First, we can’t keep looking for problems armed with the same set of arrows in our quiver?
In leadership, it goes by the adage, “When all you have is a hammer, everything looks like a nail.”
Think of our celebration — running over ten years, 2009 to 2019 — of a 6%-7% GDP growth, yet Vietnam outperformed us. It is no different from our celebration of the manufacturing uptick earlier.
Translation: We remain the underachiever, thus the regional laggard, with Juan de la Cruz paying a heavy price – abject poverty.
Let’s hold it right there.
For the umpteenth time, let’s recognize that we have a structural problem.
Ergo: We need beyond the arrows in our quiver.
For example, logical yet linear and incremental thinking will not put us on a different path, but the same old, worn one. That’s why Einstein called it insanity.
We are a consumption economy, full stop.
None of the monetary and fiscal interventions we pursue will swing us to an investment-industrial economy, not in the medium term.
CREATE and SIPP aren’t world-class. We need a Jon Canto of McKinsey to challenge our tax policy-making mindset.
Consider: Where are we with Arangkada or AmBisyon? They were supposed to attract FDIs to the big industry winners we identified. That’s why we must think out of the box.
But taxing the rich will not do the trick. That is still linear and incremental. The businesses of our dollar billionaires combined can’t generate revenues to match Samsung Vietnam, for example. That is the kind of FDI we need if we want a quantum leap in tax revenues.
Because we are a consumption economy, household consumption accounts for 73.5% of our GDP end-use. Compare that to 49% for Thailand and 55% in the case of Malaysia.
On the other hand, we allocate 31% for export initiatives, while Thailand puts 68% and Malaysia 71%.
Unsurprisingly, the Philippine industry contributes a low-31% to GDP, against Thailand’s 36% and Malaysia’s 38%.
That explains why the exports of these countries are 3.3 times in the case of Thailand and 2.6 times for Malaysia.
Finally, where it hits Juan de la Cruz, Thailand’s GDP per capita is 2.2 times that of the Philippines, and Malaysia’s is 3.3 times.
And we can’t turn things upside down because we rely on OFW remittances and “call centers” to drive the Philippine economy.
We will continue to be a consumption economy with little ability to drive industry and exports – they are the ones that generate quality jobs and wages.
That is why the blog keeps pointing out the genius of the Vietnamese. Samsung Vietnam alone delivers far more revenues than our eight top companies combined.
Translation: We remain the underachiever, thus the regional laggard, with Juan de la Cruz paying a heavy price – abject poverty.
Let’s hold it right there.
Do we wonder why the blog often speaks to Edward de Bono’s “lateral thinking” treatise? And “design thinking” is its latest version, which Silicon Valley adopted to pursue innovation.
Why? Innovation is not a one-dimensional challenge – as in R&D alone. Similarly, nation-building and economic development can’t be all-economics.
Those familiar with the blog may know that the bodies of knowledge that sprinkle the postings came after the fact. [Recall that I am thankful to the late Anacleto del Rosario, who introduced me to de Bono in my early twenties, yet too naïve to take it all even when I was up close and personal.]
That I can speak matter-of-factly to lateral thinking because I am a practitioner.
I had a traveling job for decades, and doing 13-14 hour flights wasn’t uncommon. That was before the age of Kindle and the iPad. And as a frequent flyer, airlines gave me “ownership” of seat 2-B, with 2-A, left vacant – and where I stack my files, books, and periodicals. It was my virtual office cum bedroom and dining room before “pandemic” came to our lexicon.
I learned by doing. The readings that came later reinforced my encounters with the real world. I break into a smile when I hear that American companies no longer demand any formal degrees and instead dig into the applicant’s experience. But then, think of college dropouts Bill Gates and Steve Jobs.
The belief is that progress is moving at warp speed that it requires adaptability and the knack to learn and overcome dynamic challenges constantly.
When it comes to R&D and innovation, for example, Thomas Edison started the practice of team research; instead of scientists pursuing individual efforts.
Why must we Filipinos engage in brainstorming? To overcome our predicament and embarrassment – as the laughingstock of our neighbors?
We’ve been diligent in pursuing monetary and fiscal interventions for decades, and where has that brought us?
Consider: Despite my experience in strategy, planning and execution, innovation, and beating the hell out of competition – at the local, regional, and global arenas – why did I not spoon-feed my Eastern European friends, notwithstanding their outrage?
The story of creation and the character of this universe must be our guiding light. It is about dynamism and interdependence.
Look at how Facebook dropped like a lead – with TikTok giving it a run for its money.
But it is not about being a business enterprise per se.
It is about respecting the hierarchy of human needs, i.e., “creation is good,” said the Creator.
And those needs equip humankind to respond to the demands of dynamism and interdependence. For example, because of climate phenomena, humanity migrated from Africa – and sought better abodes than caves.
Imagine if the pandemic came before the age of our digitized world. Humankind would not have invented WFH. How much more would the global economy have sunk?
I have been working from home for more than two years and will finally travel to Europe in April. By then, the wife and I would have had two boosters of the covid vaccine.
But even this little anecdote is a learning experience. Recall that when the wife and I first came to Eastern Europe, my friends assigned me an assistant cum driver and translator.
He was still in college. But he had the benefit of constantly querying me to ensure he was doing justice to his translations. And when I was leading workshops, he still had to translate because I wanted the people to be at home with the language, especially from a local.
Fast-forward to the present. My assistant earned two bachelor’s degrees and a master’s degree in engineering. And he experienced firsthand how we introduced big data and analytics using simple Excel models.
We then appointed him analytics manager, and in short order, he acquired an AI-driven information management software that he kept iterating and polishing. Today, I can be anywhere in the world, and I will see what we sold of every stock-keeping unit in every country, channel, and store and the margins we generate for every sale given the investments in marketing and selling, including “logistics.”
When the blog speaks to Pareto, I reference the big data I access remotely. And that is where the force-field change theory (postulated by Kurt Lewin) comes in – i.e., exploit the driving forces and fix the restraining ones. And the power comes from deriving trends, be they growth or decline.
For example, a brand may not be responding to ever-changing human needs. Think of simple detergents. They now come in pods for single loads. That is to address the need for convenience, especially for working couples.
And they want their clothes to bring out a pleasant scent too.
Of course, we Filipino men don’t necessarily relate to the example. But not in the developed world, especially when the wife is indisposed. I find it convenient for pods to throw in the dishwasher. But my favorite is Roomba, the robot vacuum cleaner that allows me to multitask. I am still waiting for robotic irons and a robot to recycle our trash on Monday nights.
That is not to complain. There is a gas fireplace I can turn on by the flick of a switch – and with no logs to stack up and soot to clean, as I did for twenty years. To top it all, first thing in the morning, I can prop up my feet by the fireplace with my first coffee, a great brew, courtesy of a pod-fed espresso maker that froths milk like a barista.
In other words, human needs show us how to raise the well-being of people. See above; "creation is good," said the Creator.
But back to my Eastern European friends. They are learning fast. They understand Maslow’s hierarchy of human needs and consumer insights, among others. Even a bit of quantum mechanics.
What must be the minimum level of sale to a client and then to the collective universe to reap the benefits of scale? But to do the math in advance doesn’t guarantee correctness. But with experience, big data, and extrapolation, the scenario comes to life. And it will guide future efforts too, but bear in mind that as the numbers grow, they become more dynamic.
That is my simple verbiage.
Let’s hear from James Morgan McKelvey Jr., “an American billionaire businessman, co-founder of Square, Inc., a financial payments company. He is the appointed independent director of the Federal Reserve Bank of St. Louis.”
And the following is from his book, “The Innovation Stack: Building an unbeatable business one crazy idea at a time.”
“Quantum mechanics versus classical physics. Both systems have the concept of energy, but the quantum explanation of energy is rarely necessary for daily life. Using quantum mechanics as an analogy is odd because you don’t think quantum mechanics unless you’re a physicist.
“Which is my point. Billions of people live their lives with no concept of perturbation theory or eigenstates. Classical physics explains daily life; the situations when understanding the world requires quantum mechanics are so rare that you can avoid them.
“But then, an “innovation stack” isn’t simply a list of independent changes (elements) to an existing business model.
“The innovation weaves into the fabric of the undertaking. Each block in the “stack” only works in conjunction with all the others, and the entire “stack” fails if one block is missing.” [Here’s an aside. Why does the blog speak to the photosynthesis phenomenon incessantly? And why is logical yet linear and incremental thinking devoid of innovation?]
“The complexities generated by a set of innovation elements have when simultaneously unleashed on the industry are compounded by the interrelationships of those elements themselves.
“When everything affects everything, you have a “dynamic system.”
“Dynamic systems are hard to understand and nearly impossible to copy.
“We humans are no good at modeling more than a couple of variables simultaneously. The math quickly becomes overwhelming. If you have two variables that affect each other, you have, most likely, one interaction. If you have eight variables, there are roughly 251,548,592 interactions.
“You’re never going to model an “innovation stack” on a spreadsheet – you can’t do the math.
“But companies love math, especially math that senior managers can use to make decisions. Take that math away, and they’ve nothing concrete upon which to base a decision.
“Entrepreneurs fighting for survival outside the civilized market don’t build mathematical models of what will happen; they do it and observe.
“You cannot view the elements of an “innovation stack” individually. No single element can link or unlink without changing the behavior of the other “elements.” The innovation evolves as a whole. Even without mathematical certainty, it makes intuitive sense.”
In other words, we can’t keep looking for problems armed with the same set of arrows in our quiver – because we have such faith in monetary and fiscal interventions, for example.
In leadership, it goes by the adage, “When all you have is a hammer, everything looks like a nail.”
The bottom line: We must recognize that nation-building and economic development can’t be all but monetary and fiscal interventions.
For instance, how do we make Philippine agriculture – e.g., rice – competitive to win against Vietnam and Thailand? Farm-to-market roads, fertilizer subsidies, irrigation systems, modern rice varieties, among others, are critical elements. [With due respect to Ciel Habito, we can’t cherry-pick the positives of Philippine agriculture when it accounts for the most significant piece of poverty. Think of Tim Cone. There is a much bigger world out there. And we can’t face and win in that world without beating the hell out of the competition.]
But how do we create a sustainable ecosystem that mirrors the best-practice model, i.e., the photosynthesis phenomenon? And we don’t have to “reinvent the wheel.” Thailand approximates the best-practice model, and so we must learn from them.
We must focus on farms that benefit from our dams irrigation-wise. But then we must expand the farms too – and keep running after scale – and manage them as a collective universe to reap economies of scale.
What about the industry? CREATE and SIPP aren’t world-class, as proven by Vietnam, i.e., it successfully attracted Samsung to make Vietnam their smartphone regional manufacturing hub.
That’s what it means to meet the demands of the real world. A tax policy crafted in isolation can miss critical elements. We must engage all relevant parties to brainstorm on the challenge. Think of Jon Canto of McKinsey.
In other words, we can’t keep looking for problems armed with the same set of arrows in our quiver.
In leadership, it goes by the adage, “When all you have is a hammer, everything looks like a nail.”
Gising bayan!
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