Tuesday, October 7, 2014

Linear thinking: missing the forest for the trees

Or why Steve Jobs defined creativity simply as “connecting the dots.” News item: Gov’t mulls $600-M fund for auto sector, Louella D. Desiderio, The Philippine Star, 2nd Oct 2014. “The government is mulling investments amounting to $600 million to help make the country’s automotive industry competitive . . . The government is investing in the automotive industry as it is seen to support the goal of making growth inclusive through the creation of more jobs. This is not about producing a car made in the Philippines. No. It’s about generating jobs. It’s about making sure there are many jobs we can create here . . .”

Question: How do these dots connect (a) to help make the country’s automotive industry competitive and (b) it’s about generating jobs?

In fairness, the article continues: “We’re still talking (about) the amount. It is not yet final...We’re still looking at an amount that can work over three years or five years, depending on how it goes . . . [T]he government is also still studying how the fund would be used and deployed. The investment would be sourced from the government’s regular budget.”

What dots are we connecting? (a) The amount, (b) that can work over three or five years, (c) funding use and deployment and (d) sourced from the government’s regular budget. But let’s get back to the above two dots: (a) to help make the country’s automotive industry competitive and (b) it’s about generating jobs?

Is there “a disconnect” there? There is until we define what “to make the industry competitive” means. For example, competitive means it is able to produce products that consumers prefer and buy over those from other countries. And thus it will generate the requisite volume and income to be able to sustain growth and profitability and thus create “many jobs.”

That is a fundamental given in a free market – and we Pinoys like to claim that we are more experienced in democracy and free enterprise than our neighbors? Sadly, the evidence may not bear that out as reflected in our being regional laggards? For instance, we have yet to recognize that there is no black hole [expressed in our fatalism like “bahala na”] between the input of investment and the output of sustainable profitable growth? Precisely why the global community has been monitoring nations against such measures as creativity, innovation and competitiveness. Investments don’t yield their desired outcome (and multiplier effect) in today's globalized world when a country lags in these measures. 

In short, the government budgeting and announcing some big number to supposedly create jobs is mere rhetoric when the dots aren’t connected like we witnessed over decades? When I was a young boy we had the EEA – Emergency Employment Administration. And many others followed . . . all to naught! Why? Beyond the imperative of a vision for PHL – which our string of leaders past and present have yet to set and articulate – is our inherently corrupt system, and it starts with political patronage and influence peddling and thus crony capitalism and oligopoly? And if we look elsewhere there have been truly serious job-creation efforts that we could learn from like those from centrally planned economies or former Soviet satellite countries as well as that of the unification of East and West Germany, and they all couldn’t deliver on the promise.

And so what we must ask ourselves is: why are we lagging in erecting the building blocks of economic growth and development? [In fact we Pinoys need to learn to ask ourselves why as a matter of habit if we are to learn to take responsibility for what has happened to Juan de la Cruz. It is the door that opens to what can be called the problem-solving culture of advanced nations. It is how to question the status quo or authority. We are too subservient and need to develop our curiosity. It is why children are more creative.] For example, our automotive industry is not that young, but have we benchmarked our efforts against those of our neighbors? If our mental model after all these decades hasn’t changed given our inward-looking bias – thus perpetuating our parochial cacique system and structure – as night follows day, garbage in . . . garbage out will play itself out?

We can populate our institutions with technocrats schooled in financial models and then some, but if the mindset of Juan de la Cruz remains static, we can’t move beyond square-one in economic development. And models notwithstanding their popularity can go outdated – whether it is Porter’s strategy model (or five forces analysis) or the Balanced Scorecard. And that is why it is important to recognize what undergirds a model, i.e., it is about “model thinking” which by definition is dynamic as opposed to being a static model per se.

Said differently, there is a limit to science. Models may be science- or evidence-based but man’s knowledge is very limited. There is the vast unknown that even Einstein had to acknowledge. For example, man had to evolve from the world is flat and the earth is the center of the universe to the earth is round and it revolves around the sun just like the other planets. And the best man can do is estimate the number of galaxies – between 100 billion to 200 billion – given the vast unknown is indeed unknown.

Against that backdrop and the reality of the world, where do we in PHL stand? Given how we value oligarchy and our cacique masters, our mental model is one of permanence thus undermining curiosity, discovery and creativity, while reinforcing our hierarchical system and structure – that is more pronounced than in other parts of the world? And, not surprisingly, we in the elite class believe we have the answers – when openness, transparency and diversity are imperative in problem-solving and more so in the pursuit of progress and development? And we can start by benchmarking our efforts against those of our neighbors, beyond simply mulling an idea?

Even Singapore had to learn how to build an airport and they went to school in Taiwan before they erected their first modern airport. They just didn't mull an idea. There is such a thing as learning from others despite our claim to “alam ko na ‘yan” – “I know that already.” 

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