Sunday, August 31, 2014

General George Washington

“The year 1777 was not a particularly good time for America’s newly formed revolutionary army. Under General George Washington’s command, some 11,000 soldiers made their way to Valley Forge. Following the latest defeat in a string of battles that left Philadelphia in the hands of British forces, these tired, demoralized, and poorly equipped early American heroes knew they now faced another devastating winter.” [Great Leadership Isn’t About You, John Michel, Harvard Business Review, 22nd Aug 2014; Brig. Gen. John E. Michel is the Commanding General, NATO Air Training Command-Afghanistan and Commander, 438th Air Expeditionary Wing, Kabul, Afghanistan]

“Yet history clearly records that despite the harsh conditions and lack of equipment that left sentries to stand on their hats to prevent frostbite to their feet, the men who emerged from this terrible winter never gave up. Why? Largely because of the inspiring and selfless example of their leader, George Washington. He didn’t ask the members of his army to do anything he wouldn’t do. If they were cold, he was cold. If they were hungry, he went hungry. If they were uncomfortable, he too choose to experience the same discomfort.”

It was the title of this Harvard Business Review article that caught my attention – “Great leadership isn’t about you” –because of another “drama” that has unfolded in PHL politics, about President Aquino running for a second term which means amending the Constitution. And given the subject was leadership and written by a brigadier general in the US military, it brought memories of the one leadership program that every senior manager at my old MNC company had to attend. And the centerpiece of the takeaway from the program was how a manager’s perception of their leadership style matched those of the people around them – the bigger boss, the peers and the subordinates – a 360-degree view.

And the program would provide insights on how to narrow if not bridge the gaps that may exist reinforced by a one-to-one session with a coach. In short, “leadership isn’t about you!” And it has had an enormous number of graduates globally that the different profiles of successful leadership have been confirmed many times over. And that's why even the US military sent their generals to the program.

Was President Aquino testing the water to assess if the people around him, what he calls his “bosses,” would like him to continue? And going by the rallies and the news reports, he must have heard “the bosses” weren't entertaining the idea?

But there is a sadder dimension to this drama. It simply confirms that we’re a banana republic. It also confirms that we’re all about politics – and politics of the rotten kind. Sadly, while his camp sees it as a “demolition job,” the reality is VP Binay’s reputation has gotten ahead of him, so far ahead that even here in the US, people know about his “rags to riches” story, including how the riches came to be.

Sadly indeed, we keep taking two steps back. And until Juan de la Cruz embraces transparency, we won’t move forward as a democracy. And the leadership program referenced above is meant to stress the point. Great leadership is transparent; it is not about hierarchy. And thank God Pope Francis made that an unequivocal message especially to the Vatican Curia by choosing to be housed not in the papal apartment, for instance.

I pity our NEDA secretary trying his best to drive an economic agenda. But an economic agenda is derived from the people and the leadership, and they are at the core of a nation’s culture, the hopper through which economic initiatives are either squashed or nurtured. For example, in a hierarchical environment, transparency isn't valued in the first place. We can legislate elements of it like via the FOI or the competition law but unless our psyche is heavily tilted to honest-to-goodness transparency, the efforts will represent the path of least resistance that would collapse when push comes to shove – especially given the characteristics of PHL society: political dynasties, political patronage, crony capitalism and paternalism. Translation: to take down political patronage and oligopoly, for example, demands leadership like that of Pope Francis.

And so unless the Philippine church, like Pope Francis did, demonstrates shunting hierarchy, Juan de la Cruz will always be at home in our soft culture – given the church occupies a special place in the Pinoy way of life. But then again, will we appreciate why the pope would demonstrate tough-mindedness and be at home in Wall Street lingo? Francis wanted a leaner, more efficient Vatican administration that would be solidly self-sustaining . . . he despises waste and inefficiency, and he thinks the Vatican can run better with fewer employees.” [This pope means business, Shawn Tully, Fortune Magazine, 14th Aug 2014]

Our soft culture comes from the subservience that Rizal saw and reinforced by Padre Damaso? “Why independence, if the servants of today will be the tyrants of tomorrow?” Even in the West, where there is more openness and diversity, progressive enterprises train managers to manage with respect, how then would we in PHL ever approximate such progressive ways in getting the best in people?

And precisely why we in the elite class like to talk among ourselves – i.e., we think alike. Why would we want it any other way when our quality of life – given our place in PHL hierarchy – is what we’re proud of?

We are younger than America and that would also explain why we’re still a banana republic. But that is giving ourselves a free pass too when our neighbors are likewise younger yet they became Asian Tigers. What we need would be great leaders like Washington. And Lee Kuan Yew and Mohamad Mahathir have similarly demonstrated enviable leadership traits but we chose to nitpick instead of learning a lesson or two from their successes. It is what benchmarking is about, but it demands a great deal of maturity.

And what can we do granted that it’s not easy to replicate America because they founded their nation precisely as the anti-aristocracy and anti-persecution – and thus their commitment to the pursuit of life, liberty and happiness – owing to old Europe? Consider: our younger generation has already demonstrated the penchant to follow the footsteps of their parents; ergo, political dynasties, political patronage, crony capitalism and paternalism shall continue to define us? And not surprisingly, we keep taking two steps back because crab mentality is their natural outcome.

If the leadership that PHL needs is not reflected in Binay then who? Roxas? What should be the conversation and debate about him? For example: He is a personality but did he demonstrate leadership especially given the high profile accorded him courtesy of the administration? What about visionary leadership that PHL sorely needs? PHL is a laggard as the world knows because we lag in basic infrastructure. Roxas was at DOTC where he could have demonstrated a sense of vision and taken the leadership within the cabinet to drive infrastructure development? And at Wack-Wack what did he demonstrate? That he personifies our hierarchical system and structure? Is that what we should be talking and debating about instead of personalities?

Mature politics is what leads to a mature democracy; while our personalistic brand of politics is a confirmation of our adolescence in the exercise of the democratic process. That is why young people are asked: what do you want to be when you grow up? It is to inculcate in their young minds the imperative of setting their sights into the future, the higher the better. For a nation, that means establishing a shared vision as in the common good.

So far we got it all wrong because we continue to value our cacique system and structure – and sadly, personalities. And we only have ourselves to blame. Let's call a spade a spade – if we'd ever to have the chance to be on the road to a mature brand of politics . . . and attain nirvana, a mature democracy. What about socialism? Don't even get there, would be the response of my Eastern European friends!  And we don’t want to play with fire?

Wednesday, August 27, 2014

Misunderstanding our faith – not preserving feudalism?

“To serve his higher calling as a pope of the people, Francis knows, he must continue to keep one eye on the bottom line.”[This pope means business, Shawn Tully, Fortune Magazine, 14th Aug 2014] Francis declared that sound financial management was a pillar of his greatest mission: aiding the poor and underprivileged. That mission was endangered by volatile, unpredictable budgets that careened from modest surpluses to steep deficits. The Vatican’s inept practices had inhibited giving, he explained, and had to stop. ‘When the administration is fat, it’s unhealthy,’ he said. Francis wanted a leaner, more efficient Vatican administration that would be solidly self-sustaining . . . he despises waste and inefficiency, and he thinks the Vatican can run better with fewer employees.”

That is Wall Street lingo which in one word spells “restructuring”. In PHL, we’ve had a history of labor strife because we assumed compassion means being “pro-poor” – ergo, “restructuring” is evil? If we can't streamline private-sector enterprises for efficiency and productivity, for example, what more of government bureaucracy? And so where are we today? Why can’t we move forward as an economy and nation? We have yet to internalize the imperative of creating a sustainable income stream – and being focused on accelerating economic development and moving from underdeveloped to developed economy?

When a nation has insufficient income stream, there is no wealth to spread around. The point needs to be made: the ex-socialists I write often about have understood and are learning to internalize – though it won't happen overnight – that fundamental principle, but which to us in PHL remains fuzzy? Their thinking process has started to shift from being rule-based to principle-driven. For decades bombarded by ideology and Communist rules, they would realize their limitations and impact on their cognitive process. 

Cognitive science has also established certain parameters: “how the mind works must be based on more than ‘common sense’ and introspection, since these can give a misleading picture of mental operations, many of which are not consciously accessible.” [] Help? Enter Steve Jobs, who defined problem-solving as principle-driven, and creativity as connecting the dots. [And here’s a simple exercise: imagine if we have in fact connected the dots, say, from arrival (of a visitor) at NAIA and disembarking to the terminal building to a hotel.  And imagine Pope Francis: he despises waste and inefficiency.”]

To paraphrase President Ramos, the pie is too small! Yet we believe “our GDP in dollar terms is huge” – as an absolute number or in isolation? Indeed it is huge for those bent on raiding government coffers! And economists have figured the context, and that is, our national income per person puts us in the same bucket as other poor countries. And government revenues from taxes are not the spring that generates the nation's income stream. It is the country's total output of goods and services (GDP, for short) that is the spring and from where government revenues are derived.

“It’s the economy stupid,” so said Clinton, during whose time America saw one of the longest periods of economic expansion post-WWII. In PHL we’ve had this disconnect or problem (of cognition) for the longest time because our model has been Padre Damaso – and a hierarchical church that preached compassion and for Juan de la Cruz to be “pro-poor”? Padre Damaso is long gone but Rizal saw through it even then: “Why independence, if the servants of today will be the tyrants of tomorrow?” And thank God Francis has taken it upon himself to expose this dark secret to the world. But is he simply mirroring the activist and the model radical, Jesus H. Christ?

Because we’ve accepted a cacique system and structure as a given, wittingly or unwittingly, we have tied our hands oblivious to the global nature of the 21st century world that is going to get more competitive not less. It’s a closed system compared to the open and diverse characteristics of the egalitarian model (the operative words being open and diverse and that a body of knowledge has established would explain the advancement of the West in human development) and thus we shouldn’t be surprised why we’re not regionally much less globally competitive. Net, we are able to play only in the “little league” that we in the elite class rules. It is the world we've created, a nation that serves the purposes of our cacique masters. If that remains hidden from us because of the blinders that is our culture, it will get worse before it gets better for Juan de la Cruz – and why tyrants of the world have been punished by the community of nations.

“The wildly popular Francis is more than a pontiff of the people. He’s an elite manager who’s reforming the Vatican’s troubled finances. The new pope wanted to talk about money. That was the message that went out to a group of seven prominent financiers—major Catholics all—from around the world in the summer of 2013. Barely five months after the shocking resignation of Pope Benedict XVI, Pope Francis had summoned them to assemble at the seat of holy power, the Vatican. They knew their general assignment: to create a plan to restructure the Vatican’s scandal-plagued finances.” [ibid.]

“With little preamble, he began outlining his strategic vision, in an approach described by one participant as ‘highly managerial’ . . .  [T]he pope explained to the group that for his spiritual message to be credible, the Vatican’s finances must be credible as well. After centuries of secrecy and intrigue, it was time to open the books to the faithful. Strict rules and protocols must be adopted to end the cycle of scandals that had plagued the Vatican in recent years . . . ‘Now I want solutions to these problems, and I want them as soon as possible.’ With that, Francis left the group to figure out the details.”

“What’s far less appreciated is his intense engagement—and astounding success—in overhauling the Vatican’s finances and pushing the adoption of modern practices it had resisted for decades. The changes are massive,’ says René Brülhart, chief of the AIF, the Vatican equivalent of the Securities and Exchange Commission. Now a clear game plan has been put in place, and we’re really part of the international community.”

“What has been less appreciated by outsiders until now is the pope’s elite managerial skill set. Like a great CEO, he has the ability to set a strategic vision, then choose and motivate the right people to make it work. His rapid overhaul of the Vatican’s finances is both one of the most unusual case studies in the annals of business and one of the more instructive.”

“Indeed, Francis has brought in some of the biggest brand names in the world of business. KPMG is implementing uniform, internationally accepted accounting standards to replace the Vatican’s previous crazy quilt of bookkeeping. EY (the former Ernst & Young) is scrutinizing management of the Vatican’s stores, utilities, and other municipal services. Deloitte & Touche now audits the accounts at the Vatican bank. And Spencer Stuart has recruited top management talent from around the globe. Heading the effort to restructure media operations, assisted by McKinsey & Co., is Lord Christopher Patten, a former head of the BBC and the last British governor of Hong Kong.”

What can we in PHL learn from Pope Francis? Do we have a strategic vision for PHL such that we matter-of-factly channel fiscal and monetary policies to rapidly erecting the fundamentals of an ecosystem – as in basic infrastructure and an industrial base – in order to establish a solid economic platform that will not only attract FDIs, but fuel an economy that is like a well-oiled machine? Have we ever considered bringing some of the biggest brand names in the world of business to challenge us, to rethink and restructure our enterprise and become that well-oiled machine? But because we like to look backward and inward and not forward and outward, will we ever come close to approximating the managerial skill set of Pope Francis?

“The pontiff does not talk about balance sheets and cash flow. He leaves the numbers to the experts. His forte is leadership. Like any good chief executive, he knows that the culture of an organization is established at the top . . . It’s impossible to hoodwink him. By getting the views of many participants—both Vatican officials and lay advisers—in all of his reform initiatives, the pope quickly determines if his instructions are being implemented or blocked by the old guard. If he sees resistance from old-school directors, he’ll quickly make changes, as when he replaced the entire board of the AIF, the financial regulator.” [ibid.]

Why are we poor? Because we have been in denial (e.g., that we are rich pretending to be poor?) for the longest time and haven’t had the leadership that will put PHL on the right path? And do we want to preserve our cacique system and structure and confine us to the dark ages?

Tuesday, August 26, 2014

Vision, diversity and innovation

It's a very pleasant movie experience, was my reaction as we stepped out of the cinema in suburban New York with a couple-friends. It was, of course, “The Hundred-Foot Journey.” And I repeated it as my wife and I were driving back home, and she interjected, you mean wholesome.

The four of us belong to the expatriate community – thus the movie resonates – and count different nationalities among our many friends. And just the week prior we were with an old friend visiting from Sydney, who used to live in the neighborhood and for the last twenty years (as we recalled and counted) would invite friends to a summer mud-bug party. But this year the Danish caterer recommended against it – but we didn't complain to be served lobsters instead. But the biggest draw could very well be the tagline on the invitation: “We will have very good Sancerre”.

It's an interesting international crowd – from a Harvard professor to a pharmaceutical company lawyer to a board member from Madison Avenue to a wealth management adviser to a headhunter to a group of sailors that race on the Long Island Sound, among others, and spouses from the different corners of the world – where chitchats would cover continents. As I would tell my Eastern European friends, it is the time of year when I must be in New York to catch up on our version of social media.

Whenever the word vision comes up, I’m reminded of the then young Bulgarian that my wife and I met eleven years ago in the middle of nowhere and had a cottage industry that was yet to be profitable. We want to be the Procter & Gamble of Eastern Europe. In five minutes I was convinced he was going places, I recall telling my wife on our flight back to New York. And, of course, I saw nuggets of excellence and creativity from the product packs they proudly showed. I had been involved in countless product introductions and my old MNC company had to pay big bucks to design houses to come out with product packs that would appeal to a global audience. This group of young Bulgarians had it! And to have such a vision puts them head and shoulders above most everyone we've met in Bulgaria.

To have a vision of two and then three Michelin stars in the middle of nowhere in the South of France puts them head and shoulders above most everyone in the restaurant business even if it was just a movie. Of course we Pinoys know about fine food; and I remember Y2K when our group of three couples were in Paris and greeted the New Century at RestaurantHélène Darroze, who has two Michelin stars in both her Paris and London (at the Connaught) places.

And that’s precisely why we in the elite class better get off our high horse especially when Juan de la Cruz can’t even have two square meals a day. “Archbishop John Du of Palo appealed to the VIPs not to take center stage during the papal visit. Please give way to the poor for they are the main reason the Pope will come here.” [VIPs, politicians not invited to Pope’s lunch, Ador S. MayolInquirer Visayas, 18th Aug 2014] Because the world has accepted our class doesn't mean that we're doing fine.

What is our vision for PHL? How many times did embarrassment creep into us whenever we arrived at NAIA, for example? It is a microcosm of our failures as a class and as a nation? The good news is many of us are starting to look our failures in the eye. And which is why in this blog I would quote verbatim what some of us are saying. This blog is not a literary piece or for leisure weekend reading. I am simulating brainstorming sessions where people would engage in mind-dumps and verbalize their streams of consciousness. But then, the blog would come up with simple models that would connect the dots. We may have a bigger challenge than the typical MNC, for example. And if they employ the best and the latest thinking models, we better try to approximate some of them.

But the worst thing we can do is to stay on that high horse. If we didn’t possess God-given talents and resources that would be fine. We can’t claim “Pinoy abilidad” on one hand and live with mediocrity on the other. 

And precisely why we have to learn diversity. There is a body of knowledge that confirms that brainstorming sessions yield better outcomes when there is diversity – over those groups that think alike. The good news is we are in the process of embracing our brothers and sisters from the south. But are we undermining the constitution in the process? Someone wrote about solidarity trumping all. Should we start with solidarity then before we indulge in slicing the salami further? In other words, we have to fight our instincts of parochialism. “Large numbers of luxury properties [owned by oligarchs of Kazakhstan, the oil-rich of the Gulf and the newly affluent of Asia] sit empty most of the time, palatial slivers of big portfolios. If Vladimir V. Putin is serious about defending Russian speakers wherever they are, he may have to annex the Royal Borough of Kensington and Chelsea, where Russian is a lingua franca on the King’s Road.” [The Draw of the New City-States, Roger Cohen, The New York Times, 15th Aug 2014]

“The Big Fat Greek Wedding” had our family hysterical as my American son-in-law saw lots and lots of similarities in our mixed family. And likewise “The Hundred-Foot Journey” as we all saw in Papa many of our Indian friends . . . And then very subtly yet loudly in the movie: “Innovation. Innovation. Innovation”. That is how a vision of a 3-Michelin star would come about. Disclosure: Fundamental to my engagement in Eastern Europe is teaching them about innovation and why creating a structure with marketing and R&D under one roof was one of our first initiatives – to take their blinders off that “poor Bulgarians could only afford packaged goods at 50 euro cents,” and let their imagination soar to develop and pursue product ideas higher and higher the value chain . . . because the world is the market.

In the Philippines we valued being “pro-poor” (forgetting that what marketers call product segmentation doesn’t mean ignoring poor consumers) while reinforcing parochialism? Of course, we created a handful of billionaires while being pro-poor and parochial but consigned PHL to the bottom of the pyramid because we didn't develop 21st century innovation and R&D capability? Now we want to talk about it and even launched a contest for the next Mark Zuckerberg. That is well and good. But R&D is about discovery and therefore about doing (beyond talking) and collaborating. “Three decades of research has clearly revealed that innovation is most often a group effort. Thomas Edison, for example, is remembered as probably the greatest American inventor of the early twentieth century . . . But he hardly worked alone . . . perhaps Edison's greatest contribution was his artisan-oriented shops—a new way of organizing for innovation he created that has evolved into today's R&D laboratory with its team-based approach.” []

Obviously learning and pursuing innovation cannot yield results overnight. Which is why my original one-month commitment has extended to 11 years. But as importantly, learning to assemble and diligently erect the requisite building blocks is key. Yet even in my old MNC company, we had no shortage of “hotdogs” – people that come up with bright ideas and proudly so. But the test of the pudding is in the eating. If the bright idea can’t stand the test of time, it’s just a flavor of the month! And that’s what we’ve been engaged in for so long in PHL? First our colonizers were evil. Evil was there in Eden. Evil was there among the chosen 12. Evil is everywhere including in our midst except we decided to perversely define it as nationalism, that is, oligopoly stemming from a culture of impunity and political patronage, the perfect storm behind PHL's failed economy – if not yet a failed state.

So, what are those building blocks that we’ve ignored while we indulged in Pinoy abilidad? We mustn’t stop talking about basic infrastructure and an industrial base until they come to fruition. They must be President Aquino’s priority, not justifying DAP – a classic Pinoy abilidad – and sparring with the SC? They are the core of an undertaking or an enterprise like an economy or a nation. Of course we need education and ICT (Information and Communications Technology). Progressive MNCs invest heavily in education and training to address the gaps between higher education and industry, and also in ICT. But let’s get this sinking ship that is PHL righted first before we indulge the intellect? Not that we don’t need to employ the intellect in infrastructure development, for example, but we probably need nuns shadowing everyone involved to take out the corruption in the system. That is kinder and gentler than hanging them at the Luneta.

Friday, August 22, 2014

Complexity isn’t it

Four recent articles influenced this posting: (a) P&G’s New Plan: Keep It Simple Stupid, from Barron’s; (b) Decluttering the company, The Economist; (c) Simplifying the Bull: How Picasso Helps to Teach Apple’s Style, a New York Times article; and (d) ADB tags long-term development challenges for the Philippines, from Business World.

And they brought me back to the seven years I was in the Philippine subsidiary of my old MNC company. And I had then formed a hypothesis: despite its complexities, an MNC doing business in 200 markets didn’t have to be caught up in its own web or collapse on its own weight. And the opportunity came to push the envelope – I had to move to headquarters and report to a new regional president. “We will get everyone to Bali. All the country managers as well as the global marketing and technology leaderships. We will sit and listen to each one present their takeaways from the recent rounds of budget reviews – the marching orders they gave their respective organizations for the coming budget year. The object of the exercise is before we all depart Bali, we will all be on the same page.”

Fast-forward: When the regional president had moved on and the next one came, the annual exercise had become much more efficient and so we junked the old finance-driven budget process for a goal alignment exercise. It gained adherents – first the COO and then the CEO – and was enshrined as the way we did business. The lesson: a shared vision and diversity are key in the cognitive process and the successful pursuit of an undertaking or enterprise.

“For the last three years, P&G has labored to cut costs and sharpen its focus on its biggest brands in an effort to revitalize sales and improve profitability. In short, the maker of Tide detergent, Pampers diapers and Olay skin creams wants to catch up to its faster growing rivals. That’s not an easy thing to do for such a large company.” [What is Procter & Gamble (PG) throwing out (?), Johanna Bennett, Barron’s, 1st Aug 2014] “But the consumer products giant has just ended a fiscal year in which net revenue grew a paltry 1%. So it’s decided to get smaller – quite a bit smaller — by shedding more than half of its brands.”

“That’s right. P&G plans to keep 70 to 80 brands and jettison the rest. That’s a massive undertaking, given the breadth of its current portfolio, which includes Head & Shoulders, Old Spice, Max Factor and Hugo Boss. Investors cheered. The stock rose 4% to $80.48, making P&G the best-performing stock in the Dow Jones Industrial Average.”

“PETER DRUCKER once observed that, ‘Much of what we call management consists of making it difficult for people to work.’ Nine years after the management guru’s death, his remark is truer than ever: employees often have to negotiate a mass of clutter—from bulging inboxes to endless meetings and long lists of objectives to box-tick—before they can focus on their real work. For the past 50 years manufacturers have battled successfully to streamline their factory floors and make them ‘lean’. Today, businesses of all types need to do the same in their offices.” [Decluttering the company, Schumpeter, The Economist, 2nd Aug 2014]

“Apple may well be the only tech company on the planet that would dare compare itself to Picasso. In a class at the company’s internal training program, the so-called Apple University, the instructor likened the 11 lithographs that make up Picasso’s ‘The Bull’ to the way Apple builds its smartphones and other devices. The idea: Apple designers strive for simplicity just as Picasso eliminated details to create a great work of art.” [Simplifying the Bull: How Picasso Helps to Teach Apple’s Style, Brian X. Chen, The New York Times, 10th Aug 2014]

“Apple has religiously embodied the notion that function and beauty come from elegant simplicity, and teachers in its internal training program sometimes point to a collection of Picasso lithographs that artfully illustrate the drive to boil down an idea to its most essential components. That drive can be seen in many of Apple's endeavors today, including its product marketing and the design and ergonomics of its mouse.”

“In ‘What Makes Apple, Apple, [a] course that Randy Nelson [who came from the animation studio Pixar, co-founded by Mr. Jobs] occasionally teaches, he showed a slide of the remote control for the Google TV . . . The remote has 78 buttons. Then . . . Mr. Nelson displayed a photo of the Apple TV remote, a thin piece of metal with just three buttons . . . How did Apple’s designers decide on three buttons? They started out with an idea . . . and debated until they had just what was needed — a button to play and pause a video, a button to select something to watch, and another to go to the main menu. The Google TV remote serves as a counterexample; it had so many buttons . . . because the individual engineers and designers who worked on the project all got what they wanted. But, Apple’s designers concluded, only three were needed.”

What can we in PHL learn from all the foregoing? For example: In order to improve the country’s investment climate, the ADB recommends that the country streamline regulations and reduce the time needed for opening and closing businesses. Strengthening the rule of law and police force modernization would also would also help, it added. Local firms must also be encouraged to shift to higher value-added products in order to strengthen the industrial base. To strengthen the economic structure, the ADB recommends that a comprehensive and integrated infrastructure program that emphasizes cooperation between national and local governments be introduced.” [ADB tags long-term development challenges for the Philippines, Business World, 4th Aug 2014]

That’s just one unsolicited advice! And how do we learn to keep things simple? “There is strong evidence that the cognitive skills of the population—rather than simply school attainment—are robustly related to workers’ earnings, distribution of income and economic growth.” [Investing in ‘suprastructure’, Ernesto M. PerniaGisela P. Padilla-ConcepcionRamon L. ClaretePhilippine Daily Inquirer, 3rd Aug 2014] “Our conclusions about how the mind works must be based on more than ‘common sense’ and introspection, since these can give a misleading picture of mental operations, many of which are not consciously accessible. Increasingly, psychologists draw their experimental participants from Amazon's Mechanical Turk [a crowdsourcing Internet marketplace that enables individuals or businesses (known as Requesters) to co-ordinate the use of human intelligence to perform tasks that computers are currently unable to do] and from culturally diverse sources. Psychological experiments that carefully approach mental operations from diverse directions are therefore crucial for cognitive science to be scientific.” []

Consider: Pundits and even respected economists predicting a 7% or some robust GDP growth for the year and/or next wittingly or unwittingly are playing to the crowd, no different from anchors of CNBC, the American financial channel? Sadly, the crowd that will share the spoils is big business – Filipino ones and MNCs, including my old MNC company. We’re no stranger to “a drop in the bucket”? This generation is toast if we don’t undo the mess we’re leaving our grandchildren and great-grandchildren? “[E]ven more will be alarmed, disappointed and indignant when I report today that in 2001, at the start of the new century, we were No.70 in the HDI (Human Development Index) rankings.” [From 70th to 117th: Our saga of decline, Yen Makabenta, The Manila Times, 13th Aug 2014]

If inclusive growth is really wanted, the Philippine government has to look at the reasons FDI is not coming into the country to the extent needed and outlined in the Arangkada Philippines report published by the Joint Foreign Chambers in 2010.”[Asean Integration: Are we ready (?), Henry J. Schumacher/Asean-EU Perspective, Business Mirror, 13th Aug 2014]

When we can’t (a) stop kowtowing to oligopoly (stemming from a culture of political patronage and oligarchy) and (b) focus on and prioritize the basic elements of an ecosystem, we will find ourselves unceasingly throwing darts (aka “Pinoy abilidad”) at our deficiencies – from traffic nightmares to infrastructure-project fiascos to agribusiness, etc., etc. And here lies the disconnect or the problem (of cognition): Where is our: (a) basic infrastructure (e.g., take energy and our celebratory reaction to NAIA 3 that is well past its time, for example) and (b) industrial base – that will produce competitive products and thus find a broader market beyond the domestic market, and indeed it must cover agribusiness? We can’t be talked into tourism being the silver bullet – like OFWs and BPOs earlier. It is a low-hanging fruit but can’t replace industrialization as the Greeks have learned – and even the Italians. In short, a tangible product derived from world-class R&D delivers far greater multiplier effect into the economy because of the quality of the supporting industries it spawns – or why Apple is the largest enterprise generating enormous market capitalization. But that isn’t limited to the West as my Eastern European friends have demonstrated nor to high-tech products because the consumer is human with rational yet emotional and experiential dimensions – and still more mundane needs.

Can Juan de la Cruz keep it simple despite “Pinoy orgullo” which has constantly tripped us? The good news is we're not alone: “There seems to be some perverse human characteristic that likes to make easy things difficult.” [Warren Buffett]

Monday, August 18, 2014

Development, nation-building and the common good

Philippines’ HDI (human development index) value for 2012 is 0.654—in the medium human development category—positioning the country at 114 out of 187 countries and territories. The rank is shared with Uzbekistan . . . The HDI is a summary measure for assessing long-term progress in three basic dimensions of human development: a long and healthy life, access to knowledge and a decent standard of living.” [UNDP Human Development Report] And unfortunately, in 2013, PHL’s rank moved down to 117 while Uzbekistan came at 116.

What? We not only shared our ranking but are now outranked by Uzbekistan (with a 2011 PPP Gross National Income per capita of $5,227 vs. PHL’s $6,381)? I’ve spent most of the last 11 years in Central and Eastern Europe (CEE) to support the private sector – commencing at the time Bulgaria and Romania were pursuing their accession into the EU – and visited very tough territories, but not Uzbekistan.

And we worked with a cross-section of their societies during the two years we organized, managed and trained the sales force of my Bulgarian friends to be able to do business beyond their country – especially institutionalizing the concept of partnership with the trade and retailers, i.e., manufacturers and retailers can serve the consumers better if they’re partners and not adversaries. For example, we didn’t do marketing for marketing’s sake but were heavily invested in continuous product innovation so that consumers would find value in the day-to-day products that they buy – from a rational, emotional and experiential standpoint. And that was a major departure from their mindset that we were a cheap, poor imitation of Western brands. And to this day whenever we do store checks around the region, there would always be need to focus them on performance improvement and continuous improvement. In Pinoy vernacular, “pwede na ‘yan” – or good enough – is never good enough! [N.B. When we expanded our reach around the region, we announced that we would only do business with those that would embrace our culture, not just a pledge, of integrity. An environment accepting of corrupt practices emanating from their then Communist masters was not an excuse – they must change on a dime. Yet in PHL we sincerely believe change takes forever – because that is our definition of compassion? But Francis got rid of the entire leadership of the Vatican Bank and reconstituted the Curia itself on a dime?]

And so with a bit of curiosity, I re-read a recent report from a business unit of my Eastern European friends: “Currently 98.5% of HPC business is in the focus 10 countries outlined in our April Management Meeting (Bulgaria, Romania, Ukraine, Moldova, Macedonia, Georgia, Armenia, Belorussia, Serbia and Poland).” It appears we can’t be everything to everybody and are confirming Pareto’s principle. Some Western MNCs cover as many as 30 CEE countries and in our case we’re generating almost 100% [of our HPC] business from a third of the region.

And not surprisingly, there was this news report: After years of expansion into areas like pet food and beauty products, Procter & Gamble announced on Friday that it would cut as many as 100 brands from its arsenal to focus on others, like Tide, that made the company a powerhouse over the decades . . . The move is part of a strategy to improve the company’s financial performance by doubling down on about 80 brands that generate 95 percent of the profits and 90 percent of sales . . .” [Procter & Gamble to Streamline Offerings, Dropping Up to 100 Brands, Rachel Abrams, The New York Times, 1st Aug 2014]

Translation: even a P&G has to respect Pareto? Reads their website: “The Power of Purpose. Companies like P&G are a force in the world. Our market capitalization is greater than the GDP of many countries, and we market our products in more than 180 countries. With this stature comes both responsibility and opportunity. Our responsibility is to be an ethical corporate citizen—but our opportunity is something far greater, and is embodied in our Purpose.”

What can we in PHL elite class learn from the reality of the world? That “Pinoy abilidad” has no match to the world we live in – meaning, like P&G, we must learn to adapt? It is not about being copycats of the West where because of hubris many of their countries have been brought down to earth?

But it doesn’t mean either that we can dictate our beliefs on the rest of the world? “Access to knowledge and a decent standard of living” are two of the three dimensions of human development. We can’t assume that we have all the knowledge in the world “to lift all boats”? We are among the most underdeveloped – confirmed by the comparison to Uzbekistan – our happiness index and elite-class hubris given our quality of life, notwithstanding?

Should we go back to the drawing board and relearn what human development is? What about nation-building? Wikipedia:“Nation-building aims at the unification of the people within the state so that it remains politically stable and viable in the long run . . . Legitimate authority in modern national states is connected to popular rule, to majorities. Nation-building is the process through which these majorities are constructed . . . Nation builders are those members of a state who take the initiative to develop the national community through government programs . . . Nation-building can involve the use of propaganda or major infrastructure development to foster social harmony and economic growth . . . However, many new states were plagued by tribalism . . . This sometimes resulted in their near-disintegration . . .”

What about economic development? Wikipedia: “Economic development is the sustained, concerted actions of policy makers and communities that promote . . . standard of living and economic health . . . Economic development can also be referred to as the quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capitalcritical infrastructure, regional competitivenessenvironmental sustainabilitysocial inclusionhealthsafetyliteracy, and other initiatives.”

“The scope of economic development includes the process and policies by which a nation improves the economic, political, and social well-being of its people. The University of Iowa's Center for International Finance and Development states that: 'Economic development' is a term that economists, politicians, and others have used frequently in the 20th century. The concept, however, has been in existence in the West for centuries. Modernization, Westernization, and especially Industrialization are other terms people have used while discussing economic development. Economic development has a direct relationship with the environment. Although nobody is certain when the concept originated, most people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism.”

And finally, the common good. Wikipedia: In philosophy, ethics, and political science the common good or common weal is a specific ‘good’ that is shared and beneficial for all or most members of a given community. The good that is common between person A and person B may not be the same as between person A and person C. Thus the common good can often change, although there are some things — such as the basic requirements for staying alive: food, water, and shelter — that are always good for all people.”

This blog has raised the challenge to our institutions. The good news is the church, through the CBCP, has acknowledged that it is a sick institution. But what about the others? The family, education, government and society-at-large? Has our soft culture paved the way for paternalism and populist leadership – and they came hand-in-glove with tyranny that made us a most corrupt nation?

What are we missing? Transparency and visionary leadership, for example? They are elements that the West that has led the world in human development has discovered. See above re most people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism.” And a Singaporean scholar has reinforced the treatise by arguing that the recent coming of age of Asia – referring to the Asian Tigers – could be traced to their ability to learn from these Western models.

We don’t want to be the example of the species that Darwin described that have gone extinct because they didn’t have the ability to adapt to the world?

In the meantime we know that we can’t mitigate our cacique hierarchical system and structure via our failed land reform program? Is the barrier our belief system? For example, we must first want to pursue an egalitarian model and create the requisite symmetrical ecosystem – or we shall indeed leave to the generations to come a PHL that belongs to the dark ages, not the 21st century?

Thursday, August 14, 2014

A vision of the future we can create – not more of the same

One word in the vernacular that expatriates to the Philippine subsidiary of my old MNC company would learn very quickly is“sipsip,” meaning, a suck-up. News item: “Palace: Aquino will step down in 2016.” “Daang matuwid” was a blessing. And we must be thankful to the president for his courage. But whether we count PHL independence from the time of the Spaniards or Americans, we’re not that young anymore – we can’t keep entertaining ideas like a coup and messing up with the president’s term of office? Not everything we see in the US – whether FDR or Bloomberg – is a “license to kill”.

What we want to mirror are ‘best practice’ models from wherever. But if we stick with the US for a bit, their commitment to the pursuit of life, liberty and happiness is something we may want to understand, in the same manner that the Brits looked into it. And we can also look at our neighbors; but then again, we ought to focus on best practices. For example, our neighbors are younger yet they became Asian Tigers. Bottom line: Can we just learn to grow up and toss “sipsip” out the window – unless we want to be a nation adrift? “[T]he governing class inexorably develops an unrestrained craving for power and self-aggrandizement which ultimately manifests itself in the subjugation of the populace.” [Steve McCann, A nation adrift, American Thinker, 13th Nov 2012]

And we the elite class can do something about it? Because we have been party to the perpetuation of our cacique system and structure? Has Juan de la Cruz embraced the imperative of creating his own future? Can we say that we have a vision for PHL, for instance? And absent a vision, we can’t put together the ecosystem – or what makes an undertaking or enterprise tick – of an economy or a nation because 100 million of us would be at cross purposes, with “the populace subjugated by the ruling class”? Translation: inclusive growth or an inclusive economy is not about CCT. It is about economic development. Wikipedia: Modernization, Westernization, and especially Industrialization are other terms people have used while discussing economic development . . . Although nobody is certain when the concept originated, most people agree that development is closely bound up with the evolution of capitalism and the demise of feudalism.”

“In its new publication ASEAN 2030: Towards a Borderless Economic Community, the bank looked at long-term development issues for members of the Association of Southeast Asian Nations (ASEAN). The region is expected to merge into one economic community in 2015.” [ADB tags long-term development challenges for the Philippines, Business World, 4th Aug 2014] “The Philippine economy is characterized by a relatively small, manufacturing sector, low investment, and the presence of several imbalances,” the ADB said.

“Uneven productivity across sectors, huge output gaps between large corporations and SMEs (small and medium enterprises) and unbalanced geographical distribution of income all need to be corrected to achieve sustained growth in the long run. The lender noted that the country’s high poverty incidence and the concentration of wealth in the hands of a select few pose challenges to the effective implementation of inclusive growth strategies. Prospects for environmental sustainability have worsened in recent years due to progressive deforestation and increasing urban pollution,” it said.

But then, “Having a young and educated work force, brought about by reforms in education, will make Filipinos very competitive compared to its peers in Southeast Asia . . . This, according to National Competitiveness Council private sector co-chair Guillermo M. Luz, will sustain the Philippines attractiveness as a “very good investment site well beyond 2030.”[Young work force to be a boon to investment-led growth, Daryll Edisonn D. Saclag, Business World, 7th Aug 2014]

In other words, can we ever put two and two together? How do we say that in the vernacular? But that’s why Rizal had to create Padre Damaso – to dramatize the state of incongruity and cognitive dissonance that we've accepted as our normal?

“Where did he learn to lead like this? Where does his vision come from? And what might the rest of us learn from him?” [Chris Lowney, Pope Francis, Why he leads the way he leads; Loyola Press, 2013, pp. 1-6] “After all, like the pope, we sometimes find ourselves thrust onto the metaphorical balcony: step up, it’s time to lead this department, your family, this classroom, or, as the case may be, the whole Catholic Church.”

“The skills I have most needed [as board chair of one of America’s largest health care and hospital systems] were not the narrow technical ones, but broader, all-encompassing ones, like making complicated decisions when the facts and my values collide; managing my priorities when fifteen things must be done before lunch; knowing when to play decisions safe and when to take major risks; and ultimately, figuring out what’s most important in life.”

“Too often those in leadership positions seem preoccupied only with their own status or income. They are unable to inspire or unite us; they are not imaginative enough to solve the seemingly intractable problems that plague us; they are afraid to make tough choices or even to level with us; and they are insufficiently courageous to lead us through challenge and drive change. Bluntly put, something is broken. We need new ways of reimagining leadership and better ways of preparing ourselves and others to lead.”

“Enter Pope Francis, the Jesuit pope. The paradoxes begin right there . . . [W]hy is a Jesuit pope in any way paradoxical? Simply because the Jesuit founder detested overweening personal ambition . . . Ignatius wanted Jesuits to be humble because Jesus, their role model, was humble. But he also understood how ambition and political infighting can shred organizational morale. So he was trying to rein in the human tendency to stroke one’s ego by seeking status, power, and advancement.”

“Pope Francis inherits a Church with wide-ranging, long-standing challenges; serious clergy shortages in dozens of countries, dwindling church attendance throughout the developed world, moral authority damaged by sex-abuses scandals, and, to judge by the public comments of various cardinals, a dysfunctional Vatican headquarters.”

“Such complex, multifaceted problems will not be resolved easily. Deep change will be needed and the pope’s early words and deeds make clear that he is committed to igniting massive cultural change across his Church.”
“Change agents certainly need competence and good judgment to succeed, but they also need courage, political savvy, iron will, and lots of luck.”

In the Philippines we believe that our culture is a great positive that we must embrace? And so we want more of the same?

Can we have visionary leadership like the one demonstrated by Pope Francis? We don’t need a pope, but we need one that can see beyond paternalism and populism – and retail politics. And even beyond “Pinoy abilidad”. That we can create our own future that is truly Filipino – i.e., we’re no longer, for the longest time, the colony of Spain or America? That, of course, presupposes change . . . as in maturity? But can we change, can we grow up? If we can’t . . . how can we ever put two and two together?