Problem-solving spectacle

Making sense of how we are addressing PHL “prevailing energy situation” in the face of the Meralco suspended increased rates and the bigger picture of ASEAN integration could make us scratch our heads – better than laughing or crying? “The process of Asean integration has been happening for more than a decade now. The Philippines has shown readiness, through various government and business leaders, to actively and willingly integrate since then.” [PHL shows readiness for Asean market integration next year, Business Mirror, 11th Jan 2014]

But then again: “The prevailing energy situation is our economy’s Achilles’ Heel. Power supply, even at very high cost, is precarious. That is a disincentive for foreign direct investment. Who would want to invest billions in an industrial plant when power supply is uncertain? Because of policy volatility and bureaucratic delay, we have not installed any major additional baseload generating capacity in nearly a decade.” [Blackouts, First Person, Alex Magno, The Philippine Star, 11th Jan 2014]

Timing is everything and so comes government: ‘Don’t stir up power issue.’ “At least on our end, we are doing our part to ensure there would be effective solutions to what they are facing right now . . . there are definitely solutions to the country’s power woes and that it would be best for the public and industry stakeholders to avoid moves and statements that would only make matters worse.” [Aurea Calica, The Philippine Star, 12th Jan 2014]

Not so fast? “Eastern Samar Rep. Ben Evardone, for his part, said the rising power cost is one of the two “catastrophic problems” that President Aquino needs to address immediately, using emergency powers . . . [T]here is an urgent need to fast-track the construction of more power plants not only to meet the growing demands of a rising economy but more importantly to lower the cost of electricity. In the same manner, there is a great need to speed up the construction of a mass transit system in Metro Manila to arrest the worsening traffic problem and provide commuters a more efficient mode of transport, he said.”

But that is not the last word: “Manila Rep. Lito Atienza, a member of the so-called independent bloc in the House of Representatives, dismissed Evardone’s call, saying emergency powers are unnecessary and that all Aquino needs to do is to be “more decisive, action-oriented, and really get into the country’s problems. That’s not an option that will solve these ills,” Atienza said in a telephone interview, adding the administration’s attitude in dealing with governance and crises has been one of apathy . . . They have not been able to do the simple task of providing new car owners with stickers and license plates . . . [and] also cited the case of the Languindingan International Airport, which still lacks runway lights and some landing instruments.”

“If that’s the attitude of the Cabinet of P-Noy, like in the DOTC, then there must be something really wrong in the leadership. I’m sure this is being replicated in many other agencies in government. If he (Aquino) does not know what’s happening, then he is being remiss in his duties . . . [G]ranting Aquino emergency powers would only mean that the same authority would be delegated to his “inefficient” Cabinet officials.”

“Meanwhile, Reps. Neri Colmenares and Carlos Zarate from the Bayan Muna party-list also accused Meralco and power generators of blackmailing consumers into accepting higher electricity rates . . . Last week, Philippine Independent Power Producers Association president Luis Miguel Aboitiz said that because of the TRO, unpaid power generators might not have enough cash to pay for fuel for peaking plants. This is clear blackmail. Meralco and Aboitiz are trying to circumvent the Supreme Court temporary restraining order with this threat,” Colmenares said. “What is obvious is that the problem was caused by government’s flawed policy of totally abandoning the power sector at the hands of private corporations through EPIRA.”

Do we have a solution? “Last Thursday, the Foundation for Economic Freedom convened a roundtable forum to discuss the complex issues in the power sector. The high-powered forum tackled the policy, engineering, financial and economic aspects of the looming power crisis. The impression I took away from that intense discussion was not encouraging.” [Blackouts, First Person, Alex Magno, The Philippine Star, 11th Jan 2014]

“One expert convinced all of us about the certainty of blackouts this summer and the next, when demand spikes and the thinning of energy reserves becomes evident. The thinning reserves will force us to use the costliest sources of power. We all agreed the Supreme Court’s (populist) intervention was unwarranted. It will complicate things and magnify the uncertainties without addressing the structural defects of our power sector.”

“Energy security in the Philippines is the bleakest in the ASEAN. All our neighbors have ample power reserves. The best of them have five or six times our generating capacity — and sell electricity at lower prices despite the cost of maintaining abundant reserves.”

Two columnists talked about our limitations which are no secret – and we must acknowledge that investment and technology must be at the top? Is this one of those challenges then where our assumption of going it alone must be the first to go? Where must our heads be in this day and age? And closer to home, where we talk about every other Filipino being hungry, would we in fact get a real sense of what hunger is when it is not our own reality – or of the ruling class that is calling the shots? And precisely why, for example, Francis opted to live outside the official papal home – and even beyond demonstrating a change in form, to align the Curia to his mindset, he took out conservative and other once powerful prelates from the Vatican's inner circle? Change and the approach to problem solving to truly address underlying challenges must breakdown old limitations. And Francis, not surprisingly, is attracting detractors but it appears he is on a mission that must be informing his boldness? 

US Ambassador Philip Goldberg had the following to say about another topic but also a Philippine problem: “The United States is helping improve the Philippines’ maritime defense capability now that the American government has described as “dangerous” a new Chinese fishing law in disputed Asian waters: “. . . [W]hat we are talking about doing is not about the 20th century and the bases, but about the 21st century and the kind of cooperation we can have to work together as we confront 21st century problems,” Goldberg told reporters after he was honored by the Philippine Military Academy here [Fort del Pilar, Baguio]. “Don’t dwell on the past but think about what the future holds,” he said. “That’s what we are trying to do regionally.” [Inquirer Northern Luzon, 11th Jan 2014]

That was a very loaded message from the ambassador but which we would easily dismiss because anything foreign doesn’t rank high in our value system? A friend says that given the menace of imperialism during its heyday, we can’t but dwell on the past. Yet both Lee Kuan Yew and Mahathir counseled: “You don’t have to love the West, but take their wealth and their technology.” And precisely that sat well with Deng Xiaoping given his own belief. And who’s left holding the bag – but Juan de la Cruz?

We may want to be parochial in our problem-solving; but our neighbors have a few things they could share with us – and that we can learn from? See above re all our neighbors have ample power reserves. And we seriously believe we're the next Asian tiger? It always starts in the mind – and why the power of the mindset is acknowledged especially in major endeavors! Should we first clean our house, keep our eye on the ball? And demonstrate that we're on a mission? Or will que sera, sera – if not vested interests – continue to rule Juan de la Cruz? Who can either: (a) scratch his head or (b) laugh or (c) cry?

Simplicity is beauty

“Even the founders of Google have worried about losing the magic that helped propel their search engine’s phenomenal growth. When Larry Page announced that he was taking over the chief-executive role from Eric Schmidt a few years ago, he explained to reporters that the company needed to move faster and recapture the agility of its early days, before it grew into a colossus.” [Management Be Nimble, Adam Bryant, The New York Times, 4th Jan 2014] “One of the primary goals I have,” Mr. Page said at the time, “is to get Google to be a big company that has the nimbleness and soul and passion and speed of a start-up . . .” 

“Discussions of corporate culture can easily fall into platitudes and generalities, so I set out to answer a more specific question: What are the main drivers of corporate culture — the things that, if done well, have an outsize positive impact, and if done poorly or not at all, have an outsize negative impact? After searching for patterns among my interviews, I identified six key drivers that every organization needs to foster an effective culture that will encourage everyone to do their best work and help drive innovation.” 

[The six key drivers according to Bryant are: (1) A Simple Plan; (2) Rules of the Road; (3) A Little Respect; (4) It’s About the Team; (5) Adult Conversations; (6) The Hazards of Email . . .  And if I were to summarize them, it would go something like: transparency is it, not hierarchy; keep it simple; talk face-to-face with subordinates like you’re one team made up of adults and you’re not pulling rank as the boss; and don’t email if you want an adult-to-adult conversation with your team.]

“A Simple Plan: One of a leader’s most important roles is to boil down an organization’s many priorities and strategies into a simple plan, so that employees can remember it, internalize it and act on it. With clear goals and metrics, everyone can pull in the same direction, knowing how their work contributes to those goals . . .”

Simplicity is beauty. Obviously I first heard that in the Philippines. Yet, I also knew that in the Philippines we like comprehensive, holistic and inclusive. On my to-do list when my old MNC company gave me a regional role was: get subsidiaries to refresh planning/budgeting thought process. [And I had a Pinoy strategy consultant join me while visiting two subsidiaries – because I myself had a bias for comprehensive, holistic and inclusive – and well aware that I too needed to get up to speed; and had another Pinoy consultant based in Manila as a sounding board.] I had gone through seven years of doing planning and budgeting at our Philippine subsidiary and was doing it mechanically but felt the need to question and figure out the “object of the exercise” – beyond adhering to the supposed New York guidelines.

And my journey would go farther: from attending a strategy course to fixing problem businesses to raising the competitiveness of subsidiaries concerned before they could become problem businesses to being involved in M&As – including transforming the company's budget process from a principally finance-driven exercise to a goal-setting and alignment process (after the president saw how we were doing it in the region.) And more recently, my Eastern European friends similarly had to go through a journey, eleven years and counting. And the experience has taught them how to cut to the chase, for example, and the imperatives of execution – that the test of the pudding is in the eating. And so they could relate to the above NY Times article, having recently set their sights on: “Only great products will do; we must ‘own the store’; there will be no compromises.”

And so while employers, especially in the West, have invested in in-house education and training, they would see the educational system as in need of fixing, given that it is the source of talents. “. . . [W]hat truly counts in hiring decisions is not the rote knowledge that helps college students answer examination questions, but skills and competencies that are essential for, and often developed at, work.  To be useful, the bricks of modern education need the straw of experience-based skills.  Bricks without straw tend to crumble; they cannot support weight, as has been known from Biblical times.” [Alan Kantrow, How Business Can Help Measure Education Outcomes that Matter, Harvard Business Review, 9th Jan 2014]

“The Collegiate Learning Assessment and its new version, CLA+, are already in use by over 700 institutions around the world.  What these instruments do is assess the effectiveness of college courses in developing not discipline-based knowledge, but the ability to “analyze and evaluate information, solve problems, and communicate effectively.”  The results often shock faculty, who are more comfortable in teaching content than in developing their students’ critical thinking and communication skills.”

And from McKinsey & Company [McKinsey survey, Aug-Sept 2012]: “Employers, educational providers, and youth live in parallel universes. To put it another way, they have fundamentally different understandings of the same situation . . . In large part, this is because they are not engaged with each other.”

And in PHL all the more it would take us some doing and loads of time to learn to “analyze and evaluate information, solve problems, and communicate effectively” – because we have yet to translate “simplicity is beauty” into concrete terms as in cutting to the chase, and the imperatives of execution? We can’t stop wanting to cross the “t’s” and “dot the “i’s” – because we want comprehensive, holistic and inclusive! Yet, where are we?

Owning up

“In ancient Sanskrit, the word “pundit” meant “wise man” or “religious sage.” In modern English it means “often wrong, rarely accountable.”[Ross Douthat, The confession of a columnist, The New York Times, 28th Dec 2013] This blog consistently talks about the private sector not because it is perfect but to highlight its one characteristic, that of accountability. Still wet behind the ears, my first experience with accountability was to fire a person that was recommended by a prior boss, and became a friend – and it was even in a Filipino company. And in another company, an MNC, not that long after, I was tasked to personally inform a manager (that was the age of my father) that the succession plans of the company were moving forward. And precisely why younger understudies were appointed much earlier and that the time had come for them to be promoted – and takeover from those of an earlier generation.

I didn't stay long with the MNC either, but these two early experiences made me understand a fundamental responsibility of a manager, i.e., to hire and fire. But the real challenge – in pursuit of the “common good” – is how to be proactive so that the success of an enterprise, and collectively as the private sector, makes it a positive force in an economy and nation building. And that means creating lots and lots more jobs than getting people fired.

Yet as the 21st century has played out, being proactive per se is no longer adequate especially as technology continued to accelerate at warp speed. That means beyond being proactive enterprises must be committed to investment, technology and innovation as well as to education and training and product and market development. And how nations formed their worldview proved either a blessing or a curse. For example, while on one hand the world has drastically reduced poverty, especially with the emergence of China (accounting for a big chunk of the world's population; and with their poverty down to 13.4% versus PHL at 26.5%, truly despicable given Vietnam’s 11.3% and Indonesia's 11.7%) as an economic powerhouse, on the other, many emerging markets including those in the Arab world have remained impoverished. 

Even in the EU, supposedly the largest economy as one union, and where they embarked on a deliberate effort to shore up the economies of the poorer countries (e.g., the EU infrastructure fund, among others, benefited countries like Spain and Portugal and later former Warsaw Pact nations) still, countries like Greece realized they had to clean their own house – and so did higher-income nations like Spain and Italy – because they had to pay the price. There is no free lunch! It is easy and convenient to blame others especially when they get a disproportionate share of the world's wealth – yet the Asian tigers demonstrated how to overcome underdevelopment.

There is no perfection in this world – and especially with Europe forming their versions of the “Tea Party” – and thus whether in the private or public sector, enterprises and nations have to step up, be accountable and own up? In the case of the Philippines, our oligarchic character remains the core of our political economy. And instead of methodically embarking on nation building or the pursuit of the common good, we chose to see no evil, hear no evil and speak no evil? How long have we trumpeted the coming of a booming economy if not the next Asian tiger, owing to OFW remittances and more recently the BPO industry? More to the point, there was no Asian tiger with that profile! 

It took some doing before my Eastern European friends internalized that “the buck stops with them.” They struggled to understand and accept what being accountable, disciplined and proactive meant. But today, despite their commitment to continuous education, training and development, non-performers do get canned!

And just like individuals and enterprises, nations go through their own development – and become “mature adults and contributing members of the global community.” For example, a recent news report says that Indonesia is biting the bullet to be able to aggressively attract foreign investment. But we're still debating its pros and cons? Because no one is accountable – thus we pay the price as in a culture of impunity and the absence of the rule of law! And if true, it would not be surprising that even in full view of the world the rehabilitation efforts in Tacloban have not been spared of our brand of corruption and collusion? No wonder Pope Francis said, we sinners could be forgiven but not the corrupt!

Or for that matter, whether it's the Bataan Nuclear Power Plant or NAIA 3 or Mactan airport or whatever, the common good is simply not in our instinct? Isn’t it a shame that our energy or power crisis and our pitiful levels of investment have been the biggest barrier to PHL economy – and thus the widespread poverty that we claimed we care about – yet what conversation are we having?

Are we bogged down by “pa-pogi” or pulling rank – given our value system where oligarchy, political dynasty, the ivory tower of academe, if not the church, would be tops of the national agenda? Are we so “sabog” – or all over the place, if not self-centered – that we can’t move the nation forward? [It brings to mind how the Defense Secretary Robert Gates described the US Congress in his memoir: “uncivil, incompetent in fulfilling basic constitutional responsibilities,” “hypocritical, egotistical” and eager to put “self . . . before country.”]

Who is accountable – we all are? Sadly, “we don't know” what accountability means? How could Indonesia and Vietnam have less hungry people? How low are we willing to go? 

“A whole hierarchy of people [needing] to agree . . .”

“. . . that a new idea is good . . . is [why] big companies [that] have plenty of great ideas do not innovate.” [Ben Horowitz (Co-Founder and Partner, Andreessen Horowitz), Can-Do vs. Can’t-Do Culture, recode.net, 1st Jan 2014] “As a venture capitalist, people often ask me why big companies have trouble innovating while small companies seem to be able to do it so easily. My answer is generally unexpected. Big companies have plenty of great ideas, but they do not innovate because they need a whole hierarchy of people to agree that a new idea is good in order to pursue it. If one smart person figures out something wrong with an idea — often to show off or to consolidate power — that’s usually enough to kill it. This leads to a Can’t-Do Culture. The trouble with innovation is that truly innovative ideas often look like bad ideas at the time. That’s why they are innovative — until now, nobody ever figured out that they were good ideas. Creative big companies like Amazon and Google tend to be run by their innovators. Larry Page will unilaterally fund a good idea that looks like a bad idea and dismiss the reasons why it can’t be done. In this way, he creates a Can-Do Culture.”

And from the Harvard Business Review, Dec 2012, Reclaim your creative confidence, Tom Kelley and David Kelley: “Most people are born creative. As children, we revel in imaginary play, ask outlandish questions, draw blobs and call them dinosaurs. But over time, because of socialization and formal education, a lot of us start to stifle those impulses. We learn to be warier of judgment, more cautious, more analytical. The world seems to divide into “creatives” and “noncreatives,” and too many people consciously or unconsciously resign themselves to the latter category . . . Students often come to Stanford University’s “d.school” (which was founded by one of us—David Kelley—and is formally known as the Hasso Plattner Institute of Design) to develop their creativity. Clients work with IDEO, our design and innovation consultancy, for the same reason. But along the way, we’ve learned that our job isn’t to teach them creativity. It’s to help them rediscover their creative confidence—the natural ability to come up with new ideas and the courage to try them out. We do this by giving them strategies to get past four fears that hold most of us back: fear of the messy unknown, fear of being judged, fear of the first step, and fear of losing control.”

Why is PHL industry uncompetitive? It is not surprising given what Rizal saw over a hundred years ago, i.e., we’re backward and anti-progress? And we can substitute economy or nation for industry and the picture doesn’t change? And I've shared before how my Eastern European friends struggled yet wanting to pursue free enterprise – after decades under Soviet rule – learned to embrace a Can-Do Culture.

It is not easy for an entire nation to take such a leap, but if PHL industry wants to move up to the next level, especially with ASEAN integration, it must. Because if our local enterprises aren't regionally competitive, they could be takeover targets by regional behemoths. And so while for decades we were able to raise barriers against foreign interests, ASEAN would bring those barriers down. In other words, we are no longer an island unto ourselves. And to thrive in the 21st century, we have to learn and embrace innovation and creativity. And it isn't about Pinoy creativity as we know it – because in more ways than one, Pinoy creativity or abilidad is more about making-do as opposed to value-adding innovation.

And it's no different from what I saw in Eastern Europe. Poverty informs a people's mindset. And so while they once proudly showed off that they could “copy” products from the West and priced them lower, they had to learn that a sustainable economic activity was what they had to aim for – i.e., a virtuous circle. (It also explains why we Pinoys couldn't imagine being able to develop innovative and high valued-added products?) Thus eleven years after I first arrived, they have truly embraced the mantra, and their confidence to do business globally gets stronger each passing day. They have overcome all the fears discussed in the HBR article.

Likewise, they have become “anti-hierarchy” and have espoused the 21st century's demands for rapid, self-organizing teams that are cross-functional and multi-level and even cross-national. We Pinoys can opt to be parochial, inward-looking and wedded to the past. So long as we recognize that water seeks its own level. If Russian billionaires could buy the most expensive New York apartments, Malaysians if not Indians, for example, could buy uncompetitive local Philippine companies. 

Of course, to the Filipino investor or investors, that may be a windfall – but that could be a short-term benefit if the proceeds aren’t invested in an enterprise that would be sustainable beyond the local market. Because it means we won't be able to take advantage of the bigger regional market, and thus the returns to PHL and impact or contributions to the economy would be limited . . . And until we recognize how self-defeating parochialism is, it would get worse before it gets better for Juan de la Cruz! 

How predisposed are we to change?

Between “materiales fuertes” and “fear of God” that were instilled in us, how predisposed could we be to change? It appears we are not alone, that receptivity to change is indeed not universal. “In theory everyone can change, but in practice most people don’t . . . As a consequence, deliberate attempts to change are far less effective than we like to think, which is why most New Year’s resolutions are never accomplished . . . A seminal review showed that we become more prudent, emotionally stable, and assertive with age, while our energy and intellectual curiosity dwindle after adolescence. In other words, as we grow older we become more calm and mature, but also more passive and narrow-minded. [Tomas Chamorro-Premuzic, If you want to change, don’t read this, Harvard Business Review, 26th Dec 2013]

“So, how can we change? The recipe for self-change is fairly straightforward — it is just hard to implement. In order to change, we need to start by building self-awareness, which is best achieved by obtaining (and believing) honest and critical feedback from others. Next, we must come up with a realistic strategy that focuses on attainable goals, such as changing a few specific behaviors (e.g., more eye contact, less shouting, more smiling, etc.) rather than substantial aspects of our personality (e.g., interpersonal sensitivity, empathy, and sociability). Finally, we will need an enormous amount of effort and dedication in order to both attain and maintain any desired changes — or we will quickly revert to our old habits. In short, change requires self-critical insight, humble goals, and indefatigable persistence. It means going against our nature and demands extraordinary levels of willpower.”

Indeed change takes a lot of doing – especially to learn to cut to the chase and the imperatives of execution. The test of the pudding is in the eating. But the era of innovation – with the coming of the 21st century – brought my old MNC company to Edison and Gates and Jobs. Their thinking process was the reverse of what people learned in school, i.e., they were not into linear thinking; they would “start with the end in view.” [Is it a coincidence that Gates and Jobs dropped out of college?] And that allowed them to separate the wheat from chaff. It is not a natural thought process and which is why innovation continues to be elusive, even in the West. And it took my Eastern European friends eight years to appreciate it and eleven years to truly be committed to it.

[Gates and Jobs are not unique: From Amazon.com: “Don't Go Back to School: A Handbook for Learning Anything (Paperback) by Kio Stark. “Here is a radical truth: school doesn’t have a monopoly on learning. More and more people are passing on traditional education and college degrees. Instead they’re getting the knowledge, training, and inspiration they need outside of the classroom. Drawing on extensive research and talking to over 100 independent learners, Kio Stark offers the ultimate guide to learning without school . . . Kio Stark has interviewed a roster of amazing, self-taught talents about how they did it, and distilled those observations into an essential guide,” Clay Shirky, NYU Professor . . . And from her website: “[T]eaches at NYU’s graduate Interactive Telecommunications Program; a graduate of UNC-Chapel Hill and did doctoral work at Yale University’s American Studies program . . . focused on the history of science and medicine, urban studies, and underground economics, and then dropped out.”]

But back to cutting to the chase and the imperatives of execution: From Booz & Company; Strategy+Business, 24th Aug 2010: “Growth through focus: A blueprint for driving profitable expansion. “. . . [G]rowth through more” strategy diffuses the organization’s efforts. It increases the complexity of the organization and its operations. We have found that “growth through less,” or more precisely “growth through focus,” is the best prescription for growth, regardless of the economic environment. This conclusion is based on our own experience in three well-known companies — Kraft Foods, Unilever, and Fonterra Brands (a dairy products business based in New Zealand) — on three continents over 10 years. In all three cases, a deliberate strategy of focusing on a few markets, brands, and categories produced impressive revenue and profit expansion. We have learned that seemingly mature businesses can be energized by making fewer but larger bets and by focusing relentlessly on executing a simple but powerful vision.”

“Growth through focus is not as easy as choosing what strategic bets to make. Rather, it requires the leadership team to follow a systematic approach that spans everything from strategy and vision to execution and measurement . . . Our framework is grounded in three key ideas: focus in strategy, simplicity in communication, and empowerment in execution.”

Should we wonder why despite churning out comprehensive, holistic and inclusive economic development plans for decades, our neighbors left us behind? For example, we keep hammering at poverty but poverty is a given when an economy is underdeveloped, severely in our case, and with an average income of $4,500. (And taking our eye away from the ball of development and its imperatives; which in PHL are: competitive levels of investment, infrastructure and industry.) To be inclusive is not about charity-giving. To be inclusive presupposes that interventions or initiatives have a systemic character. And surprisingly, we seem to conveniently forget that CARP or comprehensive land reform is an example of why we have not attained our desire for inclusivity. Because to be systemic, the design of an economic activity must ensure that the output will be absorbed by the economy in terms of usage or consumption – together with a surplus element – that can then loop back as an input thus creating a virtuous circle. And that is a simple illustration of how innovation could be central to the holy grail of the virtuous circle. High-value added or innovative products can command a market and generate a surplus.

Why are our neighbors able to produce 21st century products, for example? They opened their economies to foreign investment and technology, such that China, for instance, is already into space technology. Yet over 30 years ago Deng Xiaoping had to appeal to the West: we need your money and your technology if we are to lift our people from poverty.

Why can’t we wrap our heads around Deng’s logic? The HBR article would in fact confirm that Deng was a rare specimen. And he was in his early 20s while overseas, first in France and then in Russia, when he formed the belief after he saw how Russia could also use foreign investment and technology. And in those days whatever bit of technology China had was courtesy of Russia. We had a Rizal over a hundred years ago, would we have a Deng in this generation or the next? 

“In short, what the Philippines yearns for is a more “effective” state and more “competitive” market at the same time.” [Richard Javad Heydarian, Philippine electricity crisis: How regulatory capture undermines emerging markets, Huffington Post, 23rd Dec 2013] “. . . [O]verlooked are the perils of privatization in underdeveloped markets, where you have a tiny, oligarchic private sector, which lacks capital, expertise, and – above all – appreciation for collective interest, but has an unshakeable political grip on the political economy.”

One could say Amen . . . more so if the article explained how to address the capital and the expertise lack and that of the collective interest. Wasn’t government supposed to provide all that before? But as we know we’ve had the crisis since the time of President Ramos. We don’t have to reinvent the wheel but rather benchmark and recognize what our neighbors have done. 

And we can’t have an “effective” state if Juan de la Cruz doesn’t grow up – we are part and parcel of our culture of corruption . . . which comes with the culture of impunity? They are two sides of the same coin? And if we are to acquire the capital and the expertise, we can't be an island unto ourselves? Deng saw the light when he was in his early 20s . . . And wrote a Moldovan journalist: “Like America, Moldova is a young nation. The difference is, we act like one. In contrast to Americans, who strive towards their dreams, Moldovans prefer just to dream. Like teenagers, we want all the privileges of grown-up life but without its responsibility.” [Vladimir Lorchenkov, The New York Times, Op-ed, 26th Dec 2013]

Unlike the Moldovans, we Pinoys shouldn't prefer just to dream? I could relate to the journalist having spent most of the last eleven years in Eastern Europe; these people are no less patriotic than Pinoys yet they don't mince words to criticize themselves. And so I talk about them because they keep teaching me about “reality” – which was what my late Jesuit friend tried very hard to impart to our smallish Friday club.

Stream of consciousness . . . Gearing for AEC

Wikipedia: “It is a narrative device used in literature “to depict the multitudinous thoughts and feelings which pass through the mind. Another phrase for it is “interior monologue.” The term "Stream of Consciousness" was coined by philosopher and psychologist William James in The Principles of Psychology (1890): “consciousness, then, does not appear to itself as chopped up in bits ... it is nothing joined; it flows . . . In stream of consciousness the speaker's thought processes are more often depicted as overheard in the mind (or addressed to oneself); it is primarily a fictional device.”

Is PHL ready for Asean integration? “House Speaker sees PHL ready for Asean integration.” [Business Mirror, 30th Dec 2013]

“Earlier, President Aquino said these economic bills should be prioritized to help the government to attract more foreign direct investments and sustain the country’s robust economic growth, as well as to fight corruption. [Belmonte] said: We have a very long list of economic bills, and we are really trying to cut it down to a realistic level.” [A]mong these bills are the priority bills of President Aquino, such as the Cabotage law, the Fiscal Incentives Rationalization bill and the Land Administration Reform bill.”

“Moreover, the House leader said the country’s global competitiveness should also be supported by the private sector . . . “Greater competitiveness will allow us to attract the much-needed investments that will create many jobs and opportunities for our people.” This is why, he said, the public and private sectors should work together in establishing the right set of policies and laws that will impact upon key socioeconomic areas.”

“As the House leader elaborated on the Asean goal to establish itself as “a single market and production base with free movement of goods, services, labor and capital by 2015,” he, however, said this will be an occasion for fresh opportunities, as well as challenges. “To enable our country to attract more foreign direct investments, I continue to make representations to discuss possible amendments to the restrictive economic provisions of the Constitution. I firmly believe that relaxing the provisions on ownership of land, utilities, educational institutions and mass media will bring in investments that will create much-needed jobs,” he said.”

What the Business Mirror article confirms is that while the Indonesians have gone ahead with specific initiatives to attract investors, we are yet to get to first base still held by our stream of consciousness? With due respect to President Aquino, we are lucky that Speaker Belmonte is farther down the pike in his thinking. But the president is right; the economic bills should be prioritized.

But we need tangible interventions and initiatives to flesh that out. For example, we need to zero in on establishing investment-level goals otherwise all the talk would just be that, talk? Haven’t we talked ad infinitum about raising foreign direct investments, for instance? What levels must we set to generate a major bump in economic output and thus raise our average income (or GDP per capita) of $4,500? Who will do what, when, where and how – will we get there?

Competitiveness is beyond policy or competition policies and laws. To leapfrog our efforts, we better dig up the JFC’s seven industry winners. Because for PHL to write a competitiveness policy with very little experience in regional or global competition, we would again be mired in the legalese – but the test of pudding is in the eating? Don't we have tons of policies and laws yet we’ve remained deficient – very deficient, in fact – in the rule of law?

Put another way, we should pull out all the stops and support an intervention like the JFC’s seven industry winner – which apparently is a product of transparency, i.e., a cross-section of society was involved in its crafting? At this point, that is the quickest way for PHL to learn the ropes of regional if not global competition. We can’t wait for 32 or 50 industries to move from the roadmap phase to actually producing and marketing products in the region. In the private sector, it is called test marketing – and from where they learn how to fine tune their business plans.

We are not crafting a dissertation that may never see the light of day in the real world, we are putting together an actionable plan that will focus Juan de la Cruz on the building blocks of an economy, which we've failed to do over several decades? For example, energy is fundamental to an economic activity and thus must be given prominence. We can't just say we must prioritize; we must spell out our version of the two Great Commandments. That is the acid test of whether we indeed successfully prioritized our economic development initiatives. Simply put, if we were in the private sector, we are not drafting the corporation's by-laws but are developing the business model. And the simpler the better; because the key is to focus everyone on the strategy – and is a straightforward communication that empowers the people to execute accordingly.

For example, Warren Buffett would simply say it as “buy low and sell high.” In many globally successful enterprises, it is “innovation, innovation, innovation.” Which for PHL could translate to: “PHL: competitive in investment, infrastructure and industry.” Why? Those are the three very critical areas where we lag the region – and we can use the discipline of keeping our eye on the ball. And how could we flesh that out? Whether it is the Constitution or oligarchy that is responsible for our pathetic investment levels, we must turn it upside-down. And the same must apply in infrastructure development – which we must accelerate – and in industry – where we must focus on the vital few where we could attain global competitiveness.

Our biggest stumbling block is we've remained an underdeveloped economy for so long and don't have a track record in the pursuit of the common good? The evidence: everyone has his priority initiative, a sure formula for disaster, as in the outcome of crab mentality?

Revisiting our institutions

“Education schools . . . don't see their job as training teachers. They see their job as creating professional identity . . . While most programs could say they had classroom management as part of their curriculum, classroom management strategies rarely received “the connected and concentrated focus they deserve.” What's more, “instruction is generally divorced from practice (and vice versa) in most programs, with little evidence that what gets taught gets practiced.” [Joe Nocera, What is good teaching, The New York Times, 16th Dec 2013]

Not surprisingly, the private sector has raised the Western educational system as an issue. “The American work force has some of weakest mathematical and problem-solving skills in the developed world. In a recent survey by the Organization for Economic Cooperation and Development, a global policy organization, adults in the United States scored far below average and better than only two of 12 other developed comparison countries, Italy and Spain. Worse still, the United States is losing ground in worker training to countries in Europe and Asia whose schools are not just superior to ours but getting steadily better . . . The lessons from those high-performing countries can no longer be ignored by the United States if it hopes to remain competitive.” [Why Other Countries Teach Better, The New York Times Editorial, 17th Dec 2013]

If Americans can stand up to the reality that its “work force has some of weakest mathematical and problem-solving skills,” could we Pinoys do the same? My Eastern European friends, despite my sense of them generally having stronger mathematical skills than what I saw in the US, accepted the reality that they also needed better problem-solving skills. And even their math-related skills were put to a test as they applied to sales forecasting and long-term planning, for example – which, of course, demand other competencies. And so they have embraced education and training as a constant. 

Economic development which is central to nation-building is like any development efforts, it demands maturity, hard work – and then some. And while at the macro level it is the collective success of private enterprise that will nurture and sustain the broader economy, the predicate is clear: industry must invest in education and training at the enterprise level, precisely what progressive global companies have done over the last few decades.

And invariably their experiences would confirm the shortcomings of the Western educational system. For example, young interns and new hires would immediately recognize the gap between what they learned in school and what the private sector demands, for instance, in marketing. In industry, it is taken as general management which translates to horizontal leadership and financial accountability. It simply means that the old command-and-control structure doesn't apply. Because in today’s fast-changing world, what is demanded is a constant rearranging of groups into self-organizing teams that are cross-functional and multi-level such that the old formal division of labor and hierarchical structure are incongruous. For example, global companies could be developing and test marketing a new product idea in three different countries and thus would render the formal structure moot.

What about economic development? In PHL, we are input-driven, which is fine until we get to the endpoint. For example, in economics there is the input of policy as in fiscal and monetary policies; and employing a set of such policies has yielded 6% to 7% GDP growth for PHL over the recent past. But as we now know, those numbers have had no major impact on the output – that of our average income of $4,500. At this level, we clearly are an underdeveloped economy and so PHL poverty remains at such alarming levels. On the other hand, if we are to be output-driven, the desired outcome is to be a developed economy and that means an average income in the $30,000 to $50,000 range; and it would take at least a generation for us to get there even at a 7% compounded annual GDP growth rate.

Ergo: an impressive growth rate of 7% is moot – make that 8% and the prognosis doesn't change – given how deep we are in the hole! And so the questions we must ask then are: Where are we? Where do we want to be? How will we get there? We are at $4,500 in average income. We want to be at $30,000 at a minimum. [At the half-way mark poverty would have eased but methodically building the foundation is imperative to get to nirvana.] And we can't run away from reality. PHL poverty is as hard and fast as our underdevelopment.

But with over $20 billion in OFW remittances that we generate with zero efforts other than the blood, sweat and tears of OFW families, the Western financial services sector is blowing our horn for us – because we are the solitary economy with such a healthy foreign exchange reserves that prop the economy, thus a haven for hot money but which can come and go anytime. Yet we don’t get the FDIs for long-term investment as explained in this blog. 

And how will we get to be a developed economy – or how are others doing it? The first step is to open the economy to foreign investment and technology. And if these investments are to come, we must accelerate infrastructure development. And then, so that we are not dissipating time, effort and resources, while free enterprise says every entrepreneur could do his or her own thing, the government can play quarterback and focus industry to a handful of businesses where we could attain global competitiveness – like the seven industry winners the JFC teed up, for example.

To achieve a quantum leap in PHL economic output, we need investment, beyond OFW remittances and even the property boom! And despite the slew of investment-rating upgrades, we’re still the least able to attract investment. Consider: PHL gross investments at 19.4% versus Thailand at 28.5% and Vietnam at 28.2%. Consider still the stock of foreign direct investment in PHL at $30.38 billion against Thailand’s $185.7 and Vietnam’s $73.71. Ergo: we are no different from a two-stroke motorbike racing against 4- and 6-cylinder turbo-charged cars! We can brush that aside at our peril?

And what about the formal structures that are high up in our value system? To be globally competitive, we can’t have the formal structures (see above re self-organizing teams) getting in the way – like the way Messrs. Roxas and Romualdez demonstrated it at the height of Yolanda. In the private sector, those guys would have been hanged! And to drive home the point even more, government should have pulled out all the stops to support the likes of the JFC’s seven industry winners. But as Mr. Roxas and Mr. Romualdez demonstrated, our instincts and our mindsets may be anachronistic that they have no place in the 21st century? 

And which is why our culture is a consistent theme of this blog. For example, are our institutions undermined by our way of life? Do we need to revisit and reset our assumptions – from family to school to church to the public and private sectors? Could the Binays learn from the mayor of QC who reportedly accepted a traffic violation ticket and then promoted the apprehending traffic aide? We instinctively take things personally and pull rank? What about our “kaklase,” are they “licensed to kill” too, like family? And while we're proud of our schools, even in the West, the educational system has failed to meet the needs of a fast changing world? Meanwhile Pope Francis has challenged our understanding of our faith? And as one columnist put it, “nationalism doesn't create jobs”? And when we throw in political patronage (as in Ps 300 – Ps 500 million in election contributions?) and oligopoly into our cultural mix, what do we have – a failed economy, if not yet a failed nation?

It appears that the Editorial of Manila Standard Today (27th Dec 2013) offers a prescription: “Making PH attractive . . . “Economic Planning Secretary Arsenio Balisacan is pushing to amend a Palace directive to liberalize foreign investment and prepare the Philippines for the Asean economic integration in 2015. The government, he said, must shorten the negative list under Executive Order 98. The revisions largely cover the practice of foreign professionals in the Philippines and overseas interest in some businesses.”

“Foreign investment creates more jobs and results in the transfer of technology that makes industries more efficient. The Philippines, thus, must open up the economy more and adapt to change, if it wants to keep pace with its more affluent neighbors.”

But where is the editorial coming from? “The Philippines, despite having the second-fastest economic growth in Asia, is one of the least attractive investment sites in the region. An outdated Constitution and the parochial mentality of some political leaders have made the Philippines least desired by foreign investments in this part of the world.”

“Pseudo nationalists, who are just out to protect the economic interests of the landed few and the present oligarchs, try their best to maintain the status quo. The resistance of the political leadership, which includes President Benigno Aquino III, to change the Constitution and liberalize the economy further has allowed other Asian neighbors to progress ahead of the Philippines.”

“Indonesia, in contrast, is making moves to allow higher foreign investment in several sectors of the economy to boost growth and woo back foreigners who left during recent market turmoil. The Southeast Asian nation is opening up foreign investment in power plants, ports and airports and the pharmaceuticals industry . . . Indonesia is revising its “negative investment list,” which restricts foreign investment in areas considered sensitive. Jakarta hopes to expand the economy by increasing foreign ownership in airports, sea ports and toll roads.”

Ergo: it is not about destiny; we hold the future in our hands . . . And another neighbor is showing us how?