“Where is the grand design?”

“Show me the product . . . Show me the ingenuity.” Tough questions . . . that were hurled at Tim Cook: “Tim Cook, Making Apple His Own,” Matt Richtel and Brian X. Chen, The New York Times, 15th June 2014. And they apply to major undertakings, be it an enterprise or an economy or a nation? In the case of PHL, how many times did we say we had the grand design for our economic development? And we even would proudly claim ingenuity? But “Show me the product” – it is beyond a 7% GDP growth, it has to be sustainable over many years, i.e., it will take us at least a generation to attain developed economy status? But where is the product or products? Where is the grand design?

There won’t be? Read Philippines instead of Ukraine and there is the answer: “Corruption in Ukraine did not begin with Mr. Yanukovych—nor will it end with him. Weak institutions, low morale, and an underdeveloped sense of public service have made everyone from judges to traffic police liable to corruption over Ukraine’s entire post-Soviet history. Murky privatization . . . in the mid-1990s created a class of oligarchs who came to exercise outsized influence on politics and business.” [The curse of corruption in Ukraine, The Economist, 14th June 2014]

Why haven’t we developed R&D or ST&I (Science, Technology and Innovation), for example? Who needs them when we abdicate and cede the playing field to oligarchy and our cacique masters? “The fact that there is nobody in the Philippines who regulates urban planning has been great for Ayala Land because we are probably the only company there that has the scale financially to take on large plots of land . . . By developing big tracts of land, we become the government; we control and manage everything. We are the mayors and the governors of the communities that we develop and we do not relinquish this responsibility to the government.” [Ayala rules, Jojo Robles, Manila Standard Today, 13th June 2014]

Why can’t we be a free market or eliminate the restrictive economic provisions of the Constitution? Because we won’t develop the 21st century culture if we remain beholden to and proud of our archaic model, as in “Ayala rules”? “One of the values of things I learned absolutely directly from Steve was the whole issue of focus. What are we focusing on: focus on product. I wish I could do a better job in communicating this truth here, which is when you really are focused on the product, that’s not a platitude. When that truly is your reason for coming into the studio, is just to try to make the very best product you can, when that is exclusive of everything else, it’s remarkable how insignificant or unimportant a lot of other stuff becomes. Titles or organizational structures, that’s not the lens through which we see our peers.” [Jonathan Ive on Apple’s Design Process and Product Philosophy, Brian X. Chen and Matt Richtel, The New York Times, 16th June 2014]

“Fifty years ago there was a revolution in psychology which changed the way we think about the mind. The ‘cognitive revolution’ inspired psychologists to start thinking of the mind as a kind of organic computer, rather than as an impenetrable black box which would never be understood. This metaphor has motivated psychologists to investigate the software central to our everyday functioning, opening the way to insights into how we think, reason, learn, remember and produce language.”How Thinking Works: 10 Brilliant Cognitive Psychology Studies Everyone Should Know, PsyBlog, 27th Jan 2014]

“Without experts the human race would be sunk. But what is it about how experts think which lets them achieve breakthroughs which we can all enjoy? The answer is in how experts think about problems, compared with novices. That’s what Chi et al. (1981) found when they compared how experts and novices represented physics problems. Novices tended to get stuck thinking about the surface details of the problem whereas experts saw the underlying principles that were operating.”

“There are no rules only principles,” I reminded the young marketing manager that my Eastern European friends assigned to North America. And we were in Montreal and had meetings with our partners and the advertising agency and visited countless stores. The fellow is a quant [and was the brand manager of and played a major role in growing the company’s biggest brand; and negotiated media deals in different countries] and as a student he represented their country twice in the math world competition. And he continues to be a “card-bearing communist” – he keeps the ID he had as a kid and I would tell him John Paul II must also have had his as a young boy. I was explaining the principle of partnership – and its inherent character, transparency – referencing our Canadian representatives, to respond to the question he posed: “Should they know how much we’re investing in developing this market?” Born and raised under Communist rule, it wasn't a surprise where he was coming from.

And in the Philippines are we: (a) “stuck thinking about the surface details of . . . problems [instead of] . . . the underlying principles that [are] operating” and (b) do we carry the instincts of distrust given our culture of impunity and political patronage? And they have undermined our efforts to move the country forward? And so we have all the right to ask, if indeed we have a grand design for PHL, “Where is it?”

“We like to think we're rational human beings. In fact, we are prone to hundreds of proven biases that cause us to think and act irrationally, and even thinking we're rational despite evidence of irrationality in others is known as blind spot bias.” [58 Cognitive biases that screw up everything we do, Drake Baer and Gus Lubin, Business Insider, 18th June 2014]

Survival of the fittest . . .

We are against . . . and it sounds kind and compassionate? Or are we Pinoys unknowingly rationalizing our assumptions? For example, we don’t truly embrace free market because it is unkind to the weak? [60-40 ownership rule hit anew, Lenie Lectura, Business Mirror, 17th June 2014. “British companies are seriously looking at pouring more money into the Philippines, provided the government will relax the restrictions on foreign ownership of companies in certain industries, the United Kingdom (UK) mission to Manila said.”] But if we push that as far as we can, what is reality? It is preserving the old order that was archaic, as in man didn’t know any better? And which was in fact the age of ‘survival of the fittest’?

Translation: The old order was hierarchical where the lion was king of the jungle. In more modern times they were the fat cats and in old Russia they were the tsars who in reality were beholden to a bigger monster, oligarchy? But nature compensates; for example, oligarchy thrived in cacique cultures creating a mirage of an equilibrium courtesy of paternalism – and thus explains the longevity of oligarchy?

Is that one way of capturing the reality of PHL? But there is another element that has contributed to our archaic model? And it’s no other than the church? And it precisely has successfully mirrored a mirage of equilibrium courtesy of compassion to the poor and the weak? Of course, it isn’t a secret except that it would take a Francis to call a spade a spade?

Having been born and raised in an environment where we defer to hierarchy – either our cacique masters or the church – did we Pinoys miss learning responsibility? While our kuro-kuro culture could be loud and reaches far and wide, at the end of the day, no one is responsible? For instance, a culture of impunity can’t be nurtured if we the Filipino people are non-participants – as in see no evil, hear no evil and speak no evil? And the same applies to political patronage? “. . . Filipinos in general must engage in soul-searching and in communal examination of consciences to discern the status of the Filipino culture and how it can be ‘purified’ . . . I just wish that we would set it in a wider context, not only in the politicians but of the whole country and the whole Filipino culture . . .” [Parents plant seeds of corruption–Tagle, Jocelyn R. Uy, Philippine Daily Inquirer, 11th June 2014]

In fairness, it isn't confined to us Pinoys. It is human nature to take the path of least resistance or to be subsumed by the status quo because it represents a comfort zone. It is a great lesson in the art or challenge of execution. Or why “the best laid plans of mice and men often go astray.”

“I really want to figure out their personality. If someone has left a few jobs, I’ll ask why they left. If people are complaining too much, then you start seeing either an attitude of, ‘When things happen, it’s not really me; it’s the world around me.’ Or maybe they’ll talk instead about things in a way that clearly says, ‘Listen, there are always circumstances, but you make your own destiny; you make your own choices.’” [Victor Allis, CEO of Quintiq (a planning software company); Stumped? Invoke the 5-Minute Rule, Adam Bryant, Corner Office, The New York Times, 7th June 2014]

“I’m looking for someone in a leadership position who feels that when someone deals you a hand, sometimes it’s a good hand, and sometimes it’s a bad hand. But it’s not about the hand. It’s how you play it . . . It takes a little while to figure it out, but you’re trying to understand, at their core, how they behave in life. Will they be a team player? Will they be the person who can handle some adversity and actually likes the challenge? Those are the most important characteristics.”

If we are to turn a big ship like PHL even a fraction of a degree, we need leadership that recognizes that “it's not about the hand. It's how you play it.” And leadership doesn't mean one individual. Leadership is the ones at the top of the enterprise or economy or nation. If we apply Pareto's 80-20 rule, they are the 20 that generate the bulk of the results. And in PHL they are the elite class. If in the US the conservatives seem unable to put up a big umbrella to embrace a far larger agenda or one that matters to mainstream America, in PHL the elite class has successfully raised a truly big umbrella. Thus despite the differences between and amongst its different elements, the elite class has preserved the status quo? 

And so what makes up the commonality? First is it's hierarchical. And it starts when we send our children to exclusive schools; and they're Catholic, obviously. And a school bus is so “commoner” so to be chauffeured is preferred; correction, the prim and proper way. And between the gated-community and the country club that make up their milieu, they learn early in life there is such a thing as a network amongst the elite class; and so it’s not uncommon that they go together on holidays to the latest “talk-of-the-town” destinations locally or abroad? What about college; it has to be in an Ivy, where else?

And so what do the local media cover? The world of the elite class, what else? But we're compassionate and so we must fight poverty? The elite class is the fittest and so they survive – with plenty to spare the downtrodden – despite PHL's standing in the region and in the world, the nation equated to OFWs that cover the world, near and far. And that has given us a very robust foreign exchange reserves and thus the ability to manage our finances better.

Admittedly we are thankful for our OFWs' efforts because they are the direct and proximate cause of our better economic footing. But because of this good fortune, we contracted our own Dutch disease, unable to assemble and put together the building blocks of a sustainable and inclusive economy? Because we have yet to truly commit and deliver on good governance and world-class infrastructure and a free market and a regionally (and globally) competitive industry?

And while on the one hand we instinctively reject such straightforward initiatives since we believe a complex challenge demands a complex solution, on the other hand we readily want to paint a positive prognosis? For example, that PHL GDP in 2014 will continue to grow at a robust clip – albeit slower than last year – conveniently forgetting that we are deficient in the above critical areas: of good governance and free market and thus the negative impact on investment, infrastructure development and competitiveness, among others. And that it would take us at least a generation to approximate a developed economy.

And in the meantime we have yet to recognize the imperatives of: (a) setting and espousing a vision, (b) leadership and (c) focus; while caught up in our archaic model which in our heart of hearts we wish to preserve? We have an abundance of smart people jostling and offering the silver bullet to overcome PHL underdevelopment and poverty but do we need visionaries too that can set a crystal clear goal (which could be as simple as to be a developed economy?) that would rally Juan de la Cruz?

Still, a vision demands leadership and focus; and focus is something that we need to dig from our toolkit – as in the wisdom behind ‘The Great Commandment’ or Pareto’s 80-20 rule. But instead, perhaps unwittingly, we've been preoccupied raising the progress and development attained by our neighbors as a bogeyman in order to preserve our self-esteem, if not our rank in PHL hierarchy? 

Thinking big and executing

They are daunting challenges even for progressive enterprises – and developed nations. And it wouldn’t be any less for us Pinoys – and in almost every facet of the life of Juan de la Cruz? Take education, for instance:“Mourshed, Farrell and Barton studied over 100 education-to-employment approaches in 25 countries to see what the successful ones have in common. The short answer lies in a key education reform concept: There is no one-size-fits-all solution. The system has to be designed collaboratively by the major stakeholders—the employers, the education providers, and the youth themselves.” [Educated, unemployed, Butch Hernandez,Philippine Daily Inquirer, 14th June 2014]

“Education is not just a means to an end; the acquisition of competencies and job-readiness is just one aspect of its complexity. Education is a public value, which means that the measure of its true worth to society rests on how well, or how poorly, it enables educated individuals to perform their various tasks as citizens. In that sense, education—or, more accurately, education of the right quality—is a moving target.”

The challenge to us Pinoys can be more basic though? For example, why can’t we put up a modern airport in this day and age? Why can’t we have something as basic as power or energy? Why despite “Imperial Manila” the infrastructure of Metro Manila is archaic? Not surprisingly, we can’t even get new registration plates for new cars? Our inability to get things done is beyond the pale? “For the first time, the Ministry of Economy, Trade and Industry (METI) of Japan has made known its position official even as it warned that unless the Philippine government takes strong policies quickly on the automotive industry cheaper imported cars will continue to flood the market making local production to continue to fall in spite of growth in the local market for cars.” [Japan urges Philippines to make strong auto industry policy soonest, Bernie Magkilat, Manila Bulletin, 16th June 2014]

No wonder reform-minded folks especially outside Manila are asking themselves if reform will suffice or if unrest is called for – “because we Pinoys are spineless, and why EDSA failed”? That is a quote from a journalist from the Visayas; and it reminded me of my late maternal grandfather. The reality is, as we’ve seen with the Arab Spring, unless people learn to commit to the common good vested interests would be at odds, in conflict between and among themselves and chaos would rule not reform.

“The problem with smart people is that they are used to seeking and finding the right answer; unfortunately, in strategy there is no single right answer to find. Strategy requires making choices about an uncertain future. It is not possible, no matter how much of the ocean you boil, to discover the one right answer. There isn’t one. In fact, even after the fact, there is no way to determine that one’s strategy choice was ‘right,’ because there is no way to judge the relative quality of any path against all the paths not actually chosen. There are no double-blind experiments in strategy.” [Why Smart People Struggle with Strategy, Roger Martin, Harvard Business Review, 12th June 2014]

“To be a great strategist, we have to step back from the need to find a right answer and to get accolades for identifying it. The best strategists aren’t intimidated or paralyzed by uncertainty and ambiguity; they are creative enough to imagine possibilities that may or may not actually exist and are willing to try a course of action knowing full well that it will have to be tweaked or even overhauled entirely as events unfold . . . The essential qualities for this type of person are flexibility, imagination, and resilience. But there is no evidence that these qualities are correlated with pure intelligence. In fact . . . smart people tend to be more brittle. They need both to feel right and to have that correctness be validated by others. When either or both fail to occur, smart people become defensive and rigidly so.”

“. . . [S]trategy should not be a monoculture . . . Great strategy is aided by diversity of thought and attitude. It needs people who have experienced failure as well as success. It needs people who have a great imagination. It needs people who have built their resilience in the past. And most importantly, it needs people who respect one another for their range of qualities, something that is often going to be most difficult for the proverbial smartest person in the room.”

“All over the world, formal education systematically suppresses creative thinking and flexibility. National strategies to raise standards in education are making matters worse because they’re rooted in an old model of economic development and a narrow view of intelligence. For economic, cultural and political reasons, creativity should be promoted systematically at all levels of education, alongside literacy and numeracy. . . . Companies now face an unusual crisis in graduate recruitment. It’s not that there aren’t enough graduates to go around, it’s that too many of them can’t communicate, work in teams or think creatively.” [Jim Burke, Reimagining English: The seven personae of the future; English Journal 99.2 (2009), pp 12-15, The National Council of Teachers of English]

In the Philippines we’ve had calls for reform as far back if we’d care to remember? Yet sadly, where we are today, whether we count it as 116 years or 68 years since independence, we’ve been stuck in neutral? On the other hand, given our penchant for “kuro-kuro,” we offer loads of ideas and solutions. The reality is while everything starts in the mind and what man can think he can create, the success of the creation is no guarantee. For example, how many theses in business schools – or even economic development plans – ever saw the light of day?

Or how many times did we predict boom times for PHL economy? But if we’d dissect those predictions and unrealized development plans, could it be that the predictions lacked the requisite legs while the development plans would be too complex to execute – i.e., because of public response or lack thereof or politics, if not corruption?

Posing such questions could make us get defensive and/or claim that the world is more complicated than that? Indeed for a nation that has not developed R&D, for example, or manufacturing, the world is more complex than that? [“Practice makes perfect” is more than an adage. “Psychologist K. Anders Ericsson, a professor of Psychology at Florida State University, has been a pioneer in researching deliberate practice and what it means . . . The differences between expert performers and normal adults reflect a life-long period of deliberate effort to improve performance in a specific domain.” Wikipedia]

And would it boil down to our success model – or that of our cacique masters? In other words, we haven’t cultivated in our psyche a success model like Tatang Sy, for example, i.e., he is a Chinoy? And so we’d always infer that we as a people needed government to provide the crutch? Of course successive PHL administrations have failed but self-sufficiency starts with Juan de la Cruz?

“The question is why the Filipino people allow this to happen . . .?” [A failing state, Jose V. Romero Jr., PhD, The Manila Times, 12th June 2014]

 Can we think big and execute?

Where are our weak points . . .?

Asked Manila Archbishop Luis Antonio Cardinal Tagle . . . “So let us not point to just a small group. All of us should engage in soul-searching where is the Filipino culture going or where are our weak points. How do we purify our culture, our schools, our system of reward and punishment?” [Parents plant seeds of corruption–Tagle, Jocelyn R. Uy, Philippine Daily Inquirer, 11th June 2014]

If it were not Cardinal Tagle posing the question, chances are we would be offended – because of national pride? And it comes from our assumptions and beliefs that we would attribute to our culture and thus is cast in stone? In other words, if it were a weakness, we will simply take it and pay the price – as in decades of underdevelopment and poverty? And thus it reinforces our fatalism? But it is not one and the same as our faith? And precisely because of the dilemma Rizal had to create Padre Damaso?

Or is it simply human nature as in the tendency to take the path of least resistance – more pronounced in Asia because of the instincts of harmony? And why character-building – as in a “system of reward and punishment” – is imperative if man is to overcome his nature? “All of us should engage in soul-searching where is the Filipino culture going or where are our weak points,” so challenged Archbishop Tagle?

But because of his assumptions and beliefs, Juan de la Cruz would be hard put to respond to the soul-searching teed up by the cardinal? For instance, take our economy and the poverty which we see as the object of our desire for inclusive growth; is that coming from the assumption that we must be charitable to the poor? Yet, should we figure out and ask ourselves about causation? An underdeveloped economy with a per capita output or GDP that matches those of other poor nations will have a dire poverty problem like they do?

But then we see the US with its own poverty challenge and we conveniently overlook our meager economic output? How come our neighbors have drastically reduced poverty – and the common denominator being they were the Asian Tigers? What else do they have in common and where we would pale in comparison? Say, good governance or their corruption is not as daunting as ours; world-class infrastructure which is for the world to see; and free market and thus their ability to attract more foreign investments?

Sadly, we would instinctively raise a bogeyman whenever such comparisons are made? For instance, our neighbors are less democratic than we are? And because they aren’t Christians, their population levels are lower? I am making that up, but if we pause for a moment and listen to ourselves rationalize why we are economic laggards or why our neighbors became the Asian Tigers, we would hear ourselves saying something along those lines?

The reality is oligarchy is universal as is corruption; every country is inward-looking to protect its interest; every nation has poverty, etc., etc. Unfortunately, they don’t mitigate our case because we are worse in every respect? “. . . . The Wall Street Journal . . . on ‘Rethinking Economic Growth, pointed out that income inequality was a problem across Southeast Asia, and ‘the Philippines, the country where we’re right now, is the worst of them all.’” [SEC takes clear stand on behalf of stakeholders, Benito L. Teehankee, The view from Taft, Business World, 11th June 2014]

“Over half, or 54%, of the 50 Filipino executives polled in Ernst & Young’s 13th Global Fraud Survey said corruption happens widely in business, similar to the average for emerging markets but worse than the 32% for Far East Asia . . . An even larger 58% of the respondents – described as working at the country’s largest firms – ‘think certain unethical behavior can be justified to help a business survive an economic downturn . . . One in five, in particular, are amenable to misstating financial results.’” [Corruption widespread, Business World, 11th June 2014]

Yet it is not uncommon to read pundits that would make us believe that the world is destined for damnation save Juan de la Cruz? Is that faith or fatalism? How are we to respond to the challenges around us?

In fairness, we also read things like: “Today we have the sad spectacle of former heads of ruling parties convicted of malfeasance in public office . . . This is not surprising given that so-called political parties today are simply groupings of traditional politicians that . . . are bankrolled by opportunistic businessmen and moneymen out to perpetuate their erected monopolies and preserving their rentier class. With media captive also of vested interest . . .” [A failing state, Jose V. Romero Jr., PhD, The Manila Times, 12th June 2014]

“Under these conditions the rule of the oligarchy is preserved . . . The question is why the Filipino people allow this to happen. One explanation is that our people have a penchant for instant gratification . . . Another is that our extended family system supported by subsidies and reinforced by patronage politics is an accepted informal social security system oiled by the pork barrel system and other congressional spoils.”

“What will it take to bring about the politics of principle . . .? A long, rugged and tortuous route is accelerated growths that can fast track higher levels of productivity, incomes and employment! Indeed economic security makes for a less dependent and independent voting population.”

“It is not the strongest of the species that survives, nor the most intelligent, but rather the one most responsive to change,” so said Charles Darwin.

How do we develop responsiveness to change? How do we develop a forward- and outward-looking bias as opposed to a backward- and inward-looking one? We can’t if we are ensconced in and wedded to what we proudly call our culture?

Is it prayer time?

Boo-boos galore . . .

Left unsaid was: that’s our reason for being, to problem-solve. It was the first reality that I learned in the West. Just a few days after I had reported for work to a new boss in New York, and she held the title of President [for the region], she would blurt out, “I blew it!” And so it was not a surprise when one lazy Sunday there was this phone call: “Do you have something urgent to do tomorrow? How do you like flying to Toronto?” Or after arriving from Singapore the fellow who picked me up at the airport would sheepishly announce: “You want the good or the bad news first? You may want to call the boss’ assistant; she has your ticket to fly right back to Asia, like tomorrow, if I’m not mistaken.” Of course, it was our reason for being, to problem solve!

I would only smile while on the train (especially as it sped through his suburban New York town of Larchmont) reading Tim Geithner’s book, Stress Test: Reflections on financial crises: “We made lots of mistakes. Our interventions didn't always work wonders. Even Mexico, Korea and Brazil, the clearest successes, had suffered devastating economic contractions, because deleveraging after a credit bubble is always painful.”

“The money we helped deploy to countries in crisis was critical, but money can't compensate for the absence of political will. The choices we made in Washington were important, but they worked only when we dealt with competent and credible leaders in the affected countries. Brazil's central banker, Arminio Fraga, who also has U.S. citizenship, was so impressive that I later mentioned him to President Obama as potential Fed chair.”

That last sentence would remind me of another New Yorker, a friend, when President Arroyo was in the US; and he would say: “We need to make your president an American so she can take over from ours [making reference to “Dubya”], who can’t even put a simple sentence together.”

“What this company needs is new ideas, and I haven’t heard any coming out so far . . . It is a stark turn of fortune for a company that was started by Henry R. Luce in 1922 . . . The problems Time Inc. will face are not unique in an industry confronting steep challenges. But interviews with analysts and dozens of current and former Time Inc. executives suggest that a series of management missteps, a lack of investment from Time Warner and downsizing in preparation for the spinoff may have added to the degree of difficulty.” [Time Inc. to set a lonely course after a spinoff, David Carr and Ravi Somaiya, The New York Times, 8th June 2014]

“Today, however, a ‘Kodak moment’ has more to do with fear and failure than the familiarity and fondness that once came to mind. [It] calls to mind the failure of those at Kodak to realize the world has changed. One can imagine a slightly worried, anxious gathering of corporate executives dismissing digital cameras as a passing phase. A fad . . . And then they waited. And soon they watched. And eventually they realized that they had failed to understand the magnitude and nature of the change.” [Jim Burke, Reimagining English: The seven personae of the future; English Journal 99.2 (2009), pp 12-15, The National Council of Teachers of English]

It’s like déjà vu. I am commuting by train to Manhattan – like I did many years ago. But this time it’s to be with my Eastern European friends in their newest office. And we seem unable to stop to reminisce – amid laughter and banter – about the countless boo-boos we’ve made over the last several years. But they were a learning experience, and prepared the organization to strongly want to avoid falling into the trap of trial-and-error which before, then early in their life, they saw as its strength – of being fast and smart. The outlook has changed: This is the US of A; we may have had great products, great packaging and even great communications. But in this market we need more than that – we have to beat the next guy, and the next, and the next. We will make more mistakes but we can’t let the next guy win . . . Translation: the way to the Carnegie Hall is . . . ‘practice, practice, practice’.

“Businesses everywhere have to compete in a world that’s changing faster than ever. To keep pace they need people who can consistently generate new ideas and adapt to constant change. Many companies say it’s getting harder to find these people. One of the major reasons is education. All over the world, formal education systematically suppresses creative thinking and flexibility. National strategies to raise standards in education are making matters worse because they’re rooted in an old model of economic development and a narrow view of intelligence. For economic, cultural and political reasons, creativity should be promoted systematically at all levels of education, alongside literacy and numeracy. . . . Companies now face an unusual crisis in graduate recruitment. It’s not that there aren’t enough graduates to go around, it’s that too many of them can’t communicate, work in teams or think creatively.” [ibid.]

Can we Pinoys pick up something from these stories? Or does it go against the grain to admit that we struggle to face up to reality? And so while more and more we have learned to be critical of ourselves, is the balance of our self-assessment still tilted to save face? Philippine underdevelopment and poverty ought to trump the instincts to save face?

News article: “More investors want to invest in PHL.” Really? Did we not hear the administration very early in its term talking about the billions of new FDIs that were due to come? Sweeping problems under the carpet has caused us unprecedented sufferings as in decades of underdevelopment and poverty?

“No real progress in PH if dynasties not dismantled,” wrote Paolo G. Montecillo, Philippine Daily Inquirer, 17th April 2014. “The Philippines remains a fragile democracy despite the Aquino administration’s gains that have not been enough to make up for ‘nearly a decade of regression’ during the previous administration . . . A new report by Bertelsmann Foundation, a German think tank, said true progress in the Philippines would be out of reach unless the improbable was achieved: Dismantling of oligarchies that control both politics and business . . . Bertelsmann said the dominance of entrenched family clans in politics and the economy should be reduced in order to make politics and economics more transparent and competitive. The antidynasty law, which has been debated in Congress since 1987, must be passed, it said. This, however, would be ‘highly unrealistic’ since President Aquino himself and about 80 percent of lawmakers come from these dynasties.”

“The horrifying thing about everything Ninoy said in 1968 is that if he were alive today, he would have written the same essay and with a minimum of statistical updating still sound like a disappointingly true description of our country today . . . Today . . . the same problem prevails, only worse . . . Of course, we should never lose hope. But we ought to recognize what seems like the hopelessness of our situation if we go on being like business as usual . . . What is wrong with the Philippines then is still what's wrong with the Philippines today.” [Boo Chanco, A blast from P-Noy's dad, Demand and supply, The Philippine Star, 6th June 2014]

Start with the end in view III

[Disclosure: This is the third time this blog has used above title. In my development work in Eastern Europe, it has become a mantra and friends say it matter-of-factly.] There was a lively “debate” between two eminent business thinkers in the Sunday Business section of The New York Times about the business model of their likewise eminent school, the Harvard Business School. [Business School, Disrupted, Jerry Useem, The New York Times, 31st May 2014] “If any institution is equipped to handle questions of strategy, it is Harvard Business School, whose professors have coined so much of the strategic lexicon used in classrooms and boardrooms that it’s hard to discuss the topic without recourse to their concepts: Competitive advantage. Disruptive innovation. The value chain . . . The question: Should Harvard Business School enter the business of online education, and, if so, how?”

Porter and Christensen are marquee names and I was drawn to their works as a student of strategy – and more so in the 21st century that brought the Great Recession, which didn’t turn out as bad as the Great Depression but still it laid bare the weaknesses of the US economy, and much of the Western world. But the interest has been there ever since I first exercised supervision; I was a neophyte in the world of management and leadership and wondered how I could be ahead of, not behind the curve. And much later, because of my inclinations, my bosses at my old MNC company sent me to an executive course in strategy (at Columbia University.)

“Harvard Business School faced a choice between different models of online instruction. Prof. Michael Porter favored the development of online courses that would reflect the school’s existing strategy . . . At Harvard Business School, the pros and cons of the argument were personified by two of its most famous faculty members. For Michael Porter, widely considered the father of modern business strategy, the answer is yes — create online courses, but not in a way that undermines the school’s existing strategy. ‘A company must stay the course,’ Professor Porter has written, ‘even in times of upheaval, while constantly improving and extending its distinctive positioning.’”

“For Clayton Christensen, whose 1997 book, ‘The Innovator’s Dilemma,’ propelled him to academic stardom, the only way that market leaders like Harvard Business School survive ‘disruptive innovation’ is by disrupting their existing businesses themselves. This is arguably what rival business schools like Stanford and the Wharton School have been doing by having professors stand in front of cameras and teach MOOCs, or massive open online courses, free of charge to anyone, anywhere in the world.”

Porter and Christensen are big boys and don’t need us to referee their debate. And in the case of PHL, we have been faced with our own challenges. “Over the past few decades, the world of business has become increasingly complex and unpredictable. This development is largely the upshot of the transformative effects of the information revolution and the impact of rapid globalization.” [Adapting to complexity,Niceto S. Poblador, Philippine Daily Inquirer, 2nd June 2014]

“Perhaps even more significant is the fact that organizational leaders themselves are becoming increasingly aware that business organizations and their environments are not as stable and as manageable as they were once thought to be, and that the management problems that they face are not as solvable as traditionally assumed.”

“[A] more realistic approach is to address complexity head on, and to search for solutions that are more appropriate for dealing with this phenomenon. But first, we must develop a clear understanding of the workings of complex systems, and a better appreciation of how new patterns continuously emerge from the interaction of the multitudinous components that comprise complex systems.”

“Rethink strategic goals . . . Look at the big picture . . . Aim for maximum flexibility . . . Adapting to complexity requires us to challenge traditional concepts of leadership. Gone are the days of the archetypal ‘great leader’ who knows best what needs to be done, and who has the necessary personal skills to effectively goad, inspire or  intimidate others to play their assigned parts. In today’s knowledge-driven world, the exemplary leader is one who knows where the relevant knowledge can be found, and how these can be brought together in a massive collaborative effort involving individuals within and outside the organization.”

How could we relate that to PHL? For example: “Business groups oppose moves to amend power reform law,” The Philippine Star, 2nd June 2014. “’Amending or making changes in the EPIRA is not the problem, failure to implement it properly is,’ the different business groups said in the position paper . . . The business groups stressed the need to build new power plants, adding that if amendments are introduced, it would create uncertainty and turn off investors . . . ‘Brownouts will be inevitable if we don’t build new power plants. International and local investors and financial institutions won’t invest in an industry where the rules are not known and stable.’”

Another example: “Since a single encompassing competition law is yet to be put in place, the Department of Justice’s Office for Competition (DOJ-OFC)—formed in 2011 under Executive Order (EO) No. 45—has initially focused on three sectors where it was ‘likely to achieve the greatest impact’ in terms of consumer protection, namely energy, telecommunications and transport . . .’” [Competition body probes power, telco firms; Targets possible collusion, anticompetitive services, Ben O. de Vera, Philippine Daily Inquirer, 2nd June 2014]

In the meantime, “Philippine business groups as well as the Joint Foreign Chambers (JFC) supported the immediate enactment of a comprehensive competition law that would create an independent Competition Commission and prevent anticompetitive agreements, abuse of dominant position, and anticompetitive mergers.”

And a more animated article reads: “Those clueless Usecs of DOTC!” [DEMAND AND SUPPLY, Boo Chanco, The Philippine Star, 2nd June 2014] “The bidders were unanimous last year in saying that the terms of reference prepared by the DOTC usecs made no business sense at all . . . Thus, I was laughing out loud when I read the press release of Cosette Canilao of the PPP Center the day after the bidding. The release had this completely hilarious paragraph: Undersecretary Rene Limcaoco explains, ‘It was back to the drawing board for us then. We had to unlearn some of our previous notions on project structuring and procurement. We learned to balance the interests of both the government and the private sector without compromising the project’s viabilities and its public service objectives. We are hopeful we will receive good bids for the LRT Line 1 project.’”

“Hahaha! This is embarrassing, Timmy Limcaoco… apparently, you guys learned nothing from the first experience . . . you guys simply have no idea what makes an attractive business proposal. And to think that Mar Roxas’s bright boys came from the private sector, supposedly hot shot lawyers with Ivy League or hot law firm credentials . . . Well Timmy... I have no doubt you guys are working your butts off on these projects but somehow you guys just don’t get it. There isn’t one major DOTC project you guys had bid out that wasn’t controversial for violating your own rules or ignored by private business for simply being uninteresting.”

To “start with the end in view” is something associated with visionaries. And imagination matters, so said Edison, “To invent, you need a good imagination and a pile of junk;” while to Einstein, “Imagination is more important than knowledge. For knowledge is limited to all we now know and understand, while imagination embraces the entire world, and all there ever will be to know and understand.” [Jim Burke, Reimagining English: The seven personae of the future; English Journal 99.2 (2009), pp 12-15, The National Council of Teachers of English]

Indeed, the world is complex and we wouldn’t want it made more so by our sins of omission and/or commission? That we then have to rationalize our inability to step up to the plate? Or, to settle for the path of least resistance, of “sub-optimizing” and opting for what is convenient – which is another name for ‘crab mentality’? If Ateneo or La Salle wouldn’t settle for second best, how come with PHL, we matter-of-factly accept less than optimized solutions? And we’re surprised we’re not competitive regionally, much less globally? Beyond the metrics or the form of competitiveness is its substance?

R&D – to look forward and discover

It was delightful to read a column about R&D, being about the spirit of discovery. R&D by definition is forward-looking. And government and leaders can point the way forward, and so indeed we need leadership . . . but also role models. “We need to boost our R&D activities in this country. We need to review R&D policies so that R&D allows human talents to flourish instead of merely being the end-all of academic institutions. We also need to guard against the politicization of R&D. Let us demand that our national, local, and educational leaders allocate enough funds to R&D.” [Advancing R&D in the Philippines, Liberty I. Nolasco, Business World, 28th May 2014]

But does it go back to Juan de la Cruz? Is he forward-looking or does it go against the grain? And which is why Rizal – having lived through the “Age of Enlightenment” while in Europe – had to create Padre Damaso? My Bulgarian friends embraced their introduction to R&D despite decades under Communist rule, or probably because of it. But first things first: Just like what the TQM (Total Quality Management) gurus from Japan and Deming preached, that quality is built into an enterprise’s undertaking . . . R&D is not imposed from the outside or from above.

But if the culture of an enterprise – or an economy or nation – is not forward-looking to begin with, then it has to be imposed? Like we have yet to do in the case of PHL? And, not surprisingly, just like with our economy, we are lagging the region R&D-wise. “We had very few R&D personnel and experts and local patents. Not all inventions of Filipinos had commercial value. Looking at the cross-country R&D statistics, one can find a lot of information on other Asian countries but hardly any on the Philippines.” [ibid.]

Why? Did we not preach against consumerism, for instance? We may be reading a lot of US media that unknowingly we are measuring ourselves against them – but we have the jeepney to show, and not much else in inventions with commercial value? Progress has its price but it doesn’t have to be all bad, i.e., it isn’t about absolutes either way? And it brings Francis to mind, holding no punches in revisiting the Vatican Curia’s long-held assumptions and beliefs? Put another way, if we could have the latest iPad or iPhone, consumerism can’t be that bad?

How could we be forward-looking and be R&D biased? We can’t, if normal to us is big business (i.e., reading too much US politics?) contributing (is it over half a billion pesos – or more in the next election cycle?) to politicians and ensuring they would get the next big infra project? That is not what forward-looking means in an honest-to-goodness free market – but it is in an oligopoly? Not surprisingly, we accept it matter-of-factly, if we don’t celebrate it like cheerleaders?

In a free enterprise, enterprises are committed to investment (not political contributions that feed into the vicious cycle of political patronage and oligopoly?) and technology and innovation as well as people, product and market development!

For example, eleven years ago, my Bulgarian friends went through the rigors of defining the business they were in and committed to develop the products in the core categories they scrupulously vetted for sustainability (meaning, each must generate a surplus that would create a virtuous circle or in simple business lingo, produce healthy margins) and that required satisfying the metrics of investment, technology, innovation and people and market development. And which then demanded organizing business units – where at the center the joint R&D and marketing disciplines work under one umbrella – and importing experts from the West to ensure they met global standards. 

One of the thrills I get wandering around their offices is how product ideas are routinely – and with dispatch – subjected to R&D chores in the same work area that is home to both marketers and scientists. Admittedly, the process is not as smooth as it sounds. For example, product ideas [and it applies to agribusiness as well; as this blog has raised before, the “mani” that I remember buying in our neighborhood “talipapa” with my late mother could be found in 5-star hotels and bars the world over as cocktail peanuts, and they even come in attractive packaging] don't come out of the blue but are generated from endless store visits in country after country, product architecture modeling and consumer insights. But that still doesn't make the exercise a cakewalk. Because there are perpetual debates notwithstanding the analytics that are part of the process. [Where analytics helps, for instance, is in doing “what if" analyses as in developing store-level programs to drive sales among the different products and variants and sizes.]

The outcome: the organization is confidently equipped to get to market, launch new products as planned and give the competition a run for their money in whichever country where it is focused. And it is not about submission to the corporate structure because only truly winning ideas with everyone pulling together would percolate and make it to the portfolio of products. There is no free lunch but persistence does pay! And so the mantra remains: “today's excellence is tomorrow's commonplace.”

And yes, by our definition as Pinoys, it’s consumerism – because it requires understanding the lifestyle of the consumer and figuring out what her needs would be, i.e., she may not be able to articulate her needs but she surely could speak endlessly to the lifestyle that she would cherish. And so in the case of the West, Edison, Gates and Jobs would epitomize modern R&D thinking. And as Edison, for instance, said: “I want to see a phonograph in every American home.”

R&D, at the end of the day, or the lack of it in PHL, is another manifestation of our failure to be forward-looking and to respond to the basics of democracy and free enterprise – i.e., a true commitment to good governance, the rapid pursuit of infrastructure development and the dismantling of oligopoly? We can cherish and perpetuate the culture – as in preserving the backwardness that Rizal fought against – we're proud of and continue to pay the price, if we haven't paid dearly yet? Thank God Francis is visiting . . . Where Rizal failed, will Francis succeed?

Beyond knowledge is focus . . .

It facilitates priority-setting . . . “To Lead, You Must Focus” is the title of a column by Raymond Edwin Mabus Jr. [the 75th secretary of the U.S. Navy] in the Harvard Business Review (June 2014). This blog posting was inspired by that article. “Leading a large, complex organization like the U.S. Navy, which is interdependent with similar entities, calls for a certain approach. You begin with a narrow focus on your organization’s unique strength and role . . . As the governor of Mississippi, I learned the power of setting a few specific priorities and relentlessly pushing them. As the CEO of a private company, I saw that creating a compelling vision and crafting an inspiring narrative are key to achieving results. You must never lose sight of the ultimate goal.”

Does it tell us precisely why in PHL – given our ‘crab mentality’ – we continue to miss “setting a few specific priorities and relentlessly pushing them”? This blog often talks about my ex-socialist friends and despite being born and raised in that environment understood, accepted and internalized the imperative of focus! Or have we Pinoys misunderstood our faith? And thus Rizal had to create Padre Damaso – in no uncertain terms – to shoot that dimension of our culture full of holes?

My Eastern European friends were surprised when I shared that much of the business principles [which by the way they saw as universal] I've passed on to them came from my being born and raised in the Philippines, including my education and 20 years of private sector experience. But they would probe, “what did you pick up from the West?” My response: I learned execution which comes from leadership and focus. And, granted, many of the knowledge fundamentals I brought from the Philippines were polished by their constant evolution that was to be expected in a developed-world environment.

For example, while the different functional disciplines (from production to sales to marketing to finance to computing & communicating to supply chain to customer service to consumer insights, etc., etc.) of an enterprise indeed had more than the proverbial “15 minutes of fame,” as the world kept its march to progress the more these disciplines became interdependent. And CEOs who were products of their functional disciplines and chose to demonstrate their bias would later realize – sadly belatedly for some – how they undermined the spirit and intent of the enterprise. 

And as the world now knows, the financial services sector wrongly assumed that they were the center of the universe. They had created supposedly innovative financial investment vehicles like derivatives (while incorrectly invoking the role of finance in investment.) What a folly! Yet man likes to ignore life's morals, “Only life can [carve your convictions about the world.] Books can give you vocabularies and frameworks to help you understand and decide, but life provides exactly the education you need.” [David Brooks, Really Good Books, Part II, The New York Times, 26th May 2014]

And so what should the focus be of an enterprise – or an economy, the latter being essentially an enterprise – for that matter? Simply put, it’s the common good! But the common good is not derived from the instinct of ‘crab mentality.’ For instance, we are now aware that constantly mandating a living wage is counterproductive. And that is because of the interdependence that is imperative amongst the functions of an enterprise. And, not surprisingly, people – including those from international institutions – who care about PHL are one in saying: we must truly be committed to good governance, in the rapid pursuit of infrastructure development and the dismantling of oligopoly. But, of course, we Pinoys detest unsolicited advice?

What is our challenge as Pinoys, again? We constantly “lose sight of the ultimate goal” and have yet to “create a compelling vision” for PHL, as in becoming a developed economy, and thus haven't had “an inspiring narrative” to rally Juan de la Cruz to strive for said outcome? In the vernacular we have a word for it, “sabog” – loosely translates to being neither here nor there. And a developed economy would have all and be characterized by the above elements: good governance, infrastructure and a free market. 

What about nationalism? I couldn’t say it any better: “We see vested interest masquerading as national interest. We should learn to distinguish between the two,” so said the ADB’s Stephen Groff.

And what about our sovereignty – i.e., are we really serious in making the Supreme Court the decider of our fate? Remember NAIA 3 – and so we still threw in Mactan airport? And now we added Edca (Enhanced Defense Cooperation Agreement)? Granted our legal minds intellectually believe there are legal infirmities in Edca, for example, do we ever stop to wonder: is our fate in our hands . . . or in the SC?

While democracy says we have three co-equal branches and institutions that we must commit to strongly build, we as a society must likewise be a strong institution, meaning egalitarian, not cacique and hierarchical in character? And we can’t aspire to be one until we dismantle our favored institutions – e.g., oligarchy and political patronage, for example? And we may find comfort that no matter how we think along the lines of permanence, Francis doesn’t think the Vatican Curia’s ideology, for instance, must be perpetual – even when our faith is? And more to the point, a nation that has made impunity – as manifested in the more recent PDAF fiasco and with two if not three ex-presidents named amongst the world’s most corrupt leaders – central to its culture is invoking love of country?

And what about crab mentality – thus our inability to move forward as a nation – and why we are the laughingstock of the world? Will we ever learn to shape up?

Consider: “Scholar Amitav Acharya associates the ASEAN way with ‘a high degree of discreteness, informality, pragmatism, expediency, consensus building, and non-confrontational bargaining styles, which are often contrasted with the adversarial posturing and legalistic decision-making procedures in Western multilateral negotiations.’” [ASEAN: The way forward, Kishore Mahbubani and Rhoda Severino, McKinsey & Company, May 2014]

Did we or didn’t we pick up the wrong side of Western influence?