Friday, December 30, 2016

Winning in Trump’s world

Trump appears to be the wrecking ball that will upend the here and now. How can nations and enterprises win in this new era?

Let’s hear from The Economist: “Productivity growth is dismal in the West, companies are fusing at a furious rate, entrepreneurialism is stuttering, populism is on the rise and the old rules of business are being torn up . . . The most striking business trend today is not competition but consolidation.

“Management theorists need to examine their church with the same clear-eyed iconoclasm with which Luther examined his. Otherwise they risk being exposed as just so many overpaid peddlers of dead ideas.” [Management theory is becoming a compendium of dead ideas, Schumpeter, The Economist, 17th Dec 2016]

For an enterprise it is about the desired outcome, beyond the input. Productivity is a process which is an input, a factor of production, like cost reduction. While the desired outcome is sustained growth and profitability. Entrepreneurialism is stuttering? Precisely, given the high cost of entry – a.k.a. competition – in this day and age. Consolidation confirms competition is alive and well. Consolidation is about the natural science.

Economies of scale and point of diminishing returns are as natural as the boom and bust cycle. And an enterprise cannot and must not accept marginal outcomes lest investors run for cover. Is The Economist unnerved by Trump’s politics – of populism – even when it stood its ground against Brexit?

“Donald Trump preaches muscular American nationalism and threatens China with tariffs. Britain is disentangling itself from the European Union. The more far-sighted multinationals are preparing for an increasingly nationalist future.” [The Economist, op. cit.]

MNCs are not new to insular nations and why local subsidiaries aren’t a new phenomenon. India was a closed economy. The boom they belatedly experienced came from the opening of the economy. “McDonald's has over 36,000 locations in over 100 countries” says its website. Will Trump’s Wall make them disappear to sell only in the US? Will Airbus sell planes only in Europe and Boeing only in the US? What about Coca-Cola? And Apple? Eastern Europeans have acquired the taste for Scotch whisky. Remember the Iron Curtain?

Water seeks its own level. Natural phenomena will always guide global enterprises. As the cycle of development around the world takes its due course, business and management initiatives must adapt.

And think Darwin. What about MSMEs? Not every startup can move up to a high-growth company status. Extinction is not unnatural. And there is nothing wrong with mega enterprises given they generate a greater multiplier effect, including the development of auxiliary or clusters of support industries.

The Economist has reported that while Europeans generate more creative ideas than Americans, the latter are better able to turn theirs into commercial successes. Apple took on the once venerated IBM. And a today’s Silicon Valley behemoth could be tomorrow’s IBM? It is the survival of the fittest.

The world is not about to end. Ideas will always find their places in the sun. “The value of education is not the learning of many facts but the training of the mind to think,” so says Einstein.

It is about the desired outcome beyond the input or the activity. And the desired outcome is dictated by human need which is a continuum. It is dynamic not static. The mantra for enterprises is to respond to human needs and aspirations. Which is what innovation is about, not innovation for innovation’s sake.

The financial engineering that brought down the financial system and the resulting Global Recession fed on greed. It wasn’t meant for man’s wellbeing. When we add greed in a world with a sprinkling of despots we create a multi-headed monster nourished by people’s fears. And self-preservation and isolation rule.

And taken for granted is “National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists.

“A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade. Companies gain advantage against the world’s best competitors because of pressure and challenge. They benefit from having strong domestic rivals, aggressive home-based suppliers, and demanding local customers.

“These conclusions, the product of a four-year study of the patterns of competitive success in ten leading trading nations, contradict the conventional wisdom that guides the thinking of many companies and national governments—and that is pervasive today in the United States.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]

And where are we in the Philippines? We must learn to walk before we can run. The world has left us way . . . way behind. And until we shape up, it will take not just a generation before we can right the PHL ship?

“We know that our manufacturing sector is more productive than agriculture and services. However, it employs the fewest workers and in terms of ratio to GDP, this has, in fact, remained stagnant for the last 20 years.

“Clearly, manufacturing needs an enabling environment first before it can consider looking at incentives. In a way, the current incentive environment is reflective of the condition that the country is not able to standardize such an enabling environment.

“First, the government has to take stock of all the existing investment agencies that it has created. It will require a substantial effort to harmonize all the rules and regimes offered by each agency and including also those at the local government levels.

“Second, the government has to develop a critical institutional capacity in understanding needs of industries. This means that their role is beyond planning and regulation, but to a certain extent provide directions at different levels of governance.” [Making manufacturing work for everyone, Dr. Alvin P. Ang, Eagle Watch, Business Mirror, 15th Dec 2016]

And one such need is for “the road maps for the different industries [to] be benchmarked abroad.” But what about the entrepreneurs themselves, what is their worldview?

And the reason the writer put up the above article from The Economist is to challenge our entrepreneurs to look beyond the horizon. Shortsightedness is a loser in Trump’s world. Our oligarchic economy rewards cronies but not every enterprise can be a crony enterprise. We have to paddle our own canoe.

And to succeed in business we must be prepared for the worst. There is no free lunch even if political patronage says otherwise. It is Juan de la Cruz that pays the price with the world leaving us behind – and are the regional laggard. Let oligarchy answer for their folly – and the best we can do is to not be like them. Think NAMFREL: “It is better to light a candle, than to curse the darkness.”

To reiterate: It is about the desired outcome beyond the input or the activity. And it applies to the public sector too. For example, infrastructure is ground zero of development. Beyond the NEDA and the administration reporting how many major infrastructure projects have been approved, they must likewise do an accounting of outcomes.

Eisenhower is still remembered for the US Interstate Highway System that is named after him. It pump-primed development beyond the major US metro areas. Eisenhower, during his military stint in Europe, was awed by the German Autobahn System because it gave the German military such mobility.

And hand in glove with infrastructure development is industrialization. The desired outcome being to generate greater wealth beyond OFW remittances. The then new PNoy administration was presented the JFC’s 7 industry winners; and we’re now into the Du30 administration – with no time to waste! But we’re wishy-washy on both imperatives – giving the big boys the playing field to themselves – as Juan de la Cruz suffers?

They are fundamental building blocks of an economy. Not the drug war or the poverty war. Think cause and effect – beyond “Pinoy abilidad” – to overcome our myopia. And learn to own up and grow up? We can’t be perpetual juveniles – which is what underdevelopment is?

Shouldn’t media be doing more to keep them front and center of the national agenda? Instead of nurturing PHL’s elite-dominated democracy – characterized by the curse of parochialism, insularity, hierarchy, paternalism, political patronage and dynasties, oligarchy and impunity? It’s called nation building.

“To the disappointment of many, an elite-dominated democracy replaced Marcos’ authoritarian rule. From 1987, a small number of families started to restore their control of the government and rotate the seats of power among themselves.

“Despite promising national growth rates, the gains appear to have largely benefited the rich. More than 26 million Filipinos remain impoverished. And unemployment rates are said to be the worst in Asia.

“This widening gap between rich and poor, recurrent domestic economic crises, epidemic levels of corruption and failed attempts to significantly reduce criminality, have left the public deeply frustrated.” [How a Failed Peaceful Revolution Led to Rodrigo Duterte, Cleve Kevin Robert Arguelles, University of the Philippines / The Conversation, Time Magazine, 20th Dec 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]

My family joins me in wishing one and all a Healthy, Prosperous and Peaceful New Year

No comments:

Post a Comment