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]

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