Sunday, August 14, 2016

Beyond talking to ourselves

Benchmark. Benchmark. Benchmark. “WHICH Asian country has roared ahead over the past quarter-century, with millions of its people escaping poverty? And which Asian economy, still mainly rural, will be the continent’s next dynamo? Most would probably respond ‘China’ to the first question and ‘India’ to the second. But these answers would overlook a country that, in any other part of the world, would stand out for its past success and future promise.” [The other Asian tiger, Vietnam's economy, The Economist, 6th Aug 2016]

The following have all the right words – and indeed have the best of intentions. But how do they differ from how we heard teachings before? What if education is not a top-down process or is not spoon-feeding? Education is the training of the mind to think, so says Einstein?

“DTI encourages firms to support MSME through Inclusive Business,” Bernie Magkilat, Manila Bulletin, 5th Aug 2016. “The Department of Trade and Industry (DTI) has encouraged chief executives of big companies to develop and promote the involvement of micro, small, and medium enterprises (MSMEs) in the ASEAN region’s production network and supply chain.”

What can we learn from Vietnam? “Vietnam dramatically simplified its trade rules in the 1990s. Trade now accounts for roughly 150% of GDP, more than any other country at its income level. The government barred officials from forcing foreigners to buy inputs domestically. Contrast that with local-content rules in Indonesia. Foreign firms have flocked to Vietnam and make about two-thirds of Vietnamese exports.

“Allied to openness is flexibility. The government has encouraged competition among its 63 provinces. Ho Chi Minh City has forged ahead with industrial parks, Danang has gone high-tech and the north is scooping up manufacturers as they exit China. The result is a diversified economy able to withstand shocks, including a property bust in 2011.”

Can we get pass the first hurdle of the Vietnam model, that is, “bar officials from forcing foreigners to buy inputs domestically.” Or do we see it as anathema to “inclusiveness”? What about the next, “encourage competition among its 63 provinces”? Or does that run counter to “the bias against Imperial Manila” – that is the justification for federalism?

What do we need beyond exhorting the business community to come together and become an integrated supply chain? Consider: our biggest enterprises are the product of our “Pinoy kasi” business model – nurtured by our parochial, hierarchical and paternalistic instincts and glorified by our system of political patronage, cronyism and oligarchy. A true success model must foster the common good and good governance, not cronyism. If once war-torn Vietnam is not to leave us in the dust.

“At the same time Vietnam, like China, has been clear-minded about the direction it must take. Perhaps most important has been a focus on education. Vietnamese 15-year-olds do as well in maths and sciences as their German peers. Vietnam spends more on schools than most countries at a similar level of development, and focuses on the basics: boosting enrolment and training teachers. The investment is pivotal to making the most of trade opportunities. Factories may be more automated, but the machines still need operators. Workers must be literate, numerate and able to handle complex instructions. Vietnam is producing the right skills. Thailand, Indonesia and Malaysia lag behind, despite being wealthier.”

What about education? Consider: we need to “learn” about community – not the parochial or regional kind – but the bigger global community. If education is the training of the mind to think, then federalism – as an “community” option – needs to be internalized not lectured. [Likewise, democracy and the rule of law isn’t realized via the barrel of a gun. We don’t want to undo whatever freedom and democracy we have under our belt? Does President Duterte know the endgame of the war on drugs? Great leadership begins with the end in mind. Remember Marcos? Power corrupts and absolute power corrupts absolutely? We must grow up if we are to be equal to the task – of self-government.]

What about global competitiveness – which is the next critical test of the Vietnam model? For example, the Americans and the Brits are struggling to register more exports than imports after the West lost manufacturing to China. And more so when technology/automation translated to less employment. Yet the Japanese and the Germans seem to keep their economies on an even keel because they are able to exploit the bigger global market via their world-class products.

And so we have to wonder if our parochial and hierarchical instincts are a barrier to innovation and global competitiveness? Recall how under the Soviet system – because of centralized planning – products and prices were dictated from the top while the empire was isolated from the rest of the world. In the Philippines, bosses would dictate the mantra – of low-quality and low-prices – given our bias for inclusion?

And we romanticize it as “marketing to the bottom of the pyramid.” With due respect to the Indian guru that coined the terminology, India is a hierarchical system and structure with over a billion people. And that makes for a humongous market. But doesn’t translate – and respond – to the imperative of globally competitive products. The evidence? Nokia focused on the bottom of the pyramid and created cheap cell phones for the Indian and Chinese markets – and where is Nokia now? And Procter & Gamble too, in China.

Competition is about respecting the next guy, whether rich or poor. It is about human need. And Maslow gave the world a peek into that intimate realm. It is not about consumerism but progress and development – modernity, if you will – and the wellbeing of man. One can sail the Atlantic at leisure like the good old days but flying the 787 Dreamliner is the way to go when time is of the essence.

And consider the law of averages if not Pareto’s 80-20 rule. What to do with our MSMEs when they account for over 99% of enterprises and employ over two-thirds of the labor force yet deliver only a third (or a bit more) of economic output?

Not all MSMEs can be geared for global competition. And an accelerated program – like the “QBO Innovation Hub for startups and technology innovation entrepreneurs” – is a step in the right direction. [IdeaSpace, DTI launch new innovation hub, Bernie Magkilat, Manila Bulletin, 9th Aug 2016].

Because we need a true best-practice model sooner than later for the rest of PH industry to emulate. It is not about credit access or shared services per se. They must be made available, indeed. Yet the key remains: we must rapidly be schooled on developing globally competitive products – that respond to human needs. [Consider: “Exports drop for 15th straight month in June,” The Philippine Star, 11th Aug 2016.]

And that has to be against the backdrop of the building blocks of an economy – that is, beyond industry, and for industry to sprout, we must have a fix on power and infrastructure. “‘To build industry, we must first address our enabling infrastructure – roads, utilities, power, water, communication and ports. If we want to be competitive, we start with local governance.’ The newly installed Butuan city Mayor Ronnie Vicente Lagnada . . . also cited the importance of creating domestic Eco zones in the region to upgrade its industries.” [DTI urges Mindanao farmers to move up the value chain, Bernie Magkilat, Manila Bulletin, 5th Aug 2016]

Indeed, global competitiveness is not a cakewalk. Yet it is imperative that we get education the sooner the better. It is a huge challenge. That even one of the world’s most innovative and competitive companies grapples with it.

“Can Procter & Gamble Find Its Aim Again? It’s been a humbling decade for the consumer products giant. Now leaner and more focused, with its third CEO in three years, can the king of brands regain its relevance after years of subpar returns?

“On the ninth and 10th floors of Procter & Gamble’s Cincinnati headquarters, in a secure area that few are permitted to enter, sits the company’s Retail Innovation Center. The “I,” as it’s known, is slick and highly digital. P&G’s top executives believe it contains the ingredients of the company’s coming turnaround.

“The center, which existed at another location for years but was revamped and moved in 2015, aims to tell P&G’s story to its major customers. There are video case studies of disrupters, from Uber to Airbnb. There are mocked-up shelves of both P&G’s and competitors’ products and rooms set up to show P&G items in their intended habitats (such as a baby’s room with a diaper table in a suburban home and a laundry setup in an apartment). One room is being prepared for a feminine-care presentation, with lingerie, pads, and tampons demonstrating various levels of absorbency. This is serious business.

“An enormous screen in the first room allows users to click on stories showing how new technologies and marketing strategies are used. It’s mesmerizing. But there’s something odd: None of the hundreds of examples are P&G’s own innovations. That’s by design, say its creators, who want visiting customers from the likes of Walmart and Target to be startled by the pace of change, and then move on to learn more about what P&G is doing to change the consumer business. It uses big data to create customized analytics for every customer. The goal: convince people that P&G is modern, fresh, and ready to compete in this new and uncertain world.

“But the sheer number of disruptive ideas depicted from outfits other than P&G underscores the fact that the $78.8-billion-in-sales company has had so few of them of late. It’s unexpected, considering the unparalleled innovation history of P&G.” [Jennifer Reingold,Fortune, 15th Jun 2016]

The “mindset change towards entrepreneurial attitude” espoused by the DTI is well and good. But as marketers know full well, marketing starts with the first “P” which is the product. We need state-of-the-art technologies – and contemporary marketing expertise – if we are to be synonymous to innovation and be globally competitive. “Simply put, without effective technology transfer, we will not have true agriculture development. Let us learn from our own cacao experience.” [Technology transfer, agriculture development and cacao, Ernesto M. Ordoñez,  Philippine Daily Inquirer, 10th Aug 2016]

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]

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