Sub-optimization is our best shot … not excellence

You cannot connect the dots going forward, but you can when “you’ve been there and done that.” That’s paraphrasing Steve Jobs. It explains why there are winners and why there are losers.

The writer is winding down the annual homecoming with the family. And had the chance to interact with family and friends, including those that work with the Du30 administration, and expatriates. And his takeaway comes down to: sub-optimization is our best shot … not excellence. Yet, how many of us would say “pwede na ‘yan” or good enough is never good enough?

Sadly, our instincts – and what we call our resiliency – come from our acceptance of same old, same old. But have we asked: Do we have the characteristics of losers, not winners?

And as losers we won’t develop the ability to look beyond the horizon – while our sense of foresight will stay underdeveloped. It is not exclusive to us. But we’re the ones playing catch up and must step up the tempo and make more 3-point shots, as LeBron James would put it.

And it brings us back to our “culture.” If we were a Fortune 500 company, we will do a restructuring program. Many of them have been there and done that. But PH has not. Indeed, nations are not easy to change but that is a cop-out if we go by what our neighbors have attained. We go through election cycles and every outcome is a picture-perfect case of insanity – same old, same old.

Our culture? We’re parochial and insular. We defer to hierarchy and expect paternalism in return. We value and rely on patronage and political dynasties and oligarchy. And the resulting culture of impunity is straight out of a horror story. Consider: political patronage and oligarchy are two sides of the same coin. Recall Senator Villar pointed to oligarchy to explain why we can’t open the economy.

“It’s so encouraging that supporters of Du30 have embarked on a soup kitchen-on-wheels. That is how much he is liked. People spend their own money to make Juan de la Cruz happy.” The writer couldn’t believe what he heard.

Are we still surprised by the vicious circle we created given our deference to hierarchy? When the question we must ask is: What is our income per person as a nation – and can Juan de la Cruz attain glory via these freebies? We can’t see beyond the horizon – but we’re not alone. Because the chamber [of the brain] that triggers pleasure is the same as the one that gives us joy when we do alms-giving.

Still, we’re getting greater FDIs than before. Every president over the recent past said that because FDIs have been on the rise ever since our GDP growth reached the 7% range.

Consider: the PH population (not many countries can boast of over a hundred million) and overseas remittances, i.e., foreign companies would want to exploit the opportunity. But how do we leverage them in return? Think of Lee, Mahathir and Deng and beg for Western money and technology. [See above re Sen Villar pointed to oligarchy.]

We don’t have to reinvent the wheel. Think 360-degree benchmarking – from the leadership, down and beyond. More to the point, how could their leaderships demonstrate such foresight and set the directions and their journeys from poverty to prosperity? Sadly, within the PH bureaucracy demands for palm-greasing are not seen as errant but the norm. Unsurprisingly, foreign investors see PH as the least preferred.

In the meantime, we’ve turned Boracay into an ecological disaster as Palawan is – and what else?

The family was up in Baguio and it gets worse every visit. Of course, the expressways make the trip pleasant but Baguio is closer to an ecological disaster if it is not there yet.

Pangasinan was another place the family visited. The Ligayen Gulf indeed is an important driver of the local economy if we go by the seafood industry. And local entrepreneurs are creating Pangasinan as another tourist destination. This is what some of our economists are crowing about. That we can create an inclusive economy by building local economies.

Nothing wrong with that assumption. But as a major player in the global RE industry says, we need scale to be competitive and sustain innovation. And that can be said of industry in general. The local PH economy is bigger than our neighbors yet we remain the regional laggard.

Because our local economy despite its size cannot match the ecosystem that characterizes an Asian Tiger that is geared to deliver innovation and competitiveness at world-class levels. For example, Singapore is more competitive than the US.

While we are utterly deficient in the delivery of the most basic of needs, e.g., infrastructure development and land use. And are amassing challenges that have paralyzed PH progress and development. More to the point, our metro areas, including those in the provinces, have become too dense and unmanageable that decent infrastructure is non-existent. 

They are a manifestation of a total lack of foresight and the breakdown of the rule of law that in turn nourish and breed impunity. And if we add their implications on the environment and on our well-being as a people, we can only weep.

The rice industry has been the flavor-of-the-month of late. But wait a second, has the industry done an honest-to-goodness benchmarking of PH versus our neighbors? In private-sector lingo, that means a 360-degree test of what makes them winners and us losers.

Yet given our hierarchical instincts, we assume the monied has a leg up and all we need is financing for small farmers. But that as a third-world nation we can’t compete beyond PH, in the export arena. [See above re beg for Western money and technology.] Or we can … if we just impose tariffs? Have we leveraged the IRRI as a resource to figure out if we satisfy the 360-degree test?

Recall that we are perception-challenged according to a global survey. And hence our reality is suspect. But we don’t believe that. We are up in arms that we are being maligned by PH bashers. But what is reality? We are the regional laggard and the only one that has not overcome poverty!

Because we are underdeveloped.

Our consumption economy is propped up by OFW remittances and the BPO industry with MSMEs collectively as the biggest employers. So, we need more of the same? We need MSMEs that will raise our innovation-quotient and global competitiveness. Not MSMEs period.

But how can we figure that out and connect the dots given our instincts?

Here’s a simple private-sector model we can adopt if we want to develop our sense of foresight: We want to be a developed and wealthy economy. That is far forward than being consumed by the war on poverty.

That means at a minimum, we must develop industry – particularly our export portfolio and generate an incremental GDP of 100 billion dollars (which is only 2/3 of the way if we are to match Thailand’s exports.)

That yields a total GDP for PH of $420-B, from the current $320-B. Assume PH tax revenues are at 14%, we are going from $44-B to $58-B. And if TRAIN equals 7%, it means creating incremental benefit of $1-B (from $3-B to $4-B) or Ps50-B from TRAIN. A greater GDP number means greater tax revenues, both aggregate and TRAIN-derived. And why in the private sector, driving sales or revenues is the first order of business.

And there are three sets of dynamics that we must manage to get there: (a) the marketing mix, (b) the production mix and; (c) the execution mix. Simply, nirvana is beyond financing and tariffs.

More to the point, a market economy is competition driven. And why IRRI speaks to the uncompetitive PH rice industry. Once we figure out consumer needs and/or market demands – e.g., incremental or disruptive innovation – we can address the imperatives of production. And to connect the dots, we must then learn and embrace execution excellence, not sub-optimization.

The bottom line: As we stand today, sub-optimization is our best shot … not excellence. And that is not the way to play catch up. Worse is we are betting that tyrannical leadership is what will right the Philippine ship. Surprised? Think Rizal.

“Why independence, if the slaves of today will be the tyrants of tomorrow? And that they will be such is not to be doubted, for he who submits to tyranny loves it.” [We are ruled by Rizal’s ‘tyrants of tomorrow,’ Editorial, The Manila Times, 29th Dec 2015]

“Now I know why Paul dared to speak of ‘the curse of the law’ (Galatians 3:13). Law reigns and discernment is unnecessary, which means there is little growth or change in such people. When you do not grow, you remain an infant.” [Faith and Science, Open to Change, Richard Rohr’s Daily Meditation, 23rd Oct 2017]

“As a major component for the education and reorientation of our people, mainstream media – their reporters, writers, photographers, columnists and editors – have an obligation to this country . . .” [Era of documented irrelevance: Mainstream media, critics and protesters, Homobono A. Adaza, The Manila Times, 25th Nov 2015]

“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labor pool, its interest rates, or its currency’s value, as classical economics insists . . . A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade.” [The Competitive Advantage of Nations, Michael E. Porter, Harvard Business Review, March–April 1990]

“Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow.” [William Pollard, 1911-1989, physicist-priest, Manhattan Project]

“Development [is informed by a people’s] worldview, cognitive capacity, values, moral development, self-identity, spirituality, and leadership . . .” [Frederic Laloux, Reinventing organizations, Nelson Parker, 2014]