Friday, January 31, 2014

Talk mistaken for action

“My dad used to say that in this garrulous country, talk is too often mistaken for action.” [Sara Soliven de Guzman, Power Trippers, As A Matter Of Fact, The Philippine Star, 27th Jan 2014.] I could almost see the late Max Soliven [May he rest in peace!] puffing his trademark pipe and emphatically delivering his punch line. I haven't yet met Max then but I thought he could be the ideal resource to give a crash course on PHL in the '80s to a new expatriate, and he did not disappoint. Calling his office was a breeze and the next moment we were agreeing to meet at the Manila Hotel. He gave my expatriate-friend (and myself as well) a colorful history of the Philippines including insights of current events – and even the juicier versions that only a well-informed newspaper person could provide.

In July 2012, I posted a blog entitled “Unconscionable” . . . “Matagal na itong pinag-uusapan . . . This was taken up a long time ago. We have been holding public hearings at the Energy Regulatory Commission even during the 14th Congress [2007-2010].” [Inquirer, 26th Jun 2012.]“The “real debate,” according to Eastern Samar Rep. Ben Evardone, over the issue of renewable energy was between existing power producers and the proponents of renewable energy, saying that the former were barring alternative energy in order to protect their interests.”

And 18 months later what do we read? “Energy plan to be updated by yearend . . . In December 2012, the Energy department announced that a total of P3.174 trillion worth of investments was required to develop the 11,400 megawatts (MW) of power needed to meet demand until 2030.”[Business World, 26th Jan 2014]

Given the magnitude of the challenge, by any objective measure, can we say Juan de la Cruz is demonstrating that he is equal to the task?“MalacaƱang should definitely use its magic wand to solve our power crisis.  No one in this country can stop the greed of the key players of the power firms and energy officials but the President himself.  Not unless he or his men are part of the problem . . . The unbelievable price hike was indeed a well-orchestrated move made by the energy players. And why didn’t any of the government officials stop it?  Why did they have to wait for the public to cry foul?  Isn’t it the job of the DOE and Power Sector Assets and Liabilities Management Corporation to protect us from any these monsters? Sanamagan!” [Sara Soliven de Guzman, Power Trippers, As A Matter Of Fact, The Philippine Star, 27th Jan 2014] . . . Talk mistaken for action . . . 

“Nearly three decades ago (1985), I wrote an article in the Agribusiness Papers of the then Centre for Research and Communication (now University of Asia and the Pacific) entitled “Thailand: A Model of Agricultural Diversification.” [Rolando T. Dy, Agri-food exports: Why Thailand is a model of diversification, Philippine Daily Inquirer, 26th Jan 2014]

“The article’s conclusion was that:  “The Thai agricultural experience offers interesting lessons for us.  In about two decades, the Thailand has managed to lessen its heavy dependence on rice and rubber exports by diversifying into at least ten major commodities. Not putting all the eggs in one basket is one maxim which the Thais took to heart. The story continues, and so does the contrasts of achievements. In contrast, the Philippine diversification program continues to be a pie in the sky.”

“I am hoping that there will be no delay in the submission of industry roadmaps and its synthesis into one comprehensive plan for industrialization.” [Andrew James Masigan, The industrialization movement gains ground, Manila Bulletin, 26th Jan 2014.] Insiders tell me that the plan will have three phases. The first will span 2014 to 2017 and will be dedicated towards strengthening the foundations of existing industries and improving their level of competitiveness. Phase two will kick in between 2018 and 2021, and this involves shifting to higher value and upstream industries. It also calls for linking various industries together to create a chain reaction of broad-based industrial development. The final stage will take place between 2022 and 2025, and this will be all about firmly establishing the position of our industries as leaders in the region.”

“But like I said, the journey to industrialization will be a long, difficult one. It will entail sacrifices among local firms who have long enjoyed protection from foreign competition (like interisland shipping operators); sacrifices from the labor sector, who might have to see a moratorium in minimum wage; and sacrifices from the general public who will have to make do without government subsidies in rice, petroleum and many other commodities. All this will require political will like we’ve never seen before.”

Given our track record, that is indeed a Hail Mary pass? “My dad used to say that in this garrulous country, talk is too often mistaken for action.”[ibid.] And it must be because we like to “think out aloud” – and somehow or other, whatever it is, it becomes gospel truth? The problem is in the process we miss the “puno’t dulo” – or the object – which we associate with scatterbrains? Until we say, “nagbibiro lang ako” – that was meant to be a joke. If that is all there is to it, then it’s no cause for alarm, except that we have loads of assumptions that contribute to our biases and beliefs, taking for granted that problem-solving presupposes relevance, action and, more precisely, execution. And worse is if “sabi ni boss ito” – the boss said so?

Listening to a nephew, I understand that in school we teach young people problem solving and we utilize the latest problem-solving tools. But how come in the real world we can’t seem to solve most things? In the private sector there is a rule of thumb, a plan is only as good as it is executed. And it also applies to hypotheses coming from the boss: a hypothesis is good until it is tested. And our inability to move forward as an economy would suggest that we have yet to embrace the imperative of simplicity. It is not about crafting a dissertation but seeing an idea come to life. Surely we have great ideas but the fact that three of our neighbors dominate regional trade to the extent of 70% means that these ideas are confined within our parochial boundaries.

I couldn’t help but shake my head with the 30 roadmaps we are pursuing to push industrialization – because the road to failure is littered with good intentions. [Whatever happened to the JFC's seven industry winners?] Even Procter & Gamble stumbled driving scores of global brands despite the depth of talents they have – and in many cases they had the R&D advantage – and consequently had to sell some megabrands. Pareto’s principle is universal. Put another way, as statisticians would tell us, in a universe there is the distribution curve or why in an investment portfolio, not every investment is a guaranteed winner.

For example, thirty roadmaps should remind us of Soviet-style centralized planning that was meant to create jobs without regard to sustainability as in competitive products that can command a market and generate a surplus – and they failed miserably. I’ve seen some of the factories they built and met people that worked in those factories. And today even the average person could only laugh having lived through its folly. In the case of PHL, if the chemical industry is the one that is most promising, they could then take the Malaysian auto industry, for example, as a model [discussed in an earlier blog] to replicate. Other industries must likewise demonstrate their capacity or potential to win in the marketplace – which is how nirvana is defined in free enterprise. In short, we have to pick and choose which priority industries to support – and support aggressively. But crab mentality is a loser that we have yet to learn and avoid like a plague? If we could learn from others, say, the Malaysians, we would be in good company – i.e., the Singaporeans went to school on the Taiwan Taoyuan (then Chiang Kai-shek) International Airport while they were planning the Changi Airport.  [Wikipedia.] Singaporeans aren’t all-knowing – but they know where they stand – and, not surprisingly, they turned themselves into a First-World state!

How do we learn not to accept our core beliefs as gospel truths? There is no perfect race, not even the Filipino race. There is a body of knowledge that says there are three dimensions to recognize when we are facing the world: (a) our recognition of our inner self and assumptions, (b) the other person’s reality, and (c) that of the outside world. And outside world in this day and age is not PHL but the world – i.e., outside the box. [Which is what the Parable of the Talents is about except that in the Pinoy version of Christianity, it is missing – and it explains why we’re still parochial in the 21st century?] Daniel Goleman, who gave the world Emotional Intelligence, discusses those three dimensions in his latest book, Focus: The hidden driver of excellence.

Tuesday, January 28, 2014

Cardinal Tagle’s call for integrity

“[T]he only remedy to the culture of corruption emanating in the society is to develop a culture of integrity.” [Manila Bulletin, 21st Jan 2014][But] what is even worse is that you will be criticized when you attempt to correct these misdeeds. This is the year of the Laity, we are being asked to enter and transform culture.”

“To achieve the culture of integrity . . . start within your families, within the home, and within the school . . . Consistency of words and deeds is one area of integrity . . . Be truthful, be honest . . . Whenever you commit a mistake admit it . . . The culture of dishonesty must be replaced . . . [G]et rid of bias and prejudice, assessing oneself in accordance to competence and diligence instead of connections . . . [T]hey are the hidden ways by which we can transform our culture. They are the needs of our time.” 

Amen! A close family friend has said a couple of times that “we can’t change our culture.” And offered another: “no one wants to be told.” And a third would add: “especially when the words are hurtful – all the more in a soft culture like ours.” This blog is on its fifth year and I’ve heard these words countless times and in varying ways. And especially the last one – i.e., I am not the nicest person [mea culpa!] when it comes to expressing myself and so I would always pull my wife aside when friends and acquaintances would express their anger about the state of the nation. And they were the ones who had asked: “How can you help recognizing you’re overseas?” And that became the signal for me to start the blog.

On the Archbishop’s call for integrity, this blog often talks about my MNC experience and also that of my Eastern European friends. Because integrity is something that is at the core of how they would do things at my old MNC company; and it is what my Bulgarian friends have learned and embraced over the last eleven years and counting. In other words, integrity is not some out of this world experience; it isn’t beyond man’s capacity. It is different from perfection; and as this blog has discussed a few times, perfection is not of this world. Man can err and does all the time but to constantly aspire and manifest integrity is what it’s about.

Yet do we Pinoys find integrity almost unreachable? And does it come from our hierarchical system and structure? And so from the get-go we are integrity-challenged? When something is not transparent, it lends itself to abuse thus undermining integrity? And because we take respect for hierarchy (and elders and authority) as a Pinoy virtue, we take transparency for granted? And human as we are, those in the lower rungs of the hierarchy make their own world – as in self-preservation – and which is why corruption in PHL is universal and is now woven in our cultural fabric . . . thus the call from Cardinal Tagle?

And until we step up to the plate, we would continue to sub-optimize our efforts in moving the nation forward. PHL poverty is driven by underdevelopment. But we like to brush that aside instead of recognizing the reality that our neighbors have drastically reduced poverty as they demonstrated to the world how to be Asian tigers?

So what is going on? Our worldview appears stuck; and sadly it mirrors our bias for the status quo? Yet we would be reminded by Einstein: to keep doing the same thing while expecting a different outcome is insanity? And that is what the family friend means; we can’t imagine being able to change our culture and, sadly, our worldview is simply the extension of that culture? And one of its elements is our inability to raise the bar – “mababaw ang kaligayahan ni Juan de la Cruz”?

To use a sports analogy, when a team is outplayed and outscored by the opponent, the coach would instruct the players to move to and execute “plan B” – something that winning teams would always have in their back pockets. For example, while we are spending tons of money on infrastructure, we must recognize that we are playing catch up. And if we value the “common good” we would demonstrate greater transparency, integrity and a sense of urgency! But that is not what we see?

What we see is the piling of unresolved controversies one after another, replaying similar nightmares to the Bataan Nuclear Power Plant or NAIA 3 or the delays in major infrastructure projects. We don't seem to appreciate and recognize the imperative of infrastructure development in economic development and nation building and the pursuit of the common good? What is getting in the way? Is it the lack of visionary leadership? Is it pure, unadulterated self-interest and thus a culture of corruption and impunity? Is it sheer incompetence? We can't find comfort in measuring ourselves against bygone metrics with the world moving at warp speed – and, closer to home, with ASEAN upon us? And we don't want to be destined as a bunch of losers, if we're not there yet?

Whatever it is, can we visualize Juan de la Cruz – and PHL – moving beyond underdevelopment? Could we heed the call of Cardinal Tagle? Should our institutions follow his lead; better yet if the different sectors of society come together to figure out the future of Juan de la Cruz: where are we; where do we want to be; how will we get there? And it can't be same old, same old?

Friday, January 24, 2014

A straightforward approach to attract FDI

How we do it in PHL (for example with EPIRA) versus how Malaysia (with auto investment) is doing it says it all?

“Why Pippa members love the EPIRA . . . EPIRA was enacted to foster competition and give the best deals to electricity consumers. More than a decade after its enactment, however, our woes are getting worse, and the players in the power sector are limited to an elite few . . . We have to plug the loopholes in the EPIRA and redirect the law to the original intention of its framers . . . Under Section 6 of the EPIRA [power generators] are not classified as public utilities [and are not] officially answerable to the Energy Regulatory Commission . . . The country's power generators never had it so good . . . It's a beautiful law, one made in heaven . . .” [Butch del Castillo, Omerta, Business Mirror, 20th Jan 2014]

“Wanted: true competition in power . . . EPIRA was intended to privatize the power industry, foster competition therein, and bring down electricity prices as end result. Twelve years since its enactment, only the first of the three has occurred . . . For competition to be effective, there must be effective control over either the generation or distribution sides of the power market . . . Competition is what drives the economy to efficiency and improve consumer welfare . . .” [Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 20th Jan 2014]

Contrast how we do it in PHL with: “Malaysia eases rules to lure auto foreign investments . . . Malaysia relaxed restrictions on foreign automakers manufacturing small and eco-friendly passenger vehicles as Southeast Asia's third-largest economy competes with Thailand for investments.” [Chong Pooi Koon and Manirajan Ramasamy,, 20th Jan 2014]

“Malaysia will selectively seek foreign investments that bring advanced technology and offer customized incentives to attract companies . . . This is a big deal because previously we didn't issue any licenses for the manufacture of small cars . . . Effective immediately, the new policy further opens up the national maker Proton . . . to foreign competition . . .

“Malaysia wants to position itself as a manufacturing hub for energy-efficient vehicles to differentiate the country from Thailand, where foreign automakers have invested to produce pick-up trucks and other vehicles . . . By focusing on energy-efficient vehicles, we are also at the same time making Malaysia a center of excellence for technology.

“Vehicle prices may fall in Malaysia by as much as 30 percent by the end of 2018 as a result of local production by global automakers and other government incentives . . . Sales of passenger and commercial vehicles rose 4.9 percent to 595,300 units in the 11 months ended November . . . That's faster than the 2.7 percent pace in the year-earlier period. The government is seeking to attract automakers that have yet to establish major manufacturing facilities in Southeast Asia for passenger cars, including Volkswagen, Renault, Hyundai, Fiat and some Chinese companies.”

Wow! That is the kind of thought process one would read in the Harvard Business Review or a Fortune 500 company's business-review minutes. It reveals decades of experience in successful global competition. It is real-world expertise that cannot be gained overnight. Put another way, even Steve Jobs fumbled and failed early in the life of Apple. [And he would share his lesson on the imperative of focus with the folks at Google. Translation: road maps are not the be-all and end-all nor can they guarantee success – i.e., experience has taught successful global companies to focus on the vital few (i.e., Pareto’s 80-20 rule) while being dogged and uncompromising in execution – and learn from the experience. It is not about the more the merrier – a.k.a. “crab mentality”?]

The Malaysians’ bias for investment is absolute and unmistakable, not iffy and tentative. It is not parochial but instead exposes a local enterprise – Proton, Malaysia's pride and joy – to foreign competition. It is characterized by the imperatives of 21st century global competition – i.e., technology, innovation, product development, among others – that will command a market – with a clearly differentiated product portfolio – and generate a surplus given economies of scale and pricing advantage.

The bottom line: They have clearly defined and articulated their journey – from where they are to where they want to be and, as importantly, how they will get there.

And where are we? “In the Luzon grid, the top two [power generators] own 50 percent and 30 percent of total installed capacity, respectively. Meanwhile Meralco controls 71 percent of the distribution capacity . . . Lack [of competition] leads to excessive unearned profits accruing to a few at the expense of the many (that is, we consumers.)” [Cielito F. Habito, No Free Lunch, Philippine Daily Inquirer, 20th Jan 2014]

Put another way, we are like school kids ruled by the class bullies in contrast to the Malaysians that are seasoned global competitors (e.g., Proton) in league with global behemoths (e.g., Volkswagen, Renault, Hyundai, Fiat, etc.)

It wouldn't surprise Rizal, he who saw that Juan de la Cruz, over a hundred years ago, was backward and anti-progress? And it isn't surprising why today Malaysia, together with Thailand and Singapore, control 70% of regional trade! And we still believe to be parochial and in bed with oligarchy is a virtue – as in love of country? We are underdeveloped and impoverished for a reason? And it is right there when Juan de la Cruz looks in the mirror?

Wednesday, January 22, 2014

Analyze, evaluate and solve problems and communicate effectively

Sadly that ability, even in the Western educational system, is taken for granted. “Assessing skills is tough, but not impossible.  The Collegiate Learning Assessment and its new version, CLA+, are already in use by over 700 institutions around the world.  What these instruments do is assess the effectiveness of college courses in developing not discipline-based knowledge, but the ability to “analyze and evaluate information, solve problems, and communicate effectively.” The results often shock faculty, who are more comfortable in teaching content than in developing their students’ critical thinking and communication skills.” [Alan Kantrow, How Business Can Help Measure Education Outcomes that Matter, Harvard Business Review, 9th Jan 2014]

“To link education to meaningful outcomes, what’s needed is the ability in colleges to assess — in detail and at scale — the development of real world-relevant skills. That’s an area ripe for collaboration between the educational and corporate worlds. Because companies have a lot of experience in assessing such skills, managers can be valuable discussion partners for leaders of colleges as they move to build learning experiences that link skill-related outcomes with programs and curricula.” [ibid.]

“Fewer than half of youth and employers, for example, believe that new graduates are adequately prepared for entry-level positions. Education providers, however, are much more optimistic: 72 per cent of them believe new graduates are ready to work.” [McKinsey & Company, McKinsey survey, Aug-Sept 2012]

Educators by definition must be optimistic. To be optimistic is to be hopeful and confident. Wrote Rosabeth Moss Kanter in Overcome the Eight Barriers to Confidence, Harvard Business Review, 3rd Jan 2014: “Confidence is an expectation of a positive outcome. It is not a personality trait; it is an assessment of a situation that sparks motivation. If you have confidence, you’re motivated to put in the effort, to invest the time and resources, and to persist in reaching the goal. It’s not confidence itself that produces success; it’s the investment and the effort. Without enough confidence, it’s too easy to give up prematurely or not get started at all. Hopelessness and despair prevent positive action.”

“To muster the confidence to work toward your goals, avoid these eight traps: (1) Self-defeating assumptions; (2) Goals that are too big or too distant; (3) Declaring victory too soon; (4) Do-it-yourself-ing; (5) Blaming someone else; (6) Defensiveness; (7) Neglecting to anticipate setbacks; (8) Over-confidence.”

Disclosure: My old MNC company had a group of us back in 1984 listen to Dr. Kanter discuss her then new book that became a bestseller, The Change Masters. [“She likens the present business climate to the game of croquet played in Alice in Wonderland “…a game in which nothing is stable for very long, and everything is changing around the players.” Today’s businesses are faced with the same climate of sudden and unexpected changes, and, according to Dr. Kanter the only way to stay ahead of change is to be first with innovation. She calls the people and companies that anticipate and lead “change masters.”]

And Dr. Kanter has since championed “positive reinforcement” to encourage teams and overcome the barriers to confidence. Yet, she simultaneously preached leaders to be proactive thus counseled against self-defeating assumptions, declaring victory too soon, neglecting to anticipate setbacks and being overconfident, among others.

But what do they have to do about PHL? We're proud of our educational system and equally proud that Juan de la Cruz has “the ability to analyze and evaluate information, solve problems, and communicate effectively”? And not surprisingly, we have no qualms to declaring victory either too soon or too often; and we sincerely believe that we would be the next Asian tiger especially because of OFW remittances and the BPO industry? 

Have we in the process made self-defeating assumptions and neglected to anticipate setbacks in our energy or power crisis as well as doleful levels of investment, including FDIs, while being defensive and blaming others? Even the church, including the ecumenical sector, would reinforce our decades-old posture, yet given PHL foreign-equity restrictions it is easy to figure out which Philippine vested interests are able to take advantage of the hypocrisy – thus the pathetic levels of FDIs that accrue to the benefit of the few. Contrast that to how our neighbors are able to optimize FDIs – to the benefit of the common good – being less hypocritical than we are? Yet we believe we're more upright? “He who has the gold rules,” is how an American friend would self-deprecatingly explain the golden rule.

As we now know, even GDP growth in the 7% range over the recent past hasn't moved the needle. Do we want to declare victory yet again if not too soon over competitiveness, FDIs or export receipts – where in more ways than one their ecosystems are suspect? But “pa-pogi” always rules like vanity? It is not about setting goals that are too distant or too big but recognizing the need to revisit our thought processes as we “analyze and evaluate information, solve problems and communicate” to Juan de la Cruz.

For example, would our values (especially hierarchy that is reinforced and expressed in political dynasty and political patronage and oligopoly) explain why we (especially one family considered a political dynasty) would justify dole outs as virtuous – that come from the controversial pork barrel, where transparency is assumed but not a given? We don't have to be economists to figure out that if we distribute PHL average income to every Filipino that it would simply articulate our impoverished state? Which is how crab mentality has kept us stuck in underdevelopment? How do we learn what nation-building is? What’s happening to the country – the late Vice President Emmanuel Pelaez could only sigh?

Sunday, January 19, 2014

Problem-solving spectacle

Making sense of how we are addressing PHL “prevailing energy situation” in the face of the Meralco suspended increased rates and the bigger picture of ASEAN integration could make us scratch our heads – better than laughing or crying? “The process of Asean integration has been happening for more than a decade now. The Philippines has shown readiness, through various government and business leaders, to actively and willingly integrate since then.” [PHL shows readiness for Asean market integration next year, Business Mirror, 11th Jan 2014]

But then again: “The prevailing energy situation is our economy’s Achilles’ Heel. Power supply, even at very high cost, is precarious. That is a disincentive for foreign direct investment. Who would want to invest billions in an industrial plant when power supply is uncertain? Because of policy volatility and bureaucratic delay, we have not installed any major additional baseload generating capacity in nearly a decade.” [Blackouts, First Person, Alex Magno, The Philippine Star, 11th Jan 2014]

Timing is everything and so comes government: ‘Don’t stir up power issue.’ “At least on our end, we are doing our part to ensure there would be effective solutions to what they are facing right now . . . there are definitely solutions to the country’s power woes and that it would be best for the public and industry stakeholders to avoid moves and statements that would only make matters worse.” [Aurea Calica, The Philippine Star, 12th Jan 2014]

Not so fast? “Eastern Samar Rep. Ben Evardone, for his part, said the rising power cost is one of the two “catastrophic problems” that President Aquino needs to address immediately, using emergency powers . . . [T]here is an urgent need to fast-track the construction of more power plants not only to meet the growing demands of a rising economy but more importantly to lower the cost of electricity. In the same manner, there is a great need to speed up the construction of a mass transit system in Metro Manila to arrest the worsening traffic problem and provide commuters a more efficient mode of transport, he said.”

But that is not the last word: “Manila Rep. Lito Atienza, a member of the so-called independent bloc in the House of Representatives, dismissed Evardone’s call, saying emergency powers are unnecessary and that all Aquino needs to do is to be “more decisive, action-oriented, and really get into the country’s problems. That’s not an option that will solve these ills,” Atienza said in a telephone interview, adding the administration’s attitude in dealing with governance and crises has been one of apathy . . . They have not been able to do the simple task of providing new car owners with stickers and license plates . . . [and] also cited the case of the Languindingan International Airport, which still lacks runway lights and some landing instruments.”

“If that’s the attitude of the Cabinet of P-Noy, like in the DOTC, then there must be something really wrong in the leadership. I’m sure this is being replicated in many other agencies in government. If he (Aquino) does not know what’s happening, then he is being remiss in his duties . . . [G]ranting Aquino emergency powers would only mean that the same authority would be delegated to his “inefficient” Cabinet officials.”

“Meanwhile, Reps. Neri Colmenares and Carlos Zarate from the Bayan Muna party-list also accused Meralco and power generators of blackmailing consumers into accepting higher electricity rates . . . Last week, Philippine Independent Power Producers Association president Luis Miguel Aboitiz said that because of the TRO, unpaid power generators might not have enough cash to pay for fuel for peaking plants. This is clear blackmail. Meralco and Aboitiz are trying to circumvent the Supreme Court temporary restraining order with this threat,” Colmenares said. “What is obvious is that the problem was caused by government’s flawed policy of totally abandoning the power sector at the hands of private corporations through EPIRA.”

Do we have a solution? “Last Thursday, the Foundation for Economic Freedom convened a roundtable forum to discuss the complex issues in the power sector. The high-powered forum tackled the policy, engineering, financial and economic aspects of the looming power crisis. The impression I took away from that intense discussion was not encouraging.” [Blackouts, First Person, Alex Magno, The Philippine Star, 11th Jan 2014]

“One expert convinced all of us about the certainty of blackouts this summer and the next, when demand spikes and the thinning of energy reserves becomes evident. The thinning reserves will force us to use the costliest sources of power. We all agreed the Supreme Court’s (populist) intervention was unwarranted. It will complicate things and magnify the uncertainties without addressing the structural defects of our power sector.”

“Energy security in the Philippines is the bleakest in the ASEAN. All our neighbors have ample power reserves. The best of them have five or six times our generating capacity — and sell electricity at lower prices despite the cost of maintaining abundant reserves.”

Two columnists talked about our limitations which are no secret – and we must acknowledge that investment and technology must be at the top? Is this one of those challenges then where our assumption of going it alone must be the first to go? Where must our heads be in this day and age? And closer to home, where we talk about every other Filipino being hungry, would we in fact get a real sense of what hunger is when it is not our own reality – or of the ruling class that is calling the shots? And precisely why, for example, Francis opted to live outside the official papal home – and even beyond demonstrating a change in form, to align the Curia to his mindset, he took out conservative and other once powerful prelates from the Vatican's inner circle? Change and the approach to problem solving to truly address underlying challenges must breakdown old limitations. And Francis, not surprisingly, is attracting detractors but it appears he is on a mission that must be informing his boldness? 

US Ambassador Philip Goldberg had the following to say about another topic but also a Philippine problem: “The United States is helping improve the Philippines’ maritime defense capability now that the American government has described as “dangerous” a new Chinese fishing law in disputed Asian waters: “. . . [W]hat we are talking about doing is not about the 20th century and the bases, but about the 21st century and the kind of cooperation we can have to work together as we confront 21st century problems,” Goldberg told reporters after he was honored by the Philippine Military Academy here [Fort del Pilar, Baguio]. “Don’t dwell on the past but think about what the future holds,” he said. “That’s what we are trying to do regionally.” [Inquirer Northern Luzon, 11th Jan 2014]

That was a very loaded message from the ambassador but which we would easily dismiss because anything foreign doesn’t rank high in our value system? A friend says that given the menace of imperialism during its heyday, we can’t but dwell on the past. Yet both Lee Kuan Yew and Mahathir counseled: “You don’t have to love the West, but take their wealth and their technology.” And precisely that sat well with Deng Xiaoping given his own belief. And who’s left holding the bag – but Juan de la Cruz?

We may want to be parochial in our problem-solving; but our neighbors have a few things they could share with us – and that we can learn from? See above re all our neighbors have ample power reserves. And we seriously believe we're the next Asian tiger? It always starts in the mind – and why the power of the mindset is acknowledged especially in major endeavors! Should we first clean our house, keep our eye on the ball? And demonstrate that we're on a mission? Or will que sera, sera – if not vested interests – continue to rule Juan de la Cruz? Who can either: (a) scratch his head or (b) laugh or (c) cry?

Thursday, January 16, 2014

Simplicity is beauty

“Even the founders of Google have worried about losing the magic that helped propel their search engine’s phenomenal growth. When Larry Page announced that he was taking over the chief-executive role from Eric Schmidt a few years ago, he explained to reporters that the company needed to move faster and recapture the agility of its early days, before it grew into a colossus.” [Management Be Nimble, Adam Bryant, The New York Times, 4th Jan 2014] “One of the primary goals I have,” Mr. Page said at the time, “is to get Google to be a big company that has the nimbleness and soul and passion and speed of a start-up . . .” 

“Discussions of corporate culture can easily fall into platitudes and generalities, so I set out to answer a more specific question: What are the main drivers of corporate culture — the things that, if done well, have an outsize positive impact, and if done poorly or not at all, have an outsize negative impact? After searching for patterns among my interviews, I identified six key drivers that every organization needs to foster an effective culture that will encourage everyone to do their best work and help drive innovation.” 

[The six key drivers according to Bryant are: (1) A Simple Plan; (2) Rules of the Road; (3) A Little Respect; (4) It’s About the Team; (5) Adult Conversations; (6) The Hazards of Email . . .  And if I were to summarize them, it would go something like: transparency is it, not hierarchy; keep it simple; talk face-to-face with subordinates like you’re one team made up of adults and you’re not pulling rank as the boss; and don’t email if you want an adult-to-adult conversation with your team.]

“A Simple Plan: One of a leader’s most important roles is to boil down an organization’s many priorities and strategies into a simple plan, so that employees can remember it, internalize it and act on it. With clear goals and metrics, everyone can pull in the same direction, knowing how their work contributes to those goals . . .”

Simplicity is beauty. Obviously I first heard that in the Philippines. Yet, I also knew that in the Philippines we like comprehensive, holistic and inclusive. On my to-do list when my old MNC company gave me a regional role was: get subsidiaries to refresh planning/budgeting thought process. [And I had a Pinoy strategy consultant join me while visiting two subsidiaries – because I myself had a bias for comprehensive, holistic and inclusive – and well aware that I too needed to get up to speed; and had another Pinoy consultant based in Manila as a sounding board.] I had gone through seven years of doing planning and budgeting at our Philippine subsidiary and was doing it mechanically but felt the need to question and figure out the “object of the exercise” – beyond adhering to the supposed New York guidelines.

And my journey would go farther: from attending a strategy course to fixing problem businesses to raising the competitiveness of subsidiaries concerned before they could become problem businesses to being involved in M&As – including transforming the company's budget process from a principally finance-driven exercise to a goal-setting and alignment process (after the president saw how we were doing it in the region.) And more recently, my Eastern European friends similarly had to go through a journey, eleven years and counting. And the experience has taught them how to cut to the chase, for example, and the imperatives of execution – that the test of the pudding is in the eating. And so they could relate to the above NY Times article, having recently set their sights on: “Only great products will do; we must ‘own the store’; there will be no compromises.”

And so while employers, especially in the West, have invested in in-house education and training, they would see the educational system as in need of fixing, given that it is the source of talents. “. . . [W]hat truly counts in hiring decisions is not the rote knowledge that helps college students answer examination questions, but skills and competencies that are essential for, and often developed at, work.  To be useful, the bricks of modern education need the straw of experience-based skills.  Bricks without straw tend to crumble; they cannot support weight, as has been known from Biblical times.” [Alan Kantrow, How Business Can Help Measure Education Outcomes that Matter, Harvard Business Review, 9th Jan 2014]

“The Collegiate Learning Assessment and its new version, CLA+, are already in use by over 700 institutions around the world.  What these instruments do is assess the effectiveness of college courses in developing not discipline-based knowledge, but the ability to “analyze and evaluate information, solve problems, and communicate effectively.”  The results often shock faculty, who are more comfortable in teaching content than in developing their students’ critical thinking and communication skills.”

And from McKinsey & Company [McKinsey survey, Aug-Sept 2012]: “Employers, educational providers, and youth live in parallel universes. To put it another way, they have fundamentally different understandings of the same situation . . . In large part, this is because they are not engaged with each other.”

And in PHL all the more it would take us some doing and loads of time to learn to “analyze and evaluate information, solve problems, and communicate effectively” – because we have yet to translate “simplicity is beauty” into concrete terms as in cutting to the chase, and the imperatives of execution? We can’t stop wanting to cross the “t’s” and “dot the “i’s” – because we want comprehensive, holistic and inclusive! Yet, where are we?

Monday, January 13, 2014

Owning up

“In ancient Sanskrit, the word “pundit” meant “wise man” or “religious sage.” In modern English it means “often wrong, rarely accountable.”[Ross Douthat, The confession of a columnist, The New York Times, 28th Dec 2013] This blog consistently talks about the private sector not because it is perfect but to highlight its one characteristic, that of accountability. Still wet behind the ears, my first experience with accountability was to fire a person that was recommended by a prior boss, and became a friend – and it was even in a Filipino company. And in another company, an MNC, not that long after, I was tasked to personally inform a manager (that was the age of my father) that the succession plans of the company were moving forward. And precisely why younger understudies were appointed much earlier and that the time had come for them to be promoted – and takeover from those of an earlier generation.

I didn't stay long with the MNC either, but these two early experiences made me understand a fundamental responsibility of a manager, i.e., to hire and fire. But the real challenge – in pursuit of the “common good” – is how to be proactive so that the success of an enterprise, and collectively as the private sector, makes it a positive force in an economy and nation building. And that means creating lots and lots more jobs than getting people fired.

Yet as the 21st century has played out, being proactive per se is no longer adequate especially as technology continued to accelerate at warp speed. That means beyond being proactive enterprises must be committed to investment, technology and innovation as well as to education and training and product and market development. And how nations formed their worldview proved either a blessing or a curse. For example, while on one hand the world has drastically reduced poverty, especially with the emergence of China (accounting for a big chunk of the world's population; and with their poverty down to 13.4% versus PHL at 26.5%, truly despicable given Vietnam’s 11.3% and Indonesia's 11.7%) as an economic powerhouse, on the other, many emerging markets including those in the Arab world have remained impoverished. 

Even in the EU, supposedly the largest economy as one union, and where they embarked on a deliberate effort to shore up the economies of the poorer countries (e.g., the EU infrastructure fund, among others, benefited countries like Spain and Portugal and later former Warsaw Pact nations) still, countries like Greece realized they had to clean their own house – and so did higher-income nations like Spain and Italy – because they had to pay the price. There is no free lunch! It is easy and convenient to blame others especially when they get a disproportionate share of the world's wealth – yet the Asian tigers demonstrated how to overcome underdevelopment.

There is no perfection in this world – and especially with Europe forming their versions of the “Tea Party” – and thus whether in the private or public sector, enterprises and nations have to step up, be accountable and own up? In the case of the Philippines, our oligarchic character remains the core of our political economy. And instead of methodically embarking on nation building or the pursuit of the common good, we chose to see no evil, hear no evil and speak no evil? How long have we trumpeted the coming of a booming economy if not the next Asian tiger, owing to OFW remittances and more recently the BPO industry? More to the point, there was no Asian tiger with that profile! 

It took some doing before my Eastern European friends internalized that “the buck stops with them.” They struggled to understand and accept what being accountable, disciplined and proactive meant. But today, despite their commitment to continuous education, training and development, non-performers do get canned!

And just like individuals and enterprises, nations go through their own development – and become “mature adults and contributing members of the global community.” For example, a recent news report says that Indonesia is biting the bullet to be able to aggressively attract foreign investment. But we're still debating its pros and cons? Because no one is accountable – thus we pay the price as in a culture of impunity and the absence of the rule of law! And if true, it would not be surprising that even in full view of the world the rehabilitation efforts in Tacloban have not been spared of our brand of corruption and collusion? No wonder Pope Francis said, we sinners could be forgiven but not the corrupt!

Or for that matter, whether it's the Bataan Nuclear Power Plant or NAIA 3 or Mactan airport or whatever, the common good is simply not in our instinct? Isn’t it a shame that our energy or power crisis and our pitiful levels of investment have been the biggest barrier to PHL economy – and thus the widespread poverty that we claimed we care about – yet what conversation are we having?

Are we bogged down by “pa-pogi” or pulling rank – given our value system where oligarchy, political dynasty, the ivory tower of academe, if not the church, would be tops of the national agenda? Are we so “sabog” – or all over the place, if not self-centered – that we can’t move the nation forward? [It brings to mind how the Defense Secretary Robert Gates described the US Congress in his memoir: “uncivil, incompetent in fulfilling basic constitutional responsibilities,” “hypocritical, egotistical” and eager to put “self . . . before country.”]

Who is accountable – we all are? Sadly, “we don't know” what accountability means? How could Indonesia and Vietnam have less hungry people? How low are we willing to go? 

Sunday, January 12, 2014

“A whole hierarchy of people [needing] to agree . . .”

“. . . that a new idea is good . . . is [why] big companies [that] have plenty of great ideas do not innovate.” [Ben Horowitz (Co-Founder and Partner, Andreessen Horowitz), Can-Do vs. Can’t-Do Culture,, 1st Jan 2014] “As a venture capitalist, people often ask me why big companies have trouble innovating while small companies seem to be able to do it so easily. My answer is generally unexpected. Big companies have plenty of great ideas, but they do not innovate because they need a whole hierarchy of people to agree that a new idea is good in order to pursue it. If one smart person figures out something wrong with an idea — often to show off or to consolidate power — that’s usually enough to kill it. This leads to a Can’t-Do Culture. The trouble with innovation is that truly innovative ideas often look like bad ideas at the time. That’s why they are innovative — until now, nobody ever figured out that they were good ideas. Creative big companies like Amazon and Google tend to be run by their innovators. Larry Page will unilaterally fund a good idea that looks like a bad idea and dismiss the reasons why it can’t be done. In this way, he creates a Can-Do Culture.”

And from the Harvard Business Review, Dec 2012, Reclaim your creative confidence, Tom Kelley and David Kelley: “Most people are born creative. As children, we revel in imaginary play, ask outlandish questions, draw blobs and call them dinosaurs. But over time, because of socialization and formal education, a lot of us start to stifle those impulses. We learn to be warier of judgment, more cautious, more analytical. The world seems to divide into “creatives” and “noncreatives,” and too many people consciously or unconsciously resign themselves to the latter category . . . Students often come to Stanford University’s “” (which was founded by one of us—David Kelley—and is formally known as the Hasso Plattner Institute of Design) to develop their creativity. Clients work with IDEO, our design and innovation consultancy, for the same reason. But along the way, we’ve learned that our job isn’t to teach them creativity. It’s to help them rediscover their creative confidence—the natural ability to come up with new ideas and the courage to try them out. We do this by giving them strategies to get past four fears that hold most of us back: fear of the messy unknown, fear of being judged, fear of the first step, and fear of losing control.”

Why is PHL industry uncompetitive? It is not surprising given what Rizal saw over a hundred years ago, i.e., we’re backward and anti-progress? And we can substitute economy or nation for industry and the picture doesn’t change? And I've shared before how my Eastern European friends struggled yet wanting to pursue free enterprise – after decades under Soviet rule – learned to embrace a Can-Do Culture.

It is not easy for an entire nation to take such a leap, but if PHL industry wants to move up to the next level, especially with ASEAN integration, it must. Because if our local enterprises aren't regionally competitive, they could be takeover targets by regional behemoths. And so while for decades we were able to raise barriers against foreign interests, ASEAN would bring those barriers down. In other words, we are no longer an island unto ourselves. And to thrive in the 21st century, we have to learn and embrace innovation and creativity. And it isn't about Pinoy creativity as we know it – because in more ways than one, Pinoy creativity or abilidad is more about making-do as opposed to value-adding innovation.

And it's no different from what I saw in Eastern Europe. Poverty informs a people's mindset. And so while they once proudly showed off that they could “copy” products from the West and priced them lower, they had to learn that a sustainable economic activity was what they had to aim for – i.e., a virtuous circle. (It also explains why we Pinoys couldn't imagine being able to develop innovative and high valued-added products?) Thus eleven years after I first arrived, they have truly embraced the mantra, and their confidence to do business globally gets stronger each passing day. They have overcome all the fears discussed in the HBR article.

Likewise, they have become “anti-hierarchy” and have espoused the 21st century's demands for rapid, self-organizing teams that are cross-functional and multi-level and even cross-national. We Pinoys can opt to be parochial, inward-looking and wedded to the past. So long as we recognize that water seeks its own level. If Russian billionaires could buy the most expensive New York apartments, Malaysians if not Indians, for example, could buy uncompetitive local Philippine companies. 

Of course, to the Filipino investor or investors, that may be a windfall – but that could be a short-term benefit if the proceeds aren’t invested in an enterprise that would be sustainable beyond the local market. Because it means we won't be able to take advantage of the bigger regional market, and thus the returns to PHL and impact or contributions to the economy would be limited . . . And until we recognize how self-defeating parochialism is, it would get worse before it gets better for Juan de la Cruz! 

Tuesday, January 7, 2014

How predisposed are we to change?

Between “materiales fuertes” and “fear of God” that were instilled in us, how predisposed could we be to change? It appears we are not alone, that receptivity to change is indeed not universal. In theory everyone can change, but in practice most people don’t . . . As a consequence, deliberate attempts to change are far less effective than we like to think, which is why most New Year’s resolutions are never accomplished . . . A seminal review showed that we become more prudent, emotionally stable, and assertive with age, while our energy and intellectual curiosity dwindle after adolescence. In other words, as we grow older we become more calm and mature, but also more passive and narrow-minded. [Tomas Chamorro-Premuzic, If you want to change, don’t read this, Harvard Business Review, 26th Dec 2013]

“So, how can we change? The recipe for self-change is fairly straightforward — it is just hard to implement. In order to change, we need to start by building self-awareness, which is best achieved by obtaining (and believing) honest and critical feedback from others. Next, we must come up with a realistic strategy that focuses on attainable goals, such as changing a few specific behaviors (e.g., more eye contact, less shouting, more smiling, etc.) rather than substantial aspects of our personality (e.g., interpersonal sensitivity, empathy, and sociability). Finally, we will need an enormous amount of effort and dedication in order to both attain and maintain any desired changes — or we will quickly revert to our old habits. In short, change requires self-critical insight, humble goals, and indefatigable persistence. It means going against our nature and demands extraordinary levels of willpower.”

Indeed change takes a lot of doing – especially to learn to cut to the chase and the imperatives of execution. The test of the pudding is in the eating. But the era of innovation – with the coming of the 21st century – brought my old MNC company to Edison and Gates and Jobs. Their thinking process was the reverse of what people learned in school, i.e., they were not into linear thinking; they would “start with the end in view.” [Is it a coincidence that Gates and Jobs dropped out of college?] And that allowed them to separate the wheat from chaff. It is not a natural thought process and which is why innovation continues to be elusive, even in the West. And it took my Eastern European friends eight years to appreciate it and eleven years to truly be committed to it.

[Gates and Jobs are not unique: From “Don't Go Back to School: A Handbook for Learning Anything (Paperback) by Kio Stark. “Here is a radical truth: school doesn’t have a monopoly on learning. More and more people are passing on traditional education and college degrees. Instead they’re getting the knowledge, training, and inspiration they need outside of the classroom. Drawing on extensive research and talking to over 100 independent learners, Kio Stark offers the ultimate guide to learning without school . . . Kio Stark has interviewed a roster of amazing, self-taught talents about how they did it, and distilled those observations into an essential guide,” Clay Shirky, NYU Professor . . . And from her website: “[T]eaches at NYU’s graduate Interactive Telecommunications Program; a graduate of UNC-Chapel Hill and did doctoral work at Yale University’s American Studies program . . . focused on the history of science and medicine, urban studies, and underground economics, and then dropped out.”]

But back to cutting to the chase and the imperatives of execution: From Booz & Company; Strategy+Business, 24th Aug 2010: “Growth through focus: A blueprint for driving profitable expansion. “. . . [G]rowth through more” strategy diffuses the organization’s efforts. It increases the complexity of the organization and its operations. We have found that “growth through less,” or more precisely “growth through focus,” is the best prescription for growth, regardless of the economic environment. This conclusion is based on our own experience in three well-known companies — Kraft Foods, Unilever, and Fonterra Brands (a dairy products business based in New Zealand) — on three continents over 10 years. In all three cases, a deliberate strategy of focusing on a few markets, brands, and categories produced impressive revenue and profit expansion. We have learned that seemingly mature businesses can be energized by making fewer but larger bets and by focusing relentlessly on executing a simple but powerful vision.”

“Growth through focus is not as easy as choosing what strategic bets to make. Rather, it requires the leadership team to follow a systematic approach that spans everything from strategy and vision to execution and measurement . . . Our framework is grounded in three key ideas: focus in strategy, simplicity in communication, and empowerment in execution.”
Should we wonder why despite churning out comprehensive, holistic and inclusive economic development plans for decades, our neighbors left us behind? For example, we keep hammering at poverty but poverty is a given when an economy is underdeveloped, severely in our case, and with an average income of $4,500. (And taking our eye away from the ball of development and its imperatives; which in PHL are: competitive levels of investment, infrastructure and industry.) To be inclusive is not about charity-giving. To be inclusive presupposes that interventions or initiatives have a systemic character. And surprisingly, we seem to conveniently forget that CARP or comprehensive land reform is an example of why we have not attained our desire for inclusivity. Because to be systemic, the design of an economic activity must ensure that the output will be absorbed by the economy in terms of usage or consumption – together with a surplus element – that can then loop back as an input thus creating a virtuous circle. And that is a simple illustration of how innovation could be central to the holy grail of the virtuous circle. High-value added or innovative products can command a market and generate a surplus.

Why are our neighbors able to produce 21st century products, for example? They opened their economies to foreign investment and technology, such that China, for instance, is already into space technology. Yet over 30 years ago Deng Xiaoping had to appeal to the West: we need your money and your technology if we are to lift our people from poverty.

Why can’t we wrap our heads around Deng’s logic? The HBR article would in fact confirm that Deng was a rare specimen. And he was in his early 20s while overseas, first in France and then in Russia, when he formed the belief after he saw how Russia could also use foreign investment and technology. And in those days whatever bit of technology China had was courtesy of Russia. We had a Rizal over a hundred years ago, would we have a Deng in this generation or the next? 

“In short, what the Philippines yearns for is a more “effective” state and more “competitive” market at the same time.” [Richard Javad Heydarian, Philippine electricity crisis: How regulatory capture undermines emerging markets, Huffington Post, 23rd Dec 2013] “. . . [O]verlooked are the perils of privatization in underdeveloped markets, where you have a tiny, oligarchic private sector, which lacks capital, expertise, and – above all – appreciation for collective interest, but has an unshakeable political grip on the political economy.”

One could say Amen . . . more so if the article explained how to address the capital and the expertise lack and that of the collective interest. Wasn’t government supposed to provide all that before? But as we know we’ve had the crisis since the time of President Ramos. We don’t have to reinvent the wheel but rather benchmark and recognize what our neighbors have done. 

And we can’t have an “effective” state if Juan de la Cruz doesn’t grow up – we are part and parcel of our culture of corruption . . . which comes with the culture of impunity? They are two sides of the same coin? And if we are to acquire the capital and the expertise, we can't be an island unto ourselves? Deng saw the light when he was in his early 20s . . . And wrote a Moldovan journalist: “Like America, Moldova is a young nation. The difference is, we act like one. In contrast to Americans, who strive towards their dreams, Moldovans prefer just to dream. Like teenagers, we want all the privileges of grown-up life but without its responsibility.” [Vladimir Lorchenkov, The New York Times, Op-ed, 26th Dec 2013]

Unlike the Moldovans, we Pinoys shouldn't prefer just to dream? I could relate to the journalist having spent most of the last eleven years in Eastern Europe; these people are no less patriotic than Pinoys yet they don't mince words to criticize themselves. And so I talk about them because they keep teaching me about “reality” – which was what my late Jesuit friend tried very hard to impart to our smallish Friday club.