching an ism because perfection is not of this world. Nor about religion even when my wife and I led a Christian community although I would always acknowledge our faith. We know that even in the Vatican the culture of impunity has existed. And Rizal saw that over a century ago. What it's about is: we must paddle our own canoe. There's no free lunch – and it entails connecting the dots from a spectrum of disciplines, knowledge and experience. And that’s what I’ve been preaching my Eastern European friends – i.e., openness, transparency and diversity.

It is not about me and myself. It's team sport, yet we Pinoys sincerely believe that 100 million of us each has the answer? And it’s not about complexity either but in fact keeping it simple. And that means being able to focus on the vital few as postulated by Pareto. And that presupposes establishing a vision of the common good and subordinating vested interests and developing a community sense. And that is easier said than done and precisely why leadership is key. Sadly, these are not elements of our comfort zone. And that may be our undoing: when there is no pain there is no gain. Which brings us back to character building. Juan de la Cruz is “pusong mamon” – which explains our subservience on one hand and culture of impunity on the other?

I've shared my experience – living and being immersed in the two worlds of East and West – because not many of us have had the chance. And especially to witness how a bunch of Easterners learned how to beat Westerners in their own game. It was like yesterday when a business unit manager came to me looking pretty distraught: “How do we get out of this rut, this competition of ours from the West seems to be always two steps ahead?”

And my response: It’s all in the mind. We have to stop thinking like followers and start thinking like leaders. The outcome: we took market leadership from the two biggest Western competition in our home market and are breathing down their necks in the other countries where we compete. One of them even pitched a partnership that we rejected. Wittingly or unwittingly, we Pinoys express helplessness whenever we look at ourselves against the West? [But that is why we admire Tatang Sy, he never felt helplessness even in a country where in his younger days we looked down on Tsinoys as second class citizens. And everyone knew that extortion wasn’t uncommon and Ongpin was a favorite hunting ground of predators. Today Tatang Sy is the wealthiest Pinoy and we, supposedly first class citizens, continue to thrive in a culture of impunity?]

As far as East versus West is concerned, do we see ourselves lower in the hierarchy? And because they came before us, they must be ahead of us? But we're not from a different planet? And in the meantime, Pope Francis has restated that creation is not incompatible with evolution. While my sister-nun and a handful of Maryknoll sisters who visited our Connecticut home shared why they were focused on the environment. That man is just a tiny speck in the universe . . . And can't cause the ruin of his planet?

And we, my wife and I and a group of friends from the Philippines, were reminded of it on a recent cruise that brought us to the Canary Islands. [And they would also bring memories of Baguio in its heydays when the pine trees were lush and the mountain air was fresh and invigorating. Can we revive its old glory?]  

“Lanzarote is the easternmost island of the Canary Islands and has a volcanic origin. It was born through fiery eruptions and has solidified lava streams as well as extravagant rock formations. The island emerged about 15 million years ago as product of the Canary hotspot.” [Wikipedia]

“15 million years ago.” Indeed we're just a tiny speck in the universe. But that doesn’t mean we have to abandon growth and development – which is inherent to nature. Put another way, we don't have to be laggards compared to our neighbors, if not the rest of the world? But we must first recognize that “we got ourselves into this” – and must paddle our own canoe?

My family joins me in wishing one and all a blessed Christmas and a prosperous New Year!

Friday, December 19, 2014

Creating an open, transparent and diverse society

Two recent articles influenced this blog posting. “A Mckinsey article, ‘Redefining Capitalism’ (Beinhocker and Hanauer, 2014), argues for revisiting the role of capitalism. The authors claim that the essential role of capitalism is creation. The world today is a better place because there are life-saving inventions and many technical and social innovations. Capitalism creates the incentives and reward for solving human problems and makes those solutions available. It is solutions to human problems that define prosperity.” [Rolando T. Dy, The need for creativity and problem solvers, Business World, 9th Dec 2014]

“Problem solvers are scarce commodities in this country. And we need tremendous creativity to find solutions to the society’s problems. Natural resources -- land and sea -- are under-utilized. Surplus workers are mostly under-employed. And markets -- domestic and foreign -- are untapped.”

“As Filipinos, what lessons can we learn from these? Strategic Lesson No. 1: ‘Prosperity is the accumulation of solutions to human problems. Businesses contribute to society by creating and making available products and services that improve people’s lives.’ Strategic Lesson No. 2: ‘Democracy is the best mechanism for navigating the trade-offs and weaknesses inherent in capitalism.’ ”

“To quote Atifete Jahjaga, former president of Kosovo: ‘Democracy must be built through open societies that share information. When there is information, there is enlightenment. When there is debate, there are solutions. When there is no sharing of power, no rule of law, no accountability, there is abuse, corruption, subjugation and indignation.’ ”

In other words, if PHL is to develop a problem-solving culture and also of creativity, we need to revisit the imperatives of an egalitarian society: openness, transparency and diversity.

“Filipino intellectuals are detached from the hustle of ordinary Filipino lives . . . They cloak themselves with robes of erudition and pedantry. Intellectualism and knowledge production are ends in themselves…. Unless the intellectuals of this country immerse themselves in the nation’s problems and join in the great debate of Filipino-hood, they’ll remain useless erudites and pedants, or better yet books in libraries that gather nothing but dust.” [Cielito F. Habito, Public intellectuals in default (?), No free lunch, Philippine Daily Inquirer, 9th Dec 2014]

Is that a surprise given our hierarchical system and structure – against the backdrop of parochialism?

“Benedict Anderson, described as one of the most prominent Southeast Asian scholars of the 20th century . . . deplored what he saw to be ‘the long-term decline of the traditional public intellectual.’ This was against the backdrop of what he described as a ‘decade (that) started with an admirable outburst of reformist politics, but has ended depressingly with the entrenchment of oligarchies in Indonesia, the Philippines, Thailand and Malaysia. In all these places, the level of economic inequality has rapidly increased, human rights have been constantly abused, and state control of the mass media has become more formidable.’ ” [ibid.]

This blog as some would recall was inspired by my Eastern European friends who were unequivocal in their need for help to traverse the path to free enterprise. First of all, even when I saw them as creative – from the appearance of the products they showed on my first visit – they still needed to learn both the art and science of creativity and problem-solving. And I was encouraged because they recognized and accepted the necessity of examining their “thinking” – which came from them matter-of-factly.

They were ex-socialists and so we had to start from square-one: “You are unprofitable because your margins are unacceptable. The first thing we must do is focus on driving margins, and in this business, they must ideally be 50 margin points, if you are to compete against Western behemoths. The object of an enterprise is to attain sustainable growth. Show me the money! And you can be a contributing member of society. And that presupposes putting the requisite building blocks in place.”

“We will define the businesses you are in and, conversely, the businesses you must not be in – to be focused – and attain competitive advantage. [This is one business principle that oligarchic economies ignore given the culture of impunity that is perpetuated via dominance of the local market with the regional, if not global, market an afterthought, and accounts for PHL’s poor competitiveness ranking, among others.] The portfolio must in its aggregate generate healthy margins and that means moving beyond cheap and economy brands. We will go to school and learn product-architecture modelling which is driven by value-addition, thus the value chain. It is synonymous to Maslow’s hierarch of needs. And the higher the value-addition the bigger the geography we can cover, beyond your small country which you claim is poor. Product development is more than being artistic. And a product is of value if it addresses a human need or problem. This is a simple business, we make things and sell things of value.”

To cut a long story short, 11 years later, our time is heavily spent on problem-solving and product development, both demanding lateral thinking – or connecting the dots as Steve Jobs would define creativity. And this is after we’ve put the requisite building blocks in place. For example, I found out that under communist rule, they didn’t learn accrual accounting and financial statements were historical in character, not meant or utilized as management tools. And they were celebrating topline or sales numbers even without knowing the bottom line.

The factory was dated and inefficient and had no chance of generating ideal margins, compounded by the focus on cheap brands. In short, we were changing tires while the car was running. “We need to look ahead and do a 3-year plan. We will need financing from banks but must be able to present a business plan that is credible. That means we will tell a straightforward simple story: This is where we are, this is where we want to be and this is how we will get there.”

And ever since, during budget and quarterly business reviews, the core of the organization, the business unit, comprised of R&D and Marketing and Manufacturing, will examine the business – brand by brand, SKU by SKU, channel by channel, major customer by major customer, country by country, among others – with the people on the ground, comprised of sales and local marketing. It is a model of openness, transparency and diversity.

Throughout the year, the business units are developing new products in order to keep the consumers engaged and gain their trust – i.e., that the enterprise is committed to respond to their needs. As Maslow postulated, human needs are progressive. And marketers cannot be stuck in the past – which explains why competitiveness matters.

If an economy is the aggregate of a nation’s products and services, it follows that it is made up of the countless enterprises in the country. And if enterprises by and large are schooled in creativity and problem-solving, then the nation will be competitive. Admittedly, private enterprise is more efficient than the public sector.

And that is why progressive public servants would look to the private sector and adopt their best practices. But that presupposes the public sector is committed to openness, transparency and diversity. Because they are the imperatives of critical thinking, creativity and innovation. But then again, they demand leadership of the visionary kind. Not our parochial and hierarchical system and structure that breeds political patronage, crony capitalism and an oligarchic economy.

While the education community will have to embrace the pragmatism of free enterprise because bread is what people put on the table? And that was the sob story I heard when I first arrived in Bulgaria. “There was a riot because our Communist masters simply failed to supply our daily rations of bread and vegetables.”

Problem-solving and creativity is not learned in the classroom and demands the right environment. It is like our manicured lawns, they are properly tended by our gardeners. “Filipino intellectuals are detached from the hustle of ordinary Filipino lives . . . They cloak themselves with robes of erudition and pedantry. Intellectualism and knowledge production are ends in themselves….” [ibid.]

Monday, December 15, 2014

Where we are . . .

The GPS has become ubiquitous that we take it for granted. Yet its concept is a great teacher in the pursuit of undertakings, big and small. And if we would pause and ask ourselves where we are as an economy or as a people or as a nation, chances are we will realize we’ve taken the GPS for granted: where are we, were do we want to be and how will we get there?

I’ve used the GPS analogy for many years as an MNC manager. And I have used it in my development work in Eastern Europe. And I remember agonizing with the question: why’s there always the risk of failure to execute? Even when people would be in endless meetings and conferences to get things done. And in an MNC, these sessions are not only in small groups, but across functions in the subsidiary organization, if not in a regional or global setting.

And in this blog I’ve shared that my claim to fame as an MNC manager was to move our budgeting process to a goal alignment exercise. And later I would be involved in fixing problem businesses or what the world especially Wall Street knows as “restructuring.” And from those experiences I would internalize the imperative to be proactive – not to wait for a challenge to snowball into a major problem necessitating a restructuring.

Where are we, where do we want to be and how will we get there? I would develop a simple model – and as academics like George Whitesides of Harvard would confirm, simple is not the perspective of higher education, yet Steve Jobs saw “simplicity as the ultimate sophistication” and Apple would swear to simplicity in the pursuit of creativity, which Jobs would define as “connecting the dots” – akin to an ecosystem comprised of: (a) the marketing mix; (b) the resource mix and (c) the execution mix.

Simply put, an enterprise must have a product and/or service that must not only be acceptable but preferred by the consumer, and generate healthy returns – and thus attain sustainable growth. But to get there, the undertaking must be able to assemble and employ resources efficiently and, as importantly, execute the thinking accordingly.

But I’d find myself constantly going back to the question: “where are we?” It is no different from the golf swing as both golfers and hackers know it. A good swing starts with what is called the “proper address.” Or simply, where is the golfer when he or she starts the golf swing? And that is why a golf instructor would always want to check the “stance” of the golfer because it informs how he or she is “addressing the ball.” And the golf stance is counterintuitive and requires a deliberate thinking process – “what was your swing thought when you hit that ball,” is a typical question from an instructor – and why the game is called “mental.”

Where are we as an economy or a people or a nation? And that can be captured by our long-held assumptions, beliefs and values? For example, many of us sincerely believe that to be critical of who we are or of PHL is unpatriotic? Sadly, we have taken the GPS for granted when Juan de la Cruz ought to behave like a mature person, not a juvenile or “onion-skinned”?

Take the FOI. What we enact into laws are a reflection of our assumptions, beliefs and values. And the fact that we do more talking than doing re FOI speaks volumes. Put another way, openness, transparency and diversity aren’t compatible with our assumptions, beliefs and values?

Where are we? Are we committed to an egalitarian society which is what openness, transparency and diversity are about? And that is pretty evident in our institutions – beyond the church and including the school, the government and our oligarchic economy? In other words, to be inclusive which is what we claim that we want to be is mere rhetoric because it cannot be fostered in our culture? Yet even Communist Vietnam and earlier China would embrace capitalism. In other words, how come we Pinoys see our culture as gospel truth – and cast in stone? And following the GPS analogy, we’ve heard that voice constantly: “recalculating!” Because we are neither here nor there?

That said, how can we establish where we want to be when we have yet to come to terms with where we are? If we can’t establish the fact of where we are, all the more we can’t define the intangible and more complex, where we want to be? Add to that the reality of leadership being a scarce resource with visionary leadership being more so. And given our culture of impunity, we need even much greater leadership.

Sadly, despite the absence of a predicate, we’ve chosen to offer solutions – or how we will get there – and that would explain the follies behind our efforts to move the nation forward? It is the classic example of the blind leading the blind?

And as we get deeper in the hole, the more efforts we exert the deeper we seem to find ourselves – as though in a quicksand? For example, while we’re supposedly knowledgeable in marketing, we have yet to become regionally if not globally competitive. And why is the point important? An economy is as big or small as its aggregate output of goods and services. We cannot speak of regional and/or global competitiveness if we don’t address the imperative to produce competitive products and services.

In other words, we cannot move the debate to social issues as the panacea or the road to progress and development when we are unable to feed the economic hopper with the requisite inputs that will yield regionally if not globally competitive products and services.

And our failings don’t end there. Given all the foregoing, we have demonstrated our shortcomings in execution. And that would explain why despite PPP, for instance, we remain regional laggards in infrastructure development. And if we mustn’t move the debate to social issues when we’re faced foursquare by the shortfalls in economic output, we likewise cannot move the debate and skirt the infrastructure challenges of metro Manila because it has become unmanageable. We need to create a much broader (mega-metro Manila infrastructure) vision like the Japanese experts recommended. They know what they’re talking about.

We’re back to Pareto’s principle – i.e., metropolitan areas will account for the vital few drivers of the economy while recognizing there is a compelling need to develop for the rural areas their requisite ecosystem. We know the US has its economic hubs – in the east and west – and so does China and every other country. And in the case of the US, Warren Buffett made one of his biggest investments in rail transport to get Middle America connected to the nation’s economic centers. And it proved a very wise investment indeed.

In sum, we have failed to establish the environment and the platform of an ecosystem. And so we constantly find ourselves in a maze – with no sense of where we are, where we want to be and how we will get there?

Wednesday, December 10, 2014

“What is simplicity?”

“The point is that you get into trouble when you ask a single question with a single box for an answer, in which that single question actually is many questions with quite different meanings, but with the same words. Asking, ‘What is simplicity?’ I think falls in that category. What is the state of science? And, interestingly, complexity is very highly evolved. We have a lot of interesting information about what complexity is. Simplicity, for reasons that are a little bit obscure, is almost not pursued, at least in the academic world.” [George Whitesides: Toward a science of simplicity, TED Talk, Apr 2010; he is an American chemist and professor of chemistry atHarvard University. As of December 2011he has the highest Hirsch index rating of all living chemists. The h-index is an index that attempts to measure both the productivity and citation impact of the published body of work of a scientist or scholar.]

“We academics -- I am an academic -- we love complexity. You can write papers about complexity, and the nice thing about complexity is it's fundamentally intractable in many ways, so you're not responsible for outcomes. Simplicity -- all of you really would like your Waring Blender in the morning to make whatever a Waring Blender does, but not explode or play Beethoven. You're not interested in the limits of these things. So what one is interested in has a lot to do with the rewards of the system. And there's a lot of rewards in thinking about complexity and emergence, not so much in thinking about simplicity.”

After 11 years in Eastern Europe preaching simplicity to my friends, I finally heard the magic word in a very profound way in our recent budget review from one of the business unit managers. “It is very simple, our role in the business unit is to create great products, and your role in the field is to get them to the hands of the consumer. It is the simplest way to explain the 4 Ps [product, pricing, placement, promotion] or the marketing mix.”

Of course, to get to that point, the enterprise had to toil and overcome several hurdles. For example, they had to unlearn what a poor country had taught them: to sell a packaged good it has to be for no more than 50 euro cents. In short, there is such a thing as the value chain. And the higher the value-addition the greater the geography it can cover; and given economies of scale it would generate healthy returns and attain a virtuous circle. [Unfortunately, in the case of PHL, given our inward-looking bias, geography to us has been limited to our borders thus the underdevelopment of the requisite building blocks of regional and global trade and competitiveness. And it all starts in the mind, informed by our assumptions, beliefs and values – that we have taken as gospel truth? But we are so polite – or is it compassionate? – to debate the issue and aren’t able to get to the bottom of the problem?]

And that is where critical and creative thinking must be employed given the 21st century demands of innovation. And the Design School in Stanford calls it “design thinking” – which is anchored in “empathizing” with people or the consumer in order to truly figure out their needs and problems.

Still, the marketing mix is only a subset of the broader ecosystem; there is also the “resource mix” and the “execution mix.” An enterprise beyond creating great products must employ resources efficiently and execute plans accordingly – in order to attain sustainable growth and contribute to a nation’s economic output and wellbeing.

“The characteristics, which I think are useful to think about for simple things: First, they are predictable. Their behavior is predictable. Now, one of the nice characteristics of simple things is you know what it's going to do, in general. So simplicity and predictability are characteristics of simple things. The second is, and this is a real world statement, they're cheap. If you have things that are cheap enough, people will find uses for them, even if they seem very primitive. So, for example, stones. You can build cathedrals out of stones, you just have to know what it does. You carve them in blocks and then you pile them on top of one another, and they support weight.” [ibid.]

“So there has to be function, the function has to be predictable and the cost has to be low. What that means is that you have to have a high performance or value for cost. And then I would propose as this last component that they serve, or have the potential to serve, as building blocks. That is, you can stack them. And stack can mean this way, or it can mean this way, or it can mean in some arbitrary n-dimensional space. But if you have something that has a function, and it's really cheap, people will find new ways of putting it together to make new things. Cheap, functional, reliable things unleash the creativity of people who then build stuff that you could not imagine.”

“Let me close with my two aphorisms. One of them is from Mr. Einstein, and he says, ‘Everything should be made as simple as possible, but not simpler.’ And I think that's a very good way of thinking about the problem. If you take too much out of something that's simple, you lose function. You have to have low cost, but you also have to have a function. So you can't make it too simple.”

“And the second is a design issue, and it's not directly relevant, but it's a nice statement. This is by de Saint-Exupery. And he says, ‘You know you've achieved perfection in design, not when you have nothing more to add, but when you have nothing more to take away.’ And that certainly is going in the right direction. So, what I think one can begin to do with this kind of cut at the word simplicity, which doesn't cover Brancusi, it doesn't answer the question of why Mondrian is better or worse or simpler or less simpler than Van Gogh, and certainly doesn't address the question of whether Mozart is simpler than Bach.”

“But it does make a point -- which is one which, in a sense, differentiates the real world of people who make things, and the world of people who think about things, which is, there is an intellectual merit to asking: How do we make things as simple as we can, as cheap as we can, as functional as we can and as freely interconnectable as we can? If we make that kind of simplicity in our technology and then give it to you guys, you can go off and do all kinds of fabulous things with it.”

Indeed design, beyond the challenge of simplicity, can be an expression of change as explained in the exhibits titled “Disobedient Objects” at the Victoria and Albert Museum in London: “Many of the rights and freedoms we enjoy today were won by disobedience. Activist social movements have changed our world from the grassroots up, popularizing new ideas and values. The objects made as part of these movements have played a key role in those cultural and political changes . . . The objects on show were not made by commercial designers, but by people collectively taking design into their own hands to make a change in the world.”

Jony Ive, “The genius behind Apple’s greatest products [Leander Kahney, Portfolio/Penguin, 2013] . . . was a museum-goer . . .  he and his dad made many visits over the years to the Victoria and Albert Museum in London, one of the world’s leading art and design museums.” And indeed Apple products have become synonymous to simplicity and change.

But obviously there are barriers to simplicity and change. For example, PHL institutions, not just those of higher education, are reflective of our hierarchical system and structure – e.g., government, the church and oligarchic economy. And by definition, hierarchies are bureaucratic and complex. Yet successful global companies with their mantra of simplicity can be leading edge science-wise and rapidly get their products to the hands of consumers around the world. Of course, there are products that may not have obvious societal benefits. But that’s precisely why design thinking must be founded on human empathy.

The bottom line: simplicity and contributing to a people’s wellbeing are not incompatible; while complexity may not even be meant to deliver outcomes – an ego trip being a good example?

The reference to Jony Ive of Apple is apropos to the topic of simplicity; and Apple is today the world’s largest enterprise, bigger in market value than some major economies. They are the benchmark I’ve used in training my Eastern European friends. And I will shortly be training our newest batch of brand managers. But this time I will be assisted by a 24-year old Bulgarian who graduated from the Central Saint Martins College of Arts and Design in London. I was so impressed by how she articulated the concept of a product we’re developing for the Western market – i.e., it was very coherent yet very simple and very brief. And the thoughts all came back to me as my wife and I, joined by two other couples, friends from the Philippines, were at the Victoria and Albert Museum [see above re Jony Ive and his dad] in London [just before the cruise we took. I am writing this while on Queen Mary 2 and reading the book on Jony Ive.]

Monday, December 8, 2014

We can use help . . .

Just like in the US, we seem to have developed the habit of watching the performance of the economy like a boxing match, i.e., blow-by-blow. The big difference is the US is a well-developed economy and is an established ecosystem albeit far from being the model of perfection. And so with the deceleration of the economy in the third quarter of 2014, not surprisingly, came a slew of Monday-morning quarterbacking reflected in news reports like: “Train wreck”; “Blame game backfires: Palace blasted for bungling priorities”; “Troubled road PPP back to square one”; “US gov’t backs policy formulation on electricity rates reduction”; “Go global, DTI tells SMEs”; “PH urged to establish niche in IC design”; “Japanese experts to improve PH railways,” etc., etc.

I still remember Economics 101 [in our MBA class] where we learned the rudiments of calculating GDP numbers. And it’s a feel-good sense to believe that we had a handle on something as complex as an economy. But coming from the private sector and decades later though, I would smile at the naiveté that our class demonstrated. First of all, we weren’t trained to be economists and the course was just a very small piece of the program.

In the private sector we had to learn to move across the continuum – to and fro – between the short-term and the long-term. And where nirvana is defined as attaining sustainable growth – and be a contributing member of society, and presupposes putting in place the requisite building blocks, and not be led astray to conclude that “a swallow makes a summer.” 33 years ago, the CEO of my old MNC company visited the Philippine subsidiary and it was like yesterday that I still remember how he answered a question I asked: “If you have to respond to the demand of a short-term need at the expense of the future, you will not want to do it.”

And after decades of experience, I would learn that strategic plans or road maps aren’t sufficient if an enterprise is to measure up to the yardstick of sustainable growth when two elements are missing: a sharply defined future scenario – call it a vision if you will – and the absence of the requisite ecosystem. For example, even an IBM, renowned for its best minds and the owners of the most number of patents globally, had to toss its own road map that promised increasing market value.

And this blog has raised the imperatives of: (a) visionary leadership and (b) an ecosystem. Visionary leadership doesn’t come in abundance and much less in former Soviet satellite countries, as I would note during my earlier years in Eastern Europe. “We were in the dark ages that we never imagined that there is such a thing as a bright future.” In PHL, do we need to revisit our view of the future so that we would think beyond “fire-fighting” – and not to miss the forest for the trees? And given our professed compassion do we see poverty reduction as nirvana while taking economic development for granted?

Einstein would see a Higher Being behind the model ecosystem that is the solar system. And man has learned the imperative of an ecosystem while pursuing progress and development. But he can’t claim perfection and thus despite having stepped on the moon and reached Mars and Comet 67P, among other breakthroughs, disasters would still strike similar efforts. And that’s precisely why man can’t sleep on his laurels. Perfection is not of this world. Yet it doesn’t mean man mustn’t give it his best shot, if indeed he is to tame if not rule his world, the challenge to Adam and Eve when they were driven out of Eden?

Ecosystem? Let’s start with basic infrastructure. But with ASEAN 2015 upon us, what else does it entail? “The Department of Trade and Industry (DTI) is encouraging small and medium enterprises (SMEs) to expand their foothold in the global market and has lined up export promotion efforts to help them gain greater access.” [Go global, DTI tells SMEs, Voltaire Palaña, The Manila Times, 28th Nov 2014]

“This year’s export promotion efforts mainly included outbound and inbound business matching activities; participation in trade fairs in the country or abroad; a nationwide campaign to inform exporters of the opportunities in foreign markets covered by free-trade agreements (FTAs) entered into by the Philippines; and information sessions to keep exporters and potential exporters abreast on foreign market access requirements.”

And what does “to keep . . . exporters abreast on foreign market access requirements mean”? In today’s globalized and highly competitive world, it is about competition not simply access! Thus, the imperatives of investment, technology and innovation as well as people, product and market development.

Are we finally recognizing that we can use some help? How long have we had a “power crisis”? Yet, wittingly or unwittingly, we celebrate how the big boys are getting the spoils of a rather belated and fumbling efforts in infrastructure development?

“US gov’t backs policy formulation on electricity rates reduction,” says a Manila Bulletin article. The UP School of Economics just initially proffered that its research agenda will be ‘to develop institutional linkages with the US universities and institutions with expertise in the energy sector’ – to include the University of Hawaii, Tufts University, Massachusetts Institute of Technology and the University of California Energy Institute.”

“Over the years though, it was observed by various stakeholders in the power industry that academic institutions in the country – including UP – have yet to learn and truly understand the intricacies of the Philippine electricity market before gaining core expertise they so badly need to credibly recommend viable policy formulations to the Philippine government. The institutional linkages and capacity enhancement though could be the much-needed stimulus to reinforce widely-perceived energy knowledge gap, especially so since EPDP has been aiming to become an ‘independent think-tank.’ ”

Are we finally getting it? And how do we demonstrate that an “independent think-tank” is truly independent? Do we need to dismantle our assumptions, beliefs and values? “Are we changing our paradigm? And the obvious riposte to that is: What is so threatening about a change in paradigm, unless one stakes one’s reputation with an obsolete model of things? And this, I fear, is the problem. Much of the resistance that advocates of a thorough overhaul of legal education comes not so much from theoretical objections, as from threatened egos and shattered self-assurances anchored on what many have quite speciously taken to be their badges of distinctiveness!” [Genuine outcomes-based education, Fr. Ranhilio Aquino, Pensées, Manila Standard Today, 24th Nov 2014]

And beyond the egos are vested interests. “Given the impoverished state of Philippine print and broadcast journalism today, there are not too many journalists I turn to for the nourishment of spirit and higher faculties . . . Which only makes more painfully obvious the pallid and insipid hogwash that is made to pass for journalism by those are best licking boots in high places rather that pontificating on issues far in excess of their less than modest intellectual endowments! Inelegant turns of phrase, non sequiturs strung together in some contemptible poor excuse for argument, bits of science artfully combined with voodoo and a generous dose of lower Philippine mythology—these are the morsels these quacks who pass themselves off for bona fide journalists regularly throw the way of their hapless viewership.” [Cheap shots (!), Fr. Ranhilio Aquino, Pensées, Manila Standard Today, 17th Nov 2014]

But are the Americans dictating on us again? And separate and apart from that, we can’t manage major project biddings – because there is always a justification to be equivocal? Is our culture of impunity a reflection of our shortcomings in character-building? And is it at the heart of our failings in nation-building? And what makes it sad is we sincerely believe it is what compassion demands?

How do we square a culture of impunity with compassion? As my late maternal grandfather would put it, “Where is the backbone of Juan de la Cruz?” Thinking back, perhaps because I was too young, he skipped the predicate: “Rizal was hanged because he wanted to enlighten us . . .” And with that the context would have been clearer? He looked up to Rizal – and was a Free Mason himself.

Indeed we can use help . . . and yet must demonstrate that we’re up to it? A horse can be brought to water but not be made to drink?