Experience is the best teacher.

The title of this posting flows from a McKinsey article, “The perils of bad strategy,” Richard Rumelt, McKinsey Quarterly, 1st Jun 2011. [Richard Rumelt is the Harry and Elsa Kunin Professor of Business and Society at the UCLA Anderson School of Management. This article adapts his book, Good Strategy/Bad Strategy: The Difference and Why It Matters.]

“Despite the roar of voices equating strategy with ambition, leadership, vision, or planning, strategy is none of these. Rather, and it is coherent action backed by an argument. And the core of the strategist’s work is always the same: discover the crucial factors in a situation and design a way to coordinate and focus actions on dealing with them.”

In other words, experience is the best teacher. “You cannot deduce a good strategy from theory.”

A coherent action based on a believable argument is at the heart of a practitioner’s work; it distills the crucial factors of a problem and sharply defines the journey – pulling everyone’s efforts together.

Let’s revisit the blog’s reason for being, i.e., Reinventing Juan de la Cruz to win in the 21st century.

Why must we reinvent Juan de la Cruz?

Aren’t we the laughingstock of the region?

Where are we with AmBisyon? With Arangkada? With the scores of industry road maps?

Do we know the perils of bad strategy yet?

“How we wish our next secretary of the Department of Trade and Industry (DTI) would be known as the champion and booster of Philippine exports,” someone mused in a conversation. He came from knowing how far behind we have been left by our comparable Asean peers in export performance.

“The numbers are indeed glaring: over the last five years, we averaged only $70 billion a year in merchandise exports, while Indonesia earned $182, Thailand $246, Malaysia $248, Vietnam $268, and Singapore $401 billion. We’re not even near half of what Indonesia made the closest neighbor we trail.

“The new government simply must give focused and determined attention to this abysmal export performance, as in it lies the key to solving the major perennial challenges our economy keeps facing, namely: (1) lack of quality jobs, (2) low incomes and high levels of poverty, and (3) higher prices, especially of food, leading to wide food insecurity and malnutrition among our poor—in short, the basics of presyo, trabaho, and kita.” [“Doing a Vietnam,” Cielito F. Habito, NO FREE LUNCH, Philippine Daily Inquirer, 31st May 2022]

Let’s hear more from Rumelt: “A good “strategy” does more than move us toward a goal or vision; it acknowledges the challenges we face and provides an approach to overcoming them.

“Too many organizational leaders say they have a strategy when they do not. Instead, they espouse what I call “bad strategy.” Bad strategy ignores the power of choice and focus, trying instead to accommodate many conflicting demands and interests.

“Make no mistake: the creeping spread of bad strategy affects us all. Heavy with goals and slogans, governments have become less and less able to solve problems.

“I have condensed my list of its critical hallmarks to four points: (1) the failure to face the challenge, (2) mistaking goals for strategy, (3) “bad” strategic objectives, and (4) fluff.

“Failure to face the problem: A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot evaluate that, you cannot reject a “bad strategy” or improve a good one.

“If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have a stretch goal, a budget, or a list of things you wish would happen.

“Mistaking goals for strategy: A few years ago, a CEO I’ll call Chad Logan asked me to work with the management team of his graphic-arts company on “strategic thinking.” Logan explained that his overall goal was simple—he called it the “20/20 plan.” Revenues were to grow at 20 percent a year, and the profit margin was 20 percent or higher.

“A leader may justly ask for “one last push,” but the leader’s job is more than that. The role of the leader—the strategist—is also to create the conditions that will make the push effective, to have a strategy worthy of the requisite effort.

“Bad strategic objectives: Another sign of bad strategy is fuzzy strategic objectives. One form this problem can take is a scrambled mess of things to accomplish—a dog’s dinner of goals. Often mislabeled as strategies or objectives, a long list of things to do is not a strategy. It is just a list of things to do. Such lists usually grow from planning meetings where many stakeholders suggest things they would like to see accomplished. Rather than focus on a few essential items, the group sweeps the whole day’s collection into the strategic plan.

“Then, in recognition that it is a dog’s dinner, the label “long term” is added, implying that none of these things are imperative today.

“Good strategy, in contrast, works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes.

“It also builds a bridge between the critical challenge at the heart of the strategy and action—between desire and immediate objectives that lie within grasp.

“Thus, the objectives that a good strategy sets stand a good chance of being accomplished, given existing resources and competencies.

“Fluff: A final hallmark of mediocrity and bad strategy is a simple abstraction—a flurry of fluff—designed to mask the absence of thought.

“Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise. Here is a quote from a major retail bank’s internal strategy memoranda: “Our fundamental strategy is one of customer-centric intermediation.”

“The phrase “customer-centric intermediation” is pure fluff. Remove the “fluff,” and you learn that the bank’s fundamental strategy is being a bank.

“Why so much bad strategy? A “bad strategy” has many roots, but I’ll focus on two here: (1) the inability to choose and (2) template-style planning—filling in the blanks with “vision, mission, values, strategies.”

“The inability to choose: Strategy involves focus and, therefore, choice. And choice means setting aside some goals in favor of others. When this hard work is absent, weak strategy is the result.

“Template-style strategy: This fascination with positive thinking has helped inspire ideas about charismatic leadership and the power of a shared vision, reducing them to something of a formula. The general outline goes like this: the transformational leader (1) develops or has a vision, (2) inspires people to sacrifice (change) for the good of the organization, and (3) empowers people to accomplish the vision.

“This template-style planning has been enthusiastically adopted by corporations, school boards, university presidents, and government agencies. Scan through such documents, and you will find pious statements of the obvious presented as if they were decisive insights.

“The enormous problem all this creates is that someone wishes to conceive and implement an effective strategy amid empty rhetoric and bad examples.

“The kernel of good strategy: By now, I hope you are fully awake to the dramatic differences between good and bad strategy. Let me close by trying to give you a leg up in “crafting” good strategies, which have a basic underlying structure:

1. A diagnosis: an explanation of the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.

2. A guiding policy: an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.

3. Coherent actions: steps coordinated with one another to support the accomplishment of the guiding policy.

“A strategy is a form of problem-solving, and you cannot solve a problem you do not comprehend.

“The most effective leaders become strategists by focusing on the way forward promising the most extraordinary achievable progress—the path whose crux was solvable.

“You cannot deduce a good strategy from theory. Much of design combines imagination and knowledge about many other methods, copying some elements of each.

“To be a strategist, you must keep your actions and policies coherent with each other, not nullifying your efforts by having too many different initiatives or conflicting purposes.

“Becoming a Strategist: A strategy combines policy and action to surmount a high-stakes challenge. It is not a goal or wished-for end state. It is a form of problem-solving—you cannot solve a problem you do not comprehend. Thus, a challenge-based strategy begins with a broad description of the challenges—issues, and opportunities—facing the organization. They may be competitive, legal, due to changing social norms, or problems with the organization itself.

“In performing a diagnosis, the strategist seeks to understand why particular challenges have become salient, about the forces at work, and why the challenge seems complicated. In this work, we use the tools of analogy, reframing, comparison, and analysis to understand what is happening and what is critical.

“As understanding deepens, the strategist seeks the crux—the one challenge that both is critical and appears to be solvable. This narrowing down is the source of much of the strategist’s power, as the focus remains the cornerstone of the strategy.

“The strategist should understand the sources of “edge,” or power, or leverage relevant to the situation. To punch through the crux, you will use one or more of them. Willpower is not enough.

“To do strategy well, avoid the bright, shiny distractions that abound. Don’t spend days on mission statements; don’t start with goals in strategy work. Don’t get too caught up in the ninety-day chase around quarterly earnings results.

“Importantly, there are numerous pitfalls when executives work in a group, or workshop, to formulate strategy. There must be a process by which a small group of executives can do a challenge-based strategy, discover the crux, and create coherent actions to punch through those issues. It differs from strategic planning or other so-called strategy workshops, where the outcome is a long-term budget.”

The bottom line: Why are we the laughingstock of the region?

“The numbers are indeed glaring: over the last five years, we averaged only $70 billion a year in merchandise exports, while Indonesia earned $182, Thailand $246, Malaysia $248, Vietnam $268, and Singapore $401 billion. We’re not even near half of what Indonesia made the closest neighbor we trail.” [Habito, op. cit.]

In other words, despite AmBisyon Natin, Arangkada, and the scores of industry road maps, we are still a service-consumption economy courtesy of the over $50 billion generated by the OFW remittances and call centers.

On the other hand, our neighbors followed a simple mantra to become economic miracles: beg for Western money and technology. It was not to drive GDP by 6%-7%. The latest example is Vietnam.

Even before snatching Apple, Vietnam successfully attracted Samsung and catapulted them into an Asian export machine. For decades, we prided ourselves in having over 300 export processing zones.

Focus on one or two. No nation aspiring to attain industrialized status aggressively – as the Asian Tigers did – can focus on over 300 export projects.

Here’s Rumelt again: “Too many organizational leaders say they have a strategy when they do not. Instead, they espouse what I call “bad strategy.” Bad strategy ignores the power of choice and focus, trying instead to accommodate many conflicting demands and interests.

“Make no mistake: the creeping spread of bad strategy affects us all. Heavy with goals and slogans, governments have become less and less able to solve problems.”

Isn’t that familiar – given our inability to execute AmBisyon, Arangkada, and the scores of industry road maps?

Recall that the blog speaks to the Pareto principle – the “vital few” versus the “trivial many.” And Kurt Lewin’s force-field theory of exploiting the forces that drive us toward becoming the next Asian Tiger and overcoming those that restrain us.

Consider: We struggle with embracing personal responsibility in pursuing the common good because of our crab mentality. And that comes from our caste system. We pigeonhole Juan de la Cruz in his rank that the value of hierarchy and paternalism comes down to the common good be damned.

Enter: Mr. Ramon Ang and Senator Sonny Angara.

And here are quotes from an earlier posting:

“Our GDP per capita has been increasing but only incrementally. We must change this direction if we want more dramatic increases than the current.” [“Moving toward high-value industries and higher-paying jobs,” by Senator Sonny Angara, BETTER DAYS, Manila Bulletin, 4th Sep 2022]

“In real-world terms, we need $200 billion in export revenues to be on equal footing with our neighbors.

“Enter: The Philippine version of the Pearl River Delta Economic Zone.

“In other words, we need more than Bulacan airport. The excellent news is that Ramon Ang of San Miguel’s model will generate $200 billion in export revenues.

“Prioritize. Prioritize. Prioritize.

“NEDA, DTI, our think tanks, and legislators should do a rigorous benchmarking exercise to learn how Guangdong did it.

“In other words, we can continue with the zillion other LGU initiatives we want, take them as the “trivial many,” but prioritize our version of the Pearl River Delta Economic Zone.

“The object of the exercise is for the GDP to take a quantum leap.”

Experience is the best teacher. You cannot deduce a good strategy from theory.

A coherent action based on a believable argument is at the heart of a practitioner’s work; it distills the crucial factors of a problem and sharply defines the journey – pulling everyone’s efforts together.

“A strategy is a form of problem-solving, and you cannot solve a problem you do not comprehend.

“The most effective leaders become strategists by focusing on the way forward promising the most extraordinary achievable progress—the path whose crux was solvable.

“To be a strategist, you must keep your actions and policies coherent with each other, not nullifying your efforts by having too many different initiatives or conflicting purposes.

Let’s revisit the blog’s reason for being, i.e., Reinventing Juan de la Cruz to win in the 21st century.

Why must we reinvent Juan de la Cruz?

Recall how the blog defined freedom, democracy, and the free market: Personal responsibility is imperative in pursuing the common good. And in the case of the Philippines, it is becoming the next Asian Tiger. 

And in modern management lingo, there is “horizontal leadership.” It doesn’t come from formal authority yet is inherent in freedom and democracy – being self-government.

And we in the Philippine elite and chattering classes can demonstrate self-government by rolling up our sleeves.

Gising bayan!

Do we see a “paradigm shift”?

Change is not the easiest thing in the world. And it is true, especially for Juan de la Cruz.

And that is why we are the laughingstock of the region – the regional laggard for the longest time – and still on a downward spiral.

Visionaries are rare, yet we can learn forward-thinking per neuroscience. Because, like the muscles, we can tone the brain.

Sadly, given our caste system, we pigeonholed Juan de la Cruz in his rank and why we value hierarchy and paternalism. And it explains his narcissism. “We are no longer children,” per the educator, Preciosa S. Soliven.

The excellent news is that a preeminent economist (Cielito F. Habit) and a senator (Sonny Angara) have raised the challenge we face.

It is beyond the 6%-7% World Bank-endorsed GDP growth rate – because we lag our neighbors in export revenues big time.

Moreover, Mr. Ramon Ang of San Miguel addresses the challenge squarely with his Bulacan initiative. More than an airport, he identified export industries that, in partnership with foreign investors, can raise Philippine exports to $200 billion.

We have a structural problem. Yet, we took comfort in the OFW remittances and call centers – because they generated over $50 billion, drove the Philippine economy, and delivered 6%-7% GDP growth (for a decade.) Still, Vietnam, the latest Asian Tiger, overtook us to confirm our stature as the regional laggard.

Let’s hold it right there.

Our caste system is akin to a bunker – it makes us feel secure. Conversely, it explains why we can’t determine a structural problem.

In other words, nations and economies move up the value chain, and our neighbors demonstrated that. They eschewed the Western model – and turned their countries into economic miracles.

It started with Japan Inc. and continues with Vietnam, the latest Asian Tiger.

Recall that the blog raised the imperative to move beyond “consumers of knowledge” to “creating knowledge.” And our neighbors, wittingly or not, did it. Does our caste system explain why? Does it explain why innovation is foreign to us? In other words, do rank and hierarchy come with hubris, that our knowledge base is superior and that we’re stuck?

My Eastern European friends deferred to my Western background and experience that they expected me to spell out the rules of freedom and the free market. And they were angry that I refused.

“It is about principles, not rules. I cannot teach you better than your experience.”

In other words, they had to get out into the world and learn the ropes. And they fell several times. Yet, the experience enriched them.

Relate the above anecdote to “Design Thinking,” the model that captures the ways of Silicon Valley. It is cross-discipline yet time-bound and exploits the use of prototypes to gain knowledge and experience.

Our challenge is not a walk in the park. We cannot leave the heavy lifting to the handful of folks referenced above.

Recall how the US education system came under the microscope when Japan Inc. pulled the rug from under US manufacturing. Where was the forward-thinking?

The Japanese onslaught did not spare General Motors and IBM. The former was once synonymous with the US economy: What was good for General Motors was good for America. While the latter held – and still does to this day – the most patents.

In other words, forward-thinking is a scarce commodity.

But we Filipinos see the world differently – aka “bunker mentality” – including when China became the world’s manufacturing hub. The evidence? Duterte pivoted to China, and what do we have to show for getting in bed with them?

Consider: Deng heeding the words of Lee and Mahathir, turned China into an economic miracle: Beg for Western money and technology.

We measure everything by our instincts, i.e., parochial and insular – and thus the value of hierarchy and paternalism.

We cannot compare freedom, democracy, and the free market with autocracy. Yet, we are closer to the latter in the continuum of democracy and authoritarianism. Unsurprisingly, we would mirror what Putin, for example, says about freedom-loving people and nations. How can we acquiesce to Duterte’s EJKs when the world saw us as pariahs?

Because we pigeonholed Juan de la Cruz in his rank, we cut off the rest of the Universe from our worldview. First, the Universe is dynamic and in constant motion, the inverse of our static parochial and insular world.

The dynamism of the Universe did not end with the Berlin Wall’s collapse nor with China’s emergence as a superpower.

Recall how the photosynthesis phenomenon manifests the dynamism of the Universe.

Unsurprisingly, the inferiority of Ukraine’s military has already embarrassed Russia. And Putin appears unhinged by the day. And Xi is not naïve. He knows he could also be embarrassed.

Look at how China has to lock down scores of cities because of covid. Why? They don’t have the healthcare infrastructure of an advanced economy.

Nor the infrastructure of a developed financial system. Homebuyers have to ante money upfront. Surprise, surprise; only 60% of these homebuyers got coveted homes.

According to The Economist, China is not growing like China this year. The economy will grow less than 3%.

In other words, China is flirting with a homegrown “revolution.” And that will distract them from significant world events. But they must continue to flex their muscles because the Chinese people themselves will see the weakness that they know firsthand.

China’s overall economic output is humongous, but its income per capita is not at par with wealthy nations. The people will put up with repressions for as long as they share the prosperity.

But their size, while an advantage in rapid economic expansion, is also a disadvantage because it will take time for them to create an “ecosystem” across the pillars of nation-building. See above; they are still deficient in healthcare and financial infrastructure.

Even their military is under the umbrella of the Communist Party – e.g., recall Tiananmen Square. An army is a crucial tool in their efforts to keep the sword of repression dangling – the opposite side, Chinese “capitalism,” of the same coin.

In other words, China’s Communist party must offer both carrots and sticks in the hope that they could get the balance right.

The challenge of Juan de la Cruz is not a walk in the park either.

How do we unlearn our bunkered and linear worldview?

Major undertakings demand more than logical yet linear and incremental thinking.

The blog often raises the key initiatives we proudly pursued that was shortsighted: from the comprehensive agrarian reform to the OFW phenomenon to the call centers to the LGUs.

What about Arangkada, AmBisyon Natin, and the scores of industry road maps?

They are examples of logical yet linear and incremental thinking – and mirror strategic planning from the ground up.

But strategic planning as management by objective has evolved. Both demand top-down and bottom-up thinking.

And top-down thinking presupposes forward-thinking.

Take our efforts to create jobs and address poverty. The comprehensive agrarian reform did not deliver prosperity – nor did the OFW remittances and call centers. Ditto for LGUs.

There was top-down thinking behind them but not forward-thinking.

That is why we must take a page from our neighbors. Forward-thinking demands that the Philippines be an Asian Tiger. Anything less is akin to “pwede na ‘yan.”

Benchmark. Benchmark. Benchmark.

Sadly, it also demands tossing the crab mentality because it means distinguishing the “vital few” from the “trivial many.” And why Pareto must be a mantra.

Whether it is industry or agriculture, to be an Asian Tiger means the Philippine industry and agriculture must be world-class. Think of how Toyota disassembled German automobiles to leapfrog their pursuit of innovation – which is at the heart of a world-class endeavor.

Change is not the easiest thing in the world. And it is true, especially for Juan de la Cruz.

Could you take a look at our chattering classes?

Consider: We lag the region in most respects, including education. But we won’t concede in our hearts that we must “overcome inertia and dismantle our existing mindset.”

For example, we like to address our shortcomings in food security – in rice, sugar, and beyond. But they are merely symptoms.

On education, do we agree with Preciosa S. Soliven that we must grow up? Education reform is not about K-12.

That’s why the blog submits that we are a rudderless ship – and floundering. But it is about “principles,” not “rules.” And the best examples are the battles between Christ and the Pharisees and scribes.

See above; we have a structural problem – because of our caste system: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

I am in Eastern Europe as we speak. And my friends again asked me to address the management of the company. Earlier in the year, they wanted me to discuss “managing in times of crises.” This time they want me to speak about “innovation.”

Why the shift in thinking within the same year?

Recall the “great recession” of 2008-2009 when they saw their enterprise soar, even killing the brand of the industry’s most significant player.

This time they have survived rising costs – commonly known as inflation – owing to the pandemic and witnessing their enterprise again poised to soar.

What better time to speak to “innovation” again – to be far above the competition, western and otherwise?

We are a subset of the Universe that is in constant motion and expansion.

“The only constant in life is “change.” Yet, the fear of change is also a constant.” That’s from Heraclitus, the Greek Philosopher.

“Understand the relation of opposites to each other to overcome the chaotic and divergent nature of the world.

“The world exists as a coherent system; a change in one direction finds balance in a corresponding change in another.

“Between all things, there is a hidden connection so that those that are “tending apart” are “being brought together.” [Britannica.com]

Recall that the blog often speaks to the photosynthesis phenomenon.

Let’s get back to the Philippines.

Do we see a “paradigm shift”?

Change is not the easiest thing in the world. And it is true, especially for Juan de la Cruz.

And that is why we are the laughingstock of the region – the regional laggard for the longest time – and still on a downward spiral.

The excellent news is that a preeminent economist (Cielito F. Habit) and a senator (Sonny Angara) have raised the challenge we face.

But we cannot leave the heavy lifting with a handful. Mr. Ramon Ang may be a visionary, but he cannot go it alone.

Personal responsibility is imperative to pursue the common good.

We in the Philippine elite and chattering classes must roll up our sleeves. 

We must demonstrate that we can overcome the inertia and dismantle our existing mindset.

The only constant in life is “change.”

Gising bayan!

Peck the ground like a chicken – or soar like an eagle

That’s paraphrasing Preciosa S. Soliven’s piece, AN EDUCATOR’S REACTION TO ‘AMBISYON NATIN 2040’ – A WAKE-UP CALL TO THE TROUBLED SOUL OF OUR NATION (PART 1), The Philippine Star. 7th Sep 2017.

“We must learn to fly, to reach the heights. We fly high like the Philippine Eagle or remain chickens just pecking the ground.”

Enter: Ateneo Center for Economic Research and Development’s briefing, “Moving On and Moving Up: Bold New Directions for the Philippine Economy.”

“The challenge brought about by the pandemic has made it more apparent for the new administration to craft good fiscal policies that will enable the country to attain economic recovery while promoting fiscal sustainability in the medium term.”

In other words, we’re still at the same old, same old: fiscal and monetary interventions.

The debate between technocrats and leadership comes to mind.

As the blog often raises, logical yet linear and incremental thinking would be apt for technocrats. But leadership must be steps ahead. Peck the ground like a chicken – or soar like an eagle.

That means forward, lateral, and creative thinking.

Recall that in 2014, our economic managers, with the support of the “economic community,” celebrated what we call a “manufacturing uptick.”

And several times, the blog recalled why that was a fallacy. We are a service-consumption economy – courtesy of the OFW remittances and call centers – far from an industrial-investment economy.

It is not about “moving on and moving up.” It is about becoming an Asian Tiger. Peck the ground like a chicken – or soar like an eagle.

Consider: How different is the above-referenced briefing from the output we generated from AmBisyon Natin and Arangkada? And can we add the scores of industry road maps?

They are too academic and lack sensitivity to real-world consequences. Juan de la Cruz suffers from abject poverty and learning poverty.

Let’s say that one more time – and ask ourselves if it has sunk in yet: Juan de la Cruz suffers from abject poverty and learning poverty.

The University of Oxford captures the challenge, “From Poverty to Prosperity: Understanding Economic Development. It examines the vital role government plays in economic development, analyzing the political, social, and economic factors that elevate any society from poverty to prosperity. It will help people understand how their community and country can flourish, wherever they are in the world.”

Value paternalism at our peril.

In other words, beyond “moving on and moving up” is a more significant challenge that must headline our national conversation.

Our value of paternalism explains the narcissism of Juan de la Cruz.

“We used to boast that the Filipino family was the “social security” of the country: whatever went wrong, the family was always there to help each of us. We never seem to learn to stand on our feet because we are confident that the family will always be behind us to prop us up.

“We have been conditioned by our family experience to expect somebody to pick us up when we fail. But the boss is not our “itay” or “inay.” We are no longer children.” [Soliven, op. cit.]

That is why the blog never ceases to raise our caste system reflected in our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

What must we value instead? Personal responsibility is imperative to pursue the common good. And if we turn that on its head, it is the mirror image of Christianity – that we are proud to profess, or at least the vast majority of us.

Yet, the common good remains abstract – we can’t determine what freedom, democracy, and the free market are.

The evidence? Our crab mentality. Please think of how aggressively we pursued parochialism and insularity. We even codified LGUs via the Mandanas law.

To add insult to injury, our economic managers want to “pass the buck” to the LGUs, undermining the common good.

Is it more complicated than that? We make things difficult – because we are a rudderless ship.

It’s about “principles” – not “rules.” [See above; the mirror image of Christianity.] Think of Christ against the scribes and Pharisees.

Let’s get back to LGUs. Indeed, they are not bad per se. Unfortunately, LGUs feed on logical yet linear and incremental thinking.

On the other hand, forward, lateral, and creative thinking is foreign to us.

Our challenge is to overcome inertia and dismantle the existing mindset.

That’s from Kurt Lewin’s three stages of change. Those familiar with the blog may recall who he is.

In other words, Juan de la Cruz must reinvent himself.

It will not be easy. Consider: We allowed ourselves – going decades – to sink into the abyss while our neighbors – one after the other – were moving up to first-world economies.

When we saw Singapore soar like an eagle, “they’re a tiny city-state” was our defense mechanism. What about China? Are they over a billion people? And more recently, Vietnam? What do we say?

“The first stage – of the change process – Lewin called “unfreezing.” It involves overcoming inertia and dismantling the existing “mindset.” It must be part of surviving—defense mechanisms set aside.”

Our problem – for the longest time – is that we never acknowledged that we have a severe threat – because of “pwede na ‘yan.”

Thanks to Juan de la Cruz: Between the OFW remittances and call centers, we generate over $50 billion. And to add insult to injury – if our economic managers are listening – we took credit for it. It’s unsurprising given our caste system: we defer to those above us and pull rank on those below us.

As we kept sinking, the knee jerk became our go-to impulse. How much did each voter receive to vote for BBM – and those before him? We call it “retail politics.”

Retail politics is another name for crab mentality – the common good be damned.

But then, our economic managers jumped onto the bandwagon, too – our monetary and fiscal interventions worked like magic: We delivered the World Bank-endorsed 6%-7% GDP growth. Yet, it was a “no-brainer”: See above; over $50 billion from remittances and call centers.

It’s hilarious – or insanity – take your pick.

Are we all championing one advocacy or another with one glaring exception? We are not even close to overcoming inertia and dismantling our existing mindset.

Why? It comes from our instincts, expressed in our caste system – that we take as a given, if not sacred: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

The bottom line: Juan de la Cruz is the laughingstock of the region.

What to do?

Toss our defense mechanism – and that is better late than never.

And to overcome the inertia and dismantle our existing mindset, we must commit to getting from point A to point B.

We must abandon our (a) comfort zones – best described as logical yet linear and incremental thinking – and instead embrace (b) forward, lateral, and creative thinking.

Here’s a quote from earlier postings: Instead of setting a 6%-7% GDP growth target, we must set $200 billion in incremental exports. That will put us on equal footing with our neighbors given their bigger pies: Thailand is over two times, while Malaysia is more than thrice ours.

For example, we can follow the lead of Mr. Ramon Ang of San Miguel and Senator Sonny Angara.

Mr. Ang, beyond Bulacan airport, is looking at specific industries that, when pulled together with his infrastructure initiatives, will create an “ecosystem” that will mirror the “long-term value creation” metric of McKinsey. In other words, we must stop celebrating our economic smarts because of the over $50 billion we generate from OFW remittances and call centers.

Our challenge is not a cakewalk. So, we better benchmark.

Should we hold it right there?

To benchmark presupposes the bias to look outward, not inward. Between our caste system and insularity, we succumb to logical yet linear and incremental thinking. Is that why the word isn’t even in our lexicon?

When Japan Inc. pulled the rug from under the US because of their TQ or total quality mantra, one of the first lessons they shared with the rest of the world was to “steal shamelessly” from the best in class.

What they were saying was Benchmark, Benchmark, Benchmark.

For example, it is beyond citing references to bolster our argument in a dissertation. To school on the state-of-the-art, Toyota disassembled German automobiles.

That is how we can bridge the academic with the real world.

In other words, NEDA, DTI, think tanks, and legislators must dig as much as possible to understand why the Pearl River Delta Economic Zone is the best in class.

But then again, Bulacan is in Luzon. It is already generating the bulk of our GDP.

Isn’t that why we elected Duterte, to give Mindanao a fair chance?

And that is why we must do an honest-to-goodness benchmarking exercise, including figuring out how to distinguish the “vital few” from the “trivial many.”

For example, Pareto explains why China focused on Guangdong and Malaysia focused on KL.

The rapid journey from poverty to the prosperity of the Asian Tigers, China, and Vietnam is a study in Pareto.

In the case of Vietnam, two foreign investors and technology, Samsung and Apple, made it overtake PH’s GDP – despite our over 300 export processing zones.

Here’s a quote from a prior posting: “Lewin developed the “Force-field theory.” It provides a framework for looking at the factors ("forces") that influence a situation. And at forces that either drive the movement toward a goal (helping “forces”) or block movement toward a goal (hindering forces).

“Key to this approach was Lewin’s interest in “gestalt” – an organized whole perceived as more than the sum of its parts. The totality for an individual (their life space) derives from their perception of their reality, not an objective viewpoint.” [Wikipedia]

In other words, our perception of reality suffers from “cognitive bias” — irrespective of where we stand in the Philippine hierarchy.

Juan de la Cruz must reinvent himself.

We must abandon logical yet linear and incremental thinking and instead embrace forward and lateral and creative thinking.

Moreover, we must overcome inertia and dismantle our existing mindset.

We cannot keep falling into the trap of crab mentality.

We can value paternalism at our peril.

It explains the narcissism of Juan de la Cruz. And why we’re the laughingstock of the region.

Peck the ground like a chicken — or soar like an eagle.

Gising bayan!

Our challenge is not a walk in the park.

Recall the blog’s discussion on “cognitive bias.” It explains our failure to elevate the Philippines to a first-world economy despite decades since our declaration of independence from the Americans.

“Cognitive biases are unconscious errors in thinking that arise from problems related to memory, attention, and other mental mistakes.

“These biases result from our brain’s efforts to simplify the incredibly complex world in which we live.” [www.simplypsychology.org/cognitive-bias.html]

And with us Filipinos, given our caste system, we in the Philippine elite and chattering classes won’t own up to mental mistakes.

Yet, these two quotes – one from a Filipino and another from an American – must be our caveat: We are no longer children. Until we change, our government will not.

And if we want to thrive in “self-government,” we must understand, accept, and recognize that the Philippines will be as good or bad as we conduct ourselves.

Recall why the blog came into being: Juan de la Cruz must reinvent himself.

Consider how our caste system has played out: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

Sadly, Rizal saw why we would not overcome our culture of impunity: He who submits to tyranny loves it. Today’s “slaves” will be tomorrow’s tyrants.

“Corruption cases coming out one by one,” Ramon T. Tulfo, SENTINEL, The Philippine Star, 10th Sep 2022.

“One by one, they’re coming to the surface: the P12-billion Pharmally scam; the plunder of undetermined amounts for COVID-19 by some officials of the Department of Health (DOH) and the Procurement Service of the Department of Budget and Management (PS-DBM); PS-DBM’s procurement of P2.4 billion worth of low-end laptop computers for the Department of Education (DepEd); the irregularities at the Philippine Charity Sweepstakes Office (PCSO) involving one of its top officials and the plunder of government coffers by people close to him.

“And here is the latest to be uncovered: the purchase of 1,346 farm tractors by the Philippine Center for Postharvest Development and Mechanization (PhilMech) of the Department of Agriculture, overpriced by P98,000 per unit. That means that somebody got away with around P130 million in kickback!

“The irregularity happened during the time of agriculture secretary William Dar, one of the few honest officials in the Duterte administration.”

But are they “loose change” compared to infrastructure, for example?

“It’s a battle of power blocs in the administration of President Bongbong Marcos Jr. (BBM). Politically, economically, and literally.

“There are two major power blocs in the Philippines today—San Miguel Corp. and Aboitiz Equity Ventures, Inc.

“Both are venerable companies. Business savvy made them big. Bigness made them control significant sectors of the economy and also enormously politically connected.

“Born 1890, SMC is 132 years old. The first Aboitiz arrived in the Philippines in 1870. San Miguel and Aboitiz have seen revolutions, wars, coups, People Power revolts, and boom and bust times. They define what it means to be strong.

“One other quality of both San Miguel and Aboitiz is that both seem to be politically resilient. They thrive and prosper, no matter where the political winds blow.

“BBM's Energy secretary, Rafael "Popo" Lotilla, was an independent director of Aboitiz Power until 11th Jul 2022.

“Popo's appointment became controversial when the Department of Justice took the unusual step of ruling “Lotilla does not fall within the prohibition under Sec. 8 of the DOE law: “No officer, external auditor, accountant, or legal counsel of any private company or enterprise primarily engaged in the energy industry shall be eligible for appointment as Secretary within two years from his retirement, resignation, or separation from there.”

“That may be so. But in business as in politics, perception is reality.” [“Power blocs, power plays,” Tony Lopez, Virtual Reality, manilastandard.net, 9th Sep 2022]

Enter: Senator Sonny Angara.

“The bottom line is that we need to strengthen our industries, move them up the value chain so that we can produce more jobs and increase the incomes of our people. We need a whole “of government” approach and laser-like focus on this effort to achieve results.

“Our GDP per capita has been increasing but only incrementally. We must change this direction if we want more dramatic increases over the current.” [“Moving toward high-value industries and higher-paying jobs.” Senator Sonny Angara, BETTER DAYS, Manila Bulletin, 4th Sep 2022]

We need a whole government approach and a laser-like focus to achieve results.

Amen, but it must go beyond industries.

If we want to thrive in “self-government,” we must understand, accept, and recognize that the Philippines will be as good or bad as we conduct ourselves. Juan de la Cruz must reinvent himself.

And that brings us to Kurt Lewin. Those familiar with the blog may remember him. Lewin was a German-American psychologist known as one of the modern pioneers of social, organizational, and applied psychology. He ranked as the 18th-most cited psychologist of the 20th century.

“Lewin developed the “Force-field theory.” It provides a framework for looking at the factors (“forces”) that influence a situation, originally social situations. It looks at forces that either drive the movement toward a goal (helping “forces”) or block movement toward a goal (hindering forces).

“Key to this approach was Lewin’s interest in “gestalt” – an organized whole perceived as more than the sum of its parts. The totality for an individual (their life space) derives from their perception of their reality, not an objective viewpoint.” [Wikipedia]

In other words, our perception of reality suffers from “cognitive bias.”

Unsurprisingly, Juan de la Cruz isn’t predisposed to change.

Consider: How much do we admire the word “reform” – yet inherent in reform is the predisposition to change?

Lewin developed a road map for managing change: Change is a three-stage process.

The first stage he called “unfreezing.” It involves overcoming inertia and dismantling the existing “mindset.” It must be part of surviving—defense mechanisms set aside.

In the second stage, the change occurs. That is typically a period of confusion and transition. We know that the old ways are under challenge, but we do not have a clear picture of what will replace them.

The third and final stage is “freezing.” The new mindset is crystallizing, and one’s comfort level is returning to previous levels.

Let’s hold it right there.

We cannot dismantle our current mindset because of our caste system and thus our instincts: We are parochial and insular. We value hierarchy and paternalism and rely on political patronage and oligarchy; ours is a culture of impunity.

See above articles: (a) Corruption cases coming out one by one and (b) Power blocs, power plays.

They confirm the prescience of Rizal. We are caught in a vicious circle that unless we recognize that (a) we are no longer children and (b) until we change, our government will not.

See above; for Lewin’s hindering or restraining forces. They will undermine our journey from poverty to prosperity.

Here’s a quote from an earlier posting: Surprise, surprise; we proudly declared our economic smarts delivering the World Bank-endorsed metric of 6%-7% GDP growth.

Those numbers don’t mean a thing if we don’t do our homework.

Cognitive biases result from our brain’s efforts to simplify the incredibly complex world in which we live.

And they explain why we find comfort in logical yet linear and incremental thinking.

But given our complex world – that is in constant motion and expansion – we must learn forward, lateral, and creative thinking.

That is how we can measure up to Daniel Kahneman’s treatise, “Thinking, fast and slow.”

For example, instead of setting a 6%-7% GDP growth target, we must set $200 billion in incremental exports to be on equal footing with our neighbors given their bigger pies: Thailand is over two times, while Malaysia is more than thrice ours.

We keep slicing the salami, seeking a couple more points for the education or agriculture budget, for example, because we want to match the spending ratios of regional peers. But that is a fallacy, given our smaller tax base and revenues. It’s Grade V arithmetic.

In other words, we must (a) step back so that we don’t miss the forest for the trees, (b) forward-think, and (c) gear up for a quantum leap in GDP – i.e., $200 billion in incremental exports.

And then, we can follow the lead of Mr. Ramon Ang of San Miguel and Senator Sonny Angara.

Mr. Ang, beyond Bulacan airport, is looking at specific industries that, when pulled together with his infrastructure initiatives, will create an “ecosystem” that will mirror the “long-term value creation” metric of McKinsey. In other words, we must stop celebrating our economic smarts because of the over $50 billion we generate from OFW remittances and call centers.

But that is too highfalutin for Juan de la Cruz.

See above; the Lewin change process: We are in a period of confusion and transition. We know that the old ways are under challenge, but we do not have a clear picture of what will replace them.

Benchmark. Benchmark. Benchmark.

In other words, NEDA, DTI, our think tanks, and legislators must dig as much as we can to understand why the Pearl River Delta Economic Zone is the best in class.

Here’s what Wikipedia says:

“In 1979, the Central Government of the People’s Republic of China announced that Guangdong Province would be allowed to follow less restrictive economic policies. That includes setting up three Special Economic Zones (SEZs), two in the Pearl River Delta, Shenzhen, and Zhuhai.

“Preferential policies in the SEZs included features designed to attract foreign investment, such as a 15 percent tax rate, tax holidays of up to five years, and the ability to repatriate corporate profits and repatriate capital investments after a contracted period. They also included duty-free treatment of imports of raw materials and intermediate goods destined for exported products, as well as exemption from export taxes.

“The region's GDP grew from just over US$8 billion in 1980 to more than US$89 billion in 2000 and US$221.2 billion in 2005. During that period, the average real GDP growth rate in the Pearl River Delta Economic Zone exceeded 16 percent, well above the People's Republic of China's national figure of 9.8 percent.

“Since the onset of China's reform program, the Pearl River Delta Economic Zone has been the fastest growing portion of the fastest growing province in the fastest growing large economy in the world.

“In the process, a region that was once largely agricultural has emerged as a manufacturing platform of global importance. It is a world leader in producing electronic goods, electrical and electronic components, watches and clocks, toys, garments and textiles, plastic products, and various other goods.”

In doing our homework, we must also find answers to questions like: Why did Vietnam leave us in the dust despite delivering 6%-7% GDP growth? How did they figure out the “vital few” – or Pareto – over the “trivial many”? How did they attract Samsung and Apple?

Mr. Ang has done the spade work identifying industries, foreign investors, and technology that will deliver $200 billion in export revenues.

NEDA, DTI, and our think tanks can make a more granular effort in this regard because we must learn to distinguish the “vital few” from the “trivial many” to prioritize and overcome our crab mentality.

And we can learn from Fortune 500 companies too. While they are not as complex as the public sector and national governments, their markets can be as many as over 200 countries. They can have countless business entities, subsidiaries, and brands.

Yet, they can be genuinely efficient and effective – because they have mastered the art of Pareto.

In other words, we must make AmBisyon Natin and Arangkada actionable. And a simple benchmarking exercise must check our crab mentality, especially among our economic managers that have employed the same mental model – e.g., fiscal and monetary interventions – going decades. And EPZA is an excellent example of why we've fortified our parochialism and insularity.

We need a whole government – in partnership with the private sector – approach and laser-like focus on this effort to achieve results.

In other words, the numbers we are quoting don’t mean a thing if we don’t do our homework.

Benchmarking will make us appreciate and recognize the “state-of-the-art” if we are benchmarking against the best in class.

But we must aim beyond being “consumers” of knowledge. We must seek to “create knowledge.” That is what innovation is.

For example, if we do an honest-to-goodness benchmarking exercise, we must also dig into the “driving and restraining forces” that our neighbors exploited and overcame. And that can include slaying corruption.

See above articles: (a) Corruption cases coming out one by one and (b) Power blocs, power plays.

Our challenge is not a walk in the park.

Recall the blog’s discussion on “cognitive bias.” It explains our failure to elevate the Philippines to a first-world economy despite decades since our declaration of independence from the Americans.

“Cognitive biases are unconscious errors in thinking that arise from problems related to memory, attention, and other mental mistakes.

And with us Filipinos, given our caste system, we in the Philippine elite and chattering classes won’t own up to mental mistakes.

Yet, these two quotes – one from a Filipino and another from an American – must be our caveat: We are no longer children. Until we change, our government will not.

Gising bayan!