Thursday, February 19, 2015

The bias must be on “outcome” . . . not “activity”

“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]

Where are we coming from on the PPP and where is the above US official coming from? To answer the question we may want to borrow a page from education. “Outcome-based education (OBE) is an educational theory (1989-present) that bases each part of an educational system around goals (outcomes). By the end of the educational experience each student should have achieved the goal.” [Wikipedia]

And much earlier there was “Bloom’s higher level of thinking. It is named after Benjamin Bloom, who chaired the committee of educators (1949-1953) that devised the taxonomy. Bloom's taxonomy refers to a classification of the different objectives that educators set for students (learning objectives). It divides educational objectives into three "domains": cognitiveaffective, and psychomotor (sometimes loosely described as "knowing/head", "feeling/heart" and "doing/hands" respectively).” [Wikipedia]

And from Soren Kierkegaard: “Life can only be understood backwards; but it must be lived forwards.” And more recently many would have heard of Stephen R. Covey’s “The 7 habits of highly effective people,” and “Habit 2: Begin with the end in mind.”

This blog has talked about a simple model in the pursuit of undertakings, big and small, and it goes: Where are we; where do we want to be; how will we get there. And it is reflective of the thinking processes of visionary leadership (like Deng Xiaoping, Lee Kuan Yew, Mohamad Mahathir) as well as forward-thinkers and innovators (e.g., Edison, Jobs, Gates.)

In the case of the PPP – and for decades in our export promotion efforts – we trumpeted the roadshows we organized to the West and now Singapore. [“Phl holds Singapore roadshow for PPP projects,” Lawrence Agcaoili, The Philippine Star, 6th Feb 2015.] But they’re focused or biased on activity not outcome. An activity is not necessarily designed to reach a predetermined outcome, and in which case it is open-ended. And what to do to close the loop? Rely on “bahala na” or “fate”? 

As one local expert shared with me, “we train our business students how to plan but we don’t train and test them on how they execute.” And it is not surprising given the conventional wisdom and approach to learning, i.e., linear thinking. Practice. Practice. Practice.

It takes practice to learn execution . . . and also how to define an outcome so that it becomes its own metric. For example, the metric of a product idea could be something like: Can it be translated into a tangible product that sells and is preferred by consumers in the local market and beyond? Is it a sustainable undertaking, does it deliver healthy margins that it will contribute to the growth and competitiveness of the enterprise, and become a contributing member of society, including every country where it does business? [The model also applies to agribusiness, e.g., where scale via consolidation is imperative. And the bias must be to look outward and tap best practices from wherever, e.g., from Malaysia and Thailand. It is a race to the top which is what benchmarking is about. “Pwede na ‘yan” doesn’t cut it. And “alam ko na ‘yan,” is the road to disaster?]

And how many supposedly great product ideas have been pursued without defining the desired outcome that is its own metric?  And how many of them fell by the wayside? Even SMEs mustn’t use size as an excuse. It is about embracing innovation and competitiveness. And it is not a monopoly of MNCs as my Eastern European friends have demonstrated. Nor is it about the ideology of globalization. It is about the fundamental given of economies of scale. And it is beyond the rhetoric of “inclusiveness.” It reminds me of my late Jesuit friend who kept bending my ear about “reality” but was too dense it took years to sink in. Reality is the opposite of “plastik.” 

An oligarchic economy cum feudal society by definition is not about the common good and thus is not inclusive. But even the Church takes it for granted? And so do our conglomerates? While some of them have ventured outside the country, their DNA is about local dominance. They haven’t been truly honed in global competitiveness. Think Samsung. They’ve graduated from local dominance to global dominance.

Where the rubber hits the road is in the selling of a product. How does the mantra – “begin with the end in mind” – apply in selling? “Show them the money.” Don’t sell a retailer the product, show them how they will make money by selling the product in their stores. And that’s why marketing is important or the marketing mix, i.e., the 5 Ps: the product, the pricing, the placement, the promotion (and add people because execution is about people.)

And that is why innovation matters. And innovation has to be principle-based, e.g., human empathy – as championed by the Stanford School of Design; and is team-driven as opposed to being dependent on “bossing” which is inherent in our hierarchical system and structure. It is a carryover from Edison, the father of modern R&D where he moved away from the conventional wisdom – i.e., where research efforts were pursued by individuals – to that of a team-based orientation.

A marketer must thus put herself and her team in the place of the person or consumer in order to internalize what problem or need she has. And in the process of examining her need, we can’t ignore Maslow’s hierarchy of needs. Or why Steve Jobs would say that a person may not be able to articulate her need but the spirit of innovation demands empathizing with her to realize that higher level need, as in being self-actualized. Of course, we can read consumerism in that – and see malice in everything.

Yet there is the overarching goal of a people's well-being that can be attained via competitiveness that is derived from investment, technology and innovation as well as people, product and market development – the elements that make an economic activity robust and sustainable . . . and become a pillar of an economy. It is the inverse of persistent poverty or a non-inclusive economy. And it explains why the global community has adopted yardsticks in the pursuit of innovation and competitiveness, among others. [“First APEC public-private dialogue” (by Roberto R. Romulo, The Philippine Star, 13th Feb 2015) drives home the point for the BPO industry. “[T]he 21st century has moved on . . .” And he talked to “disruptive technologies”: “The dramatic changes in technologies demand greater innovation and creativity from management and different/higher skills from employees . . .”]

At the end of the day, our ability to compete will be the acid test of how we will fare in the 21st century, including in the Asean Economic Community. There is no free lunch. We can’t rest easy even when AEC opens a bigger market for us . . . if we are not competitive in the first place. It will be sad if all that we gain from AEC is a bigger market for OFWs – because it will reinforce our “Dutch disease” where services will all the more outstrip industry. We now know that it is industry that drives the economy because of its greater multiplier effect – and why the NEDA secretary wants “to rebalance” the economy . . . if we are to truly overcome persistent poverty.

And back to the PPP. “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 . . .”

Beyond doing roadshows, we need to demonstrate to investors how they will make money. There’s nothing wrong when Tom Cruise hollered,“Show me the money!” It’s reality . . . as I explained it to my Eastern European friends, a bunch of ex-socialists.

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