Tuesday, November 11, 2014

Change needs a platform, not just a program

And better yet, if it is engineered as in engineering: the action of working artfully to bring something about. Or engineer: skillfully arrange for (something) to occur.” [Google]. And from Wikipedia: Engineering (from Latin ingenium, meaning “cleverness” and ingeniare, meaning “to contrive, devise”) is the application of scientificeconomic, social, and practical knowledge in order to inventdesign, build, maintain, and improve structures, machines, devices, systems, materials and processes. The discipline of engineering is extremely broad, and encompasses a range of more specialized fields of engineering, each with a more specific emphasis on particular areas of applied science, technology and types of application.”

Do they explain why the world appears to be in a funk? Mired in Mediocrity,” Vanessa Friedman, The New York Times, 31st Oct 2014.“Neda’s Balisacan: PHL must work hard to diversify growth drivers,” Bianca Cuaresma, Business Mirror, 1st Nov 2014. “The embattled Pope Francis,” Elfren S. Cruz, BREAKTHROUGH, The Philippine Star, 2nd Nov 2014. “Good stories are better news,” Babe Romualdez, BABE’S EYE VIEW, The Philippine Star, 2nd Nov 2014. “Binay et al. warned on ill-gotten wealth,” Federico D. Pascual Jr., POSTSCRIPT, The Philippine Star, 2nd Nov 2014. Identifying the Biases Behind Your Bad Decisions,” John Beshears and Francesca Gino, Harvard Business Review, 31st Oct 2014. PH to focus on economic issues in APEC Summit,” Genalyn Kabiling, Manila Bulletin, 31st Oct 2014.

Is it any wonder why Google hires tons of engineers? One thing I noted when I first arrived in Eastern Europe was the abundance of engineers and quants among the people that invited me. And I thought they will make their mark. I remember asking if they had the gross margin numbers for their different products and everyone around the table downloaded them by brand, by product and by SKU. And the numbers revealed why they were unprofitable thus the risk they faced – and why they were seeking help. They were born and raised socialists, the profit motive was not instinctive. “And first things first: we shall focus on driving margins; and ideally in this business, so that you are able to compete in the marketplace, is to get to 50 margins.” And their jaws just dropped!

Change needs a platform, not just a program. “Transformational-change initiatives have a dismal track record. In 1996, Harvard Business School professor John Kotter claimed that nearly 70 percent of large-scale change programs didn’t meet their goals, and virtually every survey since has shown similar results. Why is change so confounding?” [Build a change platform, not a change program, Gary Hamel and Michele Zanini, McKinsey & Company, October 2014]

“In most organizations, change is regarded as an episodic interruption of the status quo, something initiated and managed from the top. The power to initiate strategic change is concentrated there, and every change program must be endorsed, scripted, and piloted before launch. Transformational change, when it does happen, is typically belated and convulsive—and often commences only after a ‘regime change.’ What’s needed is a real-time, socially constructed approach to change, so that the leader’s job isn’t to design a change program but to build a change platform . . .”

In other words, if in the private sector transformational change has had a dismal track record, what more in the public sector and the bigger structure of the government – and more so an economy and a nation? Coming from the private sector and having been involved in such initiatives, I can relate to said reality. And thus it gives me the patience to stay with this blog, now going through its sixth year.

And as my Bulgarian friend commented when he opened the company’s budget review process very recently, that 10 years ago I made the point that “brand management is general management” – and it was a fitting transition statement that I used to wrap up the two-day exercise: “10 years from now the team will still make the point that execution is a state of mind.” That it was nice to listen to everyone proudly presenting their plans yet “The best laid schemes of mice and men often go awry” [Robert Burns]. And thus went on to discuss the fundamentals of the business for the umpteenth time using real world examples – from their own markets – of do’s and don’ts.

“WELCOME to the ‘new mediocre.’ It’s not quite the New Look, or the New Deal, but it is the new normal. At least according to Christine Lagarde, managing director of the International Monetary Fund, who coined the term a few weeks ago. She was referring to the global economy, of course, which she thought could use a jolt lest it ‘muddle along with subpar growth,’ but her words, uttered during a relatively small-scale speech at Georgetown University’s School of Foreign Service, have had an impact far beyond the school’s borders and the world of economists (though said economists were very het up about it), reaching into the Twitterverse.” [Mired in Mediocrity,” Vanessa Friedman, The New York Times, 31st Oct 2014.]

“[T]he Philippines was one of the leading candidates of being a manufacturing investment hub of Japanese investors. However, subsequent political unrest blew that opportunity . . . This time, as the country becomes an outlier in terms of growth comparable to its Asian peers . . . the Philippines must grab this opportunity to finally ramp up its foreign direct investment  numbers.” [“Neda’s Balisacan: PHL must work hard to diversify growth drivers,” Bianca Cuaresma, Business Mirror, 1st Nov 2014.]

“By now the message from decades of decision-making research and recent popular books such as Daniel Kahneman’s Thinking, Fast and Slow should be clear: The irrational manner in which the human brain often works influences people’s decisions in ways that they and others around them fail to anticipate. The resulting errors prevent us from making sound business and personal decisions, even when we’ve accumulated abundant work experience and knowledge.” [Identifying the Biases Behind Your Bad Decisions, John Beshears and Francesca Gino, Harvard Business Review, 31st Oct 2014]

“What’s the solution? Behavioral economics — the study of how people make decisions, drawing on insights from the fields of psychology, judgment and decision making, and economics — can provide an answer. Since it is so difficult to rewire the human brain in order to fundamentally undo the patterns that lead to biases, behavioral economics advocates that we accept human decision-making errors as given and instead focus on altering the decision-making context in ways that lead to better outcomes. . . [I]nsidious biases are often the main cause of ineffectiveness in organizations. But they also highlight that knowing about the existence of these biases and how they operate can lead to effective solutions to organizational problems.”

“President Aquino will . . . focus on pushing for closer regional economic cooperation as well as highlight the importance of good governance and structural reforms to sustain growth. . . The agenda is like shaping the future through Asia Pacific economic partners so it’s really all economic.” [PH to focus on economic issues in APEC Summit, Genalyn Kabiling, Manila Bulletin, 31st Oct 2014]

The following line should alarm us: “highlight the importance of good governance and structural reforms to sustain growth.” Why? Do we have the credibility to speak to these reforms? “A national embarrassment waiting to happen,” Francis Ed Lim, Philippine Daily Inquirer, 31st Oct 2014. “Sometime in 2015, the Philippines will host the first-ever awarding ceremonies for the winners in the Asean Corporate Governance Scorecard. Top publicly-listed companies (PLCs) in the Asean will be recognized based on their compliance with international best practices, following the OECD corporate governance principles. . . There appears to be a big problem for Philippine PLCs. If the latest Country Reports and Assessments (2013-14) is any indication, none of our PLCs will receive an award.”

“IMF says Phl should focus on key structural reforms,” Kathleen A. Martin, The Philippine Star, 27th Oct 2014. “The story of the Philippines has improved in the last 10 years and something very striking is that growth has been domestic-led . . . the country still lags behind other economies in Asia in terms of investments, infrastructure, and even in competitiveness.”

Beyond the issue of credibility re good governance and structural reforms, do we in PHL have the platform for change when “the country still lags behind other economies in Asia in terms of investments, infrastructure, and even in competitiveness”? Should we focus on first things first? What platform do we need to rapidly erect? For example, where are we in the power sector? “Sadly for now, the prospects are not that bright.” [PH energy sector: Will it be left out in the AEC (?), Myrna Velasco, Manila Bulletin, 2nd Nov 2014]

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