“Development requires higher levels of productivity and capabilities”

“Poverty eradication is a desired outcome of development but its achievement is permanent only with the movement of a significant proportion of the population from traditional, subsistence jobs to productive, modern employment . . . Development requires not just higher levels of income, nutrition, education, and health outcomes but in the first place involves higher levels of productivity and capabilities. Higher levels of productivity and capabilities are possible only with structural transformation of the economy.”[‘International system’ works against development, Ben D. Kritz, The Manila Times, 17th Nov 2014]

This blog has talked about the imperatives of investment, technology and innovation as well as people, product and market development given my MNC background and development-work experience in Eastern Europe. And indeed can relate to the above treatise, i.e., that higher levels of productivity and capabilities within an enterprise are founded on said imperatives. And while industry can be the engine of the economy, government must: (a) create the environment and (b) erect the platform of an ecosystem. And it starts with good governance – which is a reflection of a people’s culture – the converse being a culture of impunity; while accelerating infrastructure development and opening (not closing) the economy to technology and investment especially in this day and age of innovation.

It is not rocket science if we look at how the Asian Tigers did it. But do we Pinoys think in terms of an ecosystem – or of personalities and hierarchies? Community sense and the common good [ergo, nation-building] has to be inculcated in Juan de la Cruz if we Pinoys are to have a chance of embracing “a shared context of values and beliefs”? Of course, the Asian Tigers had leadership to boot while in our case, we contributed two if not three to the list of most corrupt leaders?

“The association of development with poverty reduction created for the donor community the pride of place in economic policy in developing countries. But this place can be at the cost of reducing the responsibility of donor countries in helping to maintain an enabling international environment for development in trade, finance, human resource development and technology.” [ibid]

Certainly donor countries could have done a better job. But then again, that is why the Asian Tigers are to be admired. They knew where they stood and were able to leverage what the West had to offer. They demonstrated what the science of the mind calls the “hardy mindset,” which simply means that they realized it was incumbent upon them to be on the right side instead of waiting for others to change. And the hardy mindset would also characterize successful people . . . and explains why there are winners and losers!

The following would be of interest to us Pinoys. “As business educators [De La Salle University] in a Catholic institution, we have started to reflect upon the relevance of conventional business thinking in our present context. While concepts like profitability, productivity and competitiveness have taken center stage since the Industrial Revolution, we have become increasingly conscious about concepts such as social responsibility, humanistic management, and sustainability as well. More recently, we have even drawn inspiration from Catholic social teachings, which emphasize human dignity and the common good in the conduct of human affairs, including business.” [Rethinking business, Raymund B. Habaradas, The Manila Times, 17th Nov 2014

“Needless to say, these developments have led to some changes in the content of some of our business subjects. In the basic management course, for example, we have already introduced ‘multistream management,’ which is a marked departure from conventional management thought. While ‘mainstream management’ emphasizes profitability and productivity and prioritizes the interests of shareholders, ‘multistream management’ highlights the importance of various forms of well-being of different stakeholder groups, including their employees. This means that management must not only know how to develop the physical, material, and social well-being of their employees but their moral, emotional, spiritual, and aesthetic well-being as well.”

What about the hierarchical and bureaucratic character of Philippine business and industry? Does Catholic social teachings also mean reinforcing this character? For example: “Managers worship at the altar of conformance. That’s their calling—to ensure conformance to product specifications, work rules, deadlines, budgets, quality standards, and corporate policies. More than 60 years ago, Max Weber declared bureaucracy to be ‘the most rational known means of carrying out imperative control over human beings.’ He was right. Bureaucracy is the technology of control. It is ideologically and practically opposed to disorder and irregularity. Problem is, in an age of discontinuity, it’s the irregular people with irregular ideas who create the irregular business models that generate the irregular returns.” [Bureaucracy Must Die, Gary Hamel, Harvard Business Review, 4th Nov 2014]

“In this environment, control is a necessary but far from sufficient prerequisite for success. Think of Intel and the extraordinary control it must exert over thousands of variables to produce its Haswell family of 14-nanometer processors. This operational triumph is tempered, though, by Intel’s failure to capitalize on the explosive growth of the market for mobile devices. More than 60% of the company’s revenue is still tied to personal computers, and less than 3% comes from the company’s unprofitable ‘Mobile & Communications’ unit.”

“Unfettered controlism cripples organizational vitality. Adaptability, whether in the biological or commercial realm, requires experimentation—and experiments are more likely to go wrong than right—a scary reality for those charged with excising inefficiencies. Truly innovative ideas are, by definition, anomalous, and therefore likely to be viewed skeptically in a conformance-obsessed culture.”

Can Philippine business and industry overcome its bureaucratic and hierarchical character?

“Hundreds of consumers standing in line at your local Apple store. Thousands of protesters rushing to flood the streets of Kiev, Istanbul, or Hong Kong. Millions of fireflies blinking on and off in complete unison. Even the unconscious beating of your heart. These are all synchronized systems.” [Get your organization to run in sync, Greg Satell, Harvard Business Review, 5th Nov 2014]

“So it is curious that the institutions we build—and put so much conscious effort towards—are so rarely able to synchronize. Despite our best efforts, most organizations operate disjointedly. Fortunately, research into network science has begun to shed light on how synchronization happens and how we can make our enterprises function more effectively. Three elements are key. 1. Small groups. Most leaders tend to think on a macro level. That shouldn’t be surprising, because our efforts tend to be focused on our responsibilities. So if we’re responsible for an entire organization, then we tend to think in those terms and act accordingly. However, actions are influenced at the grassroots. As Solomon Asch showed in his famous conformity experiments, we tend to adopt our views from our peer group. In fact, his research showed that we conform to those around us even when their views are demonstrably untrue.”

“2. Loose connections. Those close to us tend to have the same limited knowledge we do. They have similar experiences, are confronted with similar challenges and share many of the same personal relationships. So while our views tend to correspond to our peer group’s, the information most valuable to us usually lies outside of it . . . It is the combination of tight circles and loose connections that drives high performing organizations.  A study of star engineers at Bell Labs found that the most accomplished ones worked in a close-knit group, but also frequently reached out to people outside of it.”

“3. Shared context. In nature, the purpose of a system is hardwired. Nobody has to tell a pacemaker cell in the heart what it is supposed to do. However, in organizations it is incumbent on leaders to set direction [i.e., strategic intent.] Southwest Airlines has prospered by being ‘the fun low cost airline’ and seeks to be nothing else. Google strives to ‘organize the world’s information.’ Apple creates products that are ‘insanely great.’  It is the mission that drives the strategy, because that’s what defines what winning looks like. Yet a clear mission, although important, is not enough. There also must be a shared context of values and beliefs.” Simply put, in PHL, we can’t get our act together given parochialism and crab mentality in a hierarchical cacique system and structure?