Wednesday, January 28, 2015

What dots to connect . . .?

Where to begin? Education as the Greeks formulated it was founded on linear thinking – or step-by-step progression – which would characterize a course syllabus, for example. But then major breakthroughs (which is what problem-solving or innovation is about) that transformed the world would come from elsewhere; and Edison, the father of modern R&D, comes to mind. And so do Jobs and Gates. And we can get a glimpse of their mental processes by looking at how product development comes about: It is critical-thinking and forward-thinking at the same time. That means looking and starting with the end in mind – and thinking out of the box, beyond conventional wisdoms and comfort zones. 

And more than going from point A to point B, it is defining the base line and establishing a hypothesis against which the outcome is measured; and paves the way to go beyond incremental gains, leapfrog convention if not undo the status quo via creative destruction.

Recently, we heard from the UK ambassador: “UK envoy offers advice on thrusts of PPP projects,” Kris Bayos, Manila Bulletin, 24th Jan 2015. “The mindset change that the UK had to make was looking it from the project developers’ point of view to the users’ point of view . . . The challenge for the Philippines is to learn from our mistake. Start on the end-users first. In terms of transport, what journey do the end users want to make and why they want to make it . . .”

And true to form, a US official would choose to be pragmatic: “This past October, a roadshow was conducted by the PPP office in the US to present to potential investors 50 PPP projects worth $20.82 billion. That is a substantial amount of investment the Philippines could use for its infrastructure improvement . . . But in the words of (Principal Deputy Assistant Secretary Kurt Tong of the US Department of State) . . . the projects need to be ‘practical,’ a word that we do not understand the meaning of in this context. However he also said the rules and plans need to be clearer . . . ‘PPP deals’ need to be viable on the revenue side of the private investor . . .” [PPP and the USA, Business Mirror Editorial, 23rd Jan 2015]

There’s no free lunch. In the final analysis, a project must be viable. It must not be based on rent-seeking proffered through government subsidy [though there are exceptions when justified by cost-benefit, e.g., the rail system in Europe, critical in conducting people and economic activity in the world’s largest economic bloc] and/or an overpriced project that the proponent is able to abandon at a profit even when the project wasn’t sustainable in the first place.

Connecting the dots: As shared by the UK ambassador, a project or an undertaking must respond to a human need. And it brings to mind the principle-based – i.e., human empathy – or design-thinking model that the Stanford School of Design has championed. And which progressive global enterprises have adopted to guide innovation efforts.

Yet, human need has a broader context and, that is, of the community and the common good. For example, to support a farmer is appealing yet in today's highly globalized and competitive world, there is a higher hurdle to satisfy. How do we introduce the concept of community and the common good to a poor farmer? More to the point is how to introduce the imperative of critical mass – that can translate to efficiency, productivity, innovation and competitiveness, thus a virtuous circle, like they have done in Vietnam, for instance?

In short, how does the community manifest mercy and compassion but not embrace “pusong mamon” and perpetuate “crab mentality”? Because doing so is mirroring the mantra of “me and myself” that we see in political patronage and crony capitalism that nurtures an oligarchic economy . . . that is then manifested in PHL's persistent poverty? In sum, “community sense and the common good” must be paramount. 

And so it is not surprising that the debate continues: What do we mean by “inclusive”? Is it robbing Peter to pay Paul? Or is there a principle-based context that is universally acceptable – or an overarching goal or vision? For example, poor nations want to move from an underdeveloped to a developed economy? And in the absence of such an overarching goal, we don't generate a sense of purpose and would debate the wisdom of federalism, for example, if only to neutralize “Imperial Manila” for the benefit of rural Philippines. But then, why would a person trained as a communist like Deng Xiaoping accept such a fundamental given as scarcity of resources – and thus would prioritize industries and regions as he kept an eye on the ball, that is, China’s modernization and economic development goals?

The key is not for our favorite regions or industries to be first but for the economy as a whole to grow at a faster clip so that it will spawn more economic activity. Surprise, surprise! China is today the second largest economy and in some measures has surpassed the U.S. Sadly, such an image is foreign to PHL because we've been an underdeveloped economy for the longest time. And our impatience has reinforced linear thinking and, not surprisingly, we've paid dearly for decades of “crab mentality.” 

We seem to have found cover in “trickle-down economics” reading about the US economy? Is the Aquino administration resorting to “trickle-down economics,” driving growth insensitively? If we have a challenge it is in fact to accelerate growth even more! The US is a well-developed economy with a GDP per capita (PPP) of over $52,000. Indeed they can talk about “trickle-down economics” because there’s loads to trickle down, but they don’t. In the case of PHL, our per capita income is a mere sliver (at $4,700; still meager compared to Thailand’s $9,900) and, ergo, there is nothing to trickle down. Of course, plunderers are indiscriminate, making us believe we are rich? Our challenge is underdevelopment . . . not to be confused with those faced by developed economies.

A developed nation is not necessarily devoid of poverty but it is the exception than the rule. And we don’t have to look far and wide but to our neighbors. Let’s stick to benchmarking against our neighbors so we don’t compare apples and oranges. Deng Xiaoping, Lee Kuan Yew, Mohamad Mahathir, for example, have demonstrated that an overarching goal is a must for a nation, and that the way forward isn't about me and myself but about the common good.

And our elite class must recognize that bragging about our successes in managing the economy carries a risk and responsibility – given our national income is yet to lift us above an underdeveloped economy? We can't raise the expectations of Juan de la Cruz when no one has demonstrated visionary leadership; people need to appreciate the course we are traversing? But are we taking Juan de la Cruz for granted, that he is not of the same level and rank?

Moreover, an underdeveloped economy does not have an efficient ecosystem such that the output we generate for every unit of input is much less compared to those of developed economies – because underdevelopment is characterized by dysfunctional policies, systems and processes. And why connecting the dots is the acid test of creativity. Question: why are we riveted to the quarterly GDP growth target when blips are to be expected from an underdeveloped economy compared to those of developed and more efficient ecosystems?

What is called for is not to mirror Wall Street’s orientation of monitoring the short-term (and weren't we critical of such short-term bias in the first place?) but to set for ourselves an overarching goal or vision. Many years ago the US, for example, did the exercise and they came up with “the pursuit of life, liberty and happiness” . . . and . . . “a government by the people, of the people and for the people.” Of course, there is such a thing as arrogance of success and, not surprisingly, they tossed their basic egalitarian ethos.

We need to craft our way forward by critically defining (warts and all) what point A is and establishing the hypothesis (an overarching goal or vision) that is point B against which we are able to truly measure progress as we traverse into the future.

For example, between the power crisis and PPP, there are numerous dots that we're unable to connect because we're still going through the learning curve on something as fundamental as vital infrastructure. And no wonder when we superimposed the (imperative) set of strategic industries like those proposed by the JFC, we seemed lost? Because we barely have an infrastructure platform to speak of that can bear the load? How critical these building blocks are can’t be overemphasized yet more than being negligent, we allowed our culture of impunity to get in the way? 

Indeed, we need a North Star – a sense of purpose – like an overarching goal or vision . . . and visionary leadership so that we don't flounder?

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