So far so good . . .

It appears the new Aquino Administration is keen to be coherent, focused and transparent? Could they be pulling together an economic program – with a bias for aggressive sourcing and targeted investments – that will be clear, simple and execution-biased? Could the new communications team be part of the efforts such that the different agencies seem to be singing from the same hymnal when speaking to the media? And thus the private sector – represented by the PCCI – seems predisposed to support the Administration’s direction?

It is not surprising that reactions from the broader media and the public are mixed – because the SONA was not a presentation of a fleshed-up agenda, and thus underwhelming? Could Aquino be under-promising and then work to over-deliver? And to respond to people’s impatience they’re talking of delivering a few quick hits and wins? Are both elements straight out of a ‘managing-change playbook’?

If indeed the above would characterize the new Administration, they deserve a BRAVO? It is not about perfection but the pursuit of success? And success can be narrowly defined (not by some growth rate but) as substantially raising our GDP such that the net GDP per person would appreciably rise – and conversely reduce poverty?

Absent perfection mistakes are bound to happen? And that’s reality – or why mortals could be saints? For instance, poverty will not be eradicated as the experience of the US demonstrated? But substantially raising investment levels like Thailand and Vietnam have done yielded lower poverty? And down the road more targeted efforts could be initiated for the purpose – i.e., continuous improvement or why marketers come up with new products all the time, for example! In short, dynamism is key; it must not cease! Which brings the point raised by the private sector to the DTI secretary: what about manufacturing?

Clearly we have yet to demonstrate competitive advantage in manufacturing but it is foolhardy to picture an industrialized nation without a manufacturing capability, given its many facets and greater impact on economic output? The US is pointed as a model – we’re not the US and can’t duplicate the extent of their advances in technology and in the service sector, e.g., financial services? And the US exports a trillion dollars annually – from nuts and bolts to aerospace products and lots more between them. So any inference that the US is not a manufacturing powerhouse is a fallacy? Of course, low-value, low-priced consumer goods have moved to China and other low-cost manufacturing locations; but they don’t equate to a US weakness in manufacturing, but rather the reality of a global economy – water seeks its own level? Net, the US has to keep developing higher valued-added products? But they’re big boys and girls and can fend for themselves?

It is encouraging that electronics still appears to be in the industry-mix of the Aquino Administration. The linear argument against it is we don’t have a competitive advantage in electronics; and semiconductors don’t generate sufficient multiplier effect to generate major employment. But that is because our electronics industry is at the bottom rung – i.e., assembly – of the value chain! And to move up the ladder we must consciously and doggedly work and partner with global players? We can’t build it from the ground up, not in the foreseeable future? For example, the writer’s Eastern European friends were able to move across 3 new business units by tapping state-of-the-art manufacturing technologies from the West; and setting up an R&D unit patterned after, and run by a talent from, the West – i.e., focused on commercialization, higher value-added thus competitive products. Lateral problem-solving says: grab what the global economy has to offer and not be helpless victims?

The bottom line: The Aquino Administration appears to be on the right track . . . and should keep on trucking! And that means once plans are ready they are presented to Juan de la Cruz; and then transparency becomes the mantra – who is doing what, when, where and how – so that Juan de la Cruz is kept updated. He is the boss as President Aquino said?

Leaders v Managers

The focus of a manager is to control – because he/she is at the top of the hierarchy; the focus of a leader is to inspire – because he/she has established a road map: where they are and where they want to be, how they will get there, and who will do what, when, where and how! And a leader-manager focuses like a laser at moving forward – exuding strength, character and confidence that rub off on the team.

It appears the new Aquino Administration is on the right track; but there will always be bigger challenges to face. Fortunately, or the reality is, the bigger the challenge the bigger the opportunity – so long as they’re focused . . . committed to their goal . . . and able to inspire . . . the team and Juan de la Cruz . . . and as importantly, keep the faith?

Planning, organizing and controlling are straightforward, but what about leadership, she asked – one of the smartest businesspersons the writer knows! It dawned on him that just like in the Philippines in Eastern Europe they’d talk about their managers.

The young Eastern European (born under communist rule in a small, poor country) who asked the question does business (not simply exporting but competing) on the ground in over 20 countries – a feat achieved in 7 years . . . while we’re on our endless debates about the value of the global market! She’s the age of writer’s daughter, speaks better English than him, spent a year of high school in Atlanta (USA) and earned a PhD in Economics attending a UK university. She has become a family friend. She was preparing for her team’s planning session and wanted to ensure and confirmation from the writer that she covered leadership.

In 7 years she evolved from individual contributor to leader (and the anointed deputy of the writer’s Eastern European friend) but admits her leadership is still a work in progress – given her very high standards. Clearly she can direct her people. But the writer has to illustrate that directing an activity piecemeal is not leadership especially when goals, timelines, resources and measures of success are not clear – and not bought into by the team. The key is to inspire them, but to be mindful of inefficiencies – which she recently realized. Thus she has been vigorously working on her leadership.

She very recently sent out an email: ‘2010 is so far a very good year for the SBU with turnover up X% for the first 6 months vs. last year. Furthermore, the SBU is delivering the most or Y% of total company profits. Yet we are using only a fraction of the consumer marketing budget. This is quite low by industry standards and also lower than the other SBUs’. We may be MISSING the opportunity to grow our strategic brands and markets in the long run. So, for SELECTED brands in SELECTED countries it might be wiser to invest more than currently planned for a better second half but also to invest for a more profitable future . . . I would like to ask you to support the SBU’s efforts in this direction. Even if we together decide that we will not spend more than we have currently planned for we will at least make sure that there are no opportunities we are missing.’

What a great leadership piece from one who’s working on her leadership – but has internalized the power of investment! She can inspire, focus her team and the bigger organization to beat competition, including global behemoths – and why some of them are now working for her!

Competitive Advantage is being dogged to meet very high self-imposed standards . . . instead of blaming the world for her shortcomings? She isn’t perfect – but is focused on the vital few and on moving forward. She is dynamic . . . and it puts her on the higher plane of ‘continuous improvement’!

‘Problem-solving is lateral’

It is not linear, it is lateral thinking. In the early 70’s Anaclecto del Rosario (May he rest in peace!) brought over Edward de Bono to present the latter’s Lateral Thinking model to his friends and clients. Anacleto was a pioneer in Marketing consulting and also introduced Philippine industry to Louis Allen’s fundamentals and principles of management. He thought that Filipino managers ought to keep abreast with emerging and best practices; and move beyond the typical linear approach to problem-solving.

For example, marketers want to win in the marketplace but must recognize that winning is not driven by one single factor like price alone, but by the dynamic of several factors: product, pricing, placement or presentation and promotion or communication. Thus figuring out how the dynamic works is a great exercise in lateral thinking (and Force Field Analysis is a good tool). Or why product development geared for healthy margins is fundamental to global competiveness – and it is predicated on investment, contemporary technology, systems and processes. (Unfortunately, the financial sector undermined the benefit of growing margins – i.e., they raise the multiplier effect of investment – by marketing copycat products that didn’t add value and that they didn’t understand, and dug a deeper hole by ignoring risk management. It was sham marketing at best; or pure, unadulterated greed at its worst – with a lot of help from politicians and consumers; and the world is yet to recover from the folly!)

One of Brazil’s largest miners explains to Charlie Rose (a respected American journalist) how their push for big-scale, high-tech mining and oil exploration elevated efficiency and margins, and thus competitive advantage. On the other hand, Cambodian and Vietnamese acquaintances tell the writer about one of Pol Pot’s claims to infamy: a failed small-scale farming mandate. And not surprising the Vietnamese are moving from small-scale to high-tech and bio-tech farming. Do we want small-scale mining (or farming) or in fact sustainable and high-value adding mining, for example? The commune system is not why China became an economic power – they opened their economy up and the great rush ensued! We have yet to internalize the positive impact of economies of scale – or do we associate it with our monopoly-cacique culture? And we have yet to embrace globalization – or do we associate it with foreign domination? Are we neither here nor there – and why the 21^st century finds us marginalized? To be small doesn’t mean remaining small and being a laggard – as demonstrated by Singapore or Hong Kong or Taiwan? Is our hierarchical instinct confining us to ‘smallness’?

Lateral thinking applies to governments as well? ‘Our tax revenues are limited but we have to support every sector of society, so let’s spread them around.’ Unfortunately, as we have seen, the outcome in the Philippines has been dismal – we can’t provide such basics as power, water, and rice, and a world-class airport or harbor?

Our tax revenues may be limited but sources of investment aren’t? With limited revenues we are confronted with unsustainable spending – which, unfortunately, is throwing good money after bad. Thus it is imperative to prioritize in order to generate the biggest bang . . . that will feed into and reinforce a virtuous circle. It is encouraging that there appears a growing consensus that the Aquino Administration can’t be everything to everybody; and urging them to exercise leadership: create a vision and establish a clear set of priorities!

The Administration hopefully would recognize the lateral sources of investments, revenues, technologies and markets – because if we don’t pursue the avenues that generate economies of scale and competitive advantage, we will be left with a very small, narrow, inefficient and uncompetitive playing field? Smallness Is not what will lift the third of us that are hungry?

What’s so magical about 100 days?

Is the honeymoon with President Aquino winding down? It appears there are efforts to offer him specific agendas from various quarters, and that he must deliver or put in motion within 100 days a la FDR?

Is that reflective of our frustrations? We’ve been a developing country for decades – and suddenly we want to impose a yardstick of 100 days, because we’re tossing mañana, finally? FDR had to find a way around Washington gridlock; and given the Great Depression he knew people were desperate for solutions. Thus he played strongman. And he sensed they were on his side – and true to his calculations, voted him three times, against the term-limit (but death would overtake him). Of more recent vintage is Bloomberg – New Yorkers voted him for another term, again beyond the term limit that had to be amended, because they thought he had solutions for their problems! The operative word is solutions – or one who can solve problems is what people want when a nation or a city needs to fix itself? And is that why Aquino is talking about solutions?

We’ve had our problems for decades – do we now expect an agenda that would give us a sense of their solutions in 100 days? If we do, are we prepared to support the vital few . . . as opposed to seek perfection? How do we define perfection? Do we equate perfection to addressing all the causes of every concerned group – sounds like the scribes or the Pharisees? Net, our problem goes beyond Aquino . . . and into our resolve as a people?

We can’t expect tangible solutions to our laundry list of problems – we need to recognize that even a president could only do a ‘couple of things’? So which things? While FDR overreached and pursued initiatives that fell outside his core program, he set out to drive what he thought were the vital few industries that were needed to turnaround the economy – winning friends and enemies in the process!

The PCCI (Philippine Chamber of Commerce and Industry) is pushing to make us an attractive investment destination. This is a welcome development if indeed local enterprises are opening their arms to foreign investments, 21^st century technologies and systems – because we badly need them to attain competitive advantage and accelerate economic development? But which industries are strategic – how much investment ($75 B?) are we targeting to ensure that we raise our GDP substantially, like the JFC (Joint Foreign Chambers) model? It is encouraging that the new DTI secretary is exploring greater international trade and has teed up 6 priority industries – and hopefully would flesh them up and set more specific goals! A columnist talks about 8 sunrise industries aimed at global competitiveness! And a UAP economist is urging the review of foreign ownership rules! And a UPSE professor wants the Administration to focus on economic growth, not labor policies! Indeed we’re smart people and should be able to feed the hungry – if we keep the faith!

We’re also talking of a water czar; and everyone agrees we need to reduce the cost of power, become self-sufficient in rice, and upgrade our airport. Indeed our credibility as a nation has been greatly eroded given our inability to deliver them – thus our failure to attract foreign investments in a big way? The Administration will demonstrate leadership if it comes out with an industrialization plan that is clear, simple and execution-biased – for example, make those two sets of priorities (strategic industries and basic infrastructure) subject to the 100-day test?

Separately the Administration talked about raising the direct subsidies to the poor that would raise our deficits for the fiscal year. But at some point something has to give – and so we’re back to the imperative of aggressively driving our revenues.

The bottom line: It is not about perfection but the pursuit of success – characterized by clarity in our initiatives as well as simplicity, with a bias for execution? That our individual preferences give way to what’s good for the country? That Juan de la Cruz grows up fast – keeping the faith and tossing the ego?

Competitive Advantage

We can call upon our faith (instead of our sentiments?) if indeed we want to move the nation forward – because we don’t want the world to leave us behind? We’re competing against the rest of the world and we want to get our act together . . . fast?

What’s the rest of the world up to? For example, the US, not just Lloyd Blankfein of Goldman Sachs (following their SEC case that was finally settled), is doing “rigorous self-examination” given the country’s eroding competitiveness. And the writer recently witnessed how this is translated in their daily lives.

It was a weekend and he needed medical attention, and went to the emergency room of their neighborhood hospital – an extension of a New York university hospital, ranked among the country’s best. But his experience from several years ago was not to crow about – the first thing they wanted to know was his medical insurance. This time the registration was a breeze: providing only his name, birth date and chief complaint. The insurance bit (and it was a breeze as well and patient-friendly) came only after he had been seen by the physician. Forget about the state-of-the-art medical equipment and devices; and the doctor standing in front of a computer keying-in the writer’s responses; and the Filipino nurse who took his vital signs and later came out with the prescription and information to edify him about his complaint, both printouts from the doctor’s computer, and then she helped the writer to his first dose of medicines. A couple of days later he received a questionnaire to rate his experience – from promptness to courtesy to his overall impression of the emergency room staff!

The writer recently did jury duty in a criminal case, and again he received a questionnaire to rate the performance and behavior of the judge! During the jury selection he thought that the court was efficiently run, able to assure him that all it would take were 4 days of hearings; after alerting the judge that he was scheduled to travel overseas. Justice delayed is justice denied?

These things they do in the private sector given their bias for efficiency, but not in the health care and the justice systems? They do give a peek into how the US is consciously raising performance as a way of life? That competitive advantage is not a ‘bumper sticker’ – it is part of the way people do their day-to-day and thus ingrained?

But that’s the US? The writer and his wife just traveled from North America to Eastern Europe, flying on an Eastern European airline and going through two of their airports. The planes were new (and the service would put US airlines to shame!) and the airports were modern and efficient. That was the wife’s reaction; and so the writer told her about the Mother Teresa airport, more modest but still modern and efficient, in (Tirana) Albania, among the poorest countries in Europe! Are we then surprised why the EU downgraded our airport?

How do we react? Recognize that we can’t do our thing in isolation – because we’re competing against the rest of the world? That we truly need to get our act together . . . fast, and step up efforts to move the country forward?

We have to toss ‘que sera sera’ – that we can’t fix government, we can’t fix corruption, and we can’t fix complacency? If ex-socialists can pursue market economy, how radical is our challenge? (The writer is having morning coffee in a café in Sofia; Western music is playing and parked outside are Western cars – he no longer sees much of the Ladas! He had just reviewed the product development plans of his Eastern European friends for 2011, which they proudly emailed him because it’s only 2010 – he has been pushing them to extend their planning horizon and to keep driving margins; and words like vision didn’t ring a bell before!)

We need to summon our collective character as a nation to attain competitive advantage – and overcome our dire economic straits?

A ‘success culture’

It’s about time we think success? It’s about time we junk ‘good enough’ – because good enough is never good enough especially in a highly competitive global economy? Thus we shouldn’t blame others or destiny because it is about us and the choices we make? In short, is it about time we embrace dynamism? To turn around a country of over 90 million people with a third of them hungry requires a great dose of dynamism? Not same old, same old?

If President Aquino teaches us a success culture and we respond accordingly then we will succeed? It appears that even doubters are acknowledging that the siren ban is teaching us to be courteous and disciplined motorists . . . and even more profoundly, law-abiding citizens – the core or the lack of which is why corruption is endemic? Sadly, even harmony which we cherish may be at the core of the lack of discipline in our system – i.e., our instinct of compassion and inclusion equates to giving a wink and a nod?

Are we ensconced in our comfort zone that unwittingly we are narrowing our playing field – and by extension our options to pursue success? Does our religion or our history or our culture view progress positively? Progress has its downsides, to be sure – but wasn’t man meant to pursue progress, and conquer his world?

Does it behoove a nation that can’t feed a third of its people to put its values in perspective? What values do we truly hold dear? Do we translate poverty to almsgiving? What about teaching people how to fish? But because we have narrowed our playing field – our fishing ground – there’s not enough fish?

In our hierarchy of needs is expanding our fishing ground an imperative? Put simply, a GDP per person of $3,300 (PPP) is indeed a very narrow fishing ground?

We can’t mirror developed economies’ approaches to economic growth – they have well-developed systems that give them a greater propensity to respond to classical fiscal/monetary tools. (On the other hand, the US has gone full circle, raised productivity and companies no longer need the headcount levels generated by the economic bubble, thus their unemployment issue.) Even in the private sector, not all ERP (Enterprise-wide Resource Planning) initiatives are created equal. Those with more developed, disciplined processes get greater value for their investments! An underdeveloped economy would respond and grow from classical fiscal/monetary interventions; but they don’t necessarily enlarge our fishing ground – we need enormous investments, 21^st century technologies and systems to elevate our competitiveness and productivity, among others? And they require dynamic thinking? But is a ‘dynamic Philippines’ an oxymoron?

Massive poverty won’t go away when our economy is a mere 10% those of developed economies. That is a huge hole we’re in? But we have yet to put our values in perspective and our priorities in order? The narrower we keep our playing field the more we will perpetuate a cacique-like culture? If Aquino pushes success and demonstrates dynamism as opposed to staying glued to our comfort zone, then he/we will succeed?

Success or dynamism demands tossing assumptions that have not moved us forward but in fact nailed us to the past, including being holier than thou – as the only Asian Christian nation, for instance? Could we cast the first stone at the outcast Mary? But there’s a more fundamental point: We’re supposed to be smart people – why can’t we feed a third of our people? This is where we need to call upon our instinct of inclusion and compassion?

Massive poverty does not equate to a success culture; courteous and disciplined driving does; the rule of law does; staying in our comfort zone does not; the inability to pursue progress does not; narrowing our fishing ground does not; ironing out our values and priorities does? ‘Unless our faith is firm, we shall not be firm’?

What to communicate?

It appears the Aquino administration is pressing the right buttons to lead us to a new era? It is reported that with the appointments within the communications team the Administration has completed its core team – that’s great, Congratulations!

The new Tourism secretary said it well: a bad product despite great infrastructure does not sell, e.g., political patronage dictates where airports are upgraded, not where we get the biggest bang? Even an A-Team can’t sell a bad product?

What is a good product? A product that is compelling – that adds value – that is priced right and is presented and communicated right is a good product? In the case of the Philippines, a good product for the Aquino administration is an agenda that is compelling – that adds value – that is fiscally responsible and is presented and communicated right?

What is that agenda? An agenda that clearly and simply articulates its object is a good starting point? Thus: We will start the journey from underdeveloped to developed economy is a good starting point? It is compelling to Juan de la Cruz? It adds value because it spells out what the object is: to drive our GDP per person from $3,300 (PPP) to $33,000 over time – isn’t that what economic development is all about? It is fiscally responsible if it doesn’t blow our deficits sky high? And it is presented and communicated well – in clear and simple terms and is execution-biased? That means there is a well-thought out and coordinated presentation initiative so that Juan de la Cruz could relate to it? It is communicated well if there is a well-thought out and coordinated update efforts so that Juan de la Cruz is well informed? It is execution-biased if it is broken down into a simple set of vital few initiatives that will demonstrate how we will get from where we are to where we want to be? It is execution-biased if the initiatives spell out who will do what, when, where and how?

The devil is in the details? How much do we need to raise our GDP to get to the above GDP per person? We can start with raising exports to the the level of our domestic economy – by an incremental $100 Billion? (It appears government agencies tried zero-based budgeting before and found it too cumbersome and time consuming. It will be if we keep to our ‘inclusion/compassion/perfection’ instinct as opposed to focusing on the vital few, e.g., does it raise revenue or margin or efficiency/productivity?)

What industries do we need to develop rapidly – for example, the 7 strategic industries presented by the Joint Foreign Chambers (JFC) that could generate $75 Billion in foreign investments?

Of course, the following are mandatory given they are a foundation to our development efforts: (1) Power, (2) Water and (3) Rice? On infrastructure – one of the 7 strategic industries identified by the JFC – which ones must constitute the vital few that will ensure the development or the coming to fruition of the these strategic industries? In short, we have to focus like a laser – because these industries would raise our investments to competitive levels; and thus the ability to tap state-of-the-art technologies and elevate the competitiveness of our products and services?

What will happen to the cronies? The Aquino administration must be guided by the ‘level-playing field’ principle if we are to attract the scale of investments that we sorely need – because we are all in this together?