Philippine Economy: Reinventing Ourselves

Is Procter & Gamble too complex?

2012-02-16T03:44:00.000-08:00

Analysts say “some investors believe the company is ‘too complex’ and that more focused competitors will perform better in the future,” reports the Associated Press, 27th Jan 2012. The CEO of the world's biggest consumer products maker was asked if the company would do better if it were broken into separate units. And he argued that the company has been more focused as major portions of the business have been taken off the portfolio. Still, an analyst went so far as to "downgrade its rating from "Buy" to "Neutral" citing an array of concerns about the company's culture, strategy and potential . . . It has limited its ability to meaningfully change how it does business."

P&G is recognized as one of the most progressive global enterprises with a track record spanning almost 200 years. Yet it is not shielded from the pitfalls that come with complexity. Economies and nations are more complex by nature and which is why strong leadership, driving a clear vision and congruent values would characterize the efforts of those that elevated themselves to model economies. In short, they succeeded in overcoming complexity and pursued a more focused development path. No wonder Myanmar is tapping Singapore’s expertise.

Until Juan de la Cruz learns to focus and prioritize, we would be economic laggards – with Myanmar soon breathing down our neck? Everything starts in the mind and a complex mind finds comfort in complexity? The writer is chatting with a Filipino grammarian from the media industry. As a writer he easily grasps varying perspectives and realizes that Juan de la Cruz is not predisposed to change. He takes his hat off journalists that he believes are mavericks if not radicals but the common denominator is still Juan de la Cruz operates in his comfort zone.

Even in a high-stake legal drama complexity does not have to be the bottom line. Writes CJ Artemio V. Panganiban on the Corona impeachment trial: “I think it is best to be transparent, open and forthright, and to abandon the use of unnecessary technicalities, remembering always that impeachment belongs to the people, not just to lawyers. Our people simply want the truth. Anything that prevents its discovery merely incenses them all the more. The best strategy is really simple and is captured in lyrical Filipino, “Walang taguan, walang takipan. Katotohanan lamang ang panalo sa bayan.” (Rough translation: Hide nothing, cover up nothing. Only truth will win the people.) [Philippine Daily Inquirer, 28th Jan 2012]

A relative visited with the writer’s family over the recent Christmas holiday and traveled with them to the Dominican Republic. And the one thing he would notice was the pace of life – and he was talking about the New York metro area and Puerto Plata, a laid back seaside community. “Waiters in Manila can’t survive this pace,” he says. But 10 million OFWs, including those in restaurants and hotels and on cruise ships, are viewed as models and clearly the pace of work doesn’t bother them. Unfortunately, when we’re at home and in our comfort zone, we do as the ‘Romans do?’

Does it explain why we’re economic laggards? Even a simple chore as waiting in a local restaurant could be complicated by the Pinoy mindset – i.e., they are simply not focused and thus slow? And back in Manila, the writer and wife unconsciously were wondering why the waiters were taking their sweet time – and the relative’s reaction was confirmed.

We must take note that even a world-class and very successful enterprise like Procter & Gamble could be criticized for not being as focused as the competition – and for its culture and its strategy and potential! And thus Juan de la Cruz must recognize such pitfalls otherwise he would simply be at home in his comfort zone. And whether it is the chaotic traffic or the lack of sensitivity to the environment or simply respecting time and space, indeed we have an uphill battle. We want to provide an efficient, rapid transport system within the Makati central business district, but how are we populating Fort Bonifacio? We would not replicate Makati’s immense density – and pollution – and chaotic traffic in an area where we have all the time and the chances to do good?

‘Cause and effect’ II

2012-02-11T16:18:00.000-08:00

The nearest the writer could translate it in the vernacular is "puno't dulo." And in a culture that is spontaneous – and concededly a fun place – it is taken for granted. While it is imperative to be focused, it is necessary to establish an end goal – “a vision," if you will – otherwise we could find ourselves simply spinning wheels. On the other hand, it does not have to be the source of complexity. For example, there are reports on the road map that will guide our fisheries and aquaculture industry – and ideally there must be an effort to reduce it into a simple, actionable plan: who will do what, why, when, where and how?

It appears that local enterprise Alsons has gone full circle in its aquaculture business – from development to international commercialization, i.e., China. In the private sector a similar experience would rate as best practice – and progressive, globally competitive enterprises spare no efforts to replicate best practice models in rapid fashion. And so the news about Myanmar tapping Singapore’s expertise in economic development should put ‘a fire in our belly’ – i.e., benchmarking must become instinctive to Juan de la Cruz, and “to shamelessly adopt success models!” The object is to be globally competitive.

One of the strategic industries we know we must pursue is tourism – and indeed we must. Yet there are critical parameters we must bear in mind so that we don't stray from "puno't dulo." The JFC (Joint Foreign Chambers) has identified 7 industry winners that must be our priority. But of course given our instinct of inclusion we want 13! Try prioritizing 7 and we could still be tripping all over as we are witnessing in the mining industry. What more of 13? And so a columnist offers to start with three: tourism, infrastructure and agribusiness. Yet we must sharpen the parameters of strategic and priority industries. For example, sustainable efforts and competitiveness – not just ‘a flash in the pan’ – must always be paramount. We gave jobs to lots of people when we ventured into garments and likewise our OFW focus. What have we learned? Simply, just to talk about jobs could be short-sighted! It means going beyond prioritizing the agenda of the poor – and beyond setting very low expectations that generate insufficient yield, and being a victim of crab mentality.

Thus Obama’s oratory is not for us! The US is a fully developed economy but the imbalance makes unemployment a major issue. Our own imbalance is not caused by full development but in fact by underdevelopment. And thus our priority must be development. We keep talking about growth but growth beyond form . . . is substance. And what we’ve labeled growth for decades was more form than substance – with due respect to cheerleaders of past administrations. Substance on the other hand would have elevated us to first-world nation by now – after over half a century. It is not a subtlety – it explains why we're economic laggards! ‘Pinoy abilidad’ is not straightforward and is in fact complex, to the point of inaction. It explains the gross and utter neglect of progress and economic development. And worse, corruption and abuse thrive in an environment of complexity. And which also explains why we can't find resolution and agreement in most things critical to nation-building. We must thus seek clarity and simplicity – i.e., it’s not about perfection which has also become our defense mechanism for inaction. The evidence: NAIA, power generation, mining, etc.!

Greece has a well-developed tourism industry accounting for 15% of GDP, more than the 10% accounted for by our OFW remittances. What must we learn? Greece, explained the writer’s Greek friends themselves, has not developed a competitive economy – or generated products and services that are competitive which would find markets overseas. Unsurprisingly, they are a big headache for the EU. Tourism is a low-hanging fruit and thus in our case, the JFC talks of 7 industry winners. Simply, we must prioritize industries that we can translate into sustainable efforts and competitive advantage. With due respect to a priest (understandably expressing compassion) tourism is good but it is not nirvana.

On the other hand, the Alsons model is a good one because it demonstrates the confluence of investment, technology, innovation, and talent, product and market development. But they can’t sleep on their laurels either – i.e., continuous improvement. Still they present a classic example of cause and effect or in the vernacular "puno't dulo." We must move beyond 'Pinoy abilidad' – and recognize the critical pieces we must assemble and the dynamic they must generate.

Understanding competitiveness

2012-02-09T21:55:00.000-08:00

Simply: “Find lines of attack . . . rattle [the competition] . . . carry the fight directly to [the] opponent . . . The results of that strategy, carried out by a veteran squad of strategists and operatives assembled by Mr. Romney . . . have been on striking display here . . . By this weekend . . . [they] were on the offensive and increasingly confident . . . His team suggested that it had learned a lesson about never letting up on rivals . . .” [NY Times, 28th Jan.]

“Dr. Norio Usui, an economist of the Asian Development Bank (ADB), shared with DTI and BOI officials his research . . . His main thesis is that the Philippines was unable to reduce poverty and unemployment despite steady growth for three decades because of its failure to diversify and upgrade its products, particularly in its industrial sector . . . Usui explains our failure to upgrade and diversify industrial production is one of the fundamental reasons why our economic growth has not produced the job opportunities for our people, reduced poverty levels, and generated more investments in our economy . . . Diversifying products simply means not to “put all your eggs in one basket,” and instead, to capitalize on existing capabilities developed in making a successful product to create new products within the same industry and in other industries that require the same set of skills and tools. If you can make a pair of pants, then with some adjustments, you can make a pair of shorts, and so on . . . This is how other countries like Thailand and Indonesia have outperformed us. This is why, according to Usui, successful economies have expanded their scale of diversification, leaving us behind.” [Legos and Two Legs, Adrian S. Cristobal Jr., WHAT’S IN A NAME? Business Mirror, 29th Jan.]

Competitiveness requires bulking up – and then some – to be able to stand up and win against the competition. It does not mean being a conglomerate – which generally thrives when the competitive arena is confined and weak as when capital is light and investment and innovation levels are low. Ergo: promote a restrictive economic policy and protectionism. Unfortunately, that is our instinctive success model, including its element of rent-seeking. We find comfort in a business that is guaranteed by a franchise, for instance, which lends itself to crony capitalism; and its equivalent in the export arena is our dependence on contract manufacturing and outsourcing. Our mindset and business model can only be characterized as passive – when competitiveness by definition is proactive. With due respect to our optimists (which we mischaracterize as patriotism) competitiveness demands action – beyond emotion! And the reality is we have been kicking up a perfect storm – from setting very low expectations owing to crab mentality to inefficiency if not inaction driven by a lack of commitment to the common good – that has put us on a downward trajectory! And until we open our eyes to that reality we shall be unable to call on the human spirit . . . to reinvent ourselves. Incremental change is not what we need though radical change would be unmanageable – if not worse than the status quo that nurtures our bias for hierarchy! It is purposeful change that we need!

The Lego analogy made by Dr. Usui is the day job of marketers. They typically develop a product architecture in order to figure out how to move up the value chain, recognizing that the consumer has needs that she may or may not readily articulate, yet could be “divined” from her lifestyle. And as the world knows, Steve Jobs was a master. And as marketers pursue value-added product elements like Apple does, they develop depth of knowledge, experience and expertise, and above all financial wherewithal – thus competitive advantage.

We must challenge our mindset – learn about the imperatives of change – instead of feeding and reinforcing our comfort zone. Which we instinctively do whenever we celebrate our "Dutch disease" – i.e., represented by OFW remittances and our oligarchy whose influence over media adds insult to injury. It is not about misguided optimism either but the necessity of recognizing reality! We must seek to understand and embrace the art and science of competition like our neighbors do. We can’t leave stones unturned. We must identify the key, priority factors (c/o Kurt Lewin) that could truly drive or hinder our efforts; and doggedly address them, meaning as our national agenda instead of thriving in our highly political culture – of impunity. As Vice-President Pelaez sighed, “What is happening to our country?”

Finding the common ground for the common good

2012-02-06T04:25:00.000-08:00

It appears the bishops' conference could be a template in finding the common ground for the common good. "Filipino bishops seek to stay clear of impeachment trial," says the National Catholic Reporter, 25th Jan 2012. Their common ground: "All of us [bishops] still believe in the separation of the church and state, and that means all the bishops respect the right of the state to run the country in regards to temporal matters."

Yet individually the bishops retain their strong feelings. The bottom line: the bishops are demonstrating maturity! There are those "who are sympathetic to the Chief Justice, and believe that the Hacienda Luisita decision is the why of the impeachment trial. While others maintain that it is part of a larger effort to probe allegations of corruption and anomalies of public officials and to hold accountable those responsible." Thus the bishops are pulling out the big guns in the name of evangelization, and that is, for the dioceses to activate the BECs - Basic Ecclesial Communities.

“BECs are small groups of Christian neighbors who regularly gather for Bible sharing and the Eucharist. The grassroots communities, which are united with pastors but ministered to by lay leaders, share a sense of responsibility for one another and integrate liturgy with reflection and action on socioeconomic concerns of the community, said Fr. Amado Picardal (Executive Secretary of the CBCP Committee on BEC).

"We have a split-level Christianity," he said, citing anonymous government workers who are "very religious, like Arroyo and Corona," but who have confessed to him about accepting bribes and kickbacks and their participation in other anomalies . . . A lot of corruption happens in the local level, and BECs can and have been able to stop these by monitoring the use of [community] and provincial government funds and money for road and other construction projects," Picardal said. [Said another: "We see people going to church, but the vital question is, How much does their faith influence their important decisions in life? Are God and his commandments still important to them?"] In 1987, a BEC he worked with in San Fernando, Bukidnon, fought to stop illegal logging that was causing flooding and droughts in the southern Philippines town.”

If Juan de la Cruz could only follow the footsteps of the bishops – and seek the common ground – we can once and for all address the fundamental failings that have stunted our development all these years: power supply, basic infrastructure and strategic industries.

The power supply issue is complicated no doubt given the new challenges as well as opportunities presented by renewable energy. Mining as a strategic industry is mired in controversy. And in basic infrastructure, to name just one, given this is the 21st century, we can’t remain wedded to the infamy of our international airport – which is being complicated by the opportunity presented by Clark but with the attendant imperative and challenge for a rail system between Manila and Clark.

We must turn things around and cease tolerating inaction – being victims of conflicting ideas and beliefs. We can't mirror the failure of our judicial system, for example, that has turned its back on something very fundamental: justice delayed is justice denied – as suffered by the coco farmers, for instance. Put another way, we can't remain indifferent to the pursuit of economic development – yet claim we are concerned with poverty. That is synonymous to what the good pastor says about our split-level Christianity!

The bishops have set an example – we can likewise subordinate our own held beliefs and seek the common ground for the common good! "Even if Corona is found guilty and is ousted, it doesn't mean corruption will end if people, the culture and bureaucracy will not reform," Picardal said.

Good news, bad news

2012-02-02T04:52:00.000-08:00

“The prospects look good for a growing economy in 2012 and I think foreign investments will increase substantially,” John Forbes, senior adviser of the American Chamber of Commerce, told the Business Mirror on 24th Jan 2012 . . . He said the growing optimism was mirrored by the rising number of foreign companies asking how they could move their operations here.”

On the same day, the writer was with a friend in the BPO business and with them was an American who was setting up, for the umpteenth time, a local operation for his American principal. It stemmed from a decision to move their India operation to the Philippines. Not surprising given what Gerardo P. Sicat wrote:

“National economy: one part world class, the main bulk is uncompetitive.” The Philippine economy is made up of two parts. One part is world class but the main bulk of it is uncompetitive . . . Let’s first take the bulk of the nation’s economy. Four-fifths of it is burdened by high costs. In general, public utility services are sold at high unit costs. Public infrastructures are inadequate, overstressed and underinvested. The business regulatory framework is impeded by corruption, rent-seeking, and involves multiple steps that jack up production costs. All these make operating enterprises weighed by high costs . . . One-fifths of the economy is world class. Here, firms are generally profitable, workers have high productivity and raw material inputs are available at world prices. As a result, the enterprises operating in them are lean, mean, and highly competitive. These enterprises are located in special economic zones . . . But this world class segment is also burdened by the inadequacies of the larger component of the economy. Infrastructure services and other non-traded goods add to the burdens of these world class components and chip away partly on their performance.” [Crossroads by Gerardo P. Sicat, The Philippine Star, 25th Jan.]

Juan de la Cruz is neither here nor there? "The slow pace in the integration of renewable power sources into the overall power supply of the country is also not the fault of Almendras. As we have underscored a few times, he is facing formidable opposition in his bid to push the country’s renewable energy program which PNoy has advocated . . . Given the names behind the move against renewable energy, we can only sympathize with Almendras. Among these big names are former energy secretaries: former President Ramos’ energy czar Delfin Lazaro and the Arroyo administration’s Raphael “Popo” Lotilla.” [Hidden Agenda, Mary Ann Ll. Reyes, The Philippine Star, 25th Jan.]

Do we have the capacity to move the Philippines forward as an economy? This was lurking at the back of the writer’s mind given all the above. He was talking to two physicians and in jest the writer said he was not even smart enough to be a doctor. (But why are you in the BPO business?) It only confirmed we've mismanaged our economy so bad for decades that doctors out of our premier university (UP) would not be practicing their profession. And they would add: “We would be doing others a favor, particularly nurses, if we train them in medical coding! These nurses pay tuition to get practical experience in a hospital with no guarantee of employment. If we could get them jobs . . . that will be a big plus.”

The writer was wondering if he was still jetlagged hearing all this. And he could only think of Warren Buffett – who says he is willing to pay more taxes because he's born lucky. “I am lucky to have won the ovarian lottery, and doubly lucky that I was born in this country.”

And the writer tells the two Filipino physicians that he would help them develop a product architecture and product portfolio – i.e., competitiveness is simply that their mindset and business model aren't stuck in passive mode, but ratcheted up to proactive mode. They had explained that the medical transcription business has been overtaken by technology. And the writer was truly impressed that indeed these UP grads are smart. They engaged him on specific ways to move their BPO business up the value chain. If we could only focus on the four-fifths of our economy – and fix them in short order we could truly predict boom times! Until then, we’re simply crying wolf!

Competitiveness efforts moving along

2012-01-30T22:26:00.000-08:00

It is encouraging that our competitiveness efforts are moving even beyond the critical “support systems” – e.g., education and human resource development, performance governance system, business permits and licensing system, Philippine business registry, etc. Reports Business World, 19th Jan 2012: “THE NATIONAL Competitiveness Council (NCC) will unveil later this year a 20-year road map in a bid to sustain business and economic reforms to be accomplished in the medium term . . . The public-private council in the next few months will focus on establishing regional competitiveness committees and co-developing industry road maps as two of the building blocks of the long-term plan . . . [The regional competitiveness committees] should be able to monitor their performance against other non-capital regions within the ASEAN, not just within the country . . . Examples of sectors to create their own decade-long plans include agribusiness, business process outsourcing, electronics, mining, shipbuilding, metal and steel fabrication, tourism, renewable energy, automotive parts, and housing . . . Each industry road map should identify revenue, investment, and job generation targets as well as the vital policy environment and infrastructure to support such goals.”

Economic and industry development is not a cakewalk. The good news is we're taking off parochial blinders, benchmarking against our neighbors, and focusing like a laser? Yet as in any undertaking, things could fall through the cracks. “While Benigno Aquino III is aggressively pursuing the past administration for its transgressions, his economic team has fumbled with the economy. Of the agencies entrusted with economic development, three are populated from either a coterie of campaign benefactors or culled from classmates. Among the most critical letdowns is the energy portfolio . . . Following privatization in the electricity sector and deregulation in the oil industry, while the Department of Energy (DOE) has been practically reduced to one that can do little more than monitor tariffs, even on that simple charge, the department has been an abject failure.” [Why the DOE is inutile, Business Mirror, 19th Jan]

The importance of power supply reliability at competitive rates cannot be overemphasized. We can't be uncompetitive in this arena; and it is noteworthy that media is keeping us informed – e.g., following privatization, rates have gone up with three local interests controlling power supply. Unsurprisingly, our version of the free market – which in fact is crony capitalism – gives it a bad name. Corruption in its many forms indeed continues to enrage people. Influence peddling and corruption comes up every time the writer and wife meet with friends. They are so endemic that to say "syndicates" are operating both like a shadow structure within and in parallel with the government is an understatement. The rules of the game are very simple: “what's in it for me, you scratch my back and I scratch yours,” explains one. “And at an even higher level it means influencing and undermining the common good like power generation for the benefit of the few. And to add insult to injury we hold them in high esteem as pillars of industry!”

To lighten the conversation the writer shares a couple of 'pedestrian examples' one could encounter in the States: They can mess things up too like the US Postal Service, especially given its current cost-reduction regime. [Apparently with people paying their bills online, the revenue of the Postal Service has drastically dropped – payments by mail were once a major revenue generator.] For example, a property tax bill and driver-license renewal did not get to me. But in both cases, we were able to get things done in a matter of minutes. We went to the city assessor’s office and the two-step procedure was over in a flash: they print out your bill and in the next window you pay. With the driver’s license, AAA is an accredited service-provider and the three-step procedure was over in a flash: they pull out your record, you pay, your photo is taken . . . and presto, out comes the new driver's license!

Efficiency means getting things done without undue delay which is what productivity is about. And the mantra of efficiency severs the ugly head of corruption. That said the US still lags Singapore and Hong Kong in competitiveness – i.e., we better recognize the reality that against our neighbors we have our work cut out for us! But we're playing it smart; we’re not clueless – because the more backward and impoverished we are the more the spoils work in our favor, at least for the few of us? And so we predict boom times? And which is why in a democracy we get the leaders that we deserve!

Kudos to The Manila Times Editorial

2012-01-27T05:39:00.000-08:00

“. . . When rational decision-making is undermined republicanism and democracy too are subverted. For the success of a republican democracy requires that citizens be fully and wisely informed. Otherwise they cannot perform their essential function of voting for better representatives or officials and choosing the best option for the common good . . . And in a free society it is privately owned mass media that has the burden, more than government-run media, of performing the function of informing—and informing toward wisdom . . . Responsible journalism is always truthful. Putting a spin in news reports, using the news pages for propaganda in favor of one side in a controversy, is an act against truthfulness. It is irresponsible journalism . . .” [The Manila Times Editorial, 18th Jan 2012]

The editorial gives us hope that journalism is still functioning in the country. Consider: Marcos and People Power, the Estrada impeachment trial, the Arroyo election and now corruption prosecution, the Corona impeachment, just to name a few, would give a sense of what unfortunately defines us as a people. Is spin confined to news in politics? Given we now appear to recognize how much we've lagged our neighbors as an economy through several decades, should our national agenda take a new tack? For example, we all rallied behind an OFW- and consumption-driven economy, while our neighbors pursued foreign investments and technology, and tapped the global market; should we then craft our national agenda accordingly instead of staying with our comfort zone? Simply, if we tolerate more of the same, how do we expect to better the wellbeing of Juan de la Cruz?

But it doesn’t appear we are anywhere near displaying maturity in representative democracy? The Aquino administration is pursuing foreign investments yet our actuations say the opposite? How many foreign investors have been burned dealing with us? The latest are the folks behind mining? The industry is controversial, that is a given. But even developed nations are in the industry. Australia and Canada are performing better than other developed nations despite the global recession and mining is a major contributor. To simply invoke populist sentiments is again more of the same. To simply be against anything ‘big and foreign’ is again missing the fundamentals of economies of scale, efficient market economy, sustainability and competitiveness – the reality that the writer’s Eastern European friends learned the hard way. These are the very same elements that our neighbors leveraged and capitalized that elevated them to Asian tigers.

We can’t seem to have a national agenda. If our journalism is spin and populist values undermine economic development, how could we move the nation forward? There is no such thing as perfection in this world! We can’t seem to find common grounds because we believe in absolutes? Our faith may be absolute but we are also commanded to give to Caesar what is Caesar’s. And Caesar isn’t perfect! Thus the key is to find a common ground for the common good especially in economic development – which we’ve messed up for decades. Poverty is the reality or simply the effect of our mismanagement of the economy. But our braggadocio hasn’t ceased?

Writes the master of perspective and geometry, da Vinci: "Perspective, therefore, must be preferred to all the discourses and systems of human learning." How do we find the common ground and the common good? For instance, the 80-20 rule (employed in major enterprises) simply means that absolutes can’t be the platform of decision-making and human undertakings – which given scarcity of resources must be characterized by prioritization. But we struggle to focus on the vital few? There will always be winners and losers especially in ideas and advocacies. To expect everyone to be winners is precisely what our crab mentality is about – everyone is clawing everyone to come crashing down? What is sad is the church could be unwittingly fuelling crab mentality in the spirit of compassion? But the church may not have the expertise to assess an industry. In selling its game plan – especially the pursuit of strategic industries – it behoves the Aquino administration to edify the nation so we don’t end up being our worst enemy.

We need to develop a deeper understanding and commitment to representative democracy. And the operative word is representative which by definition is not absolute! And journalism is not a bad place to start.

Fundamental givens

2012-01-24T03:26:00.000-08:00

Someone tells the writer that the blog seems to have a common thread. And the writer explains: Friends and relatives kept bugging me about ideas how to fix the economy having lived and worked both in and outside the country. I spent the first 20 years of my career in the Philippines and accepted our situation as a given. And my only beef every time I visit was the traffic and so my first letter to a newspaper was about the traffic. But people kept nagging and so I pulled my latest chart (‘nirvana’ is successful execution thus by design it’s simple) showing the economic profile of priority countries where my Eastern European friends should do business.

The one-page chart – that says a billion dollar in potential business for my friends – showed very little economic data: population, poverty rate, GDP per capita of these priority countries, plus the only information we controlled, the annual sales in the home country and a couple of export countries. This simple chart drives the development of our business plans (behind products with healthy margins to be able to compete regionally, and beyond) and carried the enterprise from one SBU (strategic business unit) to four. And one day the European Business Awards folks came and asked how we would explain the rapid growth of the company . . . and accordingly recognized it as one of the best in the EU in 2011 out of 15,000 they vetted, 9 years after the writer made his first visit.

But what I saw about the Philippines hit me in the gut. Our GDP per capita would not even match many of the dirt-poor ex-Soviet satellites! (Our poverty had apparently numbed me until this realization.) And looking further, I saw how meager our investment levels were. And that was how my blog got started. But having done business in many parts of the world over many years, I realized there are just a few fundamental givens that guide human endeavors. And with investment as the starting point, the first fundamental given then is the parable of the talents – which demands more than livelihood initiatives though it sounds “suplado.” Human undertakings must be committed to the optimal – and sustainable – use of our God-given resources.

But where does one begin? And so the next fundamental given is the Great Commandment – which is reflected in the econometric model (80-20 rule) of Pareto. In short, focus is fundamental to our faith. But what happens to those with little resources, thus the next fundamental given is “teaching people how to fish.” Unfortunately, we miss these fundamental givens and restrict ourselves to local resources – cutting us by the knees. And starved of investment power we are reduced to thinking inclusion, the euphemism for crab mentality, and feeling good doing livelihood initiatives, if not dole outs? In Manhattan there is a live monitor of the US deficit, in Manila we need a live monitor of our investment levels versus our neighbors?

”By the time I’d done the math, John had made me realize that my sandwich shop was marking up its product more than his watch shop. I was the one who should be ashamed,” writes David Pogue, NY Times, 5th Jan. “I think of this transaction every time somebody does a “teardown analysis” of an iPhone, a Kindle Fire or some other hot new product. These companies buy a unit, take it apart, photograph the components and then calculate the price of each. Then they tally those component costs and try to make you outraged that you’ve paid so much markup.

“These are fascinating studies, of course, just as my Chick-fil-A anecdote has its charms. But all of them ignore the elephant in the room: there’s a heck of a lot more expense to bringing a product to market than component costs . . . For example, they completely ignore the cost of developing the software. It doesn’t write itself, you know. What about the cost of the packaging? Would you like them to send your new iPhone in a Ziploc bag? What about the shipping from China? The royalties, licensing, taxes and insurance? What about the marketing and PR that let you know the product exists? The tech-support department? The factory workers? The sales and accounting teams? The graphic design? The prototypes, field testing and beta testing?” [Net, the whole is greater than the sum of its parts, i.e., synergy or gestalt?]

The Philippines won’t create a culture and an environment that would make us an innovative, competitive and an efficient functioning economy – and lift us economically – until we take to heart a few fundamental givens straight out of our faith . . . and seek and attain synergy? But Juan de la Cruz thrives in complexity?

With due respect

2012-01-20T02:11:00.000-08:00

President Arroyo did not mind sounding condescending in indicting a former student for supposedly mishandling the economy. But that is par for the course in our hierarchical culture? The teachers of Gates and Jobs wouldn’t even dare – question their opting to be college dropouts? With due respect to economists – which no doubt gives Mrs. Arroyo the confidence to sound as she sounded – we should be looking forward to our ‘nirvana’: to be a developed nation! As international agencies have confirmed, it would take over a generation to get there. But that is where we must be! HSBC also confirmed that it would take 38 years to get there. But it is not going to happen with Juan de la Cruz doing more of the same! Not with Juan Tamad waiting for the guava to drop!

Critics of President Aquino [Disclosure: the writer doesn’t know him nor has met him] are out in full force following the deceleration in government spending in 2011, and pointing to the higher GDP growth rates during the time of President Arroyo. It is reported that with the concerns raised in government audit reports especially covering major infrastructure projects, the administration, as part of its campaign against corruption, was in the process of correcting the protocols for these projects. In any case, if we are to truly be concerned, it is that we sorely lack the building blocks of an economy: adequate power supply at competitive rates, basic infrastructure and strategic industries – and where these industries deliver the biggest bang for the buck; that they are globally competitive because their products are preferred by target customers.

Put another way, development is not about exports per se – which we struggle to appreciate – but the ability of a nation to create higher value-added products because it is forward-thinking, productive, and an efficiently functioning economy. Thus it demands the ability to assemble and orchestrate the requisite dynamic amongst investment, technology, innovation and the development of talent, products and markets. Is the 21st century in our consciousness yet? Or is our parochialism so overpowering? Are we still wedded to the old where development is founded on 'comparative advantage' – i.e., what is inherent – when the challenge has been elevated to 'competitive advantage – i.e., what is created?

The more intriguing point from Mrs. Arroyo is the slanted reference to the issue of corruption. Is it another way of saying “Why are we being prosecuted?” Have we, Filipinos, finally realized that enough is enough? If President Aquino commands favorable ratings it is because people support his doggedness in fighting corruption. We’re proud of our faith and if indeed we are, corruption is something we must not tolerate!

The 10 million OFWs – specifically their $20+/- billion in remittances – are the ones keeping us afloat. And the fact that we did not suffer simultaneously the 2008/09 recession with our neighbors is simply because we are out of sync and out of step with the 21st century – a non-entity! And so it is not even to be proud about – it means we are simply sinking deeper into our Dutch disease that is unsustainable, and won’t lift us up economically! Einstein said it best: “Insanity is doing the exact same thing yet expecting a different outcome!”

What is worrisome, given decades of mediocre economic performance, is if our psyche has lost the ‘vision thing,’ and thus oblivious that we should be looking forward to our ‘nirvana’: to be a developed nation! There are winners and there are losers and it is critical that we move from being losers to being winners! While leadership is indispensable, we all have a stake in moving the Philippines forward! German-born social psychologist Kurt Lewin postulates that change demands unlearning or unfreezing a group’s strongly held beliefs in order to make room for new learning or change, and then to refreeze. Until a nation does, it would be improbable for them to objectively figure out what factors would help or hinder efforts to move forward.

Every young person would remember being asked: what would you want to be when you grow up? And the young person would then figure out how he or she would pursue that vision. The good thing with young people is they don’t carry a baggage. And so we say ignorance is bliss – even condescending?

Complexity is folly

2012-01-18T05:07:00.000-08:00

It is not our culture that is damaged. We even pride ourselves on our creativity – but which does not necessarily apply to the writer and wife? They are at the opening of a new gallery in SOHO in downtown Manhattan; and one artist proudly presents one of his works, an abstract piece, but neither can divine the artist’s mind!

While absorbing the weekend papers, the wife asks if the writer has read the article about the IBM CEO, explaining the simple strategy he devised that brought the company to even greater heights. And the writer remembers a Fortune 500 COO who would speak the same language – i.e., keep it simple, stupid! (And who saw to it that the corporate HQ took in talents with such skills from across the globe.) It took the writer decades to grasp the power of simplicity. And so he is amazed his Eastern European friends quickly embraced simplicity. Yet by their standards they are even rueful that it took 9 years for them to get there. Their focus on gross margins has crystallized the imperatives of technology and innovation – from R&D to state-of-the-art manufacturing, and beyond; that sharpened the clarity of requisite initiatives, and the simplicity of their execution, from talent to product to market development. Simply put, when 'margin is nirvana,’ so-so products are unacceptable! A complete 180 from their old 'price is nirvana' which they struggled to banish. (And why underdeveloped countries like the Philippines remain underdeveloped – and would likewise struggle to banish it?)

The Philippine economy is not to be proud of yet given our creativity we are able to speak to its positives – and we’ve been saying it for decades? And the writer is one of those! He remembers an expatriate-friend stopping him in his tracks: “Filipinos don’t know what they’re getting with Marcos; the country is in celebratory mode?” And that thought comes back when the Western press talks about how Tony Blair assumed that Jacques Chirac was totally off-the-wall for not recognizing the wisdom of the attack on Iraq! Beyond all reckoning, the justification on Iraq is too complex – and today there is consensus that it’s folly?

We’re spending a ton of money on poverty and the CCT has become a flagship initiative of the administration. And countless of us are doing our favorite advocacies. And we feel good about it! Except that for decades we haven’t really made a dent! So what gives? We unwittingly put the cart before the horse? And we would always fall into the trap because of our creativity – or more aptly, our complex thought process? Because we lead with our heart, our perspective is complex to begin with? Writes the master of perspective and geometry, da Vinci: “Perspective, therefore, must be preferred to all the discourses and systems of human learning."

Our neighbors are not smarter – and we like to think that we are in fact smarter? And we are proud of our ability to come up with complex and creative solutions? And so the writer saw it fit to remind the couple of PhD candidates he mentored in Eastern Europe to be circumspect especially with the use of quantitative models. He would look for the qualifications or the limitations of the algorithms – because a model no matter how impressive is no panacea. And in industry it’s called financial ‘mambo jambo!’ The evidence: the implosion of the global financial system and the global recession the world is yet to overcome! Indeed the test of the pudding is in the eating, and it is critical to be forward-looking especially in ensuring that the conditions for successful execution are present, including the reality that 'timing is everything.'

The writer is speaking to graduate students in an Eastern European university, one of those supported by Bill and Melinda Gates. And then the head of the marketing department speaks but rather defensively: “It takes forever for us to update our syllabus.” And so the writer says he is simply narrating the story of a recent multi-country product launch purposely designed to be simple – but would be unknown outside the company. And it happens all the time – and that should not be taken against education. And the professor breaks into a wide grin!

The Aquino administration is moving mountains to get our economy going. And it is a classic case where “less is more” – i.e., it’s about time we forego complexity and go for simplicity? Timing is everything – even in deciding when to do the Cha-Cha! The test of the pudding is in the eating, i.e., execution!

Beyond the tangible

2012-01-14T21:34:00.000-08:00

Bill Gates saw the imperative of software in the then emerging information and computing technology. And Steve Jobs through his early life experience and inquisitiveness grasped the convergence of science and art. Which in pragmatic terms is what reality is about? We've been hard at work in making the Philippines globally competitive. And the good news is we are finally marrying the hard and the soft elements of this humongous task. But it would pay dividends if we pause and recognize that instinctively our approach to problem-solving has been activity-driven? Put another way, we proudly come up with great ideas and when they fall short we throw in more great ideas? For example, how many advocacies are there in our fight against poverty? And as we now know, we haven't really made a dent! But finally . . . we are looking at the soft elements, that of our culture?

Culture matters, says the annual global innovation study of Booz & Company, Winter 2011: “Spending more on R&D won't drive results [That does not apply to the Philippines where we’re underinvested] . . . The most crucial factors are strategic alignment and a culture that supports innovation . . . Culture is the organization's self-sustaining patterns of behaving, feeling, thinking, and believing.” They likewise identified the critical elements of innovation: (a) a focused innovation strategy; (b) a winning overall business strategy; (c) deep customer insight; (d) great talent; and (e) the right set of capabilities to achieve successful execution.

How are we doing in pushing the agenda of the Aquino administration? It is reported that for 2012 the president will focus on the economy. It should not be a surprise to us anymore that focus is a mandatory in the pursuit of major undertakings? (Or are we still weighed down by the instinct of inclusion?) And with our economy coherence is imperative as we erect its requisite building blocks – e.g., sustainable power generation at competitive rates, basic infrastructure and strategic industries. And that these industries deliver the biggest bang for the buck – that their products are globally competitive, because they are preferred by target customers. But the test of the pudding is in the eating, and so our ability to execute with the right people and tools must be world-class. And so we can't go it alone – a reality we struggle to internalize?

Culture matters. So how are we pulling together our behaviors, feelings, thinking and beliefs? They must all converge and take us to our nirvana, of sustainable economic development? And that means we aren’t championing our favorite oligarchy whose interests may not be in sync with that of Juan de la Cruz – e.g., when they want special treatment versus foreign investors who could bring technology, innovation, and investments in talent, product and market development? It means growing up so that our personal preferences or feelings in politics are subordinate to the common good? And to reinforce those positive feelings we are thinking and believing in support of Juan de la Cruz?

The writer always talks about his Eastern European friends; and what they have done over the last nine years mirrors the model or the body of knowledge formalized by the Booz & Company study. And it is the same model that a New York consulting firm wants to see, through the writer, in their operations in Manila. We are well-informed people yet we seem to be ‘coy and cool’ when it comes to committing knowledge into practice? “Alam ko na ‘yan” – comes out of the lips of Juan de la Cruz more often than not? We’re masters of lip service? Is it because discipline is not our comfort zone, like the writer saw in Eastern Europe or as Lee Kuan Yew reminds us? Or is it simply misplaced pride?

And at the end of the day, leadership is indispensable. People could always pursue their own vested interests and it is encouraging that President Aquino is demonstrating resolve in the pursuit of his ‘daang matuwid.’ Obviously critics worry that he would undermine the rule of law. But if we keep our guards up, that should not be a real threat. For example, the fact that the Senate is manifesting independence is a healthy sign that in this particular case our democratic system seems to be functioning. We don’t have a track record in successfully pursuing a truly major undertaking like sustainable economic development – and that only means that we need to exert greater efforts to live by some pragmatic parameters like marrying the hard elements of economic development with the soft elements of a more positive and supportive way of life . . . or culture?

Investment, investment, investment

2012-01-08T05:32:00.000-08:00

“Country lags behind peers in securing foreign investments,” screams Business World, 2nd Jan 2012. Shouldn’t we be weeping – ashamed of ourselves? That is old news – very old news indeed! It was very old news when the writer started the blog 3 years ago! And why the blog’s reason for being is to urge Juan de la Cruz to focus on investments to drive the economy! So what are we saying today? “We need better infrastructure; we need to make doing business easier; we need consistency in our policies!” Shouldn’t we be feeling sorry this is the 21st century and our issues are so yesterday?

Has anyone counted how many articles on a daily basis are in fact press releases from local interests who are behind these issues we raise – with a little help from their cohorts in politics and our acquiescence? (We’re all in this together, i.e., as a people, we spelled out restrictive economic provisions in our Constitution!) We rail against western influence yet Madison Avenue is our template? [Disclosure: the writer’s office for many years was next block to Madison Avenue and he has friends in the industry. And in Eastern Europe he showed his friends how to do 360-degree marketing, selling products not influence.] Unfortunately, Juan de la Cruz is the biggest victim? To be fooled once is forgivable but to be fooled for over half a century is idiocy?

How could we be so forgiving? Because that is what our faith is about? As a young boy the writer remembers hearing the debate about faith versus works (between an uncle who married a Lutheran from Colorado and the more avid in the family.) And given that the church is very much a part of our culture our focus on faith is indeed powerful? And it translates to: we should feel optimistic about 2012!

What happened to “It’s the economy, stupid” – which is why there is so much poverty around us? Where is the reservoir of change in Juan de la Cruz? Where will it come from if institutions like the media, the church and government are not paragons of change? How about us? The school is where our capacity for change or the lack of it is manifested? If we are too skewed towards parochialism and hierarchy, and paying the price of abuse and the shameless disregard of the rule of law, that would simply be mirrored by the school? Where will academic freedom come from if institutions don’t value it, if we don’t value it? And we wonder why even our premier universities rank poorly? Education is inquisitive and expansive by definition – but that is not how we want to define Juan de la Cruz? And we think we are better than today’s kids because our old system was better? Are the kids running our media? Somebody should put our local media (print and broadcast) side-by-side against more progressive countries and in a flash we would see how our national conversation stacks up against theirs – and why we are cellar dwellers?

The 21st century has inspired egalitarian values – and where technology and innovation from wherever could undo established order and hierarchy. If we still believe that parochial and local efforts would suffice to match the collaboration employed in the more developed parts of the world, we simply would be smothered? It is as though we haven’t left the days of old – of the fabrication era when creating the jeepney was our pride and joy? Today’s technology – moving at warp speed – demands much more than that! Whether it is the space program or Boeing or Apple or IBM, underpinning these major endeavors is the principle of collaboration – that no man is an island!

How the world has evolved ought to teach us the reality of works? And our faith is not confined to being passive; it is proactive as well? And in the contemporary highly competitive global economy we must learn and be predisposed to change before we could even be in the game! But our game is our faith? Yet the Jesuits, among others, see Christ in everything! Thus when we focus on the economy our faith is there? It is even in our favorite oligarchy? Except that they have effectively become barriers to our ability to attract foreign investments? We need to look further and beyond our parochial confines? Or after another 50 years we would still read: “Country lags behind peers in securing foreign investments!”

‘Horses for courses’

2012-01-06T18:28:00.000-08:00

President Aquino is acknowledged to have put us on the right course, and the challenge is for us to truly be the right horse for that course (i.e., the right person or the right tool is imperative for success, says the British idiom.) And it appears we’re pulling the different pieces together so that indeed we are equal to the task?

Recognizing how big a hole we’re in would reveal how genuinely uphill and challenging our course is. There is vigor to address power generation, and that we’ve spelled out the definition of success, and would produce adequate supply at competitive rates? And it is truly heartening that we’ve stepped up efforts behind the PPP initiatives, and that we’ve sharpened priority parameters, and would generate the biggest bang for the buck? It is encouraging that our enterprises are pursuing innovation, and that we’ve crystallized the endpoint, and would raise our global competitiveness? Thus like in most global measures we must recognize that we rank poorly in patents granted, reports Business World, 29th Dec. The other reality about innovation and patents is that typically foreign interests generate more than the locals – which means we must overcome the instincts to shut the rest of the world out . . . because we could always build upon their product ideas like Apple does?

Yet successful project execution is a daunting challenge in and of itself especially major ones, and thus the imperative to stay anchored. Knowing the project’s ‘nirvana’ (e.g., to complete the project on time and on specs) and the players’ ‘reason for being’ (e.g., to elevate our capacity to be a developed nation via the building blocks of an economy) would keep the undertaking on an even keel even in the face of intimidating obstacles and barriers. Influence peddling, on the other hand, thrives in complexity . . . and when we add our penchant for ‘abilidad’ and ‘paraan,’ and inclusion and ‘paki’ and ‘awa’ we are cultivating and perpetuating inefficiency . . . and corruption! But to stick to the task is to us being ‘suplado?’

But Juan de la Cruz is optimistic; it is important to be optimistic especially given our faith. Yet it does not mean sticking our head in the sand? Invoking resiliency when the reality is we’re dealing with over half a century of mediocre economic performance should raise alarm bells? Writes Nobel laureate Daniel Kahneman, Thinking, fast and slow, pp.155-158, Oct 2011: “They keep making the same mistakes: predicting rare events from weak evidence. When the evidence is weak, one should stick with the base rates . . . The problem sets up a conflict between the intuition of representativeness and the logic of probability . . . [It applies even to sophisticated respondents in the study]: Doctoral students in the decision-science of the Stanford Graduate School of Business, all of whom have taken advanced courses in probability, statistics, and decision theory.”

It reminds the writer once again about the two Nobel laureates behind the implosion of Long-Term Capital Management, whose mathematical model worked, but not when the market turned sour. Are we Filipinos hopeless? Not if we pull ourselves by our boot straps! The strongest motivation behind the continuing progress of the writer’s friends came from the Eastern European themselves: their unequivocal commitment to leave the dark past behind and the unmistakable desire to define their own future. Except that they did not know exactly how to get there. And the writer would share a simple path: “We will keep it simple. We must come to terms with your reality, and that is, where you are, where you want to be and how you will get there.” (And in 2011 the European Business Awards recognized them as one of the EU’s best.]

Nine years after his first visit to Eastern Europe a New York consulting firm taps the writer to work with their expanding team of consultants in Manila. And after describing the outcome they want, the writer shares: “We will keep it simple. We must come to terms with your reality, and that is, where you are, where you want to be and how you will get there.” And in a New York-minute the program is born. Clearly beyond the writer, they are piggybacking on the reality of a ‘living and breathing’ business case, not a mere case study coming out of the dark ages. It parallels Apple’s approach to innovation: they define the needs of the 21st century lifestyle with products like the iPod or the iPad yet piggyback on technologies from others like Toshiba’s hard drive and Corning’s tiger glass. To reinvent the wheel is folly!

Beyond leadership

2012-01-02T01:41:00.000-08:00

Leadership especially in a leader-dependent culture has a yeoman's task. And thus we need our institutions – by definition they handhold, reinforce and perpetuate our way of life – to be front and center? But in taking our hierarchical structure as a given, are we blindsided by the reality of underdevelopment – characterized below the surface by patronage and paternalism, and yet only the tip (i.e., poverty) is what we see which gets us upset?

Societies of old experienced chaos, explained the elder in PNG village to the writer, thus the need for order and hierarchy. Yet as societies advanced the maturity brought a higher need – to be egalitarian. And Rizal expressed that need, and was critical of the Spanish hierarchy and the Catholic Church, both having taken for granted the norm of hierarchy? The western world demonstrated the evolution towards democracy and equality, and confirmed the pitfalls of hierarchy – e.g., that subservience undermines drive and motivation (as Eastern Europeans would invariably bring up.)

In an egalitarian environment people feel empowered, exhibited by college-dropouts Gates and Jobs, and taking down the mighty Big Blue. Yet progress is dynamic because of the nature of man – which Catechism tells us translates to 'according to the image and likeness of the Creator,' and endowed to do extraordinary works. IBM has since reinvented itself revealing man's facility for technology and innovation – and holding the distinction of owning the most patents. 'Man is the true measure of himself!' And to raise monopoly and oligarchic power as a model is akin to living in the dark ages? And why we remain an underdeveloped economy, and paying the price of endemic poverty?

Our largest enterprises see their competitive advantage in the ability to flex their muscles over the local economy, a throwback to the cacique era thus undermining the country’s progress and development. The good news is we’ve tabled Philippine competitiveness as a national priority and are hard at work. Yet our being the economic pariah calls for a sharper focus and greater cohesion, and more aggressive and uncompromising efforts and timelines, starting with a laser-like focus on the fundamental building blocks of the economy: power generation, basic infrastructure and a few strategic industries – and developing them to be truly world-class. The operative word is few – i.e., we have to put a stop to ‘crab mentality?’ We are the true measure of ourselves?

Has Rizal's issue with the church disappeared? While Juan de la Cruz needs the church in his search for meaning and inner strength, does the church for its part need to revisit its own role? Has the church become a victim (i.e., the sexual abuse cases) of its own unquestioned hierarchical character where the rule of law has been subordinated? Give to Caesar the things that are Caesar’s? Has the church reinforced our parochial instincts – and that between them and the school, there is a crying need to rethink our institutions? And that includes the public and the private sectors, and the media! To be parochial and hierarchical undercuts progress and development. And do we add insult to injury by espousing the belief that to be sheltered is to reinforce our faith – and worse, to be holier-than-thou, thus struggle with authenticity? But does it in fact create a soft culture that lends itself to an oppressive and corrupt system, and the wanton disregard of the rule of law? Given: vibrancy in a democracy comes from an empowered citizenry and thus equipped to make the requisite check-and-balance a reality! Absent empowerment makes Juan de la Cruz fence-sit?

“ . . . Twenty years since Gorbachev announced the dismantling of the Soviet Union, and capitalism replacing the Soviet planned economy, [what they have gone through] is largely to endure in silence the oppressive and corrupt system of power . . . until blatant irregularities in the parliamentary elections earlier this month sent an estimated 50,000 people out in protest,” writes Robert Service, a fellow at Oxford, NY Times, 23rd Dec. “Most Russians are sick of the corruption, misrule and poverty that plague their country while the . . . elite . . . feasts . . . But Russians . . . are awaking to the idea that if they want democracy and social justice, they need to engage in active struggle.”

We don’t need another EDSA but we need to wake up to the reality that ours is a broken system, a very broken one indeed! And we're bound to traverse the road of folly – of underdevelopment – if we assume that a president alone can fix the mess we’ve created? And our soft hearts blur cause and effect that we find ourselves barking at poverty?

The unromantic Italian

2011-12-29T19:55:00.000-08:00

"Premier Mario Monti outlined his austerity package to union leaders and a youth delegation at a cabinet meeting in Rome, after which he said “Italians are to blame for our public debt," reports WSJ, 5th Dec.

Leadership indeed demands 'selling' one's game plan if it is to get ‘buy-in.’ But it also is objective, calling a spade a spade so there is clarity on what the challenge is and its ownership, thus raising the probability of execution. [Execution is the acid test of competitiveness and thus while access to information is democratic, there is only one Apple, for example.] It takes a big person to admit to a big sin; and it takes true leadership to get the people take ownership of a nation’s failings.

But there is a positive dimension to accepting failures, and as Christians we know it as repentance and faith. Yet human as we are, it is not easy to accept half a century of mediocre performance. Should we then lift a page from the playbook of the private sector? Business managers have learned that accepting failure is the first step to redemption; and Europeans are quick to point out that the American bankruptcy law has proved to be an advantage for the US. But then again, redemption has been in the fabric of the American culture – and so to be holier-than-thou is ridiculed – though the hypocrisies coming from some quarters are growing.

How does the private sector do it? To reinvent an enterprise, they pursue the development of a ‘new culture’ that would sustain success. For example, A.T. Kearney, a consultancy, has identified five common culture dimensions world-class organizations possess: (1) achievement, (2) customer, (3) innovation, (4) people and (5) efficiency. They also recognize that the key is to focus on a couple while ensuring that they don’t turn their back on the others. Put another way, no organization can be tops in all dimensions.

Applying this set of dimensions to the Italian challenge, clearly they would want to reinvent themselves and be committed to ‘achievement.’ And that would mean lowering the national debt while investing in innovation in order for industry to be competitive, for example. (And Fiat-Chrysler is showing the way. Chrysler has had a dramatic turnaround from bankruptcy two years ago, accounting for two-thirds of Fiat’s latest quarter profit, with US auto sales up 25% this year, owing to a revamped product portfolio, Reuters, 6th Dec.) Italy could also address the issue of efficiency since many tradition-bound Italian businesses have yet to adopt 21st century practices. “A lot is at stake; we cannot permit ourselves to live the way we did before,” says Monti, [and] “he is facing a power battle — and a culture clash — with lawmakers.” [NY Times, 16th Dec.]

Clearly in the Philippines it is a must we demonstrate a culture of ‘achievement’, recognizing how dismal our economy has been for over half a century. And just like the Italians, we need to in short order pursue innovation to be globally competitive. And it follows we have to be more efficient, starting with the building blocks of power generation, basic infrastructure and strategic industries.

In the meantime the Italian premier is demonstrating that to be an unromantic Italian is in fact what patriotism or nationalism is about? In short, we need to become bigger men and women and admit to bigger failings? We could only reinvent ourselves to the extent that we admit our failures. As social psychology (c/o Kurt Lewin) tells us, we have to unlearn [or unfreeze] so we could provide room to relearn [or change and refreeze].

Our leadership could similarly fine-tune its ‘selling job.’ Beyond pushing ‘daang matuwid’ President Aquino would do the country a big favor if he is able to get ‘buy-in?' And which should give him the ability to lead us to reinvent ourselves by focusing on a couple of culture-like dimensions?

Critical thinking in a soft culture

2011-12-26T13:04:00.000-08:00

‘We must undo the damage of a misguided culture perpetuated by corrupt politicians and businessmen, power-hungry and greedy tyrants, the powerful forms of media and the apathy of many citizens (whose disheartening response to the mess around them is to go abroad) who defuse the fervor for genuine social change. It is not the Filipino culture that is damaged!’

That is paraphrasing one of the responses at the one-day Rizal @150 Anniversary Conference on Nation and Culture held last 3rd Dec. [Thanks to Dr. Florangel Rosario Braid.] A couple of issues raised at the conference drew the writer’s curiosity: how to internationalize the Filipino outlook; how to take advantage of the Filipino’s ability to adapt to changing circumstances as it competes in the global economy; and redefining the Filipino citizen as multicultural, multireligious. But do we accept that ours is a soft culture as Lee Kuan Yew says? Do we believe that ours is a hierarchical culture? Could they be behind the ‘misguided culture’ being perpetuated by a few? Is our softness reinforced by how we see ourselves in the social hierarchy, i.e., helpless? And so we tolerate corruption, power-seekers, greedy tyrants, and the powerful in the media because of that helplessness – and going abroad becomes an escape?

Because of our softness our bias is for inclusion (and miss the imperative to prioritize and focus) and see poverty as our biggest challenge? But isn’t poverty the outcome of underdevelopment? Or is our default-model the US, where they also have to fight poverty (in reality the core of compassionate conservatism to counter the perceived insensitivity of "laissez faire conservatism")? But to compare poverty in an economy where the per capita income is $3,500 (PHL) versus $47,200 (US) is comparing apples and oranges? Shouldn’t we be comparing ourselves with Thailand ($8,700) or Malaysia ($14,700) or any of our neighbors? These countries have reduced poverty substantially by pursuing economic development! Our income of $3,500 is simply too meager to spread around! And worse, the thought perpetuates our ‘crab mentality’?

Taking a page from the playbook of the private sector, when the revenues of an enterprise can’t cover its expenses, the marching order is to drive profitable growth. The writer is reminded of the 9 years he has spent in Eastern Europe. (And why our messed up economy would take a generation+ to fix.) And the one thing they haven’t stopped talking about is the imperative of gross margins. When he arrived, his friends proudly claimed that low-pricing was their advantage over MNCs – “because the people are poor.” Unfortunately they were not making the margins to give them the firepower to compete, and worse, were an unprofitable enterprise. They’ve learned since but are keeping the focus on gross margins. As the organization expands even those coming from MNCs could instinctively see driving sales as the key, unwittingly compromising margins. It’s giving away the store! And to enlarge national economic output or GDP, enterprises must by definition be sustainable!

The solution is simply innovation – not our celebration of monopoly and oligarchic power – to be able to create products (or services) that the consumers will value at a price that generates healthy margins. It is what competitive advantage is about! And competitiveness is driven by investment, technology and innovation, and talent, product and market development! It also applies to the Philippines? Our GDP is dependent on a consumption-driven domestic economy – which makes us proud because we have many successful local enterprises, but the big picture punctures that confidence. We are unable to match our neighbors’ economies especially exports because we are not competitive, and thus have become economic laggards!

Our biggest challenge is not poverty but development. And to get there, we need to focus on competitiveness. And it starts with the building blocks of power generation, basic infrastructure and strategic industries that will develop competitive products. And how could we address our soft, hierarchical and parochial culture? It’s a challenge to our institutions especially the church and education. Adam and Eve were driven out of Eden; Christ was a pain to the hierarchy in his community and beyond, and he embraced the Gentiles, foreigners and sinners!

Connecting the dots

2011-12-24T21:08:00.000-08:00

Two articles on a Sunday morning would remind us about the failure to connect the dots that was blamed for 9/11: (1) Filipino culture, Manila Bulletin; and (2) Manny V. Pangilinan pins down Roberto Ongpin, Philippine Daily Inquirer, 4th Dec.

It appears National Artist for Literature F. Sionil Jose and Sen. Edgardo Angara are connecting the dots – that the common denominator to our woes is our culture, or not exactly? “One generation has come and passed, yet we are still beleaguered by many of these same problems. Underlying all these is our troubling lack of a sense of identity and nationalism,” writes Sen. Angara.

The article about Ongpin confirms the obvious that all the parties involved in the alleged “insider trading” are in the board of the subject company. But reading the article, it is obvious too that Pangilinan has been distanced from the controversy even when the three-way transaction would respond to his pursuit of ownership control? Are at least three elements of our culture, again, obvious? Its informality makes it laughable for David [of DBP] to utter that the subject transaction was arm’s length; Pangilinan deserves deference because he occupies a higher tier in our hierarchy; and that crony capitalism is our “equivalent” of motherhood and apple pie?

The story of Pangilinan has made him a celebrity, the well-known secret, starting with his representation of foreign interests. And having been installed at the highest levels in our hierarchy, we have accepted his genesis like compassionate Christians must; and of course, the investments that his group undertakes are good for the economy. And in fairness we recognize his talents. Yet it fuels our credibility problem with foreign investors: crony capitalism is alive and well! Add that to our restrictive ownership rules, foreign investors won’t touch us with a ten-foot pole. Net, despite the expanding empires of our tycoons, our investment levels remain shabby – and we are missing out on 21st century technology and innovation, thus undermining our competitiveness! Industry needs the platform of technology and innovation if they are to develop the instinct and the confidence to invest in and pursue talent, product and market development – that are critical to a nation’s competitiveness.

But we’re Christians, says Ateneo? [With due respect.] Or is it simply that hierarchy and parochialism are indeed second-nature to us? Plagiarism even in a premier educational institution could be forgiven – and it was not him, it was a lowly speechwriter! Is it another element of our culture, the absence of accountability, which brings us full circle to how high we value hierarchy especially within our own backyard? It is indeed unfortunate but not surprising that the rankings of our educational institutions against the rest of the world are on a downward trend. And it mirrors our economy, governance and competitiveness; the net of which is nagging poverty in the midst of oligarchy!

What about Ongpin? I am simply a smart businessman? And David? I made money for my bank? And they represent our movers and shakers? Should we start dissecting authenticity as it relates to our instincts or why we struggle with the rule of law and why we tolerate delayed justice – which in fact is no justice? Or should we step up political maturity demanded by a democratic system?

Is our soft culture – which values deference – at the core of our wretchedness? And which explains why a Marcos could last 20 years, only to be followed by one, if not two more? But beyond our shores it doesn't cut, thus while hardworking Filipino women hold their heads up high, many have been stopped at foreign borders – profiled as coming from a backward, oligarchic and corrupt nation? And how do we muster the motivation to engage in broader issues when our comfort zone is parochial, if not narrow? Unsurprisingly we are the ‘silent group,’ whether in the majority or minority, at home and abroad?

Play-by-play, ‘groupthink’ and myopia

2011-12-20T02:38:00.000-08:00

“My father told me not to believe in authorities or celebrities – that society tends to imagine them as superhuman. It's good advice. People are snowed by celebrities all the time. In academia people have this idea of achieving stardom – publishing the best journals, being at the best university, writing on the hot topic everyone else is writing about. But that's what my father told me not to do. He taught me that you have to pursue things that sound right to you. In 2004, when I wrote the second edition of my book Irrational Exuberance, I said in the preface I was worried that the boom in home prices might collapse, bring on bankruptcy in both households and businesses, and lead to a world recession. I remember thinking that this sounds kind of flaky – nobody else is saying this, I can't prove it, this could be embarrassing. But I had learned from my father not to care what other people think. This was my book, and I believed this, so I just said it.”

That’s from the 12th Dec. issue of Fortune magazine, “The best advice I ever got,” from Robert Shiller, Yale University economist. And it seems just yesterday when Shiller was on TV discussing his book, and like most US residents (half of whom are invested in the stock market) the writer and wife were glued to the financial channel, enjoying the play-by-play (of the stock market) from their favorite anchors, effectively dismissing Shiller. And so it’s not surprising that Filipinos are critical of Americans for their short-term orientation. But aren’t we falling into the same trap; and beyond the focus on the play-by-play is the manifestation of groupthink if not myopia?

We have all become economists dissecting GDP numbers by the fraction and by the quarter? The Aquino administration (and even Obama) went through a learning curve, and still struggles to get the PPP initiative going. And if reports are accurate, they found a government that ‘sucks’ – corruption was a way of life! Did Mar Roxas find it too? The DOTC is notorious for big time corruption as the World Bank complained about?

In fairness, doing a play-by-play is important, except that in the case of our economy much of the hurdles we face go deeper. And in the private sector, a similar challenge would call for restructuring! Is Juan de la Cruz predisposed to restructuring? For example, even a 7% growth in GDP unless sustained over a generation+ does not mean economic liberation for Juan de la Cruz – which we conveniently forget! And we’re hyperventilating over one quarter or one year? (And instinctively we don’t ‘start with the end in view,’ which also explains why despite their artistry, Europe is behind the US in product idea commercialization.) We are dealing with a dilapidated structure that must be razed to the ground? Half a century of failure to build the requisite foundation – e.g., power, basic infrastructure, strategic industries – is akin to building a house upon the sand? But human nature takes the easier path, confirmed by the work (intuitive heuristics) of Nobel laureate Daniel Kahneman.

And given our soft culture, how many Filipinos would accept the advice Robert Shiller got from his father? And while we now appreciate the imperative of investment, we have yet to overcome the bias for oligarchy – despite our ambivalence – over foreign investment. And it also goes with professional services. The Philippine elite – including professionals – like its oligarchy, influence the directions of the country; and in both cases, parochialism has triumphed under the guise of nationalism and patriotism? Unfortunately, parochialism has effectively starved us of technology and innovation. How much damage has been done over decades is not easy to quantify, especially with something that is second nature to us?

And it’s never easy to accept a national failure; but it is ‘painless’ to do the play-by-play, and succumb to groupthink if not myopia? In the case of the US, the damage was so severe it triggered the global recession that the world is yet to overcome. Robert Shiller was a lone voice in the wilderness? [Shiller reminded the writer of ‘groupthink’: “It is the mode of thinking that happens when the desire for harmony in a decision-making group overrides a realistic appraisal of alternatives . . . The majority of the initial research on groupthink was performed by Irving Janis, a research psychologist from Yale University, 1972,” Wikipedia.]

Beyond meaning well

2011-12-15T05:27:00.000-08:00

Given where we are as an economy and as a nation, it’s not surprising every Pinoy wants to offer our two cents. And we all mean well! And it appears Mar Roxas is acknowledging that with his clarification on the renovation of NAIA 1. He probably needed sufficient time – rather new to the job – to get a good handle on the challenge. Early on he was for focusing on Clark. And it wouldn’t be surprising (given all the hoops the government has had to go through with NAIA 3) that there was a school of thought that we ought to start with a clean slate, and Clark offered that option.

Not knowing Mar Roxas, it appears that in tapping the expertise of the folks behind Singapore Changi Airport, he was benchmarking not parochially but globally – which is bound to ruffle feathers! When do we start to learn to be outward-looking? Haven’t we been punished enough – becoming economic laggards – by our inward-looking bias? It cannot be overemphasized that we are competing not only for tourists but in the bigger global investment and trade arena. It’s noteworthy that the cabinet’s economic cluster is well aware of the challenge and raised the issue of our airport woes. And since they impact our competitiveness efforts, the NCC has rightly taken the initiative as they focus on upgrading our airport and elevating our image.

Defining a challenge means identifying both the soft and hard elements of the problem. And again, Mar Roxas seems to remind people about this: we must put priority on the structural issues of NAIA 1, i.e., the hard elements. The aesthetic obviously is among the soft.

Applying the same yardstick, the challenge to raise our image has its soft and hard elements. The soft elements start with the fight against corruption that President Aquino is pursuing. And, of course, we’re not just about beautiful tourist attractions but more important is the beauty and hospitality of the Filipino. We also have been home to foreign companies and that our financial and commercial infrastructure is fairly well-developed. Yet, one of the biggest turnoffs to foreign investors is our oligarchic culture nurtured by political patronage and crony capitalism – the latest being the Senate investigation on the alleged insider trading that allowed the Pangilinan group controlling interest over Philex. Foreign investors are well aware that the chips are stacked against them – until they indulge in our game! And that is reflected in the meager foreign investment levels that we generate. What are we doing to truly level the playing field? Have we internalized that beyond our cacique orientation, progressive investors bring along technology and innovation that we sorely need to raise our competitiveness? We have for decades been indulged in self-flagellation, and wonder why neighbors continue to outdo us in exports?

It will do us a world of good when presenting and communicating the image we want to the outside world, that we are able to address these soft factors. And we should do the same with the hard elements. For example, what are we doing with power generation? That is something we must address in our image-building initiative. That we have a high-level effort (from the top of the house?) to fix the problem and make our industry cost-competitive, for instance? How much have we integrated manufacturing zones with infrastructure and logistics? In short, how efficient and cost-effective is our manufacturing environment? Again, it is something we must include in our image-building communication campaign. In a word, even advertising must pass the test of transparency! And transparency comes from authenticity!

Communication in marketing or advertising has to satisfy the hurdles of rational, emotional and experiential benefits. Enormous resources can be wasted if communication is not world-class, and cannot appeal to the human senses – or what marketers call 360-degree marketing. And just like Mar Roxas is benchmarking globally in raising the yardstick to measure NAIA 1, efforts to communicate and elevate our image must likewise be benchmarked globally. Consumers especially in this day and age are well-informed – and so smart marketers do, and indeed must, have a lot respect for them.

Competitiveness is measured beyond local

2011-12-12T20:18:00.000-08:00

Though they are the exception, it is truly encouraging that some of our enterprises are venturing outside the country. It is by so doing that we would develop the wherewithal and the confidence to be world-class. Practice makes perfect.

The writer and his Eastern European friends were recently in Barcelona where 110 European enterprises were honored in the annual European Business Awards. Indeed it was a great accolade for this select group: the field that met the parameters of the awards started at 15,000, delivering over a trillion dollars in revenues and employing 2.7 million people. In short, the best of Europe’s industry were represented. As the European trade commissioner enthused, he was very proud of all 110 businesses for demonstrating excellence despite the global economic crisis (for which, unfortunately, Europe is as much to blame.)

The writer's friends – and deservedly so – had to be very proud given that barely 9 years ago they were a cottage industry in the middle of nowhere, best described as a fledgling business out of a dilapidated ex-communist facility.

To venture overseas, Philippine enterprises will have to shed our mental model of monopoly power. We may not realize it but our backwardness is magnified for the rest of the world as we keep celebrating oligarchy. It is as bad if not worse than our underdeveloped infrastructure. And one could just sigh when some of our best thinkers blame President Aquino for our inability to attract foreign investors. We have as a people and as a nation more than convinced the rest of the world – many times over – that we are a parochial nation! And so they don't want to touch us with a ten-foot pole! We are to blame, not the president!

And we can complain how hostile global trade could be – and it is especially if we expect handicapping to benefit us. But the reason the writer committed to assist his friends is precisely because they had no qualms about unfriendly competition and markets – and yet they're ex-socialists! It is the same principle great teachers adhere to: if the student hasn’t learned the teacher hasn’t taught! Put another way, a business no matter how small is worthy of global competition if they stand on their own two feet! Of course, they must have a positive and a confident, forward-looking bias. They must be committed to investment – no matter how small at first – and as importantly, invested in technology and innovation, and talent as well as product and market development!

To narrow one’s perspective (even in a poor country where the conventional wisdom is only cheap, so-so quality products would sell) will from the get-go undermine innovation thus the competitiveness of the enterprise. This was the first reality that the writer’s friends had to confront – and with great difficulty. For example, they had to learn the nuance between value and price, margins versus costs. Ergo: investment, technology and innovation can’t be taken for granted. Philippine businesses need to fully comprehend what they truly mean – and as importantly leverage them – in a globalized and highly competitive world!

Unfortunately, our comfort zone – of monopoly power – robs us of the hunger to be truly globally competitive. Hierarchy allows us to lord it over, blinding us to the reality that competition is egalitarian! Crony capitalism, as we know, rewards rent-seeking oligarchy with plum enterprises and access to capital! In the end Juan de la Cruz pays a heavy price: (a) directly like the coconut farmers; and (b) even more profoundly given that this lopsided economic structure does not advance Philippine competitiveness, nor does it raise national wealth for the common good – as demonstrated by the last half century.

We don’t want the slogan ‘Backward, Oligarchic and Poor’ associated with the Philippine brand? That will indeed isolate us – be admired but dismissed as ‘just an exotic South Pacific archipelago!’

Peeling the veneer

2011-12-10T03:56:00.000-08:00

The global economic uncertainty has shaken even self-confident France. ". . . Dreams are unraveling . . . according to a Pew Research Center survey only 27% of the population now believes that 'our people are not perfect, but our culture is superior," NY Times, 21st Nov.

Russian-born author Elena Gorokhova, in her memoir (A mountain of crumbs) about growing up into young womanhood, describes the lectures she attended while training to be a tourist guide: "Leningrad – the cradle of the Great October Socialist Revolution. The rules are simple: They lie to us, we know they're lying, they know we know they're lying but they keep lying anyway, and we keep pretending to believe them.”

People go through self reflection. Should we, Filipinos, define our challenge as the imperative of inclusion? For half a century our economy was growing at 1.4% while our neighbors did as much as 6%! This bit of news hit the writer like a ton of bricks since it was the referenced period (1960-2008) that he thought defined him. Put simply, he is very much part of our failings as an economy and as a nation. It is a very telling point if we are to understand why in the 21st century we are the economic basket case of the region! We have to peel off our romanticism, call a spade a spade! There is absolutely no way to be inclusive doing a measly or a frail 1.4% for half a century! As we know in problem-solving, fallaciously defining the challenge puts us on the wrong path! [And fallacy comes from intuitive heuristics, e.g., rule of thumb as expounded by Nobel laureate Daniel Kahneman in ‘Thinking, fast and slow.’]

Economists say we must grow at 7% and even at that rate it will take more than a generation for us to be a developed economy! But our bigger challenge is masked by that impressive number – in reality another form of romanticism if we don't deliver sustainable growth! The bottom line: Our challenge is bigger than President Aquino. But he is part of why we are what we are – we are all in the same boat that we created! Our challenge is not about the imperative of inclusion. It is about the imperative of development. And development requires erecting the building blocks that will make growth sustainable. But we won’t even get the first floor up if we stick to tooting our individual horns – we badly need to toot our horn as a nation! The JFC has provided a model via ‘Arangkada’ – which unfortunately will take ‘eons’ for us to internalize. To undo 48 years of mediocre economic performance will more than bruise the ego of Juan de la Cruz. It will shake his spirit more than currently felt by the French!

We have yet to demonstrate it, but we must learn to focus and prioritize – e.g., power, basic infrastructure and strategic industries. We can’t simply be rooting for our favorite oligarchy; they have contributed to a very large extent to our cellar-dwelling performance. They reinforced our mistaken belief – poor as we are – that capital puts them at the top of the pyramid. Capital employed to perpetuate a lopsided economy is the unwise – beyond self-serving – use of God-given resources. And with their cohorts in politics – and with our acquiescence – they shut out foreign investments, technology and innovation, the wise use of God-given talents. But they also had been aided by our own education mindset. Education is meant to be inquisitive, expansive and by definition outward-looking.

And thus parochialism must be addressed and overcome by education? But our outlook was influenced by our parochial religious orientation, which treated us like juveniles? Christianity is about maturity, not about being holier-than-thou, which we perpetuated via our sheltered culture. Unfortunately, tyranny thrives when people are shielded as the Arabs have realized. But the good news is Christianity is about embracing the Gentiles and foreigners and sinners. And so how do we begin to fix ourselves? Should we try authenticity?

"We don't have sex in the Soviet Union," said a woman from the Ministry of Culture, when a French reporter asked a provocative question about Lelouch's film 'A Man and a Woman.' Is it possible that . . . sex had been successfully eradicated by the Great October Socialist Revolution, along with social inequality and decent shoes? . . . In spite of my country's taboo or my mother's silence, or maybe because of it, I've taken the initiative to investigate the subject on my own." [ibid]

Competition is egalitarian

2011-12-07T04:26:00.000-08:00

We can easily intellectualize the connection between competition and equality? Yet in our heart of hearts we value hierarchy? And we’re not alone. Many Eastern Europeans migrated to the West only to return – it’s just not the kind of culture we’re comfortable with. ‘It’s the quality of life, stupid!’ [Who would not want to be chauffeured around by Stefan or Stani or Hristo?] And now the new world order demands competition? “Better collect and hide the ID cards of our grandparents – so they can’t vote – and save the country.” It’s the running joke heard from Eastern Europeans. Their elders despite the dark ages they went through under communist rule could not imagine themselves in a world that demanded competition.

It is not surprising that people who see themselves within a hierarchy but not the leadership would behave as such: “You have to tell me what I must do. When you tell me to jump, I want to know how high!” It’s one of the unfortunate characteristics of hierarchy. The reality is competition, which is what the 21st century is about, presupposes that nations would see themselves paddling their own canoe. But we commiserate with relatives living in the West: “Our quality of life is much better and more desirable that yours!” Eastern Europeans feel the same way, and they are horrified when they watch German TV, for instance, and hear that 18-year olds are expected to be on their own!

It is encouraging that we are in serious studies figuring out the resolutions of nagging challenges – from electricity to mining to car manufacturing to name just a few. Yet, the fact that for practically half a century we were growing at a pathetic 1.4% would explain why we’re still troubled by these problems – especially when neighbors did as much as 6%! It’s painful but we have to face up to this sad reality! By German standards, we’re way pass being an 18-year old! And even Adam and Eve were driven out of Eden – expected to be on their own!

For almost half a century we were proudly tooting our quality of life! But what is even more frightening is if we’re still in la-la land – and don’t recognize the 18-year old rule? Which means that another half a century can elapse and we would still be blaming everyone and his uncle instead of paddling our own canoe?

It is no secret what created the West – i.e., the Protestant or Christian work ethic! Of course as the world now knows, they have forgotten the reason behind Thanksgiving, i.e., to be grateful for the fruit of their labor. Like the Golden Calf, the fruit became the be all and end all – the virtue of hard work was supplanted by the “value” of avarice.

But that does not give us license to be ‘holier-than-thou?’ In fairness, the West took the parable of the talents seriously? But did the church fail us or are we simply the referenced ‘not good soil?’ In fairness too, we have been doggedly addressing the elements of our dismal competitiveness rankings. But our competitiveness rankings simply reflect the outcomes of our economic, industrial, political, education, social and other institutional efforts. Put another way, they are a reflection of our values and our culture. And as long as we take our values and culture for granted – that they are in fact hard and fast and are a given – we would not be able to reinvent ourselves. Half a century of pathetic economic and human development simply points to the imperative: to reinvent Juan de la Cruz?

But what are we talking about – same old, same old? With our meager GDP person and no sustainable economic engine, we are back to our comfort zone – local consumption! We have grown the local economy to over $100 billion – comparably better than our neighbors – principally owing to OFW remittances. Unsurprisingly our basic industries (the favorite of oligarchy given that their bare bones equate to rent-seeking) will continue to prosper and reinforce our lopsided economy while Juan de la Cruz goes hungry! Aren’t we supposed to be smarter than that?

Beyond entrepreneurship

2011-12-04T17:37:00.000-08:00

Friends often proudly tell the writer that Filipinos are entrepreneurial and they don’t necessarily have to be big but they thrive. And the writer remembers a pretty recent trip he took from SLEX all the way to Antipolo and around Laguna Lake and back to SLEX. Indeed, in every other corner if not every, one would see business activity – not exactly like Chinatown but still dense. And decades ago the writer had travelled the country a few times representing his employer and worked with SMEs – aside from having already put up a family business.

In far away Italy, WSJ (14th Nov) reports: “Italy's economy today is only about 3% bigger than a decade ago. Many factors have contributed to the country's stagnation—from its rickety education system to its low rates of employment among women, youths and older workers. But a central reason, say economists, is that its private sector consists mostly of small mom-and-pop businesses that seem unable to grow . . . Unions, meanwhile, are opposed to government proposals to loosen Italy's labor laws. They have vowed to paralyze the country with strikes if the government attempts to pass such measures.

“Behind the country's stunted businesses lie the habits and fears of a long line of family entrepreneurs who cling to control of their companies late into life. Hemmed in by a thicket of regulation and legal restrictions, many of these families have learned to survive by doing business within networks of trusted customers and suppliers, rather than taking risks by dealing with outsiders . . . These firms have less propensity to innovate, engage less in research and development and rarely penetrate emerging markets," said Mario Draghi, ECB President and former Bank of Italy head, in a recent speech.

There is something beyond entrepreneurship. When the writer first arrived in Eastern Europe, he saw two very different entrepreneurs. And it is not difficult to figure out why he committed to assist one but not the other.

The bigger one had friends amongst a group of former communist rulers and was out to leverage the relationship and get into different businesses, having already acquired one. [And so the writer simply grins when he hears socialist-leaning Filipinos romanticize the purity of socialism.] But he wanted his first business sold to a Western MNC because he really did not understand the business; and was not prepared to spend time nurturing it. But he had hoped to make a killing – make hay while the sun shines, and get into other businesses. His connections were pointing him supposedly in the right directions – even when he did not understand the other businesses too! Fast-forward: the first business shrank to a mere shadow of its former self, and could not attract buyers – not MNCs, not locals. Not even the writer’s friends, who earlier considered it, would buy the business.

The smaller one, only a fraction of the business of the other, had the desire to grow the business. “Our country is small and we need to learn to do business in a bigger market, like the region.” (In the Philippines, our big population, on top of our parochial instincts, spoils us – i.e., we focus on the local market and don’t develop the wherewithal to compete in less friendly markets. And that’s not how Olympians are made!) But with a new found motivation following the collapse of communism, they wanted to dip into other businesses too. And the writer urged them to focus (in order to attain ‘nirvana’ a.k.a. competitive advantage) on two core businesses, one each for the two brothers. With that caveat, they made minor investments in other businesses. Fast-forward: with the global recession these other investments went south. But they now have two very much larger businesses; and these two – each is into several but related businesses – more than compensated for their bad bets.

The bottom line: there is something beyond entrepreneurship. And the writer’s friends are now committed to building an institution not a fiefdom. And they educated their children to respect the vision and its requisite values. In the 21st century, could they really afford otherwise knowing what nirvana is? But which tradition-bound – e.g., inward-looking, values family, monopoly and oligarchic power instead of technology and innovation power – Filipinos or Italians would struggle to accept?

Of MNCs and economic analyses

2011-12-01T04:01:00.000-08:00

It’s not surprising that the JFC (Joint Foreign Chambers) are the ones behind “Arangkada” – which spells out the vital few industries that can raise our economic output. Nor is it surprising if nationalists would not be enamored. “Here are these foreigners again, directing our economic downfall!” What is reality? These people are doing business in the region and are able to compare countries. If the country manager of an MNC in the Philippines is viewed by his or her regional office as being behind the peers from Thailand or Vietnam, for example, he or she would want the local environment to be competitive – like the Philippines fixing the power supply and cost issues, among others.

If the MNC has expansion plans, the Philippine country manager would want a fighting chance that the expansion would be in the Philippines. And, of course, they will invest in technology, innovation as well as talent, product and market development – the building blocks progressive MNCs are committed to given their drive to attain competitive advantage. An MNC can come from anywhere, not just the West – like the writer’s Eastern European friends. Just because we don’t know (how to be an MNC) makes them evil? Of course there is always a bad apple – even in a place where corruption is a way of life like ours? Our challenge is to learn (how to be an MNC) ASAP! Or we can choose to be out of sync with the rest of the world – remain an island unto ourselves, cling to hierarchy and oligarchy and the attendant massive poverty!

Industry impacts the economy directly – i.e., GDP is simply the aggregate output of the products and services generated by a country. If booming economies in the region are growing 8%-10%, for instance, and we are doing a slower 4%-5%, clearly we have work to do. (The reality would make us cry: “from 1960-2008 our neighbors did 3.6%-6.0% against our 1.4%,” Manila Standard, 17th Nov.) Yet posting and celebrating a high growth rate is empty when the building blocks that will sustain it are not present. And worse is when it makes us celebrate ‘a flash in the pan’ instead of focusing on problem-solving thus nation-building! Our unreliable and uncompetitive cost of electricity is not new – and our efforts to date are feeble and unacceptable, in this day and age, of competitiveness!

We need to focus on industrialization, and in producing truly competitive products and services that can be marketed beyond our shores. The more competitive they are, the greater our ability to overcome economic slumps. And which explains why MNCs strive to maintain a portfolio, not only of products, but of countries; and balance out their risks and opportunities. And the writer talks often about his Eastern European friends – supposedly amateurs compared to us in the free-market system – because they adopted the exact model: A few years ago, 100% of their revenues came from their local market; today it accounts for less than 50%, and will continue to come down by design – i.e., they’re not about rent-seeking monopoly and oligarchic power. And despite the economic slowdown in Europe, they continue to grow and step up investments in the building blocks of competitive advantage. And they’re not even in the high-tech industry. But they are not parochial either!

Our latest dismal export performance simply reflects our nagging deficiencies in infrastructure, and the imperative to develop and produce compelling and competitive products. Yet we can’t simply pursue infrastructure projects without a clear priority and focus. But ‘priority’ and ‘focus’ are not instinctive to us – i.e., crab mentality wins out? For example, we know that of the 86 airports around the country, 46 are white elephants. The JFC identified 7 big winners or industries that can generate $75 billion in investments and over $100 billion in incremental GDP. The key is to focus and prioritize the infrastructure projects that will support these strategic industries. It’s counterintuitive, to be inclusive starts with not being inclusive! And like the Pharisees and the scribes who struggled with the Greatest Commandments, our soft culture – which could be at the heart and why we’re progress-challenged – struggles with the phenomenon. And which explains why we’re anti-MNCs/foreigners, i.e., to prioritize and focus is second nature to them? In the vernacular, “mga suplado sila.” If true, we must be alarmed about our future!

To take our eye off the ball and proudly profess optimism is ‘bahala na’ or ‘que sera, sera’ all over again! Unfortunately, we assume it’s patriotism? We are decades behind the times – we need more than ‘a flash in the pan!’

Community sense

2011-11-28T21:16:00.000-08:00

Is there in fact an industry out to discredit President Aquino? Whether people are out to discredit the president may not be the real problem of Juan de la Cruz. Our real problem is our lack of community sense?

Our efforts in power generation, for instance, must recognize regional if not global competition because we are competing for foreign investments at the front end and trade at the back end – beyond parochial issues that seem to consume us perpetually! Is the problem simply too big and we don’t have the capacity to solve it? But we would scramble to provide electricity if there is a rule that says: until we become supply- and price-competitive with our neighbors, no electricity will be supplied to all gated communities! And we’d surely call a national campaign? In the meantime, vested interests are celebrating because they have controlled the industry? Are we, as the writer’s Jesuit friend lamented, missing something, like authenticity? Or we simply don’t care? It is a microcosm of our failings or the state of denial we’re in! In Europe once dirt-poor Eastern Europeans couldn’t help give a dig to their neighbors: “4 hours work guaranteed plus 4 hours ouzo break!” “We’re Italians, don’t expect logic from us!” These people are simply blind to reality? What about us?

After President Diosdado Macapagal, with an exception or two, we lost the credibility of leadership and nationhood? (And the US is probably mirroring us – from Clinton on to Obama, Whitehouse leadership credibility has gone kaput!) Put another way, after President Macapagal, we have elevated two if not three amongst the most corrupt leaders of modern times! And their cohorts are still around – protecting their good names? How much more backward-looking do we want to be? We’re still in the “dark ages”!

Of course we have more billionaires today, yet poverty remains stark? What we proudly call our consumption-driven (essentially OFW-driven) economy – as opposed to an investment-driven economy – in fact sets up and strengthens the oligarchic character of our economy! We like to think we’re different from the more progressive-thinking, yet secular West? But are in the same boat? And now we worry that our schools don’t meet international standards – which means our road to the future is on a downward trajectory?

Which comes first, the chicken or the egg? We won’t be able to figure that out unless our starting point is a community sense? Vested interests behind the power industry (and the broader infrastructure industry) believe Juan de la Cruz in fact owes them a debt of gratitude? In the meantime, did the stakeholders behind tourism, one of our strategic industries, finally come together? We are our own worst enemy! Within industries we have pseudo-tsars flexing their muscles especially proud of past accomplishments – that we’re the economic basket case of the region?

What is reality? We are lagging behind our neighbors not just in the infrastructure basics, but more alarming is the stark absence of the building blocks of industrialization! Screams Business Mirror, 10th Nov: “Exports plunge 27.4% to 2-year low.” That is to be expected – i.e., our celebration of oligarchy is a celebration of backwardness manifested by our failure in power generation! And if our best business minds see crony capitalism simply as our way of doing business – “I’m in good company, I am no solitaire” – we are totally out of sync with the 21st century! It is the age of competitiveness, driven by technology- and innovation-focused investments! We can’t cling to “whom you know” – and must move on to “what you know!”

It would take a community sense if we are to move forward with dispatch – whether with NAIA 1 and NAIA 3, for instance; and if we are to indeed prioritize, implement and succeed in the pursuit of the strategic industries we have identified (e.g., ‘Arangkada’) and put us on the path to industrialization. It is heartening that DoTC secretary Roxas is talking about the imperative to prioritize!

‘Creativity, leadership and problem solving skills’

2011-11-24T03:50:00.000-08:00

The new World Bank report, Putting Higher Education to Work, says about the Philippines: “. . . [E]mployers and employees find . . . gaps [in the right skills] to be particularly severe in creativity, leadership and problem solving,” Manila Times, Random Jottings, 23rd Oct. The good news is we don’t have a monopoly of this problem. Progressive global enterprises have it in their crosshairs, and its constant fixing is part of the business. To develop an organization and its people and elevate their skills in creativity, leadership and problem-solving to world-class levels cost money. But it’s a must-do. For a business to be true to its role as a contributing member of society, it must be committed to the proposition that it is a sustainable, profitable enterprise! Yet it does not mean ‘rent-seeking’ oligarchy or inward-looking, underinvested uncompetitive enterprises out to make a fast-buck via “products” that insult Juan de la Cruz. It's the formula to sink a country like it did empires past, e.g., the Soviet’s. The good news is our furniture makers apparently have learned that to succeed in the global arena they have to move up the value-chain! Bravo!

It is encouraging to hear the views of the UST Rector: “. . . A sincere examination of conscience among our legislators” is called for, Manila Bulletin, 23rd Oct. “Government funds allocated for [public universities] could have been better spent to improve basic education . . . Garbage in, garbage out . . . When I was a student in philosophy, one of my professors taught us the distinction between a product and a creation . . . A creation . . . is something that begins simple, even imperfect, and then evolves from simplicity to complexity, from imperfection to perfection . . . What we sorely need today is not the quest for perfection but for simplicity; not just the search for productivity but creativity . . . The government can lead the way towards this by being more creative in addressing problems in education.”

It appears the good rector is echoing the findings of the World Bank. “So why isn’t higher education fulfilling its potential? The main reason identified by the World Bank report is that higher education institutions have been managed as “disconnected” individual institutions. Governments have a fundamental role in making higher education work as a system where individual institutions are well connected among themselves and to firms, research institutions, and earlier levels of education.”

That is clearly easier said than done . . . unless we keep our nose on the grindstone – as one, not as disconnected parties! Even amongst the best in the private sector, they can’t simply raise their creativity, leadership and problem-solving skills – they work . . . and work . . . hard for it!

"I want them to meet this deadline, but at 31 hours from that deadline with 175,000 customers still out, I am skeptical," Malloy said of Connecticut Light and Power, noting that to meet the deadline the utility will have to restore power to affected customers at a rate of 5,500 residences per hour. [CNN, 5th Nov.] As a result, Malloy has directed CL&P to provide him by 10 a.m. Sunday with a town-by-town, hour-by-hour restoration schedule. They need to work through the night, they need to hold their crews, they need to have as many people as possible on the streets of Connecticut to meet that goal," Malloy said, adding that if by 10 a.m. Sunday the utility "knows it's not going to meet its goal, I want to know that . . . Malloy said earlier Saturday he is bringing in a consulting firm to do an immediate analysis of the power company's response, and legislative action is possible. Connecticut's attorney general has already called for regulators to investigate CL&P.”

Even the public sector can be hardnosed, committed to execution! Who will do what, why, when, where and how? Says President Aquino: “. . . Our administration, when we started, was bequeathed quite a whole set of problems, so much so that I won’t say that we’re the best experts—omniscient prognosticators of all of these problems—but it has given us a confidence in handling these problems to have an attitude that every problem presents an opportunity.” [Business Mirror, 5th Nov.] There is hope for Juan de la Cruz after all?

A new day, not a perfect storm just typical bureaucracy

2011-11-20T16:58:00.000-08:00

It’s delightful reading President Aquino’s interview with Business Mirror and Philippines Graphic, 5th Nov. “Renewed business confidence in the Philippines, Mr. Aquino said, is reflected in the re-investment of firms that had previously written off the Philippines as an investment site . . . And he is convinced that the Philippines won’t just have to dream of becoming a manufacturing country—by all indications, it can happen . . . The emerging markets of which the Philippines is a part of presents high growth rates for people who are looking for investments. So it behoves all of us to have that environment where we correct the so-called issues against us. So we welcome all of these investors who are looking for that safe haven. The problems elsewhere in the world can translate into opportunities for us and you can see that in so many fields.”

The writer remembers many years ago managers at General Electric seeing themselves as “too US-centric” – as they benchmarked with corporate friends wanting to internalize what being global meant. And the writer thought sitting in New York even for a month would turn one into “too US-centric.” And, of course, there is such a thing as corporate politics to contend with; so corporate-types aren’t exactly naive of the real world. The key is to strive for simplicity – the foundation of competitive advantage because it informs execution – by keeping people singing from the same hymnal because in the free market, failure is not an option! (And why New Yorkers had to ‘occupy Wall Street’; they wouldn’t put up with the chutzpah of greedy bankers who resisted regulations after being bailed out for their colossal failure. And the gall to brag about their smarts when Bear Sterns and Lehman, for example, were offered for a song through the kindness of the Fed – i.e., even bozos could generate profits under those terms!)

Indeed it is important for President Aquino to be confident and self-assured. And reading from the flow of his spiel, it is clear he wants to turn the tide and make us an investment haven. And even beyond that, to be a manufacturing country. Yet even Malacañang can’t escape the phenomenon of “too Malacañang-centric” especially given the reality of cordon sanitaire. And, of course, Philippine politics is much more severe than corporate politics and thus the challenge to get the rest of the country singing from the same hymnal is exponentially larger.

Should there then be the corresponding sanctions if administration managers don’t get the simplicity of the president’s game plan? For instance, we want to raise GDP by >$100 billion via a few vital industries, like tourism and mining to name just two. How discombobulated are these two strategic industries becoming to be? The good news is, after all the highfalutin rationale that froze us into inaction, we are finally doing something with NAIA 1 and NAIA 3. But is our issue with foreign airlines about losing 2 billion pesos in tax revenues or is it about protecting local airlines? Haven’t we been in protectionist-mode for decades which has cut us by the knees, i.e., foreign investors wouldn’t touch us with a ten-foot pole? We don’t want to keep sowing chaos and confusion – the breeding ground of influence peddling, oligarchy and thus corruption? Instead we want to seek simplicity? If a major enterprise cannot compete in the global marketplace, it has its rightful place? Where is Pan American or TWA? In the private sector, failure is not an option – one either sinks or swims? Thus behest loans that are written off by our government financial institutions are worse than the bank bail outs in the West – i.e., they still had to pay them down? What about electricity so basic for an economic activity and heightened development? What about the escalating conflicts surrounding mining regulations?

Beyond simplicity is leadership – and even in a hierarchical structure, the key is ‘to sell’ the game plan, not simply to impose one’s will, which could just be ignored in a democracy! The object remains: to get buy-in and alignment!

Hopefully, the administration is ushering a new day. And that what we are witnessing is typical bureaucracy, not a perfect storm?

Of comfort zones and paradigms

2011-11-18T22:14:00.000-08:00

People including foreigners respect the caliber of the leadership in our private sector – despite all the unfavorable news about our economy and beyond – given our history and decades of experience. And it is not surprising since we were supposed to lead Asia into the new century; and the decision to make Manila the HQ of ADB was a confirmation of that belief by the international community.

Indeed the private sector has its core of progressive enterprises. Unfortunately, the rest of the economy hasn’t matched the progress achieved by our neighbors . . . . And so our economic managers proudly unveiled PPP in order to accelerate infrastructure development. And the JFC, working with both the public and the private sectors, developed ‘Arangkada’ to get us on the road to industrialization by focusing on a few vital industries like tourism. Sadly, before it even got off the ground it conflicted with another initiative, to raise the efficiency of our tax collections! (Confusing 300 tenets from the Greatest Commandments like the Pharisees?) And so foreign airlines are staying away; and given our high electricity costs, exporters are also thinking of leaving! And they are on top of our avocation of taunting (if not milking, as one columnist described it?) foreign investments – and we wonder why we only get a pittance? And unwittingly we’re coddling ‘rent-seeking’ oligarchy believing we’re patriots – and wonder why a third of us are hungry? A system that is underinvested cannot generate wealth for 100 million Filipinos – especially when investment is controlled by a handful! It is no different from the time of the tsars! And we’re walking around proud of tradition?

“Home” – our comfort zone – is where we can let our hair down and prop our feet up? Hopefully the house isn’t burning? We’ve stuck with our comfort zone for decades; and with the 21st century now a reality, it appears we’ve recognized the world has dramatically changed! What to do? We reinvent the wheel? Unfortunately, our ‘default menu’ may be ‘factory set’ and we appear unable to override it! And so the solutions we come up with have a common thread: inward-looking and, sadly, feeble. Our compassion (or “awa”) wouldn’t take radical surgery even if it was the prognosis – yet we grew up with an abundance of parables? Compassion stops where ‘crab mentality’ begins? If Brazil and Mexico with per capita incomes several times ours still needed CCT, how do we expect ‘farm to market’ roads, for instance, to be the prognosis for our underdeveloped economy?

Which also explains why we struggle with interventions sometimes demanded by institution-building like restructuring – i.e., we personalize the downsides because of compassion. But a leg has to be cut to save a life! Unsurprisingly, our institutions are weak – and thus despite our smarts we can’t build a nation? And we’re entertaining initiatives akin to import substitutions that stunted our manufacturing like they did our economy? The only way we can compete and thrive in a globalized economy is to invest and leverage the investment via technology, innovation, education and talent development as well as product and market development. And that’s done by partnering with the outside world not locking them out. There is no free lunch!

Yet even contract manufacturing, for example, does not have to be one-way, from the West to the East! The writer’s Eastern European friends signed up a Western enterprise to manufacture for them! An enterprise from an ex-communist state just out of the dark ages is the principal, not the hired hands! They are about competitiveness, not ‘rent-seeking’ meant to thrive in crony capitalism and its safety net, political patronage. Simply put, they must sustain profitable growth if they are to carry on their contribution to their economy thus the common good. And it means investing in product development and in technology via product sourcing, in this particular case.

We can talk ‘paradigm shift’ but now must walk it? When the writer covered the region, the only place where he heard ‘paradigm shift’ was in the Philippines, but it was in the neighbors where he saw it! Unfortunately, the world will not change the rules to fit our comfort zone! Nor is it about reinventing the wheel; it is about leveraging what an interconnected world has to offer. It is not about being steeped in tradition; it is about challenging an unfortunate present and creating a better future. We can’t be too heavily laden and weary to formulate a contemporaneous worldview – we have to keep the faith!

To romanticize is not to problem-solve

2011-11-14T22:43:00.000-08:00

To problem-solve demands execution which is hardnosed: Who will do, what, why, when, where and how? Indeed we must promote tourism, being a strategic industry. But we have to in short order learn to raise our expectations – we’re in a downward spiral, which if not yet obvious is glaring if we simply look outward? But it is heartening that we are addressing the need for a word-class airport and the infrastructure network to support tourism and, as importantly, our broader industrialization needs?

But the real question is: how hardnosed are we? Poverty will keep staring us in the eye until we learn to stare reality in the eye? To romanticize is not to problem-solve? Thus, we must be able to pose the question to ourselves: Does our economy need fixing? If it does, who will do what, why, when, where and how? That demands loads of leadership! Unfortunately, we instinctively lead with our heart and thus get quite romantic? There is nothing wrong with romanticism – passion is synonymous to great achievements! Yet, problem-solving is fundamentally hardnosed?

Of course we value a high minimum wage? Of course we value our OFWs? Of course we value patrimony? They are great examples of how we romanticize instead of problem-solve? We should have valued skilled work, industrialization, and investments and competitiveness? And it is one of the reasons why we’re not comfortable with foreign investments especially from the West – they’re too hardnosed, not romanticists? But that’s how higher education in the New World was founded by the Christians from the Old World, via the select-few Ivy League institutions – i.e., imbued with academic rigor? And so many of us put our children behind those ivied walls? And when they return home, we look up to them too? But that’s because they occupy some higher tier in our social hierarchy (not unlike in the US.) And given our hierarchical culture, we romanticize them too?

Yet, problem-solving is hardnosed? Two Nobel laureates were behind the implosion of the once sterling hedge fund, LTCM? To be hardnosed is to ask the tough questions no matter who the players are and how high they are in the hierarchy? The Catholic hierarchy in the US is paying a heavy price for taking it for granted!

Does our economy need fixing? If it does, who will do what, why, when, where and how? And we can’t be half-hearted, we must leapfrog! Who will leapfrog the what – i.e., our anemic investment levels, antiquated technology, outdated innovation, plummeting education and talent development, outmoded product and market development pursuits? Why? We can’t even put body and soul together for Juan de la Cruz! When? Like yesterday! Where? Prioritize, e.g., critical basic infrastructure and vital few industries! (To prioritize goes against our grain of inclusion and compassion?) How? Don’t shut the rest of the world out – and nurture oligarchy, which is why we’re still in the dark ages! Peter the Great at least invited the best Europe had to offer to modernize his country? And CSR can’t be our best shot; it is simply insulting and at best condescending! The indios are good in livelihood projects – only?

Our 10-million strong OFWs bring $20+/- billion to our economy. Now we expect them to bring 10 million tourists too? We have a problem with our tourism program like we have a problem with our economy? We are an underdeveloped economy driven by OFW remittances – thus a natural haven for oligarchy, i.e., free money is coming without the imperative of competing in the global arena! We call it ’Filipino abilidad’ when it’s unmistakably cacique in character, confining us to the dark ages! What athlete will skip global competition and expect to be and win in the Olympics? In the meantime, we defer to hierarchy and celebrate oligarchy, wickedly trapping us in a vicious cycle! Unsurprisingly, we have become an object of charity, i.e., international financial institutions see us as CCT-dependent!

It is the 21st century and even countries that were once pariahs are zooming past us? Our response ought to be strong enough for the rest of the world to view us as an investment destination, beyond tourism! That we can build a world-class airport and critical basic infrastructure – and as importantly, that we can pursue the vital few industries (i.e., overcome ‘crab mentality’) that will put us on the road to industrialization! We don’t live in trees anymore!

An institution not a fiefdom

2011-11-12T05:29:00.000-08:00

The worldview of Juan de la Cruz values hierarchy, ‘inclusion and compassion’ and above all is family first? The writer’s Eastern European friends came from the dark ages – the repressive Soviet rule! But they’re self-deprecating: “The new subway system is up in two years; it will leapfrog us 20 years, which means we’d still be 80 years behind!”

“I am asking the older daughter to help me sell to the younger one the benefits of being disciplined especially with schoolwork.” The writer’s friend is sharing that he just took away the laptop and the iPhone from his 14-year old – to give her a lesson for doing less than she did the previous term. Instead he got her an ergonomic chair – to sell her the idea that her priority lies elsewhere, i.e., in her schoolwork. And so he was delighted when the girl said that without her laptop and iPhone, once she gets home, she is able to straightaway do her homework.

“I don’t want them to simply follow my footsteps. I want them to pursue what would make them happy so that they’d have the passion for it. And so she’s taking Spanish, now that she knows English. And my brother and I agreed that we should not position our children to run an operating company within the group. They could be involved with the holding company, and as a family we could structure our investments as much as we like. But we must leave the operating companies to the professionals, who must be motivated and not worry about competition from family.”

The day has come! The brother’s older daughter completed her Harvard MBA and is now in the process of understanding the holding company. And the freshly minted HBS grad (with investment banking under her belt) sits down with the writer. “Whatever little I know about industry, as you know, I picked up in the West. I am a stranger in my own country and in our own company. But I agree we are building an institution not a fiefdom.” Time flies. The writer still remembers when she had first approached, to review the curriculum vitae she was putting together: “I hope to get an internship in a good outfit either in New York or London.” She was attending the university at Bath in the UK. The scenario could be straight out of Connecticut (where George W. Bush grew up, and attended Yale and Harvard.) How did they learn about modernity so fast, so soon?

The writer wondered how he would ‘sell’ – as opposed to impose – a lesson to a 14-year old! Would he have the heart to take away her laptop and iPhone? Why would they not simply give the plum job to a family member who’s a Harvard graduate – i.e., we personalize before we professionalize? And unwittingly we undermine transparency, if not engender corruption? What does that mean for our brand of democracy? We don’t get the best answers because we’re ruled by hierarchy? The writer’s Eastern European friends recognize that until their culture is able to breed a Mark Zuckerberg or a Bill Gates or a Steve Jobs or a Larry Page and Sergey Brin, they’d still be closer to their socialist and dark communist roots than the 21st century!

Until we learn to respect a 14-year old? Until we respect reward and discipline? Until our institutions learn that they have the obligation ‘to sell’, not simply impose their will, we would be closer to the dark ages? And so radical groups are emboldened to be critical of our establishment? Unfortunately, they unwittingly romanticize socialism yet Deng Xiaoping isn’t their model – whose radicalism was to embrace market economy? He practically begged the West to bring money and technology to China? He knew the harsh realities a closed, socialist economy brought to them? Yet our nationalists hyperventilate whenever they hear the word foreign? There is nothing more important to them than to put that pot of soil under lock and key? The church ought ‘to sell the parable better?’

Should we then remember Deng Xiaoping when dealing with the US, for example? Also, technology has leapfrogged less advanced countries to ably compete against Uncle Sam, e.g., Singapore is ranked higher in competitiveness? And globalization has exposed their vulnerabilities, their cost structure and their greed? That should enrich our formulation instead of blaming everyone and his uncle why we’re an economic basket case? We must grow up!

Of white elephants

2011-11-08T05:45:00.000-08:00

“Roxas uncovers 46 white elephants,” Manila Bulletin, 19th Oct. Our airport issues keep piling: from the downgraded airport to the worst airport to 46 white elephants across the country! Not surprising given our ‘inclusive-compassionate’ mantra – which, unfortunately, has equated to ‘crab mentality’? Instead of prioritizing and pursuing sustainable initiatives, we spread scarce resources thinly and miss their benefits altogether – a formula for sub-optimization and inefficiency, and over the decades poverty? With due respect to an economist: Brazil and Mexico’s GDP per person – at PPP of $10,800 and $13,900, respectively, versus our $3,500 – is why their poverty picture is better, not CCT per se!

While representations from the public and the private sectors worked with the JFC (Joint Foreign Chambers) to develop an industrialization road map – i.e., ‘Arangkada’ – some of us are still railing against mining, against capitalism, against globalization, against what-have-you? That’s fine so long as we don’t seek perfection (not even the prelates are perfect?) and be reduced to inaction and rendered helpless? We grew up with the Great Commandments and the Parable of the Talents and know about focusing on what matters and optimizing yields from our God-given resources?

Efficiency is what we want in tax collection. But efficiency doesn’t mean undermining a strategic industry like tourism, where we expect elevated revenues, assuming we do our homework and execute accordingly – i.e., put the right pieces and infrastructure in place? Fundamental in competitiveness is benchmarking – i.e., do our neighbors have the tax problem that we have with foreign airlines? Taxation is the job of Congress – and so we have the LEDAC, to align the initiatives of the executive and the legislative branches?

As an underdeveloped economy our primary goal is to raise our total output, and that means our GDP. Unfortunately, we don’t have the track record. Which puts us too close to the trees (tax receipts) and thus miss the forest (GDP)? Indeed we must push efficiency in driving our total output, e.g., like low-tax rate Singapore? And ‘Arangkada’ spells out the vital few industries that will deliver the biggest bang for the buck: investments of $75 billion, incremental GDP of >$100 billion and lots of jobs over a decade. Raising our GDP by such magnitude will raise our tax receipts!

Of course it will not happen tomorrow, but a third of Filipinos have been wallowing in poverty for decades! We simply have to step up to the plate! “What are the five products you want to focus on? Get rid of the rest, because they’re dragging you down,” Steve Jobs says to Larry Page, Bloomberg, 22nd Oct. “Sharpen the company’s focus . . .” Until we’re truly globally competitive engaged in daily blocking and tackling that will be Greek to us – and mired in counterproductive efforts? And until we step up to the plate and learn the ropes, poverty will stare us in the eye!

In the meantime we’re enjoying the sideshows mirroring Hollywood’s celebrity culture? E-mails a friend from Manila: “Do you want easy money? Our government financial institutions can lend money in a flash, not for development purposes – to unload their own equity holding at a spread, and proudly so; and conveniently dodge ‘luto sa sariling mantika’ – and you can turnaround (for an even wider spread like the middlemen who benefited from land reform as opposed to the farmers?) and ensure a friendly party gains controlling interest of a publicly-traded company – and where all the parties involved sit in its board?

“But given our “informal” (big boys) culture Juan de la Cruz sees it as ludicrous (adding insult to injury!) that sitting in the same board should be taken (hook, line and sinker) as an arms-length scenario? Of course, legal niceties could render a different verdict – and prove once again that Juan de la Cruz is simply too smart for his own good? And explains why the world ranks us poorly in ease of doing business or attracting foreign investments? Who cares – it’s what patrimony is about, like protecting our tax code or favorite oligarchs?

“We ought to invite George Clooney to turn us into a hit Hollywood movie? Pixar would be an alternative? Or Saturday Night Live? It’d be an insult if it were a zarzuela!”

“Not in my generation . . .”

2011-11-04T06:01:00.000-07:00

That’s probably what Rizal thought too, and so he was hopeful the youth was going to be the future of the Philippines? The wife and 3 Filipino friends, after traveling together, had the sense that the country wouldn’t get fixed in this generation? And it is not for lack of trying? As a Jesuit friend (May he rest in peace!) would lament: ”Juan de la Cruz has to internalize authenticity – to be ‘plastic’ is not authentic?” ‘Don’t judge a book by its cover!’ But we like to present the beauty that is the Filipino, as Imelda would stress. And unsurprisingly, our priority in tourism is a new slogan? (While Mahathir decades ago had as his focus and priority building the Malaysian road network. It was reminiscent of Eisenhower, educated by the autobahn as a soldier! And so the writer would remind his Eastern European friends: “We can’t be running around like a headless chicken competing with these global behemoths!”) And thus we’re proud of our hospitality, our deference to hierarchy and beyond? And we would put our guests in our own bedrooms, offer them to partake of our humble meals – and we do it from the kindness of our hearts?

The problem is when the guest has a standing in society – like a politician or a government official – we effectively set up a conflict of interest? And we can’t get a grip on corruption because its genesis is positive? And when a guest does not respond according to our expectations, we conclude they are insensitive – no ‘debt of gratitude?’ And our expectations rise even higher when it comes to outsiders or foreigners? We expected the Americans to demonstrate greater sensitivity – and when they didn’t, they’d be ‘ugly Americans?’ But they are imperfect; as are the Japanese or Chinese or even Europeans and whoever, and thus would always be ugly? And it would explain why we’re less welcoming of foreign investments than our neighbors?

At 100 million Pinoys, we are a big market and should have a robust economy? But not when our GDP per person is a mere fraction of our neighbors’ and even once deprived satellites of the Soviet empire? We have now accepted the need for stronger institutions – to create a stronger base to build a strong economy and nation? Thus it is encouraging that President Aquino is personally carrying the fight against corruption? (Still, the government has to deliver – e.g., how could we drive a complex initiative like the PPP when we can’t resolve a tax issue with foreign airlines, for example, and when tourism is supposed to be a strategic industry?) And we have other institutions too, like the church and the school? Institutions are made up of humans, and in our case it’s Juan de la Cruz! Wherever it came from we have set very low, if not narrow, expectations for ourselves? (In the vernacular, ‘mababaw ang kaligayahan?’)

Writes the Rector of UST, Education Blues, Manila Bulletin, 16th Oct: “. . . I felt the need to overhaul my vocabulary. The latest educational jargon . . . is now mostly derived from economics, business, and information technology. And these point towards the new directions for higher education . . . it is subject to market forces and, just like any other commodity, comes with a price . . . Given the fast pace of obsolescence of technological tools, schools are forced to spend millions to acquire the latest and the best software and hardware, to keep abreast with the competition . . . Schools are gauged in terms of their functional, not fundamental relevance, to society . . . without regard for a solid humanistic foundation . . .”

Progressive (as opposed to greedy) global enterprises are educated on the confluence of economics, theology and ethics, e.g., “Why Lonergan’s Economics,” Stephen Martin, Assistant Professor, Religious Studies Department, Seton Hall University, 2006 Nov. These companies comprehend the role of education, and as importantly, recognize the responsibility of business. They are committed and heavily invested in education and talent development, knowing full well that in a globalized, highly competitive economy, investment must come in concert with technology, innovation, education and talent development as well as product and market development.

Is the challenge for our institutions then to develop in Juan de la Cruz a “solid humanistic foundation?” But that cannot happen by ‘being an island unto ourselves,’ especially when it perpetuates a cacique system and structure? And having a disproportionate number of entrepreneurs isn’t the answer either – if we’re starved of teachers, priests, nuns, artists, policemen and women, doctors, scientists, among others? And we can’t keep putting the onus on the youth?

“This facility can’t be efficient!”

2011-10-31T05:35:00.000-07:00

The word facility can be substituted with product – or brand, office, subsidiary, company, branch, agency, bureau, department, government, country, economy, etc. – and it will still hold? The writer’s Eastern European friend is proudly talking about the group’s latest venture and how the manufacturing manager reacted to a facility (“This facility can’t be efficient!”) that they considered for acquisition but did not.

But he’s real proud because it is the third new business and is already doing comparatively much better than the previous one, already a success story by itself. There are at least two things the businesses have in common: (a) consumer packaged-goods and (b) efficiency. And efficiency has become instinctive to the people (and the organization) that it is a competitive advantage! Ergo: even a simple business could go beyond local if it is competitive! “We were victims of repressive rule. Free market and globalization opened the door for us but we needed help to understand how to leverage investment. I had to sell my dilapidated car realizing investment was the first step.” Since then they’ve experienced the power of technology, innovation, education and talent development as well as product and market development.

The friend reminds the writer that when the latter first visited, the remark that dropped their jaws was: “We need to mechanize the packing lines as a first step to raise efficiency.” The focus on margins (a clear-cut measure of efficiency) has become an obsession! And they have elevated the game . . . to driving margins via volume, value, and profitability founded on a disciplined and rigorous approach to product development and innovation. But they had to struggle: Europeans (indeed generate more ideas than Americans but the latter are ahead in commercialization) have had the sense that they’re a creative and artistic bunch, and the focus on discipline and rigor would cramp their style if not undermine their creativity. (Everyone would think “I’m a Steve Jobs?”) And so they would lapse into proudly showing off lovely new product ideas. But when tested through the rigor and discipline of product architecture modeling, for instance, it becomes obvious the idea could not travel beyond the home market – i.e., it does not deliver a compelling (human) higher value-added proposition!

Substituting facility with Philippines or Philippine economy, the title of the blog reads: “This economy can’t be efficient!” And why does it matter? Global companies are truly obsessed with efficiency – which is how they are able to raise their competitiveness, and elevate it into a competitive advantage. And nations that are able to attract foreign investments better than others have one thing in common: they are perceived as efficient economies! For example, the US – despite its economic woes – is still the nation that attracts the most in foreign investments. But we could be in better shape if we turn underdevelopment on its head – i.e., we have lots of room for growth unlike the US, which is fully developed! Thus, the US needs ‘stimulus’ money. BUT we need to focus on development, i.e., not piecemeal but building blocks toward, say, our critical basic infrastructure or vital few industries, e.g., ‘Arangkada’.

If the Philippine economy is to be efficient, we have our work cut out for us? We need the Aquino administration’s flagship PPP initiative to take-off? We need to reverse declining exports; prevent insurgents’ attacks on mining installations – i.e., edify Juan de la Cruz about the net positives of the industry; overcome delays and overpayments of major projects; be a preferred nation for major infrastructure projects – e.g., canceling projects like Laguna Lake, Ro-Ro, NAIA 3, rightly or wrongly, undermine our efforts to be perceived as an efficient economy? And we have to be unstuck from an economy driven by oligarchy and monopoly power? Power is closer to man’s animal instinct, not his intellect – as Clinton rued how a supposedly intelligent man could succumb to a Monica? And it applies to corruption too?

Clearly we have ways to go? Those who have elevated efficiency into a competitive advantage have moved the challenge down to their gut – starting in their head, dropping it to their heart and settling in their gut or to the level of their instinct? Simply put, it is above and beyond rhetoric, ideology, debate and ‘kuro-kuro’ and as importantly, way past being frozen to inaction?

Thank God it’s Friday

2011-10-27T05:30:00.000-07:00

It’s actually a Monday morning but two news items from the Philippines carried the positive feelings that Fridays bring over to the new week, as the writer sits for his morning coffee. “The COMSTE (Congressional Commission on Science, Technology, and Engineering) is promoting a new, radical model for higher education – one that is heavily centered on R&D and innovation,” Manila Bulletin, 9th Oct. “This new model is called the innovation clusters, tripartite partnerships on R&D among the academe, private sector, and government . . . While we do have several outstanding universities, they stand out as islands of excellence in an ocean of mediocrity. We have to change that if we are to truly harness the potential of our people . . . Efforts at reducing poverty and improving governance will not result in progress unless we leapfrog development itself,” says Sen. Angara.

It appears the Agriculture road map is beginning to take shape; and the department’s budget is being raised by 60%? Earlier reports were discouraging, lagging behind the efforts of other strategic industries? “The AF 2025 February report indicated that a priority goal for rice and corn is an improvement of good governance, increased public and private investments, and technology development,” Manila Bulletin, 10th Oct. ”Fisheries is the top promising sector being eyed by AF 2025 to help lift the entire agriculture industry with the goal of making the Philippines a seafood basket and aquamarine center of the region . . . The interventions needed to achieve this include opening up of Pacific and China sea fishing area, mechanization . . ., technician training, community organization of fishers, implementation of fish cage . . ., establishment of fish processing centers in fish production sites, and construction of docking area (cold storage facilities for small fishers).”

Finally we are setting high expectations for Juan de la Cruz! We’re not just the little brown brother! We’re not just good to partake of the spoils from a cacique system via livelihood projects! We’re not just to take the condescension and insults from a lopsided economy that has descended into la-la land? The czars and the emperors were condescending – but they’re not of the 21st century? And for a nation that was to lead Asia to be a maturing, modernizing society, we can’t settle for the crumbs? How do we rectify decades that we’d rather forget? ”Efforts at reducing poverty and improving governance will not result in progress unless we leapfrog development itself . . . To help lift the entire agriculture industry [our goal is to make] the Philippines a seafood basket and aquamarine center of the region.”

Senator Angara and the Department of Agriculture need Juan de la Cruz to move the country forward? It is encouraging that “The new model [from COMSTE] is called the innovation clusters, tripartite partnerships on R&D among the academe, private sector, and government.” But beyond that, we must not be an island unto ourselves? We can’t be chanting ‘patrimony’ oblivious to the reality that our neighbors are able to leverage? And the church can’t afford to make Marx’s dig a truism, that ‘religion is the opium of the poor’? Rizal made a similar point? For instance, given the reality of ‘scarcity of resources,’ ‘to be inclusive’ is rhetoric – ‘to prioritize’ is how to make things happen? Simply put, we need to learn to say ‘no’ – so we could prioritize?

Juan de la Cruz needs to recognize that there is a world beyond patrimony and livelihood and charitable efforts? Lifting the country and helping the poor can only be sustainable in a sound economy? It is noteworthy that our think-tanks are now teeing up why we don’t seem to be committed to investment? And thus it follows we’re not predisposed to technology and innovation? As the wife would say, “we don’t have to go very far, my siblings’ jaws would drop whenever investment is on the table.” And that is despite growing up with the parable of the talents? But we’re happy to ‘live on interests’ – or LOI, off the family heirloom?

Thank God it’s Friday, and people like Senator Angara and the Department of Agriculture are forging on!

Beyond investments and competitiveness . . .

2011-10-23T06:15:00.000-07:00

. . . And . . . corruption . . . we must challenge ourselves about our . . . problem-solving and execution, like the way ex-NEDA secretary Dr Sixto Rojas did? To paraphrase him: ‘it is not the absence or lack of consistency of economic plans that has made us economic laggards . . . we need new thinking?’ We were the gold standard in economic planning such that our neighbors would simply ‘copy and paste’ our plans?

It is a well-informed and sophisticated Filipino that foreigners see in Juan de la Cruz – and why many have made it abroad. But it won’t be surprising if Filipino expatriates say that our worldview does not necessarily match those of developed economies? For instance, Gibo Teodoro was viewed by the business and foreign communities as an ideal leader. In an interview he expressed that perhaps it was his instincts that they sensed from his message and his responses. And which he thought came from his overseas experience – where success was a pretty intense process. And in the inelegant lingo of corporate America, for example, it means ‘daily blocking and tackling.’ (How it reminds the writer of Charlie Badion!) And it is for the same reason that we believe Mar Roxas is an ideal right-hand man for President Aquino?

One columnist calls it our ‘pusong mamon?’ Our instinct is to lead with our heart – and thus ‘inclusion and compassion’ is what Juan de la Cruz is about? A Filipino scholar whose concentration was in ‘culture management’ would stress though that . . . ‘if we’re meant to lead with our heart, it would be situated where our head it, perched above our shoulders?’

Socialism is meant to be inclusive and compassionate. Yet after 8 years in the writer’s second home, he has not heard that it is what the young people want. In fairness, the older folks would prefer the ‘good old days’ when they had their share of the community’s jobs or farms or basic necessities – from bread to vegetables, etc. But as the world now knows, Deng Xiaoping went against the grain and embraced market economy?

The writer is still awed by the length and breadth of Ukraine’s wheat farms, yet the system failed. The lack of bread caused riots across the region – i.e., low-pricing may be enticing yet proved violent. Today, people wonder why the communist leadership put up an aluminum plant and a truck factory (read as inefficient!) in their town, among many other examples, when the source of raw materials and target markets were ill-defined – i.e., job creation per se was unsustainable. And Putin doesn’t seem to have learned, still banking on oil, while behaving like a modern-day czar? But has Juan de la Cruz learned his lesson? We don’t want to lionize oligarchy – i.e., livelihood efforts would characterize a cacique structure more than an egalitarian society, which is driven by sound economic fundamentals?

A market economy demands loads of problem-solving and execution, and investments and competitiveness? It is a fundamental given yet not instinctive to Juan de la Cruz? We valued a high minimum wage – except that as the ILO says, we missed to value skilled labor? (And the converse is: we value slack, precisely why our elders warned us to guard against Juan Tamad?) We valued the OFW phenomenon giving jobs to millions – except that as we now know, we missed to value industrialization? We valued patrimony – except that as we now know, we missed to value investments and competitiveness, i.e., the Asian tigers and China and India have been getting a disproportionate share of technology, innovation, education and talent development as well as product and market development?

The human ego can go haywire (Maslow) and seek higher needs instead of building up from a strong foundation? (The Soviets sought the lofty aims of an arms race while failing to build the fundamentals of its economy?) And in our case that means: a world-class airport, electricity, infrastructure or simply roads to our biggest revenue-generating tourist attractions to begin with (i.e., prioritize!), and the strategic industries spelled out in ‘Arangkada’? Arangkada is a straightforward road map to push industrialization via a vital few industries that will deliver the biggest bang (i.e., prioritize!) for the buck, i.e., $75 billion in investments and lots of jobs over a decade, and incremental GDP of >$100 billion. What do we need to get there? To remember . . . that our heart is not perched above our shoulders?

The two subsets that is PHL

2011-10-19T05:55:00.000-07:00

Twenty years ago the writer would confidentially and dearly share with his Indian friends that the Chinese were going to leave them in the dust. ‘Have you considered that you could be too smart for your own good? The Chinese are about . . . aggressively looking forward to the future, and you don’t want to be about . . . aggressively invoking the past?’ It was not the time for the Indians to engage in ego-trips – i.e., their challenge was problem-solving and execution, and investments and competitiveness!

These were sophisticated people at home in their own enclave, e.g., like a secluded section of a luxury hotel – not accessible to outsiders, not even hotel guests. One was visiting New York and on his itinerary was a dinner in a Michelin-rated French restaurant; and more importantly, to see a daughter at Harvard. The Indians are inherently smart and their facility with numbers is as good if not better than the Chinese or Eastern Europeans. What the world calls Arabic numbers is from them – and thus their expertise in numerology. Likewise they have Gandhi, their faith, their higher education, among others – and so it is not surprising that they have so much pride about their heritage and their past? And the West respect their talents – thus numerous regional technology and R&D facilities have been built in India.

Yet, poverty was so visual that every time the writer arrived in India he had to put things in perspective. Globalization came right up their alley . . . owing to their IT capability and then some, allowing them to partake of its spoils. Still, there are two subsets that is India, not unlike the Philippines?

When our monetary authorities talk about our financial and economic stability, we need to put things in perspective? And that is, that there are two subsets that is PHL? On the one hand we’re comfortable sitting in 50 boards (given our cacique structure) shaming Jack Welch? Yet on the other, overseas employment and, more recently, BPOs are our major sources of employment; and as importantly, drive the economy. And they have alleviated the housing issue – thus, property development has been booming; and of course, industries tied to it. And as we’re making good our commitments to the international community, we’ve opened the local market to imported goods. The net effect: OFW remittances remain our economic engine – i.e., the local economy is far greater than our export revenues! Yet, we’ve now recognized that neither or even in combination – OFWs and BPOs – would make for a strong industrial base? Our biggest export, electronics, is still an input to the broader industry – i.e., we’re not into competitive finished products? And so the Aquino administration is beginning to entertain doubts about our once promising export targets?

The bottom line: even the engine that makes one of our economic subsets tick will not lift us from underdevelopment? And so long as we’re comfortable in our hierarchical structure, we’d remain predisposed to accepting a sad reality? Our real challenge is problem-solving and execution, and investments and competitiveness? But we have no track record in successfully dealing with them? The evidence: a white elephant that is NAIA 3? Or not having electricity? Or not having access roads to our biggest revenue-generating tourist attractions? And we talk about tourism being a natural strength, yet the one airline to and from Europe are unhappy because our taxes are not competitive against our neighbors? But we need to raise our tax receipts? This kind of internal conflict is common in many developing countries – i.e., being too close to the trees misses the forest?

We like ‘holistic’ – like ‘inclusion and compassion’? Eliminating the restrictive economic provisions in our Constitution may be holistic and ideal – that we must pursue, indeed! But isn’t getting a world-class airport far simpler, yet we haven’t done it? From a strategic standpoint the JFC’s ‘Arangkada’ proposal should satisfy our standard of holistic? But we must get the basic things right, first and foremost – before we sow confusion and be back to square-one? We can learn to walk before we run – e.g., raise our efficiency- and productivity-consciousness, critical to get us on the path to competitiveness, especially as the global economy remains anemic?

Ideology, sustainability and education

2011-10-16T06:21:00.000-07:00

As we are well aware the battle over ideology is creating a lot of uncertainty in the US – notwithstanding the friendly golf game between Obama and Boehner? The Bush-Cheney ideology, rightly or wrongly, has been perceived as being at the root of decisions that plunged the world into chaos? And Christian ideologues, to the horror of many, have taken the law into their own hands?

As committed Christians, it’s not surprising that we want to live up to our ideals. And so in crafting policy initiatives, say, pushing PPP projects, we prescribe cures like job creation; or safeguarding the interests of small farmers in agro-industrial efforts. They are not bad! The problem as we know is that when we’re too close to the trees, we miss the forest? Says the Director of our Wage and Productivity Commission, “. . . Our high minimum wage (at 90 v. the 70 index of ILO) disrupts the whole economy, it doesn’t value skilled workers . . . it leaves most of the country’s technical personnel or skilled workers vulnerable to seeking better opportunities abroad,” Business Mirror, 29th Sept.

The writer remembers many months of protracted negotiations with the Chinese on a joint-venture. In hindsight, they had understood the benefits of a market economy . . . perhaps from Deng Xiaoping? As the plans took shape the Chinese confessed they needed education and time to fully comprehend competitive advantage and sustainability. Fast-forward: the venture beat a similar facility in the West in productivity – and as importantly, it took less time to get there. And the issue of job creation went away – as the partnership pursued more investments and generated greater economic impact.

The model, unsurprisingly, is being replicated in the experience of the writer’s Eastern European friends – amongst a few others the writer had witnessed before, including in Africa – who (similarly) intimated early on that they needed education and time to better understand what competitive advantage was about. We have our own experience re the shortcomings of land reform: it became a giveaway to middlemen, who ended up as the new, if not worse masters, of the small farmers? Net, it is economic viability and sustainability that we must aim for – which is what competitiveness is about? [Perplexed, given ‘scarcity of resources’ and ‘supply and demand’ especially, the Provost of UMass shares with the writer what she learned in a recent trip to Asia: People don’t relate economic sustainability to competitiveness? And the writer suggests: Harmony and serenity reflected in a Japanese garden would explain it?]

Those who lived under Soviet rule are the first to realize how liberating freedom is. Yet, education and progress don’t come automatically. And in a cacique structure like ours, those who have access to the outside world, by definition, fortify their standing; and explains why the gap between rich and poor hasn’t narrowed? It should be funny that in the 21st century we still have radicals whose views conflict with those in the mainstream? Yet it is not surprising because they see the gap between the haves and the have-nots? How could they appreciate ‘competitive advantage’ when they view the system as suspect? And given that we’re economic laggards how can we truly embrace the free market, like Deng Xiaoping did; and when parochialism has handicapped us to be confident players in a globalized economy?

Our challenge beyond education is to progress with the rest of the world – and we won’t get there if we believe that our faith is meant for us to stand still, for example? And education does not start in school. It starts in shedding backward-looking beliefs? In the same manner that economic reforms became the seeds of political reforms in many parts of the world, economic success would inject an expansive education paradigm? Parochialism, on the other hand, has narrowed our perspective and unsurprisingly, education – meant to lift Juan de la Cruz – is paying a dear price?

Now we’re talking about charter change. The bad news: (a) in a cacique structure the radicals don’t trust the elites, suspected of being behind charter change; and (b) those who want to preserve the status quo would find an excuse to undermine the efforts? Are we up to the challenge? Should we get something done in the meantime, e.g., a world-class airport, electricity, roads to our biggest revenue-generating tourist attractions? And being serious about ‘Arangkada’? Let’s focus like a laser on a few things for a change?

Branding goes beyond activity

2011-10-11T04:12:00.000-07:00

When the writer first arrived in Eastern Europe, people animatedly talked about branding. Yet, several years later, attending the business community’s brand management awards night, it was obvious that people still mistook activity for branding. The discipline is relatively new and periodically they invite gurus from the West – and it’s big business, they can fill the National Theater to capacity.

The writer tells his Eastern European friends that he didn’t hear the word (“branding”) thrown around in the West – not in organizations that own global brands. And outsiders probably see the activity behind these brands and assume that’s what branding is about? And this is especially so in developing countries where new brands are being created all the time – yet many don’t survive and if they do, they can’t travel beyond the home country?

A brand is an investment . . . and must generate a multiplier effect that raises the value of the business. A brand is thus a ‘business proposition’ to begin with – not simply an activity. And as a business, it demands leadership and financial accountability.

We’re currently talking about branding the Philippines to create a positive image for the country, attract investments – and likewise employ it in our tourism efforts. If branding is a ‘business proposition’ to begin with, then we must look at the Philippine brand as a business proposition? And it demands leadership and financial or economic accountability, e.g., raising our GDP?

A business proposition must be sustainable. It means it must attain competitive advantage. And if indeed it does, then we would be attracting more investments! Love begets love! And which explains why the international community is promoting investments and competitiveness especially for the developing world to partake of the spoils of globalization.

Yet it is not something new. The Asian tigers and likewise China and India have recognized the imperative of a business proposition being geared to attain competitive advantage, and thus continue to attract foreign investments. And that must be the starting point of our thought process – and efforts to create a Philippine brand?

And since we have to work in partnership with foreigners, we need to recognize what a ‘win-win’ partnership is about? The JFC (Joint Foreign Chambers) has shared with us what it means. How far have we pursued their recommendations, which apparently we were in agreement with?

We can’t fall into the trap of ‘Filipino abilidad’ – which we unwittingly invoke when we are unknowingly sidestepping reality? For instance, Juan de la Cruz can’t summon Filipino abilidad if we don’t have a world-class airport and the ability to provide adequate energy at competitive rates? These are fundamental requirements to simply be in the game . . . as our neighbors are? We must accept and simply deal with reality? Who will do what, when, where and how? Isn’t it about time we get such basic things as an airport and electricity in place? Or should we be proud of our resiliency, ‘Filipino abilidad’ and faith instead? There is a time to stop talking and start doing?

To give justice to the Philippine brand, it must be a business proposition that is sustainable, geared to attain competitive advantage? Simply put, branding is about authenticity?

If Russia has its oil, we have our OFWs

2011-10-07T06:15:00.000-07:00

Putin doesn’t say it but people believe that he thinks he is God’s gift to the Russians? So long as oil flows Russia’s coffers won’t be bare? And with our hardworking OFWs, we’re truly blessed? And are we God’s gift to mankind – given our faith? Yet as one columnist-priest says, God bless us if the inquisition is resurrected?

Those who have done it before believe that economic reform is what would push Russia forward! Does it also apply to the Philippines? But there is reform and there is reform?

The good news is President Aquino started on the right foot: “Ang daang matuwid.” Shares a friend (who lived under Soviet rule) upon seeing the fourth BMW pulls in by an open-air café: The Customs collector at the airport says it would take him one year to afford a BMW; while the one at the north border would take one month. But the one at the south border needs to take out his PC, Googles something and then opens an EXCEL file; he appears to be running some numbers and then declares: “It would take 3 years to buy BMW – you know how much their market cap is? I need to offer a generous premium.”

Beyond fighting corruption, we need structural change or reform, but that presupposes not ‘tweaks’ but a ‘re-design’ of our economic model – that has been dictated by deep-seated beliefs? To redesign we need to recognize that where we’re coming from . . . may not give us a new paradigm? And this may be our biggest hurdle – because we wrap our mindset in euphemisms: resiliency, ‘Filipino abilidad’, faith, etc.? We have to stare reality in the eye: we can’t build a world-class airport; we can’t provide adequate energy at competitive rates; we can’t bring tourists from the major cities to our strategic (i.e., biggest revenue generating) attractions; we can’t elevate gross investments and competitiveness and yet aren’t committed to ‘Arangkada’? Ergo: we must be focused on assembling and erecting the building blocks of the economy – from the elementary to the strategic – beyond reviewing GDP growth goals?

The writer’s Eastern European friends struggled to undo the belief that the only way to do business in a poor Eastern European country is to develop cheap, economy products and brands. And the writer could feel for them. Instinctively, they would scrimp, installing motion detectors so that the lights in their staircases will turn on only as needed. And their mindset when an expense is under consideration is: “It’s not necessary.”

They started as ‘doubting Thomases’ before they realized the imperative of mechanizing the packing lines in their first factory – which meant spending for equipment while getting rid of unnecessary headcount. Fast-forward: Today, with four state-of-the-art manufacturing facilities and marketing in over 20 countries, their headcount is several times more. Ergo: the object is not to create employment per se but to attain competitive advantage – which simply means ‘sustainable profitable growth’! [In defining ‘inclusive growth,’ it pays to heed the fundamentals of TQM – i.e., growth must be sustainable, like total quality, and must be built into the design and the process? Simply put, it is substance beyond form? And indeed it’s an axiom – i.e., even a global icon like P&G is currently under pressure (given operating margins lag those of peer companies) to deliver sustainable profitable growth, Financial Times, 25th Sept.]

And as the writer’s friends pull their latest expansion plans together – to directly attack Western markets – they are exuding confidence, ‘keeping it simple.’ A manager with a PhD in economics would crack the team up: “This game plan would not merit a PhD but none of our business plans would,” and she was grinning from ear to ear.

The test of the pudding is in the eating? And as Einstein would explain, “The value of education is not the learning of many facts, but the training of the mind to think”!

Between our instincts of ‘inclusion’ and ‘compassion’, it’s not easy for us to keep things simple? Unfortunately, in subordinating ‘result-orientation,’ the people are the ones paying the price, via massive poverty? And more profoundly, we’re the economic pariahs in a region that is meant to lead the world in this century?

Expectations, paternalism and oligarchy

2011-10-05T06:14:00.000-07:00

Parochialism started us on the path of low expectations, nurtured by paternalism – thus reinforcing our cacique structure? And still our rites of passage scream hierarchy: gated communities, exclusive schools, proprietary country clubs, monopoly power – not to be proud of yet we are, i.e., hierarchy and abuse are two sides of the same coin?

Flying from Eastern Europe to Munich, the wife is next to an American. And as typical the conversation goes: ‘what brings you to this part of the world’? “Back in the States we think these are small, underdeveloped nations if not exactly in the dark ages; but in this particular case, they produce world-class arms that we in the defense industry need.” And then on the leg to Paris, a Frenchman in the energy business says he visits a subsidiary regularly: “They welcome us with open arms!”

While no longer as fit as 20 years ago when they last rode a bike, the writer and wife thought they could still handle a town in Normandy. About a dozen others felt similarly; and while most came from the US, there was a young Malaysian-Chinese who rode with the group. “I’m on a weekend holiday from Berlin, where we had acquired a German enterprise.” The writer assumed they were a typical Asian conglomerate. “We’re quite focused and intent on developing global competitiveness and industry leadership – which is why we acquired the same business in the West. I am the only Malaysian in the Berlin office. It’s amazing how a truly developed environment could be lulled into complacency. Their ways are consistent as a way of life, which is probably what is demanded by the surroundings, but to explore something more innovative does not come naturally.” Are they a straightforward lesson in ‘transparent competitiveness’ – as opposed to the Filipino bias for oligarchy? Valuing hierarchy is inconsistent with economic development, i.e., authentic development promotes an egalitarian ecosystem? Unsurprisingly, only one Filipino enterprise made it to the Forbes Asia’s Fab 50 or best publicly-traded companies?

How fast the world has changed! The writer spent a decade covering Malaysia and felt exactly as this Malaysian. “We can use help, if you could focus on Malaysia in the meantime,” intimated the general manager when the writer first visited. [At around that time, an employers’ group had visited Malaysia and told Marcos that the expanding road (rubberized, for a softer, more pleasant ride) network of Malaysia was something to behold. Is it any wonder that in the tropics simply providing the means to get from point A to point B would make them tops in tourism?] And the wife couldn’t help: “How far are we going to tolerate being left behind?” We’re so parochial that we’ve set our expectations so low – compared to the rest of the world – and expect to be nurtured by paternalistic leaders, unwittingly perpetuating our cacique structure?

We’re against an initiative if it demands sacrifice – because we’ve suffered for so long? ‘One step back, two steps forward?’ The bottom line: we would rather maintain the status quo, and yet wonder why we’re economic laggards? We never imagined we could be an industrial powerhouse to begin with – ‘we’re just the little brown brothers’? Our expectations were merely to be left alone, never mind if we’d run the country like hell? Our perspective hasn’t changed over generations and yet we expect a different outcome? ‘Insanity is doing the exact same thing yet expecting a different result,’ so says Einstein?

Arguably the Irish prime minister was over the top in his criticism of the Vatican: “With the church failing in its moral responsibility, we can’t allow them to have authority over our schools”! Eastern Europeans, Malaysians, the Irish . . . and everyone else . . . has moved on except Juan de la Cruz? Our dailies don’t say we’re from the dark ages, but neither do they say that we’re of the 21st century? There is dissonance in our perspective about an open economy attracting investments – as well as technology and innovation that in turn elevate a nation’s capacity in talent, product and market development? We’re still about a bias for local investment despite the glaring shortfall in our capability in technology and innovation? And even more fundamentally, we’re still about patrimony? If there is one island that has what we need – and can freely dig investments and competitiveness – we could be an island unto ourselves? And so man in order to survive learned to barter – even without the benefit of prior knowledge?

Their GDP per person is 3.8 times

2011-10-02T04:36:00.000-07:00

That is, compared to ours in the Philippines. “What’s wrong with us, Filipinos,” the wife would sigh as she was distracted by a “big dig” in the city center – where they were boring tunnels for the new subway system. It used to be that the wife would be delighted simply hearing ‘progress stories’ from the locals. She remembers being horrified billeted in an updated ex-Soviet era apartment – with double steel doors reminiscent of spy movies – despite the newly installed Western kitchen and bathrooms. And when she saw where they lived her heart sank. Clearly, their lives have gone several notches up. Today, the wife would be emailing pictures back home: these people are not ignorant . . . of yachting . . . golfing . . . the good life!

“Hristo is driving you tonight, if you don’t mind”? Stani, very politely, almost inaudibly explains why: “At 2 pm I will be closing on the apartment I bought.” And the writer and wife congratulate him. Stani adds: “It’s in a new apartment complex.” Over a recent long weekend, Hristo (with wife, Veya, and 13-month old Krisy) joined the writer and wife in a resort by the Black Sea. And on the way back Veya excitedly talked about their summer holiday in Turkey. She loves traveling, and shared her many experiences: Spain, Egypt, England, etc. And so planning ahead, for the next long weekend, the family would join the writer and wife in a country club – their version of Baguio Country Club, but which in winter is a ski resort. “We don’t play golf but we would surely join you for food and drinks at the clubhouse.”

The wife wonders if form is sucking the substance in our perspective. We can’t build a world-class airport, can’t supply energy at competitive rates, will renegotiate the NBN-ZTE deal as well as North Rail and Laguna Lake rehab? When is Juan de la Cruz going to wake up?

But back to reality in Eastern Europe: “This size delivers 10-margin points more than your expectation,” says a marketing manager with a smile. After a pregnant pause everyone is looking at the writer. “That is classic ‘American greed’ – and the world can’t have more of it”! And the response: “I get it. That is not ours: we must reinvest it on the brand – ‘kill the enemy,’ move from ‘iPhone 3 to iPhone 4”! Bravo – is all the writer has to say!

Then a couple of planned TV commercials are on the agenda. The first: “That is typical ‘me too’!” And there is a scramble to show the competition’s commercial – and it drives home the point. And then the next: “The title grabs but the execution is generic”! Silence . . . “It is imperative to revisit the product architecture: (a) to sharpen the definition of the brand, (b) truly crystallize the rationale of each segment in the value chain, (c) elevate the clarity of the communication and (d) the most crucial point, raise the confidence of the team to forge on. Like in Chinese checkers, creating one’s own path is key, and not to allow competition to define the rules of the game, and to dictate its tempo!”

Is the Philippines allowing others to define its future? Until we learn that establishing and internalizing a national agenda is a must, we would be pulled in all directions? For example, WikiLeaks have become the latest distraction? We have to set our own goal and get there? [Authentic faith delivers result? ”. . . Give us this day our daily bread . . .”]

China practically begged for Western investments and know-how? Imagine China lecturing the US, today? Why not – the US lectured Japan on the lost decade; and the US has likewise claimed infamy given its own lost decade? Net, there is no value to second guess the US, or whoever, imperfect as they are – the value lies in sharply defining our own future? As adolescents we honestly believed we ought to be independent until mom or dad needed to bail us out – i.e., the issue went away only after we paddled our own canoe? Are we there yet?

The eyes could play tricks

2011-09-29T07:41:00.000-07:00

Once we've lost the innocence of youth we call ourselves adults . . . and then create our own world of ‘make-believe’ – that finds us in la-la land, even forgetting that we left the bathroom lights on?

“The reason was not simply the crash of the Russian-made Yak-42. It would be senseless to blame the state for a single freak occurrence. It was rather the frequency of such disasters, which have been caused not only by slipshod safety regulations but . . . a rotting fleet of Soviet-era machines whose condition the state has failed to manage . . . If the ruling elite has brought such an era of prosperity, as Putin repeatedly claims, why do Russia's planes keep dropping out of the sky? (Time Magazine, Sept 8th) Says Medvedev: "The value of human life is higher than all others, including the need to support our national manufacturers . . . If they cannot pull it together, we have to buy planes from abroad."

Decades ago friends separately visited Moscow and came back with their favorite stories and souvenirs. And among the souvenirs was a Russian wrist watch that the writer proudly wore. But among the stories was something surprising to Westerners who had been awed by Sputnik: there is no such thing as honest-to-goodness maintenance in their facilities; and the engineers especially were thankful they survived the visit to a refinery, which they thought was a disaster waiting to happen.

Maslow tells us that the human ego is present whether we are rich or poor. One story locals shared with the writer and wife on their first visit to Eastern Europe was the advent of cable TV. They found it so liberating – in their previous life they were limited to black and white and a couple of communist propaganda channels. In fairness, they enjoyed Russian cartoons. The wife wondered why they mostly dressed liked Madonna – when New Yorkers, for example, viewed the Italians as chic. MTV was one of the first Western cable channels they had access to and in no time Madonna was their idol. And window shopping in the city center one day, the wife saw how much hipster jeans were on display. And separately, the writer checked and found out that designer jeans sold for $200 and smart phones for $300. And monthly salary stood at $300 for most people!

A consultant from the West, years ago, ran a couple of programs in one Philippine posh resort and noted that outside his luxurious casita a man with a garden hose was keeping the grass green. And at the end of his visit, he realized that despite the sophistication of the Filipino (or ‘elite prosperity’), we were still an underdeveloped economy – e.g., there are glaring gaps in our ways; and in their aggregate explains our dismal competitiveness rating? The good news is our planes are not dropping out of the sky! Beyond our outdated airport are our gated communities and country clubs. But how does one get from point A to point B? In a world of ‘make-believe’, who cares?

As Maslow explains, one doesn’t have to fully satisfy his basic needs to move up to his ego needs? Poor Nokia, they were sucked into the ‘bottom of the pyramid’ creating cheap cell phones for the China and India markets. While becoming the largest cell phone maker in the process, they paid a heavy price losing the competition against Apple! Why? They failed to compete up the value chain – fundamental if one is to sustain market leadership! Apple (a technology-innovation niche player) went after value leadership and healthy margins – not volume leadership. And with Apple's market value ($350 Billion) now approximating the size of the largest global enterprise, Exxon Mobil, the impact of Apple on the world economy is far greater . . . than to merely be selling affordable goods to the poor?

Is there a virtue or moral in the story? For example: confusing faith with responsibility? Compassion drove us to promote an OFW-driven economy while missing the greater good by neglecting industrialization? The 21st century will impose more challenges which we must confront, not sidestep?

Education is tricky business

2011-09-25T05:55:00.000-07:00

To one coming from the private sector, the decline in education in the Philippines comes as no surprise. They face a similar challenge in the US, despite the tons of money they pour into education. Net, it is not only money . . . yet money helps? This blog talks about our economy, emphasizing investment and competitiveness – and clearly they are intertwined with education? And given that we’re economic laggards, we ought not to wonder . . . that we are underinvested in education and competitiveness? Action speaks louder than words? The bottom line: until we lift ourselves up and overcome economic lethargy, education – and the wellbeing of Juan de la Cruz – would continue a downward spiral?

The good news is we appear to have gotten over our love affair with OFW remittances? What we still need to recognize is the imperative of a broader-based economy, not one focused on a few interests? Our parochial instincts continue to get in the way of truly opening our economy to be in sync with the 21st century? Investment must be wedded with competitiveness – and given our economic history, we don’t have the capacity to drive competitiveness to world-class levels? For example, as economic laggards, we’re starved of technology and thus innovation. And absent these elements, our ability to educate and develop talent, by definition, is limited. (For instance, we need more globally competitive Filipino enterprises for our MBA case writers; our top-tier companies are principally domestic businesses.) These limitations are glaring given our inability to develop competitive products – and thus the inability to develop a broader market? (In the early 90’s, GE realized they were US-centric and reinvented themselves to be a global enterprise – which gave them the ability to pursue R&D without a US bias, i.e., they were parochial too.)

We have to stop thinking ‘Filipino abilidad’? It is synonymous to sidestepping reality? We need to stare reality in the eye? Until we lift ourselves up economically, we shall remain poverty-stricken? Because it is through a robust economy that we can generate the means to upgrade education – that will impact our competitiveness and our ability to attract investments. Our OFW-driven economy has created a true crisis, brain-drain? Instead of reducing poverty we’ve been afflicted with the ‘Dutch disease’, undermining the greater good? Our trained teachers are either maids or chambermaids – even in places unimaginable, from our conventional view of ‘must-destinations’. But the reality of our dire economy would explain why Filipinos will be anywhere in the world to eke out a living? And to add insult to injury, business interests run schools aimed at expanding our OFW contingent!

How does our economic model really look? We closed our economy thus limiting industry to a few, effectively controlling the economy, while supposedly ‘championing’ patriotism? And local industry sells products at affordable prices meant for local consumption (i.e., uncompetitive), while ‘promoting’ CSR? But for the elite, we have imported products – so everyone’s happy? The Central Bank proudly proclaims that their efforts to raise our forex reserves and fight inflation are spot on. And indeed the system works according to Forbes magazine: a handful of Filipinos are among the world’s wealthiest!

Our economic model was our problem . . . before we had an education problem? An open economy would attract . . . beyond investments, technology, innovation and talent, product and market development? It is not about subscribing to an ism, it is the reality of why our neighbors are prosperous?

It is understandable that we struggle to leave our parochial instincts behind. The writer was raised inside parish walls – where he went to school, played basketball, played softball, and had his first boy-scout camping experience, beyond going to church and being in the boys’ choir. The parish was our life, and in our psyche, it still is? And not surprising, a sister is a nun! And even in the suburbs of New York, the writer’s daughter went to a parochial school!

Cambodia may be in our rearview mirror – for now? In the meantime, Vietnam is leaving us in the dust? It’s the story of Juan de la Cruz? Let’s not blame our educators, but ourselves?

An adolescent economy

2011-09-21T03:38:00.000-07:00

An underdeveloped economy we shall be if we can’t overcome our ‘handicapping system’? It was called ‘import substitution’ before? On the same day we are trumpeting a 10-spot bump in our competitiveness rating, we are again into an inward-looking mode? Our local investors have access to capital but are handicapped by our underdeveloped manufacturing capacity – and thus must be protected? How do we sustain such an effort?

George W. Bush never wanted to let go his training wheels – and got what he wished for, Cheney?

Investment and competitiveness are two sides of the same coin? We shall be unable to truly ramp up our competitiveness rating – and leverage the world beyond ours – if we continue to nurture an adolescent economy? The Western world knew that despite the fall of the Berlin Wall, people would remain hostage to underdevelopment if they weren’t shown how to attract investments and, as importantly, compete. The writer was drawn to an underdog, Eastern Europe, because of the challenge faced by a couple of countries: they wanted to get into the EU and needed to step up to the onslaught of competition from the West. Of course they stumbled; and EU had to withhold infrastructure funds after audits revealed that corruption had reared its ugly head, for example.

The writer’s Eastern European friend is going through his ‘15 minutes of fame’ – responding to why he must be the 2011 Europe’s entrepreneur of the year, among 10 finalists: The fall of communism gave them choices – to paddle their own canoe – and he made the choice to be in the business he pursued. But to succeed was not a matter of choice – it was the values he learned from his parents that gave him the inner strength to be a David in a sea of Goliaths. His mother was critical when in one subject he missed the equivalent of an ‘A’ rating. And with a wide grin, he says: “My younger daughter was very angry at herself when she missed the equivalent of an ‘A’ rating, and so my wife and I tried to console her – but she would not have any of it.”

It was not easy for these people to simply embrace the imperatives of investment and competitiveness. The friend would explain: “I thought I knew what brand management was – which was why I chose to be in the business. Now I know that my knowledge was miniscule. I did not understand the power of margins – it took me 10 years to be able to employ it as a competitive advantage; and I am still learning.”

They once proudly thought that local engineers could cobble together local parts and fabricate a production line. Today, with 4 different businesses and marketing in over 20 countries, their manufacturing facilities are state-of-the-art; and those proud moments are now just memories – but fond memories. They have chosen to move on, and forward. Like an MNC, they have optimized their portfolio (of products and countries) which, on balance, gives them robust annual growth, overriding the economic cycles of the different countries. (It is something we don’t appreciate: we have yet to optimize our export-product portfolio via higher valued-added, competitive products. For example, our electronics exports, i.e., semiconductors, are not competitive finished products and thus dependent on the growth – but dragged down by declines – of the broader industry. Our neighbors would only be thrilled that we can readily find excuses not to be in competition with them? Yet our folks taught us to guard against ‘Juan Tamad’ – e.g., we ought to rank ahead most other countries in competitiveness?)

Our neighbors did not wish for a Dick Cheney . . . and simply let their training wheels go? The writer is amazed reading about China – how much confidence they’ve gained over the years. And hopefully they would share the spoils with us, following the visit of President Aquino. The writer spent years doing business in China: Folks from the West had to hold their hands and showed them the ropes. If there was one thing they never demonstrated, it was being parochial. They were hard bargainers but understood what a ‘win-win’ negotiation was about; and thus were able to draw as much investments from the West, which they put to good use – raising the bar, and raising their competitiveness to world-class levels.

Investment and competitiveness

2011-09-15T06:51:00.000-07:00

The good news is we’re getting more and more into the issue of investment and competitiveness. The bad news is the RH bill continues to divide? Moral theologians (e.g., liberation theology) and legal luminaries (e.g., pluralism is embedded in our faith) are arguing for? Even priests would preach responsible parenthood? The writer remembers attending a retreat while in (parochial) grade school talking about ‘beget and educate.’ And even in the Vatican there are the pro and the anti-Vatican II camps – not exactly anti, but not exactly pro either? And one argument goes: Faith is personal, i.e., Christ is about having a personal relationship; and that relativism is inherently present in a personal relationship or in one’s conscience? And that sinners are in fact welcome to the fold – and to the horror of the scribes, embraced by Christ? Yet above the fray, church authorities are obligated to define the bounds of morality? But that is not the point of this blog!

The blog is about our economy – and especially our inherent inability to focus on investment and competitiveness. It is more concerned about confusing faith with responsibility. For instance, we debate about another person’s inability to make both ends meet – and then expect him or her to be bound by the church’s definition of morality, i.e., we are our brother’s keeper? And the perspective is not surprising given our faith, of being evangelists?

It is a debate that won’t find closure – whether the RH bill is passed or not? But do we really seek closure? Or are we about ‘kuro-kuro’? Unsurprisingly, we talk about investment and competitiveness yet we remain underinvested and uncompetitive?

Our ‘paki’ system reinforces our comfort zone, hierarchy? Whether we’re a tier above or below, ‘paki’ can always work in our favor? Either way we’re entitled to the spoils of a ‘handicapping system’ – i.e., we’re either subsidized or we’re privileged? While we claim to be behind meritocracy, in reality we see it as the lack if not the absence of compassion? In one word, it is ‘awa’ or ‘kawawa’?

Foreign investments must be founded on meritocracy, but given our parochial, hierarchical instincts, we assume that foreigners are a tier below and must pay the price – and thus the process of corruption gets a nourishing start? Do those behind aborted major projects – e.g., NAIA 3, NBN-ZTE, Ro-Ro ports, etc. – even feel they are in the wrong? As revealed in WikiLeaks, we simply disdain foreign investments?

In our value hierarchy, investment and competitiveness are not prominent? The good news is the Aquino administration continues to seek foreign investments and the China visit would hopefully give new life to the seemingly floundering PPP initiative?

The business community is rightly sounding impatient – we can’t seem to get our act together? We easily get distracted – or there is always a brighter idea that we would want to pursue? To have a national agenda is foreign to us? But a culture of impunity is par for the course? Those who view themselves higher in the hierarchy simply flout the rule of law – elements in the military, the police, the judiciary, the legislature and politicians across the spectrum continue to dig our grave deeper; and embarrass their peers?

But we are all evangelists? The wife is pleasantly surprised that the cleaning lady in the heart of Eastern Europe, once communist-ruled, is an evangelist. She’s playing the professionally cut CD, featuring the lady and her husband, singing evangelists, from their church.

We have our faith, and the responsibility, to be committed to a national agenda, and indeed be our brother’s keeper?

Activity trap

2011-09-11T04:50:00.000-07:00

“We’re experts at looking busy doing nothing!” An Eastern European friend commented as he pointed the writer to a fairly large crew alongside a country road, and this was a few years back. The writer smiled as he recalled an incident decades ago in Manila. Rather sheepishly, a young American engineer (in the company’s management development program, getting his ticket punched in a developing country) shares with the writer: “There must be a more efficient way to do this job . . . I had a work order done and this morning I see a crew of at least a dozen with picks and shovels.”

Fast forward: The writer is having his morning coffee in a café in the heart of Eastern Europe, and sees a couple of heavy equipment on the narrow street. “There is a leak in the water main, I think, which I called about,” says the café owner. And that evening, the street was back in shape, with the affected portion repaved. These people remain critical of inefficiencies they see around them. It’s not the absence of patriotism; a number of them have decided the West was not for them, and returned home. They’re not meant for the cut-and-dried culture of North America, as they would explain, but they still believe they deserve something better.

We similarly may not be cut for the ways of the West but we do deserve something better? Yet, unwittingly we opt for the lowest common denominator? Simply put, we would rather accommodate and accept things that undermine the common good? There is corruption and there is corruption? But we can’t build a modern airport and supply energy at competitive costs – so fundamental to a nation’s economic life? Unsurprisingly, our investment levels and economic output are pitiful compared to our neighbors? There are winners and there are losers – and it hurts but we haven’t behaved like winners? And it’s a shame for people proud as we are?

We don’t want to justify our failings by the failings of others or we’re bound to sink deeper into the abyss? We don’t want a world that has ‘shrunk’, and characterized by sub-optimization? We don’t want to be left with very little choice – to simply move pieces on the board, caught in an activity trap that cannot lift us to the next level? We’ve been pursuing countless initiatives for decades but kept a blind eye – because of an inward-looking bias – on what truly drives an economy? The writer often talks about his Eastern European friends: while born and raised as socialists under communist rule, they have embraced the simple truth about the free market – i.e., investment and competitiveness! Yet they have something in common with us: when faced with an issue, they instinctively sidestep reality. And so they had to learn about the greater good and the challenge of leadership: ‘taking the team from where they are to where they have never been before’ – step-up to the challenge, exercise leadership and seize ‘the teachable moment’!

We understand what winners are like – like the Ateneo basketball team that swept the first round of the UAAP? Clearly they don’t seek the lowest common denominator? Nor do winners simply throw darts? Do we think, for instance, that the military can generate incremental resources and pursue its upgrade-program by making better use of military golf courses? Or that one warship will give us military muscle? It’s like the cellar-dwelling team recruiting an outstanding Fil-Am player – and Ateneo won’t even skip a beat?

Without investments there is no economic activity – but the bigger they are the bigger the activity; and the more competitive they are the greater the revenues and the margins they generate, and thus wealth? Why are we poor? Our investment levels and economic output are pitiable especially given our population? The administration has now realized that pursuing PPP is no cakewalk especially given how the world views us – i.e., WikiLeaks effectively have announced that we’re no place to do business? And given the string of issues we have with the Brits, the Germans, the Belgians, the French, the Japanese, foreign airlines, etc., etc., perception could become reality?

One columnist asks: “Do we really want foreign investments?” Put another way: we don’t want to be experts at looking busy doing nothing? Yet instinctively we do because the status quo gives us a feeling of equilibrium, for the short-term?

Sense of urgency

2011-09-08T04:34:00.000-07:00

‘Mr. Bloomberg appears to be recovering from a difficult winter, when other polls found his approval ratings to be even lower in the wake of the city’s lackluster response to a blizzard in late December . . .,’ reports the NY Times, Aug 26th.

When Hurricane Irene threatened the New York metro area, and given how Bloomberg was pilloried for failing to demonstrate a sense of urgency last winter, it was fascinating how all along the East Coast people – not just public servants – geared up. And this was especially so after folks from California thought how naïve Easterners, especially New Yorkers, were when they rushed outside as ‘an earthquake with a magnitude of 5.8 rumbled through Washington DC’ (and sent tremors through the region) in the afternoon on Aug 23rd. The good news: none of the glass windows from Manhattan’s skyscrapers shattered, which could have injured any of the countless people who thought they were seeking refuge out in the open. And with Hurricane Irene, even the property management of the writer’s community sent out emails spelling the ABCs of hurricane prep: “. . . Don't forget to bring in anything that can be blown away. It's expected to be a category 1 when it crosses the (Long Island) sound. Winds of at least 74 mph sustained with higher gusts. 40 mph winds could topple trees so power outages are a good possibility statewide.” And the writer and wife skipped a beat since they’re overseas.

“Rains, floods and the ensuing traffic jams, it turns out, are the great equalizer,” writes Juan Miguel Luz, associate dean, Center for Development Management at the Asian Institute of Management, Aug 19th, Philippine Daily Inquirer. (And we could add ‘nature’s wrath’ – as a great equalizer?) “Climate change will be particularly critical for the Greater Metro Manila Area because the metropolis is built on an alluvial, deltaic plain at sea level. The Philippine Imperative on Climate Change predicts that over 60 percent of the metropolis would be submerged permanently if global warming raised the sea level even by only three feet. “This is not a fearless forecast,” says Neric Acosta of PICC, “it is a reality check we must confront today.”

However we perceive climate change, the point of the article goes beyond as it concludes: “. . . Metro Manila will not only be the unlivable megacity it has become, it will destroy value for the entire country in the process.”

Is the author a prophet of doom?

“What should all of this be telling us? One, the problems of a megacity goes beyond LGU jurisdictions. Two, the problems transcend short LGU terms of office (three years with two possible reelections) and presidential administrations (six years, no reelection). Three, the problems go way beyond project responses. We need to seriously re-engineer Metro Manila’s infrastructure and living/work arrangements. We need structural reform with four essential elements: Political power and authority to call the 17 cities to task when necessary; professional and technical expertise in urban planning and land-use management to plan for the entire region; financial and material resources to manage shared services effectively; and, long-term infrastructure investment funds.”

Do we have what it takes to respond to a dramatic challenge like this one? Is the sense of urgency second-nature to us? Have we been unwittingly caught in the ‘activity trap’ figuring out how a tiny pie would suffice for close to 100 million Filipinos? No wonder President Ramos talked about enlarging the pie? In the private sector, that means firing the sales manager, the marketing manager and the CEO in that order if they could not enlarge the pie. Why? Because the team could have missed the fundamentals of investment, competitiveness, revenue and margin, the dynamics of which generate sustainable profitable growth? For a nation, their absence equates to poverty? Unfortunately, until we’ve lived through the many twists and turns of the dynamics of these elements, thinking outside the box doesn’t come instinctively. Working with Eastern Europeans for 8 years, the writer has realized that the story never goes stale! Why? Education as people know it is linear?

‘Medieval European feudalism’

2011-09-04T06:36:00.000-07:00

“You would think this is 21st century Europe, but the down trade is still reminiscent of medieval European feudalism. And so the modern trade accounts for 80% of our business. My goal is to bring that down to 60%, and eventually 50%, and that means I have to invest in the down trade and make my products accessible to those feudal villages.” The writer is reviewing the newest business of his Eastern European friends – and very impressed with the 360-degree approach to marketing, including the power of the concept behind the product – which jumps out from the communication materials, and even when benchmarked against other categories of products. As importantly, the assessment is confirmed by those outside the organization, and consumers that were grabbed by the campaign.

But ‘feudal’ resurfaced when the discussions moved to the market conditions obtaining in the different countries. Some countries in the region are still run by lords! And it is especially true of those outside the EU and not subject to EU oversight. (Of course, not even EU could preempt the supposedly more sophisticated PIIGS from shooting themselves in the foot.) That said, just like China, despite being bedeviled by human-rights issues, Western businesses continue to chase their potentials. (Their average income, for example, makes them more attractive than the Philippines.) And clearly, being once communist-run, these countries could use 21st century ‘goodies’. Unfortunately, many people have been burned like Western Europeans who thought they found an alternative investment to the Spanish or Portuguese seaside, when their cherished second home by the Black Sea declined in value just like everywhere else.

For Philippine businesses, Asia or even the ASEAN region would be a good market and thus don’t have to follow the lead of global enterprises – who have but saturated the world and thus emerging economies irrespective of location are ‘must-target markets’. And the key in venturing into emerging markets is the wherewithal of a business to handle the ‘curve balls’. Yet in one country the change has been positive: The Prime Minister cleaned the police force by ridding the Interior Department of all political appointees. And to ensure efficient tax collection every ‘point-of-sale’ had to be online; and when a Russian oil company failed to comply with their gas pumps, he shut the company down. And at the Customs, he simplified the process: documents are simply submitted and in 4 days are back via courier – no room to negotiate ‘expediting fees’; people queuing with documents in hand only hear one word, ‘next’. And learning from the malfeasance of the prior administration when road-building funds were withheld by the EU, he would announce the precise timeline of a project which everyone thought was a joke – until they saw work going on 24/7. “We thought it was a dream, not in this country did we ever see people do work 24/7.”

Being confined and dealing with local issues could mean lesser stress for Philippine enterprises. But it is a double-edged sword: it can discourage Philippine companies from venturing outside the country? And it would be unfortunate? We won’t move up the learning curve – and accumulate wealth and gain the means to be ourselves foreign investors – if we remain inward-looking? Sadly, the Filipino mindset has yet to evolve – i.e., we’re still about ‘thinking global but acting local’? The problem with that is when ‘acting local’ means tamping down or limiting our worldview and turning it into a parochial bias? Simply put, we really don’t want to “run the country like hell” – i.e., that’s great sound bite but translates to turning back the clock, reminiscent of medieval European feudalism?

There are people whose heritage, while characterized by feudalism and socialism-communism, are consciously marching forward with time – like the writer’s Eastern European friends! He would still break into a grin whenever they remind him they’ve become capitalists. The imperative of investments, for instance, has become second nature – because they’ve realized that no one could define the future for them! And since they’re still learning the ropes, they could not let their guard down! Unsurprisingly, a business unit while presenting their updated 3-year plan exuded so much confidence that was not lost to the writer!

The world is moving ahead, with or without us? And to be left by the train means more, not less, poverty? But, of course, for the few, it would be heavenly – which was how Catherine the Great saw it?

Faith and responsibility

2011-09-01T05:10:00.000-07:00

A committed-Christian friend with an advocacy to lift the poor was the least the writer expected to be critical of the typical Sunday homily. “Sometimes I feel like walking out because we are giving credence to ‘religion being the opium of the poor!” And another adds: “I wish it would, but Christian charity as we know it won’t suffice!” These friends are perhaps vindicated by the legislators who traveled to Mexico and saw firsthand how dole-outs don’t work: a program meant for 5 years has gone 17 and counting? Not even in the US – where the Catholic Church is the largest charitable institution (e.g., soup kitchens, orphanages, etc., etc.) outside the government; and where charitable-giving (of over $300 billion a year) has been institutionalized via tax breaks. Beyond the homeless (that folks behind “Food on wheels” reach out to) one example that would stick in people’s mind (and unsurprisingly, conservatives while pro-life and anti-abortion espouse the ideology of small government) is the three generations of a welfare family in the Northeast: ‘they’ve lived the American dream’ (captured in photos) without the corresponding responsibility of ‘a fair day’s work . . . for a fair day’s pay.’ Indeed, faith and responsibility could be a mouthful?

“Give to Caesar the things that are Caesar’s.” Given where we are across the global measures of human dignity – from governance to the gap between rich and poor – our challenge is to take the extra mile and push economic development? For instance, beyond the unresolved NAIA 3 is the unresolved downgrade of our airport, as well as the North Rail project, the Ro-Ro ports deal and worst, the highest-cost yet our unreliable energy supply? How much incremental economic output would we have generated if critical infrastructure projects have been on stream – and why corruption matters; and so does a sense of urgency, and a bias for efficiency and productivity? It is not whether the glass is half-full or half-empty? It is about attracting not driving foreign investments away? That’s the one side of our equation. And the other is: The same half-a-dozen entities continue to dominate our economy. And then we wonder: “Oh, the gap between the haves and the have-nots is getting wider?” And would blame all and sundry? Should we instead own up? Our neighbors are no less patriotic than we are and are subject to the same 21st century reality, including self-serving ODAs from friendly nations?

It matters that our neighbors are outdistancing us because their economic fundamentals are stronger – i.e., robust investment levels have elevated their global competitive instincts? The sad part is no one says they’re smarter – and some of us even dare say we’re smarter? What we need is to overcome an inward-looking bias, our 'jeepney culture', for example? The jeepney represents pride and compassion? Pride in our creativity while providing livelihood to countless? Did we not give more clerical jobs thus livelihood to countless in the old days – when an assistant would pound her Underwood to draft our correspondence, until we were satisfied with the edits? And why the phenomenon of ‘the-assistant-to-the-assistant’ came into being? Now we understand what optimization is as opposed to sub-optimization?

It's nice to remain isolated in paradise, and keep to our definition of the world order – i.e., parochial and hierarchical? But the human spirit is not meant to be limited, but to soar – given our image and likeness? Yet being the only Christian nation in the region doesn’t mean being holier-than-thou?

It will take time before we could be competitive? And while we remain less than committed to competitiveness the Philippine economy shall remain lopsided in favor of a few – because we have unwittingly gone to bed with them . . . effectively restricting competition, and thus investment, technology and the global market? Or is it in fact self-inflicted? Reports Business World, Aug 22nd: “Innovative ideas . . . that could boost productivity and competitiveness are underutilized by entrepreneurs in this city, a study completed last month showed.”

Proud as we are of our faith, we can’t confuse faith with responsibility?

‘Practice makes perfect’

2011-08-27T19:47:00.000-07:00

‘But nobody’s perfect, so don’t practice.’ Lifted from ‘6 inspirational quotes to live by’ which is circulating in cyberspace. Is it another expression of authentic Filipino humor? We also share most things profound including homilies like this one in the writer’s inbox: “. . . Although Peter could not clearly see Jesus, his voice was enough to encourage Peter to walk on water. Faith is indeed connected to our ability to hear God’s voice . . . People nowadays are so busy and distracted with many things. We are multi-task human beings; we do many things at the same time, but lose our focus in the process . . .”

It is not only in our faith journey where focus is imperative? When the writer first met his Eastern European friends, he was delighted to hear that they were committed to focus on the business. And would not just chase low-hanging fruit! And thus the writer reinforced the point: In today’s globalized and highly competitive world, one could discount focus if they were in a banana republic – where hierarchy and monopoly rule, instead of ‘the rule of law’, characterized by oligarchy on the one hand and massive poverty on the other? General Electric, the US conglomerate, is an exception and is a carryover from America’s ‘pre-modern’ era. In Japan, some popular zaibatsu brands have been overtaken by Korean competition if not acquired by Chinese enterprises. Of course, in Asia, where we’re still evolving into the ‘modern age,’ we have a number of these conglomerates. That is not a problem per se.

But the 21st century successful businesses are those where focused investments – innovation, R&D and market research, for instance – are the driving force. And so in supposedly poor Eastern Europe, the writer’s favorite ice breaker when he’s with a group is: “Raise your hands if you have an iPhone?” And they proudly do! As importantly, they’ve learned that even in a simple business like consumer-packaged goods, they could develop and incorporate higher value-adding characteristics into their products. Under communist-rule they had to contend with products that were ‘not user-friendly,’ tissue paper for one, and thus found liberation. Poor isn’t helplessness?

If ‘practice makes perfect’ . . . but because ‘nobody is perfect’ . . . would we rather not practice? Unfortunately, because we haven’t truly pursued global competitiveness, our worldview has yet to evolve? And sadly, the folks behind our PPP initiatives would only confirm that our restrictive economic statutes are undermining the administration’s efforts to attract foreign investments – an important source of technology, innovation, talent, and product and market access? And beyond these formal restrictions is something more frightening: a confluence of interests? Are we, for instance, still questioning if foreign investments guarantee employment or if it’s a bane to local entrepreneurs? In the meantime, our neighbors continue to attract them? Of course, fierce competition could undo businesses that are unable to stay ahead of the curve. For instance, Pfizer, once among the 3 largest enterprises in the US, and iconic Kodak, both once major global employers, have had rough patches. And they’re not alone!

The reality: Competitiveness is the only genuine economic security especially during hard economic times – not shutting out the critical drivers: of investment, technology and the global market? What we need is to squarely face our shortcomings – e.g., our inability to compete, which starts with poor infrastructure beginning with energy? Unfortunately, local vested interests (as a legislator-columnist writes) are behind the scene campaigning against FDIs – i.e., we would have the same half-a-dozen entities behind every major project? But what technology and/or innovation have they pursued that can travel outside the Philippines? The ideal route for our industry is to emulate global enterprises, those that are committed to aggressively driving competitiveness – by focusing resources accordingly. We have to shed the ‘banana-republic model’ of monopoly power! Handicapping is for amateur golf!

Should we then seek to elevate the probability of positively shifting our destiny as a nation – and not implicitly accept a downward trajectory if not a point of no-return? Or what would be left for us is to ‘walk on water’ – or as a friend would explain: only faith and prayers would save us? What we must pursue then is to lift our (a) investments and (b) competitiveness in a major way – i.e., commit to focus and prioritize and execute?

An open letter to President Aquino

2011-08-24T20:45:00.000-07:00

It is a wet Sunday morning in the New York metro area, and countless are reading about President Obama. His popularity has dropped even lower than his unfavorable rating and the feeling is he is a president lost. And it’s a pity because he campaigned under the banner, ‘The audacity of hope.’

The writer is a product of globalization thus the reference and interest beyond our borders. The emphasis on ‘globalization’ is intentional because we Filipinos have yet to fully appreciate and embrace this 21st century reality or "given"? As a lifelong observer and participant from the private sector of the ‘world around us,’ he has realized the value of a few fundamental givens. And he traces them to his Filipino upbringing where our faith is a major influence: The Pareto principle (from the Great Commandments), optimizing returns on resources (from the parable of the talents), the power of the human spirit (from the lesson of Eden), not to confuse faith with responsibility (from ‘Give to Caesar the things that are Caesar’s.’)

The writer has watched at close range how others not only Americans renewed themselves, while we Filipinos would always be hailed for People Power. And your parents, both, would always be remembered for it. It would take the life of your father for us to stand up for freedom. (Today we have to stand up for freedom – from poverty?) America’s history is bloody, yet modern America has demonstrated a propensity to repair itself – and thus the frustration with President Obama? Or should people own up – i.e., greed created the housing/credit bubble and brought the Great Recession? And until the housing spoils are mopped up, the countless industries touched by housing would remain anemic, and the economy likewise? And why Buffett wants the superrich like him to share, via higher taxes, the pains of the average American, and is asking US legislators to stop coddling them?

Your administration started with a great message of hope too. And we are grateful that you are tackling the scourge of corruption head on. Beyond destroying our moral fiber, corruption undermines efficiency, productivity and thus economic output. And as an underdeveloped economy, we badly need to drive our revenue or GDP. The JFC (Joint Foreign Chambers) has developed a simple roadmap that would truly drive economic output – via the strategic industries they have identified would attract $75 billion in investments. And given their multiplier effect should yield incremental GDP of over $100 billion – which should move us closer to a Thailand, with a much better poverty scenario than we currently do. And this is where faith, if you will, can’t be confused with responsibility?

President Obama recently met with a handful of CEOs to discuss how to address the issue of unemployment. It could be a good model for us to adopt? For example, as the leader of the nation, you may likewise want to meet with the JFC to appreciate the vital few initiatives that must be pushed at the highest levels in order to turn the roadmap into an action plan synonymous to success? The writer, coming from the private sector, indeed has a bias for simplicity – a simple roadmap, a set of priority initiatives and the imperatives of execution. President Obama has a political liability in that he has to run for reelection; you have the luxury of retiring from the presidency in a few?

There are a couple of things that would turn the JFC roadmap into a winner for Juan de la Cruz: dramatically lifting investments and competitiveness. And in both cases, we need to prioritize which initiatives must occur ASAP. President Clinton took the bully pulpit while he pushed his (‘It’s the economy, stupid’) mantra with Treasury Secretary Rubin, and doggedly worked with Congress to balance the budget. There will always, always be barriers to execution, which is why a laser-like focus on driving investments and competitiveness is imperative. How could the administration keep the focus? Who in the cabinet could be the taskmaster working with you? A taskmaster is one who has no patience with the ‘ifs and buts’ – because failure is not an option?

Please pardon the unsolicited advice and the simplicity. The private sector is acknowledged as more efficient and effective because it is driven by simplicity – their key to execution. And thus Reagan and Clinton took note. More power to you! And thank you very much for teaching us to abhor corruption!

Keeping up with the Joneses

2011-08-21T06:21:00.000-07:00

In the vernacular, as a friend would explain, it means ‘mababaw ang kaligayahan' – i.e., many of our small firms may fail the acid test of ‘sustainable profitable growth’ because our goal in life is to simply outdo the next door neighbor? And so the venture is not treated as a separate and distinct entity – or why Filipinos are well traveled, i.e., once the business starts bringing in the dough traveling to North America or Europe, and shopping for designer goods represents self-actualization? A journalist who interviewed Facebook’s Mark Zuckerberg was expecting him to be driving some fancy cars, and found what really was driving him: to keep excelling in what he does.

Of course it is convenient to blame government for not providing proactive interventions to our small businesses. Reports Business Mirror, Aug 7^th, “. . . The general failure to expand or even just sustain operations can be traced to weak or poorly designed government interventions to increase small entrepreneurs’ knowledge and skills to use technology and financial resources to grow their business . . . Value-adding can be enhanced [if these factors] are present: constant availability of quality raw materials in their required volumes, choice of equipment and machinery, lack of access to training and technical assistance, lack of support services, and reliance on service markets.”

But isn’t what is in our heart and our mind where it all starts? Are our low expectations manifested in our instinct to think small? When the writer and wife met an Eastern European who was speaking from the heart and dreaming big, he promised to help make his dream come true. Fast forward: 'He has been selected as one of the ten Ruban d’Honneur recipients for The RSM International Entrepreneur of the Year Award in the 2011 European Business Awards,' says the email from the sponsors, and his submission is revealing especially given socialist background and born under communist rule. He makes the writer proud: he started from scratch with no clout whatsoever, just a big heart.

“It is my dream to develop the Best and Biggest Company out of Eastern Europe. We grew from a small cottage industry producing simple consumer products that became market leaders in all the categories we competed in our home country, taking market shares from 3 of the largest global entities in the industry. Our recent achievements have been in geographical expansion with, again in many cases, market leading positions by categories; and the establishment of three new businesses.

“To develop critical mass, we had to explore export opportunities in neighbouring countries. In the local market, we had become strong partners with the trade. Outside the country was another story: it was necessary for us to continue to demonstrate our ability to supply a broader range of products. And as the modern trade (international retail stores) came to the region, we had to raise our focus on healthy-margin products and brands.

“Gaining dominance against global behemoths has not been an easy task. There have been many hindrances along the way. A lot of the things that big companies take for granted, we had to learn the hard way. For example: consistent product quality is crucial, margins matter, and distribution and consumer marketing must be in sync and can’t work in isolation. Now we have state-of-the-art factories, R&D and QC labs ensuring total quality. We match the MNCs in financial information infrastructure and even beat them in bottom line profits. We have a solid business model for entering new markets with all key factors of success lined up. And best of all, we have lots of room for growth.

“I’m a visionary. I dream of ideas, products and business models that are far beyond what exist. I am always looking for something, for the next step that will generate success. I never stop adapting and changing and this is the style by which I have built the organization. This is what allows us to generate consistent business pace and growth year-on-year over the past 10 years. No matter how big we become, I am preparing the company for what will take it to the next level – be it products, business models, organization, infrastructure or people.”

‘Pinoy kasi’: A mental model

2011-08-17T06:05:00.000-07:00

The Tea Party's battle cry, it appears, is simply 'Down with big government' – while the conservatives want to cut entitlements and cut taxes? And the democrats, on the hand, insist on preserving entitlements while raising taxes? Yet all claim that they hold the answer to America’s deficit problems? Of course they can't agree because they're unwittingly pushing conflicting ideologies instead of problem-solving?

The private sector has had its history of responding to opportunities and challenges – of problem-solving. Manufacturing showed the way through the baby-boom era; and as competition within industries intensified marketing developed as a discipline. And even in the Philippines, we saw this occurrence via the local airwaves as marketers helped popularize soap opera as a genre. And as competition deepened even more, the number crunchers then came with their sharp pencils that saw restructuring become part of the private sector’s lexicon, including mergers and acquisitions – to accelerate growth, buy brands and technology.

With competition continuing to escalate, more tools had to be developed: computerization, productivity and quality among others, and later even newer generations of these tools. These developments spilled beyond national boundaries and spurred globalization, with its own set of challenges – both to developed and emerging economies . . . And competition in a globalized economy imposes a greater demand for innovation. Nokia developed low-priced cell phones that captured large markets like India and China, and thus held global market leadership. Yet, Nokia is in more trouble than it ever imagined! While the pricier Apple has become the largest tech company if not yet the most valuable global enterprise, if indeed it would overtake Exxon-Mobil as anticipated.

And so the world has seen how progress has evolved? How did we in the Philippines respond to this changing world? By sheer inertia alone, we would not imagine that we'd be isolated from this reality? Even the Chinese and the Soviets accepted reality – and motivated the writer to make Eastern Europe a second home (though as a student his curiosity about socialism was limited to browsing Mao’s Red Book.) To our credit, we are hungry for knowledge – for example, we are among the first to always tap contemporary business and management thinking, i.e., seminars like education are a big business in the Philippines! But knowledge can’t stay in the head – it must come down to the heart and then to the gut before it becomes second nature, if it is to renew ‘Pinoy kasi’?

What does 'Pinoy kasi' mean? If it means parochial and hierarchical then we have our work cut out for us? And we have an even bigger challenge if we fold-in populism and faith – because they would reinforce parochialism and our hierarchical structure . . . in a world that is moving at warp speed? Ergo: we would remain out-of-sync? If our industry continues to invoke slivers of 'Pinoy kasi' instead of leveraging foreign investments and trade, for instance, then we shall indeed be frozen in time? We can’t speak from both sides of our mouth re foreign trade – but is it our comfort zone, a throwback to our ideals of hierarchy manifested by monopoly trade, for instance? And if in industry hierarchy plays a role, all the more in the public sector – where transparency is easier to elude, if not a given?

If we don't leverage state-of-the-art technology in our efforts to raise competitiveness whether in agriculture or industry, we shall remain of the past, with the past and for the past? If we see the route to innovation and competitiveness going via fabricating local machinery, for example, because of cost considerations, we would simply be recycling import substitution – something economist John Nye pointed out as folly? As Nokia learned the hard way, it is the dynamic of technology, innovation, talent, product and the global market – i.e., margins – that is key in global competition. We no longer can value local fabrication because of cost alone, like the writer’s Eastern Europeans learned – i.e., we can’t stick with the jeepney as our model for 21^st century technology? We’re playing catch up and ought to accelerate the learning curve, not start from square-one – by seeking partnerships with technology leaders instead of going it alone, as China demonstrated? Our instinct can’t always be to look inward?

The human spirit gone astray

2011-08-12T05:54:00.000-07:00

Humans can call upon the human spirit, raise their ‘pain threshold’ and accomplish super-human feats! But when vested interests are able to mask reality, the human spirit goes astray? Washington clearly could not raise its pain threshold given the compromise they struck on the debt ceiling. It’s not rocket science that reducing entitlements – i.e., Medicare and Social Security – and raising revenues – i.e., taxes – were required to drastically cut US deficits. Washington needed to step up to the plate: make the tough call, i.e., take the savings where they must and step up spending where it made sense to fuel the economy. The private sector does it all the time – and thus calling upon the human spirit becomes second nature! Put another way, innovation and competitiveness are learned by doing. And Pacquiao knows it better than most – while politician Harry Reid who befriended him missed the doing piece!

Politicians have very little capacity for pain – because the pain, especially when shared by voters, would be disastrous to a politician’s electability. And which explains why only half, if not less, of American voters exercise their right to vote. In the meantime, over 15% of Americans get by only because of food stamps. It’s a catch 22: Americans remain in denial unable to accept that cherished entitlements are no longer affordable – while unwittingly keeping the economy anemic for the foreseeable future. Unsurprisingly, S&P lowered the US debt rating! In the meantime, the Democrats believe that the object of the opposition is to make Obama a one-term president. The bad news is with Europe also in economic limbo, the global economy will remain feeble – and most likely bedevil also the next US administration, even if it’s Republican. China, as the next largest economy, thus needs to play a global leadership role but they’re new in the game – and they have their own concerns, i.e., how to spread wealth more equitably especially with inflation rearing its ugly head, and as they rely on the local economy to take up the slack from a weak global demand. Not surprising, US legislators are calling for a halt in aid to China – i.e., China today is still a US-aid recipient.

Asia remains the silver lining but unlike Europe with long-established institutions, Asia is characterized by sub-optimization – i.e., its culture of ‘relationship first’ (as opposed to the ideals of meritocracy) undermines the strengthening of institutions. We are well aware of this phenomenon and which is why President Aquino remains steadfast against the ‘wang-wang’ culture? Yet nation-building demands more!

Indeed relationships (beyond their role in human existence) are at the core of human endeavors – which the writer experienced first-hand covering the region for a decade, i.e., his being Asian opened doors. But there is a line that cannot be crossed especially when the personal means turning one’s back to principle. For instance, delivering bad news is always a discomfort but that is why there is such a thing as leadership. Unfortunately, the desire to be liked could undo leadership. Why can’t we get basic initiatives right even when much has been embarrassingly reported about our failings in governance and competitiveness, for instance? And the manifestations are for all to see – e.g., it’s the 21^st century and our infrastructure remains underdeveloped, for example? And to add insult to injury, corruption throws us farther back – e.g., how many more major infrastructure projects do we have to abort before we realize why foreign investors aren’t coming?

We would not be accepting of the string of 'loose ends' before us if it would stereo-type us as one exotic Pacific archipelago – and thus would seek closure instead? But does the comfort that comes with our hierarchical structure give the impulse that the way forward is through Christian charity instead of economic development? Unwittingly, it is reinforcing of an economy that is skewed to benefit a few? For so long as our economy is driven by OFW remittances, industries would be rewarded (even handsomely, according to Forbes) for responding to their consumption needs? And that would undermine (a.k.a. 'Dutch disease') our capacity as a nation to gear up and advance in technology, innovation and competitiveness – thus the prospect of rising poverty – especially as the global competitive hurdle is raised even higher by harder economic times?

The budget: Talking the talk

2011-08-09T04:11:00.000-07:00

It appears the DBM secretary is hitting all the requisite operative words in describing the budget: rapid, inclusive and sustained economic development, and focused and cohesive. Indeed the administration must articulate 'its reason for being'. And President Aquino seems single-minded in ‘cultivating the soil’ that is the Philippines – that until we own up to our ‘bad attitudes’, which he spoke about with our community of psychiatrists, we can't expect to grow and prosper.

The fundamental role of a nation is to raise its standard of living via the pursuit of sound economic interventions. Watching our local news is a most depressing experience as they present our reality – our failure to value human dignity! It is thus encouraging when the president's team is able to present something coherent and focused like the budget – which can be game-changing if executed with conviction? We can't pat ourselves on the back with 'make do' initiatives – when they don't fix the fundamentals of the economy: from infrastructure to strategic industries to competitiveness to economic surplus. Thus it is understandable that dole outs are criticized by many – especially if they are unsustainable and take resources away from initiatives that have a far greater impact, or if they don’t deliver the assumed positives. Translation: we don’t want to unwittingly embrace an economy that is lopsided – i.e., for the benefit of a few with a great number ordained to a lifetime of poverty.

It is critical that we appreciate the focus and the coherence in the administration's agenda. On the other hand, we can't applaud the theatrics of the 'big boys' – e.g., the ventures they're wrestling about will not yield the quantum leap necessary to pull the country out of the abyss. They won't raise our technological capacity or our competitiveness. Surely they expect to grow their revenues and that would still be welcomed, but not necessarily praiseworthy – in the name of nation-building. What will elevate our economic output is raising revenues especially in industries where we're laggards. For example, the 12 major dollar-earning industries the Agriculture department identified must indeed be a focus. But the administration must provide concrete plans and take the necessary steps to make them happen – and when?

Just like in any economic or business activity, a robust product portfolio is key in order to optimize yield – for instance, it appears electronics exports are slowing? Thus, we need new high-performing industries in our portfolio. And likewise we need the electronics and BPO communities, for example, to be truly committed to developing higher value-added competitive products. It is noteworthy that the budget provides for infrastructure projects to make strategic tourist destinations accessible – a must given the beauty of the Philippines. Focus and coherence are imperative so we don't get distracted while the administration goes full speed ahead. There will always be the low-hanging fruit that is tempting. Or why developing countries create monopolies cum conglomerates – instead of technologically-driven and globally competitive enterprises. And there is that one initiative where the administration must exercise greater leadership: addressing our energy issue. What must we undertake to ensure sufficiency at competitive costs? Who, when, where and how will we do it? What is the role of renewable energy over time? In short, if we want the administration's budget to be focused and coherent, we must want an energy initiative that is similarly focused and coherent. We need to execute – walk the talk!

What is the outcome that we want – and is mandatory? We want a clear-cut program that will drive economic output in the identified strategic industries that will be sustained by a robust, competitive product portfolio and an efficient infrastructure system. The administration's reason for being must be so articulated, monitored and communicated for Juan de la Cruz to be on board. We must not be distracted by favorite if not politically expedient pet projects or vested interests – while millions of Filipinos end up paying the price because of failure to execute . . . and thus a failed economy! How could we even watch local news that vividly bring to the comforts of our living rooms the widespread hunger . . . in the country . . . we claim we care about – or do we really?

The Pinoy ‘basta’ and ‘bahala na’

2011-08-04T20:25:00.000-07:00

The wife is talking about her projects and wonders if there’s a common thread in how we, Filipinos, interact? The problem with a tenant-farmer remains while her favorite farming family continues to progress: they were able to buy and own their farmland, send the children to school, and only those who chose to be farmers did. For several years the wife has been working out a scheme for the farmers to own their farms – encouraging the rest to follow the lead of her favorite family. But the saga continues, i.e., with those who would simply say, ‘basta’ and ‘bahala na!’ She’s been tempted to give the small inheritance away but worried about unintended consequences.

The writer and wife are winding down their month-long homecoming – which they always look forward to, cherished moments with friends and relations . . . With the latter ever so keen to hear what the view is from the outside – which is why the writer started this blog in the first place. And to move beyond the blogosphere, he sat down with an educator, two groups doing business outside the Philippines and one local entrepreneur – who is now gearing up to venture overseas. And the writer committed to support their pursuit of competitiveness. But a friend couldn’t help: “Why do you think our entrepreneurs, big and small, are not predisposed to compete beyond our shores? Are we simply too comfortable where we are given our hierarchical structure? Why would we welcome foreign direct investments then when they would only disturb the apple cart? Is it our sad reality?”

Is Juan de la Cruz predisposed to change? Is ‘basta’ (or ‘I insist’) – whether we verbalize it or not – in our subconscious? And then we simply tuck it away with ‘bahala na’ (or ‘que sera, sera’). And are we driven by the ‘Pinoy heart’ which finds comfort in the grey area – as opposed to closure – and thus abhor ‘quentas claras?’

The Germans are taking a wait-and-see attitude about our PPP given the NAIA 3 fiasco, among others. And the writer wonders how much we’re missing, opportunity-wise? In Eastern Europe and other emerging economies, Germany, the strongest economy in Europe to come out of the Great Recession, is plenty busy investing and supporting emerging economies!

Do we see quentas claras as impersonal and insensitive that we end up with lots of loose ends? A friend chimes in: “A European diplomat wanted to know if indeed we’re the happiest people on earth; and told him how much we took on the teachings of the friars. And fundamental is the unbending faith and belief and hope in the future. Why do we smile despite growing poverty? Because we have something to cling to, a security blanket, that of hope?

“Go to the smallest town or listen to our televangelists . . . you hear an abiding faith and hope – that the future is to look forward to.” And another friend adds: “And so people even believe they would be granted their dream US visa – not necessarily tomorrow, but someday. And you know, it’s like nurturing a lucky lotto number – you don’t want to give it up because you don’t want to miss the jackpot by a hair. Are we in reality perpetuating poverty – because of ‘bahala na’?”

They were said in jest . . . but are they really far from the truth? And the wife shares: “I try to get my chores done when I am in town. My batting average is not perfect, and I probably step on toes. But I have good news to bring back to the States: The livelihood manager of our GK community returned to our group a portion of the seed money that we provided; and the even better news is they now have a larger working capital that would sustain the venture for the foreseeable future. We continue to work with them to ensure the venture’s sustainability. And it’s a delight to see how the community has evolved from once aspiring to have a roof over their heads, to generating incremental income for the families.”

There is a world beyond ‘basta’ and ‘bahala na?’ And while Christian charity is a must, driving the economy aggressively is our greater challenge – for the common good?

The common good . . .

2011-08-01T06:15:00.000-07:00

It is undermined in societies infused in hierarchy and parochialism, and characterized by oligarchy – as experienced by many developing countries. Unsurprisingly, the phenomenon has been examined and incorporated into a body of knowledge by economists – e.g., Dani Rodrik of Harvard University, and cited by Dennis Botman, IMF resident representative for the Philippines.

“. . . Greater trust could lead to improved governance,” writes Dennis Botman, Business World, Jul 12^th, “ . . . by creating greater accountability and less political polarization and stimulating reform momentum by reducing catering to vested interests . . . Trust is associated with less corruption . . . Countries with high levels of trust have grown faster in recent decades than other comparable countries . . . The standard trust indicator that is used is the proportion of a population that answers yes to the question: “In general, do you think that most people can be trusted, or can’t you be too careful?”

“In the Philippines the vast majority suggests that one “can’t be too careful” (93%) compared to the average of the 84 advanced, emerging, and developing countries surveyed of 70% being less trustworthy . . . More equal societies have greater social trust and that these are mutually reinforcing . . . Equality promotes the vision of a shared fate, where others are part of your “moral community.” In contrast, in an unequal world, people will be reluctant to take risks in dealing with people who might be different from themselves. They will press for closed markets and work within their own sub cultures-and will tolerate corruption . . . Thankfully, reducing inequality and strengthening education are key pillars of President Aquino’s social contract with the Filipino people, which augers well for rebuilding social trust and economic growth in the period ahead.”

Which comes first, the chicken or the egg? Is the ‘señora’ the cause of the ‘majordoma’s’ (or the driver’s) egregious behavior or is it the other way around? With friends – from the expat community – enjoying the breezy veranda in the country club (in one of our gated communities), the writer and wife hear an earful. “Corruption seems to appear at every level: from non-seniors presenting senior-citizen cards to filing suits heard by ‘friendly judges’ to holding vital machinery at the Customs until the palm is greased, among others. And so inefficiency (and poor customer service) even in high-profile, technology-based businesses is to be expected.” Separately, over lunch in Fort Bonifacio, the writer is told: “Since the time of Marcos, we seem to have elevated ‘dummy capitalism’ to an art form!” [And Ernesto M. Maceda writes, PhilStar, Jul 19^th, “Yes, it can be accurately claimed that the whole government was plundered,” enumerating 13 instances of alleged plunder.]

Sensing an opportunity to get back to the sumptuous meal, the writer tells the restaurant owner that the ‘pork sinigang’ is to die for! And he promises to come again, and is told they would open another outlet in one of Makati’s desirable residential complexes. And in these circles, poverty is invisible? Decades ago, the writer then based in Manila, had his eyes opened by visiting friends: “Nation-building is an uphill battle when poverty is invisible – and when people are able to shut out the inefficiencies creeping into a life of supposed luxury.”

Does the ‘common good’ appear, but rather vaguely, in our horizon? And it brings to mind the writer’s Eastern European friends: “We’ve lived through so much frustration that we’d simply accept things as they come – like fate!” And it leaves a bad taste in the mouth as visitors and investors, especially – who swear to their love of the Philippines – watch the horrors inherent in our ‘uncompetitive business environment’. And so we wonder why despite our best efforts – e.g., GK, ‘Go Negosyo’, CITEM, BPO’s, etc. – we remain economic laggards?

The writer is with an educator and they’re discussing a graduate course re human behavior in organization: If major enterprises, say, 200 of the country’s top 1,000 corporations, can take the lead and follow the example of MAP – in monitoring President Aquino’s fight against corruption – while driving integrity and competitiveness within their respective organizations, we should be able to make some baby steps in search of the common good?

SONA – Speaking from the heart

2011-07-28T06:14:00.000-07:00

“He’s indeed the mother’s son!” One of the telling reactions to the SONA – both mother and son must have been appalled to learn how rotten public service has become? President Aquino’s focus on corruption seems to have gotten our attention – finally? A legislator though would like to see “fear” within the bureaucracy to ensure that indeed the fight against corruption sinks in?

Critics of the SONA are all over the board but it is encouraging that the need for direction – beyond favorite pet projects – is being stressed. In MNC lingo, it simply is: ‘we must walk and chew gum . . . at the same time.’ And JFC folks, mostly coming from MNCs, understandably, want clarity on the PPP, for example, the vehicle the administration has identified would drive investments. (Translation: our economy is skewed, respectful of our parochial, hierarchical structure – and we can’t remain nonchalant to this major economic barrier if indeed we want to address poverty!)

The Philippine government is not an MNC although some government managers pride themselves in the ability to adopt MNC thinking and operating mode: the MNC business environment is complex (e.g., doing business in over 200 countries/markets that aren’t homogeneous, for example) yet it defines its reason for being in simple terms. And as importantly, it is able to exercise leadership where people take ownership – thus can be trusted and relied upon to deliver results. Of course, governments are more complex yet leaders like Reagan (“It’s morning again in America”) or Clinton (“It’s the economy, stupid”) were able to operate like MNC CEOs.

Cabinet secretaries have been busy developing their respective roadmaps – and indeed they’re impressive strategy documents. For example, the platform of Philippine Agriculture 2020 is pursuing agriculture like a business, i.e., sustainable and profitably growing. And in tourism the desired outcome is to make the Philippines a ‘must-experience’. These are truly sturdy, secured anchors! The challenge is how to manage the ‘Pinoy heart’? And when we say inclusive growth (our favorite buzzword), we better not be stepping on a mine field – because it opens up compromises, thus inefficiency if not corruption? It happens even in America: the push for housing was an attempt at social engineering – i.e., inclusive, yet sub-prime mortgage was clearly unsustainable – and, regrettably, it opened the floodgates of greed to the bankers, and brought the global financial system down . . . thus the Great Recession!

Indeed we ought to focus on ‘pursuing agriculture like a business’ or “making the Philippines a ‘must-experience’? Inclusive growth may be politically correct – yet it must not be akin to assuming that land reform would magically solve poverty, for example? As a recent Manila Times editorial points out, the Taiwan model succeeded because it was business driven and thus sustainable – while ours was essentially land distribution, a giveaway to middlemen if not usurers? Is our instinct to compromise why we’re prone to inefficiency and corruption? The test for the Aquino administration is to focus on driving the execution of these roadmaps – i.e., separating the wheat from the chaff! Our neighbors have drastically reduced poverty by aggressively driving their economic output? Put another way, we’re a poor country yet we expect people not to be poor? Thus charity is a must – but it can’t be an engine of economic development. (Social engineering is no panacea – e.g., some US teachers are found cheating re ‘no-child-left-behind’.)

As Asians we know the one step back, two steps forward phenomenon? The writer had to explain it to his Eastern European friends when he urged them to unequivocally drive margins. And one of their first initiatives was to eliminate manual packaging (e.g., one step back) in the factory, and to mechanize the process; and they followed this with uprooting the offices from ‘the middle of nowhere’ to the city center and in a modern, award-winning building – to start the shift in mindset: coming from a poor ex-communist village with very low expectations, to becoming a truly honed, respected competitor to MNCs. (Translation: many ex-MNC managers have joined them!)

Fast-forward 8 years: From doing business in one small country with one dilapidated factory . . . today they’re doing business in over 20 countries and counting, with four state-of-the-art manufacturing facilities. Like an MNC, they have helped develop auxiliary and support businesses around their enterprise! Driving investments and competitiveness brings to life what economists call the multiplier effect – a meaningful terminology a.k.a. inclusive growth?

SONA: expectations, impatience and reality

2011-07-24T23:03:00.000-07:00

With President Aquino getting ready for the SONA, it appears we are learning to dial down our expectations while simultaneously expressing impatience – and recognizing reality? Perhaps the president’s credibility in his fight against corruption has earned him the benefit of the doubt?

This blog talks about the imperative of ‘focusing on the outcome’ especially in pursuing major undertakings. Indeed we can talk the talk – yet competitive advantage lies in the ability of an enterprise to separate the wheat from the chaff. The writer covered the region when our neighbors (not as well-informed as we were, he thought) were zooming and turning into Asian tigers. And he was the least surprised as investors favored them, over us – even though Thailand in fact adapted our economic development plan. We don’t need another economic development plan as we know it? Every time there is a new regime, our ‘weather-weather’ pattern is legitimized by the new power structure, and the spoils that come with it? And thus those lower in the hierarchy would rationalize [widespread inefficiency cum] corruption – i.e., the Peter Pan syndrome, of following the leader? And Juan de la Cruz has yet to recognize that inefficiency and corruption especially when endemic undermine competitiveness – i.e., productivity and economic output?

Clearly we must learn to focus on the desired outcome if we don’t want history repeating itself? With an average income that is a meager 10% those of developed economies, the idea of inclusive growth is a pipedream if we don’t raise our revenues or GDP substantially – the gut of our challenge! Yet as an underdeveloped economy, we have lots of room to grow – if we elevate our competitiveness and leverage the global economy like the Asian tigers did. Ergo: our focus must be competitiveness, not unsustainable populist initiatives! Unfortunately, as the JFC points out, our batting average, in executing the priority initiatives from Arangkada Philippines, that will drive investments and revenues, has been dismal. And it will get worse if we don’t demonstrate conviction, and are tentative instead? It’s a disservice if we simply stay the course – or if ‘Pinoy kasi’ means we can’t turn things around? And our response: “We’re the happiest people on earth?”

The writer is with a group of exporters and they’re talking of the good old days – “but today our group is much smaller: we’ve lost our competitiveness!” The good news is they recognize the downside when small entrepreneurs treat their ventures as personal, as opposed to being separate standalone, entities. And so there is passive risk-taking and thus the aversion to investing in technology, for instance. Likewise, they recognize the challenge of productivity – e.g., foreign buyers tell them how productive Chinese workers are: ‘putting a fair day’s work for a fair day’s pay’. That mantra ought to be the standard – not ‘populist initiatives’ (a.k.a. misplaced compassion) that are unsustainable . . . and undermine the common good?

And so the writer challenges them to confront these barriers instead of sweeping them under the rug – e.g., like whitewashing the slum area around the airport? We have to change ‘Pinoy kasi’ to mean something positive? And he relates the first time he visited the factory of his Eastern European friends: They proudly expounded with great [national] pride that they could cobble together some locally fabricated equipment. But after the writer reviewed the margin numbers, he had to explain why “outcome” must come first before “activity”: A factory provides the largest opportunity to drive margins – and it comes from speed and flexibility. And instead of being fixated by costs, the key is to focus on driving margins – and tapping state-of-the-art technologies, for example, and pursuing the development of higher value-added products that would find a much larger market overseas. Today they’re singing a different tune: ‘We ordered and are awaiting the latest technology from Germany – because the numbers are the numbers!’

Why does the Philippines continue to rank poorly in competitiveness? Instead of focusing on the desired outcome, we focus on the activity? Instead of defining a much bigger market beyond our shores, we simply want to tap Filipinos here and abroad – and even telco businesses, supposedly technology-based, define a very limited market? We must set higher expectations, and not undersell our efforts and ourselves? At the country level, we have to focus on driving our GDP – i.e., raise our revenues ten-fold; and at the industry level, we must focus on driving competitiveness – i.e., tap state-of-the-art technologies and pursue the development of higher value-added products, that would find a much larger market beyond our shores. We need to raise ‘Pinoy ambition’ – and take the parable of the talents to heart?

The ‘half-pregnant’ myth

2011-07-22T06:10:00.000-07:00

In marketing lingo, it means conviction! But would we rather find comfort in ‘the grey area’ – because we don’t want to be labeled ‘yabang’ or ‘hambog’? We’re expected to be unassuming? It’s in fact very Asian! In the US, beyond the ‘glass ceiling’, there is also the ‘bamboo ceiling’ (New York magazine, May 16). If women are still fighting for equally, the conventional wisdom is Asians also have a fight in their hands. And it is traced to what has been labeled the ‘timid culture’ in the East – and why Easterners are sometimes called ‘inscrutable’. And Westerners, Americans especially, are uncomfortable when Asians don’t speak up. Unfortunately, it has been taken against them especially in leadership. The Western mind presupposes that leaders must have the conviction and the passion to lead in both good and bad times – and since the true test of leadership is when the chips are down, it is assumed that to be timid is a liability.

The writer encounters this reality with his Eastern European friends. And so he would remind them that in every major undertaking, it is important to be passionate – and would tease them not to use words like ‘maybe’ or phrases like ‘we will see’ especially after an agreement is reached no matter how tough the challenge is.

In one business review after the writer had just flown in, he was horrified that the group was taking the shortfall in sales for the period indifferently. They had concluded that it was insurmountable! And so he played an ‘old song’ they had heard before: ‘To be faced with famine or persecution must be insurmountable? But who said we can’t create our own country?’ Fast-forward: In the short period of less than 2 months, they were able to pull together stepped-up efforts to overcome the shortfall. (Progressive enterprises train their people to develop especially the instinct ‘to make things happen’ – and overcome ‘taking the path of least resistance’. And why developing a culture of competitiveness is indeed an immense challenge – it’s far more than reducing red tape. It starts in the mind, and then the heart before it gets to the gut and be instinctive. Many years ago, the writer learned that beyond teaching Chinese engineers how to run a hi-tech facility, they also had to be equipped with problem-solving skills. But we, Filipinos, know it all?)

Why is the Philippines poor? We can’t be half-pregnant? We must have the conviction and the passion for nation-building? It means not compromising our principles even when the personal is tugging us wrongly? Inefficiency and corruption are products of compromises – whenever we compromise principle and mistake it for compassion?

We have humongous challenges; and we can’t define and prioritize impactful solutions if we don’t seek conviction? The JFC has tabled a roadmap, ‘Arangkada Philippines’, but it will only be impactful if we bite the bullet for principle’s sake? For example, we need a similar roadmap that defines and prioritizes the execution of ‘Philippine Agriculture 2020’, no doubt an excellent piece of strategy. But a strategy is only as good as it is executed! We put together great plans – even world-class plans – but we have to be serious about execution! And it takes conviction!

We can’t be half-pregnant in defining our economic goal, that is, to be a developed nation; in defining our strategic industries and in spelling out the priority initiatives that will bring them to fruition; in partnering with foreign investors or in negotiating trade agreements; and even in pursuing populist initiatives, e.g., land reform or CCT – and simply, it means we must seek sustainability and not waste scarce resources like the 50 years behind our failed land reform program.

The writer has done business in many parts of the world yet is still dumbfounded when he’s told how blatant corruption in our country is. Does the ‘weather-weather’ phenomenon mean that when our time at the helm comes, we must abuse it to the hilt? In fairness, we have plenty of honest-to-goodness efforts, but they’re undermined by insidious corruption? Invariably, Juan de la Cruz lives in an environment with ‘low trust levels’ and thus has little confidence in his future? And for a nation it equates to perpetuating underdevelopment and poverty – e.g., a worker or a farmer won’t give it his all? In the private sector, that is recognized as an outcome of failed leadership – unfortunately veiled in hierarchical environments?

‘Management incompetence’

2011-07-18T00:54:00.000-07:00

“An outspoken, straight-shooting executive [former GM Vice-Chair Bob Lutz] believes the greatest factor in the demise of the U.S. auto industry is management incompetence,” reports The Daily Tickler, Jul 6^th. “No, it's not the unions (although that contributed). No, it's not uncompetitive wages compared to Asian manufacturers . . . Auto executives worried too much about hitting the numbers and not enough about creating a product consumers wanted to buy . . .”

The writer has heard the exact same criticism (from his days negotiating with unions, and doing restructuring and M&A’s) and thus recognizes the imperative of market research, R&D and product development. And so he gives his Eastern European friends grief whenever he senses that they’re slacking in product development.

Whenever the writer is in town he instinctively goes to do ‘store checks’ – to get a sense of what consumers find in the stores, and which products or brands appear to be moving relatively fast. But what hits him is the range of products, of local and foreign brands. It would confirm how much trade has been liberalized; and no wonder those with a strong patriotic bias are critical of globalization – and why our liquor industry is against a recent WTO ruling? Hedging against globalization should not mean the absence of conviction; and we won’t have the conviction if we keep to the proposition that the current generation is not ready – i.e., we’ve given a string of generations slack and the whole country is paying the price?

What is reality? We have pursued a consumer-driven economy that effectively responds to the needs of our OFWs? And, of course, ‘the elite’ – who now have access to their preferences without hopping on a plane to Hong Kong or Singapore? Today’s kids can pursue culinary arts when their parents had to travel to Switzerland?

Unfortunately, everyone is focused on the local market . . . yet rightly so – it’s a big market of 100 million Filipino consumers? For foreign brands, the Philippines is part of their concerted effort to expand their market. But for local brands, it is part of a defensive effort to protect a piece of the Philippine market? Local brands by design (i.e., sense of entitlement?) limit their market while foreign brands by design (i.e., competitive spirit?) expand their market? Fundamental in strategy formulation is the expansion of one’s market – which to foreign brands is a no-brainer? (The best defense is offense!) But it isn’t so with local brands? Do our parochial tendencies narrow our perspective? Do we believe we can’t compete overseas?

Looking at how our local brands present themselves in supermarket shelves, for instance, there should be no reason why we should not venture to market them overseas? Is it because our brands don’t have healthy margins for us to afford market development beyond our shores? Is it because our brands tend to be copycats and don’t have true value-added? It is precisely why product development is critical – and glossing over it equates to the ‘management incompetence’ that Bob Lutz speaks to? This blog talks about investment: in technology and innovation, and talent, product and market development – precisely because they are the imperatives if we are to leverage the global economy? Our financial services industry must look beyond our shores – and promote business development initiatives beyond our parochial predisposition? And our marketing, science & technology communities and universities ought to aggressively pursue R&D and product development? But we don’t have to start from scratch – partnering with global players could provide us the necessary platform to raise our technology and innovation quotients – and Nokia is a good example?

And we don’t have to be a Steve Jobs to succeed in the global arena. We must develop the overseas market for products and services that we can differentiate – and add value? But then again, shifting our mindset will be the most difficult part especially if we can’t shed our parochial bent? Foreign investment in the meantime continues to raise objections to our protectionist bias, despite trade liberalization. As the world knows, Philippine industry equates to a handful of major local players – and they have yet to truly enlarge our economic pie – and our actuations are perceived as unwelcoming. Ergo: they simply look elsewhere? We don’t want to burn our candle from both ends?

Moving forward with competitiveness

2011-07-13T23:57:00.000-07:00

It is encouraging that we appear to recognize that the regional, if not the global, market presents opportunities to drive our economy? And that we must become competitive to make it a reality? Which means generating the confidence and the capacity to be truly competitive? It is not easy for a battleship to change course, more so a country and a culture? Circulating in cyberspace are photos of ‘Manila when it was first in the region’. And one could almost see oneself in very pleasant surroundings, window shopping along Escolta all the way to Plaza Moraga?

Our best days need not be behind us? But we have to first get rid of the thought that somehow whatever ails us could be solved by external help? An attendee to the recent forum of PhilDev (on innovation and entrepreneurship) writes in his blog that perhaps given our colonial past, we seem married to the notion that some big brother would help us? But of course we have a few big ones who can help – and they are our major enterprises? They are in the best position to make this battleship change course – but not if we’re glued to the past. Unwittingly we may be reliving the ‘gilded age’ in America when oligopoly ruled – granted we are in that stage of our evolution and development? Yet we welcome and need their investments! But they must figure out what it will take for Philippine industry to be competitive – and thus able to expand our market beyond our shores?

Industry captains can push for eliminating foreign investment restrictions which have held back economic development? While we see some degree of progress we keep sub-optimizing our efforts owing to our “paki” culture which is a hair removed from inefficiency if not corruption? Our major enterprises can spearhead bringing ‘science and technology’ to the country? Given their credibility, they can call on our legislators to make the Philippines competitive via statutes that attract foreign investments and encourage technology and innovation, and talent, product and market development? To whom much is given much is expected – which is another way of expressing the 80-20 rule, especially in prioritization? Of course it will not be a cakewalk – to reorient a business from local to one with regional, if not global, reach would require a new mindset and greater investment, which is precisely what the Gokongweis are doing, for example?

Instead of railing against MNCs, we should in fact encourage our major enterprises to become MNCs themselves. And the reality is Fortune 500 companies are able to spread economic benefits because of their confidence and capacity to be globally competitive – i.e., they invest aggressively in technology and innovation, and talent and product and market development. The writer shared this reality with his Eastern European friends, and one of his greatest thrills is seeing them come along, raising their standard of living in 8 short years. They have become a model for how a local concern could compete beyond its borders, and so the EU has taken notice of them.

We, in the Philippines, remain mired in crafting livelihood projects because our economy is insufficient to feed 100 million Filipinos – and why the abuse inherent in corruption and crony capitalism is criminal? It would take lifting our average income ten-fold before we could be a developed nation! But we can raise our sights and muster the confidence and generate the capacity to be globally competitive – and steer our battleship to change course? And as The Manila Times July 7^th editorial, while teeing up Taiwan as a model, points out: we need to focus on the economic objective [even] of populist initiatives like land reform for them to be sustainable; we can’t waste 50 years on major initiatives for naught? Kindness to a fault is compassion misplaced – i.e., we’ve wasted so much scarce resources in unsustainable efforts?

Watching the administration’s ‘Pilipinas Natin’ (TV broadcast) present its economic initiatives during its first year, one can’t help notice the focus on “inclusive” – which the moderator in fact queried: “Is it even realistic?” It probably is semantics, but indeed the realistic approach is to focus on driving competitiveness? Initiatives like “OTOP” or agriculture as an industry can only be sustained if they are anchored in competitiveness? Put simply, we cannot gloss over the requisites of competitiveness – i.e., investment in technology and innovation, and talent, product and market development – if we are to enlarge our economic pie, for the common good? Competitiveness – coupled with integrity – must prevail if we are to put meaning behind our favorite buzzword, “inclusive”?

An invitation to smugness

2011-07-09T20:54:00.000-07:00

“American ‘exceptionalism’ is also an invitation to smugness when just the opposite is needed,” editorializes USA Today, as the US celebrates July 4^th, its 235^th anniversary. “The nation does not hold a monopoly on wise policies. Far from it, as evidenced by our shrinking manufacturing base, underperforming schools and dysfunctional health care system.

“Rather than reveling in our greatness or turning up our noses at other countries, American leaders should be studying the best practices abroad and bringing them back home.”

This brings the writer back to a similar time when a similar sense pervaded corporate America: We must learn Japanese manufacturing! The writer has seen America ‘stumble and fall’ . . . and not just once, e.g., the periodic recessions that would highlight the shortcomings of a supposed superpower. And he has participated in what the editorial is conveying and experienced how America had to stand up, reminding him of the movie, Kung Fu.

It was with the same sense that the writer took on the call for volunteerism following 9/11, and from a president he never warmed up to and in fact criticized, and found himself in Eastern Europe. And he thought one month was good deed enough. But he sensed the Eastern Europeans had more than stumbled and truly wanted to stand up, and so he committed to share with them a piece of the American experience, albeit miniscule. In the beginning they simply expressed lack of understanding and pumped the writer for “rules”: How do they do this in the West? But beyond the rules he wanted them to appreciate the principles behind them – because they needed to embrace and be anchored in what makes free enterprise tick.

And so at times they found themselves conflicted. Their pride in the products they had created made it difficult to see their downsides. Yet it was important for them to understand the imperative of competitiveness – that product development is both art and science (e.g., technology and innovation), and that a robust product pipeline is key; and that absent healthy margins sustainability is at risk, i.e., global players could drive them to extinction. But they first had to learn the fundamentals of product architecture modeling – which in its simplest form is translating Maslow’s hierarchy of human needs into segments or the value-chain of products for a specific product category, i.e., a product idea is a response to a human need. [It is encouraging that in the Philippines, PhilDev has introduced the imperative of innovation and entrepreneurship, emphasizing innovation and healthy-margin products. This can’t happen overnight, and presupposes shedding our parochial instincts; and being more demanding, demanding word-class products even from local enterprises, who in turn would equip themselves to take on the bigger regional, if not global, market? And successful Philippine businesses can lead the new thinking?]

But there were other “rules” that they immediately embraced. For example, “integrity is what we are”. They would tell the writer that they resented the abuse that came with the powers of the hierarchy. And so they differentiated themselves from “the Communists” – they were ‘the anointed’, by the Soviet rulers. And the resentment continues today against those who successfully gained ownership of businesses simply because they were the anointed – i.e., the transition to democracy was not all milk and honey.

It appears we, Filipinos, are beginning to recognize that we have more than stumbled? Now we must be bent on standing up? It will not happen if unwittingly we believe in our individual successes and rely on them because it is in nation-building, the common good, where we have failed miserably? For example, integrity as a nation is imperative and it cannot be achieved if we can’t turn it into a culture? Competitiveness is another and it cannot be achieved if we can’t make it part of who we are? And it is not about perfection but continuous improvement – a lesson Americans learned from the Japanese. Like in Christianity, no one can claim perfection because it is a journey – and it is not easy because the path is straight and narrow? But we can dig deep into our hearts for the human spirit – so that we can stand up every time we stumble and fall?

Integrity . . . and . . . Execution

2011-07-05T18:35:00.000-07:00

The MAP must be congratulated for pushing forward with its efforts to create a culture of integrity and execution via its private-public partnership initiative (Business World, Jun 28). It has effectively created a ‘shadow-ombudsman network’ to monitor the progress of the Aquino administration in its fight against corruption and, as importantly, to improve the country’s business environment? And thus attract and raise our investments to competitive levels – and give us access to technology and innovation, and drive people, product and market development? [But the neighbors are crooks? Precisely – great competitors exploit, not embrace the weakness of competition? It’s called ‘the killer instinct’ – and is valued, i.e., winning fair and square is what integrity is about?]

Four other articles (from The Philippine Star) ought to be highlighted: (a) Developing countries take lead (in renewable energy); (b) PHL seeks rich countries’ help in promoting renewable energy; (c) UP professor clarifies value of ODA; and (d) When less is more (on the economic provisions of the Constitution). These pieces are interrelated and bring to life the challenges to our frail economy – or why we’ve faced them for decades?

The cost and the unreliability of power is one of the biggest if not the biggest barrier to our development? But it appears there is good news down the road? “The Philippines could be considered one of the world leaders in renewable energy, with more than 30 percent of its power generation coming from renewable resources . . . The Renewable Energy Act passed in 2008 calls for new support mechanisms, including a feed-in-tariff and a renewable portfolio standard, which are expected to be implemented in the next months. Additionally, the Philippine’s Department of Energy launched the updated National Renewable Energy Plan this month, which aims to triple renewable energy supply by 2030.” (Mary Ann Ll. Reyes, The Philippine Star, Jun 29)

But we can’t go it alone and must seek help from rich countries – yet our actuations say otherwise? Thus the UP professor (The Philippine Star, Jun 29) reminds us: “The Philippines is at the losing end . . . ODA projects coming in the Philippines have been dwindling since 2001 to the present . . . and cancellation of ODA-funded projects would affect the “palatability” or how other countries regard the Philippines.” And that must be in reference to NAIA 3, ZTE, Ro-Ro ports deal, North Rail, Laguna Lake rehab, etc.? It appears we simply love to shoot ourselves in the foot?

Is it our psyche – we simply complicate instead of simplify things? From our Constitution to the bureaucracy and red tape AmCham raised, and beyond? “There are times when less is more. The less said, the more flexible, the better is the result. The more said, the greater the probability of mistakes that lead to unwanted results”, writes Gerardo P. Sicat, discussing our Constitution (The Philippine Star, Jun 29). “Very few constitutions have detailed statements about the role of the state in economic matters or in the control of resources to be used in production. The Philippine constitution is exceptional in that it has these details . . . Among all the East Asian neighbors – ASEAN members, South Korea, Hong Kong, and Taiwan. There are no economic provisions stated in their constitutional document. They leave economic issues unsaid, or unspecified.”

Complexity breeds not only inefficiency and even worse, corruption? While simple sharpens focus, and drives efficiency and execution? Of course, simple does not mean dumb but smart? It appears we, Filipinos, equate complex with smart? So did the Pharisees and scribes? [Our kind hearts whisper ‘to include’ not ‘to prioritize’?]

Before the writer flew back to New York, like he always does, he shared with his Eastern European friends what they have labeled ‘tricks of the trade’. A couple of them were still hurting from the put-down from the writer, so he explained: “The bigger we become, the simpler it must be – we are not tested for the complexity of our formulations but for their effectiveness and impact. We want market share, we want volume, we want investment spending, we want margins – and together they give us healthy profits, thus competitive advantage, that will sustain geographic expansion and growth. Try that with complex and we won’t even get to first base – because it will leave us high and dry in our perch?”

Agriculture initiatives continue to lag?

2011-07-03T04:21:00.000-07:00

The Joint Foreign Chambers (JFC) already raised this issue when they reported on the progress of Arangkada Philippines earlier in the year? Are we simply too nice as a people – tolerant of inaction? The writer has felt a similar nonchalance in Eastern Europe; and probably why it has become his second home – it is not as cut and dried as the US?

It shouldn’t be surprising that on June 25^th there was a commentary, Structure Follows Strategy, in The Inquirer? Yet it still sends shivers? It speaks to a classic gobbledygook? Put simply, in agriculture we’re still neither here nor there? “But we’re nice people” – the writer could almost hear his Eastern European friends! He remembers being briefed about the local culture: “Please don’t expect Stefan – who was to be his assistant, translator and driver – to be at your place on the dot at 9 every morning.” Left unsaid is: “We’re not a slave to time.”

We believe we have a strategy but the structure is missing – and the requisite leadership to drive pieces of the initiatives is non-existent, says The Inquirer? But we are uncompetitive and poor because our economy is lagging – just like our agriculture efforts? Resolve and urgency – how do we dig them from our hearts? But we’re nice people? Or is it the big guys – like the middlemen providing credit, for example – taking advantage of the small farmers, and they can’t fight their city hall? And as bad if not worse is when local officials misappropriate funds for local development, like it was reported recently?

We have to look our reality in the eye: we can’t get things done, we suffer from endemic corruption and we’re stuck in the past given the issues we’re still dealing with – when our neighbors, including supposedly poor Vietnam, are already doing large-scale farming and pursuing bio-technology? It is not simply a matter of thinking big or small? But thinking small or ‘making-do’ yields small outcomes – reminiscent of the parable of the talents?

Yet we are proud that we’re thinking big – because food security is the mantra of our agriculture efforts? But should it really be food security, the new buzzword? Or should it be a sustainable, profitable enterprise that we want for agriculture? And that means ensuring from the get-go that competitiveness – i.e., investment in technology and innovation, and people, product and market development – is the guiding principle of agriculture? It means that the factors of production – men, machine, materials, money and method – are optimized for efficiency and productivity. And to ensure commercial success, the dynamic of the product, pricing, placement (distribution) and promotion are optimized as well. And finally to ensure execution we are able to satisfy the acid test: who will do what, when, where and how? There could be several layers in our agriculture initiatives – from the local level all the way to the national level – and that is why the bias must be to prioritize, following the 80-20 rule?

What should be the contribution of agriculture to national revenue? What sectors will generate the greatest revenue streams and must be the “core business” of agriculture? How can it sustain this revenue-generating capacity? Do we need to tap foreign markets for produce where we have the competitive advantage? How do we attain such advantage – e.g., via technology, innovation, etc.? What market shares must these produce attain to have critical mass and justify investments – from infrastructure to production to logistics, for example? How will the efforts be shared across the stakeholders – corporate entities, cooperatives and individual farmers? In short agriculture must have a business plan. Once we have an articulated plan and a strong commitment to execute and thus generate the desired income streams, then we need a parallel initiative to pursue livelihood-directed efforts at the local level.

To take care of the economics (of agriculture) that will yield the surplus for compassion’s sake is authentic; to talk compassion without the economics is not walking the talk – because it’s unsustainable?

The AmCham speaking frankly

2011-06-29T06:45:00.000-07:00

Full disclosure: Almost 30 years ago the writer sat in one of the committees at AmCham – and the task was to ensure that American companies in fact pay market-competitive rates, i.e., better than local rates. [Reports Business Mirror, Jun 19^th: “The secret to success is people management”, and explains “why US management rules the world”.] But that is what competitiveness is about: investing in talent as well as product and market development on top of aggressive investment in technology and innovation? But over the last 8 years the writer has been in Eastern Europe and guided a couple of Eastern European companies to compete in the EU market, against Western interests, and even hired away some of the latter’s talents. And it was under the auspices of the USAID – but that’s what free enterprise is about, fair and square, no handicapping or sense of entitlement that hierarchy or rank brings? And thus China is today able to flex its muscles . . . after leveraging the global economy. Granted they’re still learning the ropes? But so is the US in more ways than one – and even their supposed values are aspirational and forward-looking? And they admit to the greed that took the global financial system down; and the failure to lock up the culprits?

And with the Eastern Europeans the writer is among those preaching the imperative of competitiveness – i.e., competitiveness is about investment . . . but beyond capital. Thus the competitiveness rankings are simply the score. Similarly, poverty is not the cause but the effect [or the score] of a failed economy?

Why are we uncompetitive – and poor? Because we pursued competitiveness not as free enterprise is designed to be and celebrated “competitive edge” as a reward of a parochial and hierarchical system that is unwittingly protectionist, on the backs of 10 million OFWs? It protects the few and/or the hierarchy but leaves 30 million Filipinos hungry? The model limits foreign investments and misses that they come in many forms: capital, technology and innovation, and people, product and market development? It is disconcerting that our gross investments lag those of our neighbors. And it gets worse given our uncompetitive R&D investment levels and capacity. We need a radical shift – think beyond consumption and outside the box and think global. And favor investments that raise our technology and innovation quotients. It’s the 21^st century?

Is it surprising to hear from AmCham then? Business Mirror, Jun 18th: “There is too much bureaucracy [and] red tape, and the Philippines is quite protectionist . . . The Philippines is moving too slow. This country reformed slowly than most Asian countries. Many of its laws and regulations are no longer in tune to the present setup . . . If it were up to AmCham, what some Filipinos regard as the “nationalist” provisions of the Philippine Constitution or Philippine laws would be repealed as soon as possible for being “irritating and out of tune” with the times. These provisions include the 60-40 division of any foreign-owned company in the country; the barring of foreign businessman from owning land; and the disallowing of foreigners to enter the retail-trade business in the country.

“Remove these barriers, and one day you will wake up like Malaysia. It’s strict for bad business but wide open for foreign direct investments . . . Malaysia opened its economy in the last 25 years. The result made the country the second most developed nation in Southeast Asia . . . The Philippines has tremendous opportunities to grow because of its God-given resources. That is our fearless forecast. We’ve been here for over a hundred years, and we will stay here to witness our expectation for your country . . . AmCham . . . remains very bullish about the Philippine economy and identified seven core industries that would soon make it big if given the needed push and support. These industries include agribusiness, business outsourcing, creative industries, infrastructure, mining, manufacturing and tourism.”

Of course, to be competitive means to pursue the profit motive? It is this surplus that generates the benefit of free enterprise, i.e., it feeds the investment cycle and when truly successful becomes a virtuous economic circle. [The Bernard Lonergan, SJ, Institute addresses this point, the convergence of economics, ethics and theology.] Some are toying with other isms because “free enterprise” in the Philippines failed given massive poverty? The writer’s ex-socialists friends wonder when they read about our gripes. They can distinguish free enterprise from oligopoly – which still confounds them? And why they opened the media to Western interests – they had associated media with the old Communist-propaganda machine. They are in search of authenticity? What about us?

‘New York state of mind’

2011-06-25T05:40:00.000-07:00

The wife would pity the Eastern Europeans for rapidly learning and mirroring the New York state of mind: “They’re too young to be so serious with life!” The writer is with a very smart fellow who as a student represented his country in math competitions – and would probably run rings around American kids and be a good match against the Singaporeans or Koreans? They are discussing product development, and how to step back and approach lateral thinking – and not be held hostage by linear thinking. [He had heard the writer challenged two others to think big and leverage their growing businesses; and guided them back to the drawing board, i.e., incremental thinking must be out the window.] The object of the young man’s new assignment is to move up the value chain and it requires ‘discontinuity’, short of ‘creative destruction’. [A simple example is moving to liquid detergents from powder detergents.]

And he gets back at the writer discussing “quantum mechanics and the power (of thoughts) that comes with it; and explains he will manage the new business as though he’s in a chess match, an ancient battle – being disciplined and strategic, always anchored in the fundamentals”. The guy is a quant – and with his talent the expectations of the writer would, once again, be exceeded? The world is moving at warp speed!

Finally warm weather arrives in this part of Eastern Europe! Many years ago the family was in Paris and the writer wondered how Europeans could be lousing around in an outdoor café as though time stood still? It was his New York state of mind that was robbing him of the moment. Before stepping out of the hotel to explore Paris he had to make a phone call to New York – and the only thing he remembers today: “Please wear your thinking cap if you haven’t done so yet”!

How liberating . . . to be lousing in an outdoor café in Sofia – in jeans and driving shoes! And in his favorite tees from the daughter, which reads: ‘Retired – you’ll be charged a consulting fee if you want to talk to me’! With iPad in hand the writer breaks into a smile reading the piece of Dick Cavett. His wit is why the NY Times on a weekend brings the New York state of mind even to once communist Eastern Europe. Busy with his iPad the writer isn’t responding to the waitress until Andrea Bocelli comes to the sound system with a signature song and so he says: “a bruschetta please”.

When the writer first arrived in Eastern Europe he immediately noted that to be frugal was second nature. While wasteful Americans could learn a lot from them, there was a tendency to tolerate poor quality in more ways than one. And thus to move up the value chain is an uphill climb – especially when making-do is valued?

Is there an element of making-do in ‘Filipino abilidad’? Should we recognize that the 21^st century demands much more, at warp speed? Says Robert Sears, AmCham director for external affairs: “The Philippines is moving too slow. This country reformed slowly than most Asian countries. Many of its laws and regulations are no longer in tune to the present setup,” reports Business Mirror, June 18^th.

And it starts with wanting to do business beyond our shores – because it will mean, even force, investing in technology and pursuing discontinuity? Cebu Pacific comes to mind; and they probably are managing their international expansion as though it’s a chess match, an ancient battle – disciplined and strategic, always anchored in the fundamentals?

The writer again wears a grin as he reads: Secretary Gates looks forward to driving to a Burger King once he steps down as secretary of defense. What would his t-shirt say? Hierarchy is something we value but others don’t? And the iPad pops a message, “A bomb explodes in Southern Philippines”. Do we have more than an image problem?

Arrogance of success

2011-06-21T02:47:00.000-07:00

A CEO at one of the world’s most successful enterprises, but is now retired, once acknowledged to the troops that “arrogance of success” was making them vulnerable – especially in a globalized economy that has become more competitive than they themselves imagined. And so he purposely reversed some of the company’s dogmas. But dogmas don’t just get erased or deleted – and those who ‘grew up’ with them stay wedded, as a friend would explain. Inertia is not confined to physics?

The Philippines doesn’t have such a problem with economic success but individually Filipinos have excelled. How do we stack up against the Western value of individualism? That is not to say we’re not concerned, especially given our falling global rankings (in competitiveness and economic freedom)? But being concerned and . . . moving forward are not one and the same – e.g., the JFC are expressing impatience with our PPP? And that is to be expected from the business community, local or foreign? “A prominent hedge-fund manager . . . has publicly called for a change at the top of the firm [Microsoft], arguing that Mr. Ballmer [CEO] is ‘stuck in the past’ . . . If IBM’s history is the guide, Microsoft may yet end up jettisoning its leader,” reports The Economist, Jun 11^th. Given our respect for hierarchy, that would be heresy?

The writer’s Eastern European friends just received an invitation from the European Business Awards to compete in the 2011 International Growth Strategy category in recognition of their explosive growth over the last 8 years. But success in the business must equate to sustainable profitable growth – and it can only happen when they can sustain a clear cut competitive advantage? But separately and within the firm they felt like being stopped dead in their tracks as they were going through the periodic business-review debates. Ergo: the mantra of continuous improvement never ceases? Young marketing managers who have successfully built their businesses may feel they’re invincible . . . until they realize that there are ideas that could not travel outside their home market. On the other hand, Cebu Pacific confidently placed an order for a big number (37) of aircraft given their aggressive plans to go international. Put simply, they have an idea that could travel outside the home market?

A major barrier to Philippine competitiveness is our inwardly-focused economy? Because that is our strength and it is good for the local economy? Unfortunately, precisely because of such rationalization, which for all intents and purposes hasn’t done us proud, we have yet to develop the drivers of competitiveness – e.g., elevated and aggressive investment in technology and innovation, and people, product and market development? And our industry has no bias for R&D investment – and ‘Filipino abilidad’ will not compensate for that? [Writes The Economist, “By 1935 some 95% of its (IBM) profits were generated by innovations introduced in 1917. This effort soon expanded through partnerships with universities and embraced pure research as well as the more applied, commercially driven sort.”]

And beyond our lack of key infrastructure, we have now recognized how much our neighbors have outdistanced us in attracting foreign investments? And when we add how we complicate instead of simplify things (thus breeding insidious corruption – (KISS) keep it simple, stupid?), our ability to attract foreign investment remains suspect? NAIA 3 was, and still is, one pathetic exercise in futility – and we have others, e.g., Ro-Ro ports deal, Laguna Lake rehab, North Rail, etc.? But do we even care? It is another characteristic the writer senses in Eastern Europe: people don’t seem to care much beyond their respective worlds – because they have gone through so much forgettable events and experiences that they would simply take things in stride? [And we explain that as happiness or resiliency?] Instinctively we would recall the past to prove how colonizers took advantage of us; while Eastern Europeans would talk about how they made the wrong bets, like becoming aligned to the Soviets?

In the final analysis, does it boil down to getting over the past? It appears Westerners are more able to take stock and move on – while Easterners seem overwhelmed by the past? But says Medvedev of Russia: “the country must begin to attack the problem [of an oil-dependent economy] immediately to avoid ‘the point of no return’ from the (economic) models that are moving the country backwards . . . Corruption, hostility to investment [among others] are the taxes on the future that we must and will scrap,” reports the NY Times, June 17^th. And the operative word is . . . immediately?

Energy and electronics . . . hierarchy and corruption

2011-06-18T05:40:00.000-07:00

The Independence Day celebrations must have encouraged completion of loads of homework from various government departments and partners in industry – from reporting progress in our energy PPP initiatives to developing a technology roadmap for electronics to the crafting of a game plan for tourism? And not to be outdone, one daily had an editorial on the whys of corruption – perhaps pursuing President Aquino’s pledge to traverse the straight and narrow?

Cronyism, pork-barrel politics and the absence of campaign finance reform would explain our insidious corruption? We believe we are holistic and populist and want to be inclusive when we’re addressing poverty? But how do we dissect corruption? Like ‘analytical Westerners’ able to sharply compartmentalize – and explain why we are unable to overcome it? But where is closure? Excellence and competitiveness have no respect for Filipino time? Are our legislators to blame for pork-barrel politics and our inability to pass a campaign-finance reform? Is cronyism synonymous to our “weather-weather” syndrome and an expression of hierarchy and the power that comes with it? Corruption is so insidious it is everywhere? When we violate easement rules and gain extra space for our homes or businesses we are not only aiding and abetting corruption but are polluting and undermining the environment as well? Or when we turn king of the road once we’re outside our gated communities, superior to traffic cops and traffic aides?

The buying of votes is a way of life and perpetuates hierarchy and power? Campaign contributions are there because kingmakers thrive in the environment – they are an investment because politics is big bigness; while blatantly undermining whatever leadership role public service is meant to bring in the first place? Political leadership is designed to educate Juan de la Cruz, not to undermine nation-building – or why public servants parade their superior education and training? [It appears we have made education big business (diploma mill?) given the staggering number of colleges and universities we have when only a small fraction in fact goes to college? And not a surprise our competitiveness ranking is mediocre? Similarly we have lots of SMEs but are ranked poorly in entrepreneurial dynamism because we don’t seek to excel and compete beyond our borders?]

Do we expect to move forward with our energy PPP initiatives – and make the failed EPIRA just a bad dream? Energy is so fundamental like an international airport or trains and roads and bridges – and will we learn to put them up sooner than later? What about the electronics industry’s technology roadmap? Do we expect local industry to commit to invest and move our semiconductor industry up the value chain – e.g., “automotive electronics, PV/solar, mass data storage and research and development (R&D)”? Or are we dependent on foreign enterprises – i.e., local industry has yet to invest and raise our capacity in science and technology? Tourism will largely be a local effort, though foreign investments could be tapped – and will we do better than our performance or non-performance in NAIA 3 or the Ro-Ro ports deal or North Rail and succeed in erecting the requisite infrastructure system for tourism?

We’re not unique given other people are also predisposed to messing things up? The only difference and why we seem the odd one is that we can’t seem to move up? We keep sinking in the competitiveness and corruption indices, for instance? And how do we propose to move forward – doing more of the same? Thankfully, the Aquino administration appears committed to do the right thing?

Should we debate corruption as much – or the incompetence in infrastructure building and development – as we do condoms? Is insidious corruption which has made us economic laggards and mired in poverty less of a concern than condoms? Both would touch the conscience but one is pulling the economy and the whole country down, today not tomorrow? What about the common good? How many have we contributed to the infamous list of the world’s most corrupt leaders? And where do our leaders come from? Not from some country out to screw us?

Tribal and thriving

2011-06-14T20:30:00.000-07:00

Unfortunately that playing field is long gone, and our inability to pull together says we’re not ready for the 21^st century? Even the Brits were tribal yet today the coalition-ruling party is working hard to push the country forward, embracing reforms that hit the pocketbook. [Unfortunately, Americans want their cake and eat it too – and find themselves like cartoon characters spinning wheels?] Deng Xiaoping moved the country to embrace market economy, socialism be damned? People know they have to move beyond warring tribes? And in our Christian faith it’s called the common good? Not only are our big boys in tribal wars but even within the media loyalties between current and past administrations are adding fuel to the fire – and so are clerics? The personal indeed trumps principle in our way of life? Thankfully, there is a great article from the scientific community about countryside development being key to growth – but the article does not speak to execution: ‘who will do what, when, where and how’?

Edison, being more than a scientist, knew that innovation had to come hand-in-glove with capital. And Silicon Valley today mirrors that orientation, i.e., venture capitalists are in bed with the innovators. And someone like Steve Jobs plays both roles so recently he made a presentation to the Cupertino city council explaining Apple’s new headquarters expected to be up by 2015. It will house more than their current 12,000 people spread across the San Francisco metro area. But it will be green and the vision is to make it a model for the 21^st century. From photos it looks like a large UFO that had descended on a green earth. And when asked what he expects Apple to contribute to the community, he says unequivocally: “taxes and more taxes. [And added:] plus a bunch of smart people who could afford desirable housing in Cupertino. But you won’t see their cars in the campus because they will be underground. Green is the theme of the campus.” Eisenhower while commanding the Allied Forces in Europe was awed by the efficiency of the German autobahn system and when he became president pushed for what today is known as the Eisenhower highway system. Tribes look at their own; but Edison, Jobs and Eisenhower looked beyond their own and looked ahead?

We truly believe we’re smart and creative people but ‘no man is an island’? Like in institutions public or private, societies that deliver results for the common good are not the same as those confined in their respective tribes. And it is leadership that steps in to pull people and ideas together? It sounds Mar Roxas will be focused? Hopefully being a politician and future president won’t be a barrier to getting his job done? It appears President Aquino needs a no-nonsense manager? And it would pave the way for Juan de la Cruz to support Mar Roxas in his new assignment if he gives the lay of the land, and it’s not pretty?

For instance, getting basic infrastructure projects off the ground and completed in a timely manner is a must? NAIA 3, Ro-Ro ports deal, North Rail, etc.? How we allowed such incompetence and corruption to define Juan de la Cruz and his way of life is the first reality we must confront, and Mar Roxas must address? No amount of ‘Filipino abilidad’ can make up for these failures? Time is gold – and we keep asking ourselves how we could address poverty, when we don’t demand timely execution? We have to roll up our sleeves and get things done? And that means literally paying the price – delays cost tons of money, and sweeping them under the rug as we do must stop? It’s the 21^st century and it’s long past for us to have these platforms – of a robust economy. Our economy is frail because we have not faced up to these realities? And that means stepping on people’s toes when warranted? In our desire to please everyone, we have compromised excellence and competitiveness – what the 21^st century is about – and not a surprise, we’ve become an economic joke?

Poverty is not the cause but the effect . . . yet we keep banging at the wrong door? It is not poverty that we must fix but ourselves? We don’t do self-immolation or Gandhi-like fasting or the Japanese hara-kiri, but we must find a way to rally Juan de la Cruz’ spirit? Writes The Economist, June 10^th: “. . . Italy has failed to renew its institutions and suffers from debilitating conflicts of interest in the judiciary, politics, the media and business”. Sounds familiar?

Beyond communication

2011-06-11T06:58:00.000-07:00

Behind a successful brand is an outstanding product? There are fundamentals we can’t ignore – granting we all want to lift the economy and the country up? Thinking and believing make it so . . . when the critical elements of an undertaking are in place? We want a new Philippine brand to burnish our image – thankfully it is what the Aquino administration is pursuing?

But the president by himself can’t do the job? Corruption is so insidious that major projects carried over from prior administrations are headline news. And everyone is crying foul as these projects come under scrutiny – with Juan de la Cruz oblivious to the inefficiencies, the costs of delays that set progress, development and GDP back? In business lingo, it hits us at the bottom line! Until we subscribe to the discipline of transparency, we would slip into the habit of opaqueness? Is the issue behind the fiasco of NAIA 3 out in the open? What about the ones of the Laguna Lake rehab, the Ro-Ro ports deal, the North Rail, etc.? These major projects may have already muted the outrage of the incurable compassionate Juan de la Cruz but foreign investors are watching – wondering about our numbness, i.e., how could such nice people keep shooting themselves in the foot? Not that all foreign investors are desirable – but the key is transparency? Respectable investors would respect us, and foreign investments would come if transparency is the rule?

It brings to mind an op-ed piece from the NY Times, June 4th: “An Archbishop Burns While Rome Fiddles.” The Vatican has been on a PR offensive to address the issue of sexual abuse opening its doors to US media to get nosey American journalists to hear it from the horse’s mouth. Yet, the efforts fall flat when the archbishop of Dublin can declare: “Nobody could have read what I have read and not did what I did,” he said as he walked me out into the windy spring day, writes the NY Times columnist. “If I didn’t react to the stories I heard, there would be something wrong.” And she adds: “He could not get through a story about “a really nasty man” — an Irish priest who sexually abused, physically tortured and emotionally threatened vulnerable boys — without pulling out his handkerchief and wiping his nose.”

We can fiddle with the shortcomings inherent in our economy – from the lack of basic infrastructures to corruption to raising barriers to foreign investors – but while doing so we can’t expect to optimize our efforts in rebranding the Philippines? We believe condoms will destroy the country when insidious corruption on top of parochialism and false patriotism already did? As the World Bank says, we ought to be attracting a lot more tourists and making tourism a strategic industry like they do in Thailand or Malaysia; but not when our world-class attractions are inaccessible thus limited to the moneyed-class – i.e., very consistent with our value of hierarchy? The mantra of excellence and competitiveness extracts a great measure of discipline – there is no free lunch? Imelda was a terrific promoter of the Philippine brand, and successfully orchestrated the big IMF meeting in Manila decades ago. We saw that she was a no-nonsense taskmaster and successful lifted our profile in the process. Beyond the meeting itself and the events that surrounded it, we saw infrastructure projects and 5-star hotels rise up as though via a magic wand. But how do you hide poverty and so she resorted to ‘white-washing’ fences along the roads in the vicinity of the airport.

And the rest is now history: crony capitalism became the economic engine of the Philippines? Marcos wanted us to join him in his supposed fight against oligarchy while creating his own version? But he knew the soft spots in our culture and so we all applauded in support of the new hierarchy he created? And it reinforced our patronage system? Our challenge goes beyond communication or branding – and why we’re economic laggards?

The writer is chatting with an Eastern European and she laments that it takes courage before they could admit to a mistake. And the writer shares stories of leaders who simply admit mistakes: The sooner we admit mistakes the sooner we can fix them. Mistakes are as old as man, and mistakes can be fixed, but not if we don’t admit to them? And it takes courage according to a young Eastern European? Demonstrated, for instance, by the archbishop of Dublin?

The PPP must be making a dent

2011-06-08T21:10:00.000-07:00

With everyone scrambling to get into the action, the Aquino administration’s PPP (private-public partnership) vision must be gaining adherents? The Ayalas, Metro Pacific/PLDT/Meralco/etc., San Miguel, etc. are all opening their wallets? And there is even in-fighting with a little help from their friends (a.k.a. PR machines); who would accumulate the most? And not unlike school kids, unfair initiatives are being exposed and teachers and principals are being urged to step in?

But that’s the beauty of the market economy, people open their wallets? And especially in a place like the Philippines, where over the years we’ve paved the way for the few, and allowed gross investments to deteriorate; we could use these capital funds? Yet vestiges of parochialism and false patriotism – e.g., denuded forests, a polluted Metro Manila, insidious corruption and a skewed economy – ought not to undermine the great opportunity in front of us. With the world in an economic turmoil, capital would seek investment options – and developing markets like ours would get on the radar screen of investors. Bearing in mind that in a global recession developed markets would tend to contract, while developing countries would be caught in a building mode.

Eastern and Central Europe, for example, offer a panoramic view of how investors would prowl the world ever ready to jump on a “prey”. And this is in the midst of a volatile European-wide economy – i.e., with reports of debt-default risks, currency deterioration outside the euro zone and business pace decelerating from prior year. And precisely why mergers and acquisitions are ripe, i.e., poorly managed businesses become bargain wares for progressively managed enterprises. The writer hasn’t seen an abundance of heavy equipment like construction cranes since the speculative days of Hong Kong and more recently China. Clearly these people – born and bred as socialists – are learning about global competition and the global economy with all its ups and downs and would only come out of the experience wiser and more confident?

We badly need to move the Filipino worldview to the 21^st century? Nationalism is to be proud of yet countless have become COWs – citizens of the world? It’s a small world – and we don’t have to make it smaller, and miss the parable of the talents? The good news is local-Philippine major players are reaching out to foreign partners with the expertise or the technology that we need, like rail transport, for example? It seems that we’re running out of investments that are driven more by political patronage but low in technology? And technology as an afterthought, and the innovation it brings, is why we are yet to develop the confidence in global competition?

It’s time to recognize that parochialism and false patriotism have inflicted the cancer in our society? And add corruption, it could become terminal cancer? We’re happy to have 4 Filipinos amongst the world’s wealthiest – with 100 million Filipinos being the market? We could produce more if we look at a market of 7 billion – or at least the region? And it would give us a larger economy, not confined to concocting livelihood projects – i.e., gain respect beyond compassion from the rest of the world? But the world shall not wait for us – e.g., global investors have already factored the Great Recession thus poised to pick up the spoils once the global economy picks up? It takes investment, technology and innovation, and talent, product and market development to be globally competitive?

And many countries don’t even have to pursue PPP or Arangkada Philippines-like initiatives yet Western capital funds are coming. Why? They don’t have biases like parochialism or false patriotism?

Writes the Harvard Business Review, May 31^st: “In our increasingly interdependent global economy, (local) knowledge doesn't confer power. Instead, power stems from finding and sharing knowledge across national boundaries. Eschewing vertically-integrated, insular R&D models, Indian CEOs and policy-makers must learn to orchestrate global innovation networks anchored by collaborative partnerships. We look forward to India's "Decade of Collaboration."

People not structure deliver result

2011-06-05T23:05:00.000-07:00

It is encouraging given where we are as an economy and a nation that the Aquino administration has made its roadmap official with the issuance of EO 43. It appears the administration’s directions are not incompatible with Arangkada Philippines? And given it is a broad program there are many pieces to it. The reality is people not structure deliver result. And that remains our challenge? And it means focusing on outcomes not activities? We can’t afford more bureaucracy – where an activity becomes ‘the be all and the end all’? And to paraphrase former NEDA chief Dr Sixto K Rojas, we’ve tried every trick in the book. What we need is new thinking. For example, the administration appears serious about fighting corruption – thus must focus on outcomes not activities? And it means passing the Caesar’s wife’s test across the board? It is an uphill battle since in our culture relationship trumps principle? We don’t need another manifesto that says we are committed to fighting corruption? The test of the pudding is in the eating?

And Arangkada Philippines ought to be up there simply because there is no other initiative that captures our pressing need in a more straightforward manner? We need a substantial bump in our national income and that means we have to pour investments in a few strategic industries that can bring this about? Of course, the iceberg could be a monstrosity below the waterline – and here is where individual pet projects and vested interests would fight to get on the train? And it is here where leadership is called for. For instance, there are very basic elements that must be put in place to get investors committed to the administration’s roadmap and so there ought not to be any equivocation in this respect. And again, Arangkada Philippines provides guidance?

Reports Business Mirror, May 30^th: “With good governance and anticorruption as overarching theme, the plan has three broad strategies. First is a high and sustained economic growth, which provides productive and decent employment opportunities. The second strategy is provision of equal access to development opportunities across geographic areas and across different income and social spectrum, which will ensure that economic growth and opportunities translate to poverty reduction. Thirdly, the plan will push for the implementation of effective and responsive social safety nets in order to assist those who will not be able to catch up by the character of a rapid economic growth,” the National Economic and Development Authority said in a statement. “The government’s targets are anchored on the 16-point agenda of the President, which he disclosed during the election campaign in 2010, as well as the country’s commitments to meet the Millennium Development Goals (MDGs) by 2015”.

And among the 16-point agenda would be: poverty, health care, education, housing, land distribution and acquisition. Clearly, while the government is driving trade and industry in order to generate economic output, it has to spend for many of these critical initiatives? The administration does not have sufficient means to cover all these initiatives to the level that would address our issues? Inclusive means generating the positive outcomes from these initiatives – not merely a laundry list? We don’t need to adhere to 300 tenets – but the Great Commandments? Of course in the global competitive arena they talk of Pareto’s Principle because he developed an econometric model. Amazingly, great competitors – like Apple or Steve Jobs – swear by it yet countless pay lip service?

Likewise it is imperative that we take political patronage out of the equation and again, it demands leadership? The question we have to ask ourselves is not who gets the spoils from the administration’s roadmap; it is what are the vital few initiatives that will give us the biggest bang for the buck so that they are sustainable? In short, the priority ought to be initiatives that will be sustainable over the short- to medium-term . . . to lift us ‘above water’ and then we can deal with the rest, but still on a smartly prioritized basis? For instance, we still have the NAIA 3 issue yet have added the Laguna Lake rehab, the Ro-Ro ports deal and SCTEX? And as we have seen PPP-driven projects don’t get off the ground on time? And so are the strategic projects in Arangkada Philippines?

Leadership is focused on the outcome beyond the activity?

Squaring a circle

2011-06-03T05:53:00.000-07:00

We can leave that for the mathematicians like they sweated to figure out the accuracy of Pi? But to try putting a square peg in a round hole is foolhardy? Is competitiveness a round hole that won’t take a square peg? We’ve thrown loads into the challenge yet competitiveness appears elusive?

Are we ignoring ‘reality’ – or the ‘fundamental givens’? Are we bringing into the challenge a baggage – of ‘Pinoy kasi’? We’re proud Filipinos, especially proud of ‘Filipino abilidad’? But problem-solving doesn’t respect nationality and culture? Which is why Deng Xiaoping said what he said – and embraced market economy? And today it goes beyond Deng, reports the NY Times, May 24^th: “The power companies say they face financial ruin if the government continues to tightly limit the prices they can charge customers, even as strong demand is sending coal prices to record levels. The chairwoman of one giant utility, China Power International, recently warned that one-fifth of China’s 436 coal-fired power plants could face bankruptcy if the utilities cannot raise rates.”

Subsidies [our go-to economic tool?] can only go so far – as we now know? It is like the environment; talking sustainability while denuding the forest doesn’t compute? True compassion is driving development, not treating ‘Pinoy kasi’ as sacred? Our expertise in accounting and finance is recognized worldwide – and why back-office operations are coming to the Philippines. But are we ignoring the fundamentals of margins? When we travel to the West it makes sense to do our shopping because goods are cheaper – and would proudly pull out our iPad2 once we’re home? But that is a function of economies of scale – and so even a democratic president like Clinton pushed for NAFTA, even though the US market in and of itself is a huge market?

Put another way, a market of 100 million Filipinos is still a disadvantage scale-wise compared to the regional and global market? Of course, to many local businesses and MNCs in the Philippines, 100 million is a big market. But that’s precisely the blind spot. We view ourselves – and are viewed by MNCs, too – as a market as opposed to a regional if not global resource, with the exception of BPOs and semiconductors and a few others? That is why our local economy is a lot bigger than our export economy?

To overcome this local bias we need in short order to be competitive? And that is a challenge to our creativity and ability to generate funds for investments? Our local bias would explain why oligarchy is alive and strong. And we are complicit [driven by respect for hierarchy?] for turning a blind eye on transparency and political patronage? For decades we accepted a phone monopoly, and a system from the dark ages? What about coconut? The resurrection of these debates is a reflection of our inability to turn from the past? Innovation and investments are available in a globalized economy and the key is to leverage them? And that means we have to get the basics right – e.g., an international airport, power, water, roads, bridges, Ro-Ro ports, etc.? And ensuring that to do business with us isn’t perceived by foreign investors like pulling teeth – because until we do, we will insanely be putting a square peg in a round hole?

Problem-solving is a discipline, not an expression of one’s culture or faith? Given our holistic perspective we tend to bring our cultural biases in our problem-solving – and also our faith? Culture and faith matter. But we can’t feed 100 million people . . . because our income as a nation is deficient – and so to problem-solve means we have to figure out how to raise our income? 10 million OFWs have figured it out – with a family income insufficient to make both ends meet, they had to go take jobs overseas?

And as a nation, we have to move from simply being a market to being a regional if not a global resource – and we should be debating how to make it happen more than debating whether to use condoms or not? Beyond individual upward mobility – which may be a function of education – is the challenge of the common good – which is a function of economic development? We’re critical of Western individualism – but have yet to be different?

The cycle of life – the why of development

2011-05-31T05:12:00.000-07:00

With the miracle that is Singapore people would have an opinion on Lee Kuan Yew – good, bad or indifferent? The writer remembers seeing the young Lee personally overseeing the construction of the Singapore Zoo. And today he may be waking up in the heart of Eastern Europe but wouldn’t miss the news about Lee Kuan Yew’s resignation. Would the younger Lee address the issue of transparency more proactively – ‘benevolent rule’ in this day and age is passé? And which is why the West always had issues with Singapore?

The past is to learn from; the present is to live in with the learnings from the past; and the future is to bring the hopes from the learnings of the past and the present? Having been around the block the writer has had a ringside view of the ‘’cycle of life’.

In the Philippines decades ago, one of the first functions in one company he had to attend was a retirement dinner. But it was like run-of-the-mill; so he wanted to reduce its frequency without being insensitive to the honorees. It shocked his assistant until he said: “I cannot, even if you pay me, hear myself saying almost the exact same thing so many times a month”, and she giggled. And everyone then realized that there was a way to ‘reform an old-standing tradition’, making it an even more fitting event. As a rule, people in the company had to publish their calendars in advance; and one time a Japanese colleague requested the writer to stop by Tokyo because Japanese value their service awards – and if he’d do the honors. ‘Indeed, life’s milestones must be celebrated!’

Before traveling to Manila last January, the writer and wife visited two elderly friends in their apartments in Manhattan. No matter how much the tandem of Cuomo and Bloomberg had to cut their budgets, it was delightful that caring for the elderly was still affordable. And the attending nurses explained how the system worked. They had a team that would visit several times a week . . . and the joy in the faces of their patients said it all. With such positive vibrations the writer didn’t even believe they were on their deathbeds. (May they rest in peace!)

In global business MNCs are heavily invested in managing the ‘cycle of life’. Succession planning is a time consuming process yet regarded as very smart investment, pioneered perhaps by General Electric. Jack Welch, a GE ex-CEO, was known to have spent half of his time in succession planning. And the process is as severe if not more so with products and brands and with markets. The unwritten rule: nothing is permanent. [Everything turns to ash?] Being young once afforded the writer the chance to encounter 3 MNC CEOs. And it’s a wonderful feeling that today folks he called ‘young people’ are behind the company . . . while he collects his senior citizen (Metro Rail) ticket at an ATM in Grand Central Station. And it’s honor system: you stick your credit card and punch ‘senior citizen’ and bingo. And it also works in movie houses: while the writer keeps to the notion that he doesn’t look like one they still hand him the discounted ticket. [Research confirms that societies with ‘a low-trust level’ are generally underdeveloped.]

And the cycle of life goes on. Recently, his Eastern European friends showed him the new R&D lab of their latest venture. And said one: ‘This is the kind of investment you expected from us, and we’re proud of it’! From a cottage industry in the middle of nowhere occupying an old dilapidated ex-communist structure – which even the locals would deride – they are now an MNC, in the short period of 8 years. And in the Philippines we’re still debating about the same old issues from decades ago? We really don’t like foreign investors or MNCs? But ex-socialists have themselves become MNCs? We Filipinos ought to look forward to being MNCs ourselves? There is no rule that says ‘no’? Nations develop for the common good – not stay put?

How the writer would wish he’s running from school anticipating the joy when he sees his mother simply being home? Before flying to Eastern Europe, the writer and wife had to house-sit for the daughter and son-in-law who were out of town. Waking up on their first morning and after successfully brewing his first cup of coffee, the writer remembers the first time his parents stayed over in their new house in the Philippines, and the daughter was just nine. Mother was fumbling in the kitchen, after waking up before the maids did. (May she rest in peace!)

Hierarchy, permanence . . . and parochialism

2011-05-23T07:07:00.000-07:00

RHIP – Rank Has Its Privileges! Could our mindset be leaning to our instincts of hierarchy and permanence – thus our seeming inability to adapt to the times? And adaptability is one of the elements of developed institutions highlighted by Prof Hutchcroft in dissecting our institutions, speaking at a recent gathering in Bacolod?

Hierarchy and permanence especially in a parochial society won’t be hospitable to transparency – and so some sectors are pushing the FOIA with the Aquino administration? But our challenge goes beyond the ‘freedom of information’? Our comfort zone, unwittingly, is to shut extraneous forces out and perpetuate respect for hierarchy and the acceptance of permanence? Unsurprisingly, the church thrives and oligarchy, too? While the Church wants to address transparency especially as it relates to sexual abuse, its efforts are deemed still opaque in the West? Hierarchy tilts to opaque; on the other hand, transparency brings openness and fairness – and thus competitiveness? And somewhere along the line is our confusion, and why we struggle with competitiveness?

And so while the world economy has gone global we’re still of two minds – or hearts? But because of our compassion we recognize that beyond the church and oligarchy is poor Juan de la Cruz? The latter being the underdog finds a soft spot in our heart – and even gives legitimacy to insurgent elements, claiming to protect the poor? But to rock the boat is pointless and thus the option is to acquiesce – finding consolation that as a society we are in a state ‘equilibrium’? Everyone is in their right place . . . except the country – because what we have in fact attained is the ‘lowest-common denominator’? When the 21^st century demands a ‘culture of excellence and innovation’?

For decades Detroit labored yet failed to satisfy this new culture especially because the US auto industry was founded on the ‘command and control’ model – synonymous to a former GM CEO and management guru? Its attendant environment had set off demands for labor fairness and protection . . . until the industry turned uncompetitive? The Japanese (and soon the South Koreans?), having taken over industry dominance, demonstrated that the better model is that of a ‘high-commitment work system’ – i.e., manufacturing teams are vested with authority and every person is an equal and thus highly committed to the success of the enterprise, which likewise stepped up its investment in technology? Invariably new US car manufacturing operations are adopting the contemporary model in state-of-the-art facilities sprouting in the South, and abandoning Detroit and its old mindset?

The global community in the meantime continues to raise the mantra of innovation. And as innovation spreads it opens new markets and opportunities for investment, e.g., China and India. And in India a Western auto maker has introduced the concept of a ‘modular car’, where damaged external parts could be replaced rapidly and inexpensively, thus eliminating the need for repairs – not uncommon given the density of India’s thoroughfares. And so while India has a long history in car manufacturing one industry titan saw it fit to buy the Jaguar and Land Rover brands – to stay abreast with progress and innovation. [China has its own challenges, global leadership demands a new set of responsibilities – but China’s leadership over the short-term must keep an eye on social stability as opposed to transparency? But as nations and people evolve, and as the Singaporeans displayed in their recent elections, they would want to be treated like adults? Which is likewise manifested by current events in the Arab world?]

It is the 21^st century and we have seen how college kids if not drop outs could change our way of life as we know it? Thus progressive enterprises organize teams instead of relying on the formal, hierarchical structure, especially with innovation and product development initiatives. But nations and cultures are not as flexible? And the challenge, in our case, is to raise our consciousness of the barriers we need to overcome – our comfort zone being largely characterized by hierarchy, permanence and parochialism?

We would not want the Asian tigers to continue to corner investment funds that move around whenever there are perceived growth opportunities? When push comes to shove investors would still bet on markets that are committed to competitiveness – unfortunately despite professed Western values like human rights, for instance?

Where coherence comes from . . .

2011-05-20T21:48:00.000-07:00

Could our consciousness to be competitive be on-again, off-again? And so every now and then NAIA 3 is front page news – or power, water and other basic infrastructure issues? We recognize the benefit of creating a ‘brand that is the Philippines’ and understand the imperative of having a ‘good product’ behind the brand? It is important then that we raise our consciousness to be competitive – i.e., we have to arrest our underperformance against our neighbors? Otherwise such performance would become our brand – i.e., ‘perception is reality’? Brands are easy to destroy but utterly difficult to build. For instance, President Aquino alone can’t make the PPP (private-public partnership) succeed – it is how we bring coherence in our enterprise that is paramount so that the outside world sees that we’re focused on rebuilding our economy and our country, and thus would bet and invest in the Philippines?

In 2007 the ADB collaborated with our economists and put together a scholarly assessment of our economy, ‘Philippines: Critical Development Constraints’. It is available online. And their diagram (Figure 1.1) says it all: Investment – or the lack of it – is at the core of development/underdevelopment! [What a surprise?] The good news is we now have ‘Arangkada Philippines 2010’: “[It] contains measures on how to realize the projected $75-billion foreign direct investments and 10 million jobs in the next 10 years from seven priority industries”.

The people behind ‘Arangkada Philippines 2010’ are periodically updating us on the progress of our efforts – yes, it is us, not just them? And still we may choose to talk about condoms, the positives of a large population, maximizing OFW remittances, raising tax collections, etc.? What about the core of our underdevelopment, investment? In short, are we focused like a laser . . . so that we can execute and get things done and done right with coherence: who will do what, when, where, why and how? Major endeavors demand single-mindedness – but does our psyche find comfort in ‘retail politics’, i.e., all politics is local where every wish has to be appeased? Sounds like Washington or California – which are descending into chaos? Where is their coherence?

We can’t keep our eye off the ball – i.e., investment – given that the 21^st century is a highly competitive and globalized economy? And it cannot be driven from the commune like China did before – nor can it be characterized as a barangay or LGU economy’ – which fortunately works for the few, i.e., ‘the insiders’ or ‘The Boys Club’?

And given our frustrations we want to pitch our own solutions to the country’s woes that we firmly believe are spot on? The Pharisees and the scribes thought they were spot on too – adhering to their 300 tenets yet unconcerned about coherence?

He must have scratched his head when asked if it was okay to work on the Sabbath – given his response? And as they kept bugging him he had to give them the KISS – Keep It Simple, Stupid! – and laid down the Great Commandments? Do we need the second coming? A close family friend would always say that we, Filipinos, are the chosen few and thus the second coming?

Through the magic of technology the writer is able to keep abreast with how his Eastern European friends are doing. And whether he is present in person or virtual, they would still break into a chuckle despite hearing KISS for many years. And so they developed a ‘go-to program’ – and labeled it “KISS” – to get them focused on what matters whenever they’re in a bind: it could be resolving why a new product offering missed its sales target for the month, or how to bring margins to budget numbers or how to conclude an acquisition process and not let it drag. ‘Being too close to the trees and missing the forest’ is something they swear by! How quickly ex-socialists could learn ‘transparency and check-and-balance’ – and, as importantly, coherence?