Sense of purpose

Sometime ago, the UK wanted to consider a national sense of purpose and made reference to the American ‘pursuit of life, liberty and happiness’. The context: it’s not unusual for a Brit to keep a bed in the UK but work in another EU country and thus may have divided loyalties. And from across the pond President George H.W. Bush comes to mind – and his beef against ‘the vision thing’, and why he stumbled with his ‘read my lips, no new taxes’?

In the case of the Philippines, could our sense of purpose be ‘all over the board ‘especially given our ‘kuro-kuro’ culture? But with hierarchy we have no qualms? Thus, it is no surprise that leading the pack in the government’s infrastructure program are our conglomerates. Are they committed and able to drive and elevate our competitiveness or are they out to boost their portfolio – not characterized by best practice or what they know but whom they know? There are hurdle questions we must ask and answer if there is clarity in our purpose and values? We take it as gospel truth that our conglomerates can succeed in any business; but as a country we accept that we’re preordained to fail in manufacturing, for example? How can a conglomerate’s capacity be greater than the country’s? (Do we need more Fr. Bernas to clarify our value system – for one, our faith respects pluralistic societies?)

It appears within the administration that there is a lack of clarity which industries we would provide incentives to and why and how? Intel, for example, is building its largest and most efficient semiconductor fabrication facility in China because of aggressive Chinese incentives. The writer had experienced this first hand many years ago while representing an MNC. We keep thumping our breast over the $20 billion OFW remittances and the taxes we could collect via our current economic model? Yet our GDP shortfall if we are to raise our standard of living is north of $100 billion, a magnitude we have yet to internalize? Put simply, we have a structural problem – and are a disaster waiting to happen unless we become stout-hearted men and women?

We want to be a developed country . . . And to get there we need enormous capital that will buy us strategic investments in strategic industries, technology, innovation, products, talent and market. We need a simple ‘purpose’ so that we can craft a crystal clear value system – that will give us the strength of character to doggedly forge on? Sadly, politics, vested interests and a lack of sense of urgency can conspire to undermine resolve? And given our soft heart, we keep tolerating them and thus are unwittingly creating a monster: how do we develop a bias for efficiency, productivity and ultimately a competitive nature? Failure means relegating ourselves to a mere exotic South Pacific island chain – i.e., life imitating art like The Flintstones?

What could be our (economic) value system? We value capital, not cronies – and matching if not outdoing the Chinas of the world in incentives; we value strategic industries, not favors to friends; we value technology, not fielding our OFWs effectively as ‘muchachos’; we value innovative products, not low-value commodities; we value talent, not relations; we value markets – the bigger the better, not simply to corner the local market.

The thought process to develop a sense of purpose and value system could be the outcome of education – e.g., ‘The value of education is not the learning of many facts but the training of the mind to think’ (Einstein). But it doesn’t have to hold us hostage until we develop the equivalent of a Stanford or a Yale or a Harvard? Industry should provide education and training to its employees? We should partner with world-class universities to put their stakes in the country? We should upgrade our educational system – but that will not happen overnight? And so let’s not be frozen in time? But in truth we want to restrict foreign influence in education for Juan de la Cruz; while we send our kids to be educated overseas – reinforcing hierarchy? And we extend the restriction to foreign investors; while we profess dislike for oligarchy? The writer’s Jesuit friend (deceased) would call that ‘plastic’, i.e., are we for real?

Oh . . . we don’t need to read the negative in the American ‘pursuit of life, liberty and happiness’ – because we’re the chosen people? Like the UK, we need to establish our own ‘purpose’ – and others would cheer us on, not read the negative?

Privileged upbringing, poor outcomes

Just like in the Philippines, family events in the New York metro area bring extended families together. And almost always gut-level conversations especially about ‘the kids’ are at the core. The writer’s wife had major back surgery. And so he was in the middle of these chats while she was unable to play her hostess role. Yet it was a gratifying experience – beyond the outpouring of well-wishes and prayers were loads of great Italian cooking: ‘We know you’re not a kitchen person and like Italians we know Filipinos would come and you have to serve food’.

‘This neighborhood is not wanting of ‘privileged upbringing, poor outcomes.’ (And the writer recalls George W. Bush, who claims to be Texan but grew up in the neighborhood; in fairness, he became president.) ‘I know my son and so I wanted him to attend private school; my husband is a product of the public school system (in the Midwest) but they all walked to school, life was simple. Discipline to me is a mandatory. Do you know that even at West Point, a friend says, that it takes a year before they could reshape American kids?’

Obviously the extended family is delighted with the way ‘the kids’ turned out but the consciousness of the abundance of risks always remains. The writer remembers his father who always counseled to fortify his values and not fall into complacency. And when the father of his son in-law (both come from Wall Street like his daughter) talked about the subject using practically the same words, he realized that parents would always be parents.

We Filipinos can’t be guilty of being less than parents to our children. Unfortunately, we continue to struggle with corruption and underdevelopment, for instance? How are we formed – by the family, the school, the church, the community? As Hillary Clinton says, ‘it takes a village’?

One of the criticisms leveled on Americans is that they are ‘too dialed up’ or in the vernacular, ‘suplado’. But beyond the US, notable in the writer’s experience dealing with successful institutions is the clarity in their purpose and value system. The writer remembers growing up hearing elders talk about ‘business is business’. He was too young to comprehend, but now realizes that it was preaching ‘sense of purpose’ and clarity in one’s value system. For example, it is universally held that inherited businesses could run aground by the third generation when values take a back seat?

The extended family and the church and the school and the community ought to pull together to educate kids to develop clarity in their value system? Arguably, we have not done a good job? There is country first before family or friends? But public service in the country is synonymous to graft and corruption, fairly or unfairly? And so the writer is delighted to read Fr. Bernas’s piece, Religion and the RH bills (Inquirer.net, Oct 25^th), because it effectively talks about country first? “The President is not defying Catholic teaching because Catholic teaching, for a pluralist society, requires that government interpret the common good of the country not only according to the guidelines of whatever religion may be the majority, but also according to the effective good of all the members of the community, including those belonging to minority religions. For that reason it is good that the President has invited other religions to the dialogue . . . We who have not experienced massive religious persecution must learn from the lessons of history.” As a resident of ‘Terry Schiavo (and Scott Roeder) country’, the writer can relate to the admonition.

We have a gigantic challenge: Can we do a self-critique of our value system? Until we recognize that our assets are discounted by our liabilities, we would always assume that to be critical is to be unpatriotic – and which explains why we seem unable to dig out of the pits?

The cost of entry

Hopefully as a people we recognize that the 21^st century – characterized by a globalized economy and by extension a highly competitive environment – has an inherent cost of entry? Simply put, we can’t expect to walk into the arena as though we write the rules of the game – we don’t and the sooner we internalize reality the better we could gear up and play? Nor can we keep invoking victimhood – a lesson Obama tells black people and minorities? A lesson we can learn from (‘small’) Singapore too?

It would be pathetic if we’d consider that the whole world is wrong and we’re right – that we could play by our own rules, culture, history, tradition? That would be too bad, so sad for a people well-informed and well-traveled? (Of course our rules work for businesses benefiting from OFW remittances; but that is classic ‘thinking small’? And we can be people of big minds, and ‘lift all boats’?) The global economy is not perfect. But we’re not about to write a dissertation to prove a point?

And it’s not a theoretical argument – the global economy, warts and all, has lifted millions from poverty and made once poor China and India, Brazil, Russia and more recently Indonesia, major economic forces. Or why ideology has become moot? In fact the aftermath of Western greed – that brought about the ‘debt and housing bubble’ and the collapse of the global financial system – highlighted the reality of a competitive world. How? Singapore and Germany demonstrated how competitive economies would regain their footing. And the inverse, unfortunately, is: uncompetitive economies would slide down the scale?

What should be our end view? In a globalized and highly competitive economy, we must see ourselves as truly competitive? We have local teams that are truly competitive – how do they do it? Their mindset is to excel, not to ‘make-do’? Will the coach of Ateneo or La Salle field players because of compassion or because of the imperatives of competition?

It is encouraging that the Aquino Administration has become more discriminating. It is eliminating subsidies to uncompetitive industries. It is cancelling export promotion drives for low value-added products. It must in fact draw up a roadmap – and provide the leadership – that will spell out every major element of competitiveness – e.g., from capital and investment to technology to talent to products to market? Not friends, not relations, not cronies, not hierarchy – which, unfortunately, are preeminent in our value system?

Our challenge is to understand, accept and buy into a value system that brings out our animal spirits – so that we are all behind, adrenaline pumped up, what could be our best chance to raise our standard of living? We have to move on and not be distracted, justifying our mistakes and/or dissecting the mistakes of others – despite the human need for company? We can ill afford distraction in a highly competitive global environment? And everyone else is irrelevant to our cause – something to learn from athletes?

And we can’t afford to outsmart ourselves: there are notions that may ring nicely but it doesn’t mean they’re absolutes; nor are they representative of reality? How could China and ex-communist countries become competitive when they had no inherent competitive advantage in manufacturing, in product development, in global competition? Because they recognize what it takes to be competitive? And as importantly, they believe in themselves – determined to call upon their strengths while vigorously overcoming their shortcomings? The past is there to learn from, not live in? Let’s not undersell ourselves?

The greater good

A recent report argues that the Japanese seem to have lost their animal spirits. That they’ve gone beyond the ‘lost decade’: ‘For nearly a generation now, the nation has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought [though an exaggeration?] in the global economy.’ (The New York Times, Oct 16^th)

Over a generation ago, we were seen as the fastest growing Asian country. Today, not unlike the Japanese, we appear to be disheartened instead of being dynamic – i.e., mired in ‘making-do’? Fortunately, the private sector has stepped up to the plate and is engaging the Aquino Administration to pursue an industrialization initiative.

But old habits die hard? It would be gut-wrenching if we’re still clutching our life-support, i.e., OFWs? What about our animal spirits? Our tendency to look back as opposed to look forward seems inbred? Are we distracted, can’t pursue the way forward because we want perfection, cross the t’s and dot the i’s? Does hierarchy distract us and turn us passive? Is our instinct to personalize (i.e., our compassionate heart) distracting us from recognizing the greater good? Major economic undertakings demand a laser-like focus?

If we keep looking back, we would find the continents configured differently; and the Alps would be nowhere? The US and Australia would be inhabited by natives and aborigines? And we would be a pristine Pacific chain of islands speaking Bahasa if not Chinese; or a combination of modern metros and rural farms speaking Japanese? The writer remembers a Jesuit friend (May he rest in peace!) who spoke at length about reality; but the writer, unfortunately, was dense.

The Pharisees and the scribes aspired to be models of perfection – but as we know they were off base? Or why Clinton, among many, calls the American system an experiment, its imperfection for all to see. Hierarchy has long been discredited by the imperatives of competitiveness, i.e., layers of authority are anathema to productivity and thus ‘high-commitment work teams’ came into being. And even before that, royalty has long been in decline. Even the Vatican has started to demonstrate a bit of transparency – because integrity suffers when hierarchy rules, i.e., abuses are not uncommon. But we won’t part with our señorito-muchacho culture?

As in any journey, it is important that we establish a baseline; and fortunately the private sector has done that precisely – via the initiatives the PCCI and JFCs have presented to the administration. And that baseline says we are lacking in infrastructure and strategic industries that could only be had if we amass enormous investments – both local and foreign. In one word, we need to pursue industrialization.

That ought to be our starting point? So that we can look forward and together create the animal spirits that major endeavors exact? And we could only take a new, positive posture if we seek the greater good – instead of personalizing our challenges? Over a period of more than a generation we erred by leaps and bounds – we blew it? And so we need to start afresh? We don’t want to personalize that – because ‘we’re all parties to the crime’, i.e., we’re like seeds that fell on the wrong spot?

‘People are funny’

Which explains, according to a New York Times article (Oct 16^th), ‘the rise in popularity of behavioral economics, an effort to account for the slippery, indefinite nexus of money and humans’. And it continues: ‘The entire question of how emotion will change people’s behavior is pretty much outside the standard model of economics’.

The writer from early on has raised the impact of our culture on why we are where we are as an economy. Not that he is a behavioral economist – far from it – but having done business over 4 decades, and in many parts of the world, he is witness to how people could indeed be funny.

The writer, earlier in his career, benefited from the perceived sophistication of Filipinos given our access to developments in the West. And his task was to share these developments first with people in the region and later globally. The writer had watched in wonderment how in the region they scrupulously absorbed ideas apparently foreign to them; while Filipinos, on the other hand, demonstrated nonchalance – pride, indifference, lack of esprit de corps, whatever?

The writer is then the least surprised why we are where we are today as an economy; and why our neighbors are where they are! Sadly our attitudes haven’t changed all these years? Is our self-image fragile? Could we be objective and pursue something outside our comfort zone if it would do us good? For instance, in the 21^st century when the world including those unschooled in capitalism have embraced (e.g., aggressively tapping and driving investment) the fundamentals of the free market, we are still celebrating our OFWs; and the businesses that are flourishing because of them? Our OFWs live abnormal lives away from home, and despite best efforts won’t raise our GDP beyond third-world levels. Shouldn’t they be the object of our compassion – beyond facilitating their needs like remittances, they need an economy and industry that would let them take their lives back? They could relate to our ‘muchachos’ – at work practically 24/7 and away from family, i.e., ours is a señorito-muchacho culture?

Compassion seems to turn our sense of values upside down? For instance, how much do we feel compelled to protect an inefficient and unproductive industry, forgetting that the interest of the country is far greater than the interest of one sector? In the process, we have dispersed and dissipated scarce resources to the detriment of the greater good. Fundamental to economics is the optimum allocation of resources – and we have a well-developed economics discipline. Why? Our culture or ideology gets in the way? The writer has lived and worked with ex-socialists; and observed them adopt a system totally opposed to their up bring. Bottom line: there are fundamentals that can’t be overturned by compassion and/or ideology nor by ‘kuro-kuro’ – that we have yet to internalize, and why we are where we are as an economy, i.e., crab mentality?

The Aquino Administration ought to be encouraged given its apparent commitment to do good. But will culture undermine their efforts – i.e., why can’t they be straightforward about their value system? If the CEO of HP was dispensable, how could friends be above country – even Nixon and Clinton had to account for their follies?

We are embarking on a major industrialization initiative; and more complex choices between what’s good for one interest against others and country would collide. How would the administration handle these complexities? The simple answer or why successful institutions are thriving is because there is clarity in their value system. But given our instinct to personalize, do we miss the import of the greater good, and instead misread it as the absence of compassion – and being imposed upon, i.e., ‘suplado’?

The writer has raised the lesson of Eden before. Our faith has compassion at its core but not of the selfish kind – or Eden would still be around? The compassion (and the love) had come earlier – being made into the image and likeness of the Creator, i.e., we possess the capacity to excel?

Executing ideas with confidence

Ideas are only as good as they are executed with confidence. Reading news reports from the 36th Philippines Business Conference and Exposition, the writer was figuring out – perhaps unfairly – if the takeaway from the gathering would come down to ‘executing ideas with confidence’.

Rightly so, President Aquino proudly articulated the administration’s efforts to aggressively tap foreign direct investments. And the business sector (PCCI) for their part offered an excellent agenda: ‘to adopt an industrialization and an integrated infrastructure program as part of a long-term economic plan to boost growth’.

The PCCI deserves plenty of credit for stepping up to the plate. And recognizing how much effort they expended to distill their proposed agenda, they do deserve our praise. The writer had early on talked about the JFC’s (Joint Foreign Chambers) efforts to define 7 strategic industries where we could be competitive; and for which we could attract foreign direct investments, of $75 billion. These two initiatives could represent the best chance for the Philippines to move its economy forward. And thus the key is to execute them with confidence. And that means the public and private sectors solidifying the partnership that they appear to be forging, recognizing that partnerships aren’t necessarily perfect.

The global economy demands the highest levels of competition – and it starts in the mind. We can’t afford to be tentative nor lacking in resolve. We have other challenges and issues but we can’t afford to dissipate our efforts either. That may not be easy because of our compassionate heart and our instinct to be inclusive? But if indeed we are compassionate, we need to recognize that until we have the means, our compassion would be toothless.

For instance, there is a fly in the ointment: ‘The European Union (EU) has warned that if the Philippines continues to drag its feet on a possible Free Trade Agreement (FTA), the EU might not be able to accommodate the Philippines anymore because it is processing several agreements with other Asian countries . . . This comes at a time when even Vietnam has already overtaken the Philippines in terms of exports of manufactured goods to the EU.’

And what’s our response? ‘We have already said that the FTA with the EU may take between four to six years to complete . . . It entails a lot of work for all of us . . . FTAs should not be entered into lightly. In fact, the current FTAs of the Philippines have been underutilized . . . Our own business sector has not been taking advantage of the opportunities with FTA . . .’ (The Philippine Star, Oct 16)

Is this another one of those where we seek perfection? Perfection is not of this world? Analysis-paralysis, is that what it is? In business the mantra is: the organization first – because it serves a large and diverse constituency and thus a force for good when so committed; and in our case, it is the country first – not friends, not relations, not cronies, not hierarchy? Country first – or is that Greek to us?

Or are we again protecting an industry – which is why we’ve been failing the country for so long? Of course nothing is simple, but when we are the basket case of the region and there is a market to be tapped, what is the excuse? Mañana? In the private sector, that kind of attitude and foot-dragging is simply unacceptable – and so it is in nation-building? (‘Needs to be studied’ seems to be the code to justify our foot-dragging, as the tax row raised by KLM suggests – even when ‘the Philippines is the only country that charges airlines these taxes, Tourism Secretary Alberto A. Lim said’.)

Leadership is about ideas executed with confidence. We now have nearly fine-tuned ideas but the challenge remains: can we prioritize and execute with confidence?

‘Sufficiency economy’

Indeed we must heed the advice from two Americans (Broad and Cavanagh, who visited the country and have written books about the Philippines; Inquirer.net, Oct 13) that the vulnerabilities of our economy should worry us. Net, we cannot afford to be complacent given that our income stream is not driven by a ‘sufficiency economy’.

But the writer parts ways when they say that our economy must be ‘more rooted in local production for local consumption’. That is the conventional wisdom the West is preaching to China (and others) in order to balance trade, i.e., China’s economy remains robust because of exports while US exports took a hit and the economy suffered amid the global recession. China noted the advice by restricting credit and encouraging local consumption – but it does not mean that China will shy away from being an export powerhouse. (Other Asian countries suffered during the recession because the export market tanked. But the fundamentals of these countries are much stronger than the Philippines and thus have higher GDPs per capita, and can take bumps on the road; and Singapore, for example, is demonstrating explosive growth once again.)

Also, the writer’s definition of a sufficiency economy is much broader. And that is, beyond local production and consumption, the bigger challenge is competitiveness. The writer represented a US MNC during the period when investments were pouring heavily into China and other Asian countries. Obviously his company wanted to develop local production and encourage local consumption in the counties where they were present. But in a free market, enterprises must seek the optimum return in order to sustain profitable growth. And that means ensuring that they are globally competitive so that the investment in one country has the capacity to serve a broader market, i.e., tap regional economic/trading blocs. That is why MNCs are establishing ‘centers of competence or excellence’. Simply put, the product portfolio of an MNC could be farmed out on a specialized basis across several countries ensuring optimum return on investments.

And in his current engagement in Eastern Europe, the writer continues with the model (with people nascent to the free market) because it is fundamental to economics and business and productivity, i.e., high value-added products that generate economies of scale optimize return on investment and thus ensure sustainability. In one word, competitiveness! And it applies to the US as well. America must remain head and shoulders above the rest of the world with a constant stream of innovative products and services. It is way pass the stage of low-cost generic products – i.e., its high-cost structure while a disadvantage must serve as a motivation to constantly seek excellence, and both the US and the world will be the better for it. Edison, Gates, Jobs and their peers are respected beyond the US because of excellence in innovation – i.e., man is the true measure of himself. (Disclosure: the writer carries a US passport; and had represented the private & public sectors internationally.)

A globalized economy provides the avenue to optimize economic returns while at the same time global trade allows countries to access their needs – but they must be smart enough to always seek the optimum economic activity. For instance, China’s explosive economy requires huge amounts of raw materials that they source from Australia and Canada, among others. And both countries did not allow the ‘debt and housing bubble’ to infect their economies. Germany, on the other hand, while hit by the recession like other export-oriented countries, is today the only major European country to regain its footing – because it is a highly competitive economy. Their products are true high value-added – from premium cars to high-tech industrial products.

Net, the Philippines need to pursue a competitiveness strategy that can only be driven by drastic increases in investments in select or strategic industries that would be globally competitive. Of course, we must develop the basic infrastructure network upon which these strategic industries can be erected – and as importantly, the courage to be a world-beater by digging deep into ourselves? A nation that produced a Rizal won’t be true to itself if it prides in OFWs instead? But a cacique-like culture will celebrate it? (Disclosure: last summer was the 3^rd time where the writer and his wife heard an earful from OFWs on a cruise ship. They wonder if we get it.)