Sunday, November 16, 2014

The best minds . . .

Bring a pot of gold? “[IBM chairwoman and CEO Ginni Rometty] on Monday dropped her profit target of $20 a share for next year and abandoned the five-year profit targets . . . First introduced in 2007, the five-year ‘road map’ was a key factor in Mr. Buffett’s decision to invest in the company, prompting him to say that he did not know of ‘any large company that really has been as specific on what they intend to do and how they intend to do it as IBM.’ ” [IBM shares tumble as profits and sales fall, Financial Times, 20th Oct 2014]

“The road map is dead, which is a good thing . . . They’ve got to remake the company. It’s a multiyear effort, there’s still a lot of pain to get through . . . Only about a third of the company’s revenues come from growing parts of the tech market, with the rest stemming from older technologies that are facing contraction . . .”

But IBM’s got the best minds in the private sector? International Business Machines Corp. (IBM) amassed more U.S. patents than any other company for the 21st straight year, helped by its push into big-data services, which glean insights by mining large quantities of information.”[Alex Barinka, Bloomberg, 14th Jan 2014] “IBM’s 6,809 patents in 2013 scored an annual record, the company said today in a statement. With inventors from 41 countries, more than 31 percent of the patents came from overseas. South Korea’s Samsung Electronics Co. and Tokyo-based Canon Inc. (7751) ranked second and third. While computer-related patents can take almost three years to process, the annual list shows where companies are seeking growth opportunities.”

Another American iconic brand, GM, doesn’t seem to be doing better: “Recalled GM cars remain unrepaired,” The New York Times, 3rd Nov 2014. Disclosure: In my old MNC company we had a technology center whose campus would embarrass the biggest PHL universities – well-manicured and all – and where we had a helipad to ferry folks to and from our Midtown Manhattan headquarters. We had PhDs across every science directly/indirectly related to the business and we had hundreds of them. Yet we still partnered with the best universities and entrepreneurial R&D labs. In a globalized world, to be inward-looking is the kiss of death?
I was relating this to my Eastern European friends while we were in New York recently and wanting to tap into the US science and technology community – and we did – as a way forward following a string of product development sessions. “Born in New York,” was how we labeled our efforts, only to find out that Tiffany’s shortly after would advertise the exact tagline. It’s a free country!

All the foregoing came to mind as I read: “Phl Economic Society holds 52nd annual meet,” The Philippine Star, 9th Nov 2014. “The Philippine Economic Society (PES) will gather the country’s top economic policymakers, market leaders, the academe, civil society and students to discuss and debate the theme ‘Forging Ahead: The Philippines as a Developed Economy in 2050’ . . . The theme addresses the forecasts of financial institutions such as HSBC and Goldman Sachs, which included the Philippines in their list of ‘new emergers’ and projected the Philippines rise to become one of the largest economies in the world in the next few decades . . . In addition to the plenary presentations, over 40 research papers will be read in 15 parallel sessions . . .”

And the last line reminded me of the then PhD candidate that I mentored [and she confidently hurdled her dissertation defense where I was proudly present] and we read through tons of research papers remotely from wherever either of us was courtesy of the digital world. “We’re doing this not only to see you earn your PhD but to see you succeed in your real-world efforts.” She didn’t disappoint. She moved from an MNC subsidiary to a headquarters global project and then was appointed regional manager covering several countries.

And what are we reading in PHL media? “Congress demands updated energy dev’t plan,” Myrna Velasco, Manila Bulletin, 8th Nov 2014.Investors and array of stakeholders have been batting for a ‘more concrete energy plan’ that must be laid down by the department so they can also be guided forward on how to time their planned projects . . . The 2012-2030 PEP is not only outdated, but even the policy directions and investment terrains are not as coherent.”

And there’s more: “Phl growth seen threatened by impending power crisis,” Iris C. Gonzales, The Philippine Star, 6th Nov 2014. “The solid pace of the country’s economic growth is at risk from the critical energy supply, a global energy expert said in a forum organized by the American Chamber of Commerce of the Philippines . . . The is going to be the powerhouse in Southeast Asia but high growth makes energy supply a problem, said Daniel Yergin, a Pulitzer awardee during the AmCham forum titled, ‘Quest for Energy Security: Perspectives for 2030 and Beyond – A Focus on the Asean Region.’ ”

And from the Europeans: “ADVICE FROM THE EUROPEAN UNION: Trade facilitation, customs modernization drive trade and growth,” The Manila Times, 6th Nov 2014. “The benefits of trade facilitation are enormous and might even be more important than a further reduction of import tariffs! For example, revenue loss from inefficient border procedures is estimate to be above 5% of GDP in some countries. Implementing the trade facilitation agreement that was agreed to in Bali last year would support trade in goods by improving transparency, streamlining customs procedures and eliminating red tape. Some studies (Peterson Institute) estimate the benefits to global GDP of such an agreement to be as high as US$ 960 billion. The OECD in its turn estimated that trade cost reductions from the Agreement would be over 15% for lower middle income countries like the Philippines. These benefits would come from measures related to documentation, automation and information availability as well as other simplifications.”

Aren’t these very serious indictments of Juan de la Cruz? If we can miss the simple, how do we do the complex? For example, beyond strategic planning which we seem to embrace is the imperative of problem solving and execution. And problem solving starts with problem-definition. And the science of the mind says we can't be spot on in our problem-definition if we carry our biases to our problem-solving. [Recall how ideologues brought gridlock to Washington.]

Problem solving is undermined when we defer to sacred cows, for instance, because it limits the reach of the brain. The evidence: PHL ranks poorly in innovation and creativity. Even design thinking in today's age of innovation is about problem solving. And the design school at Stanford demonstrates that. And their starting point is to assemble a cross-discipline group, which goes back to the egalitarian principle of openness, transparency and diversity. But we Pinoys like to talk among ourselves especially the elite class and plutocracy? Have we in fact subordinated the values of freedom and democracy to our culture of impunity?

And are we more likely to get it wrong from the get-go because the first imperative in defining a problem is to empathize with those facing a problem or a need? And understandably those in the elite class will define a problem from their perspective? For example, to empathize with a housewife is to feel for her and her needs (for user-friendly products for the home.) And if we translate that to the challenge of poverty, defining the problem – or to empathize with the poor – is not about giving alms. It is about rapidly developing a functioning and growing economy – given our per capita economic output is that of a poor impoverished nation. And thus alms-giving is unsustainable as we’ve witnessed with CCT – and is in fact patronizing and reinforcing of subservience and hierarchy.

It is also not about capping the returns on capital and spreading them to income earners. [If we trace the dynamics of investment, it has a far greater multiplier effect than consumption, and so capital – which is risk-taking, by definition – generates greater returns.] That may apply to Wall Street where because of greed – expressed in financial products designed to be opaque as opposed to transparent – the global economy imploded. While in the case of PHL, we simply shot ourselves in the foot, stunted economic development by deferring to our cacique masters. While Singapore, Malaysia and Deng Xiaoping solicited and embraced “Western money and technology.” In a globalized world, to be inward-looking is the kiss of death?

We can assemble our best minds but if we keep taking problem-definition for granted we will be prescribing cures to a misdiagnosed disease? See IBM and GM above.

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