The Asian Manager, August 1996 Issue by Sherbet Manalili

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Development inAsia tlanagem6nt . People-Centered Development r Innovations, Social Change . Excellence in LocalGovernance -

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VOL,IX,NO,4

THEASIAN

lnternetAddress:tam@aim.edu.ph

MANAGER AUCUST/SEPTEMBER1996

covDn sToRr RedefiningTheGlobalDevelopment Paradigm 5 br1ProfrsorEduadoA. MornL6, ,tru Rediscover thatpeoplearetheendof andnot themeansto development. MANAGDMDNT UPDATDS

Development

ba Professor EmilP. Bolurynifa, ^rM Totalqualitvgovernmentleadsto servicequalityand citizen-customer commitment.

MarioAntlnil G. Llpez, AtM fo Professor New relationships haveevolvedamongvarious stakeholders astheypursuebusiness andcorporate socialresponsibility.

Emmnnuel A. Leycl,AIM 47 by Professor LGUSmeetthedemandfor socioeconomic inftastructure. POLICY I'ONUM

Competitiveness Revisited:Backto Productivity 45

hu l'rutc'<,,r LJclC. Cuizn.,tv Pookwinnersprovethatdevolutionworks Calrrrg in thePhilippines

by Proltssor TownyB. Lt)ptz,AtM Thecitizenis thebeneficiary in thedevelopment marketplace.

byProfessor Francisco L. Roman, uu andMntt.L. Martin Krugmanconcludes thatproductivityis thekey underlyingconceptbehindcontinuingeconomic growthof nations. ITAI| AGEMDNT COMMUNIOATION

by PrLtftssor Leonnrdo R.Si/os,et,v 30 Organizations are "islandsof conscious powerin this oceanoI uncon.ciou5 cooferdlion.

My FatherisA Doctor,My MotherisA Typewriter 49 MilagrosT. Carcia, ,qttr by Professor Empathvandhumorallow communicators to cross culturalbarriers. OPINION

Entrepreneur's Corner by Prof*sorSolednd A.Hernn t ), AtM 35 Development managers, AIM alumni,arechangeagents, breathingin new life to institutions,peoples, andnations.

SAIM lr r ?\\ \\ !l \\r( LR -\ l\'bli.ntntrriita!.r\!i l'shlutr (r Mnnngfnr.ntnnn th.FeLlerationof Ariif nFlrlLr f or\lanaBc m€nl Alunmi As\,.Dl1ors.

PublirhffFelipets.Altunso Lo-Publishfls1:dilor-in{lhicfRicardoA. Lim lhmging ldilor Ma. T€resitaMartin Palo Diftlor.{)Frdtii'ns ! llirt rli'nt Millie C. Ferrer 0l\ig ! tlodn{tion(.on{dl{nt Fr.nco Patriarca l!!rx illr ldilorJudith AngelaE. Alpav

Rts+rlTh|nd Prrdurlion Amy C. Espiritu henirina l$ishnl VanessaM. laballas (iNulalionlssislsntEdenS. Cardenas P lishingEord Renet Domingo.lesurC.Uallegor. Jr.,RicardoA. Lim, Victor S. Limlin8an,EduardoA. Morat6,Ashok K. Nath

l,hilippnft\: l)cI,. (iutierrfT, F.\ {6ir2)8944lt09l Lud\LiAF.d.n8in, Fn\ 161l)032 2i5 Ili)8

P irl,Nr:5 L Salahuddin,Fnx (9221)a6iJ2271. tl'n{: Y K Ch!n, F.t (822)7387970 JdFn: Tokuji Niinuma, Fax (1i13)3582-9104 Tluil.trd: Dr Anthony shnrmn,F;! (662)331e303. I niled litr"dm: BrinnTaplin Asso.iates,

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o lee{r b\ lrr .,1n M,!,r1, I ,^ll n .t\ n\d\ &l i{.pftr]u.uor nr nnv nDtrn.r 1f nh,,l. or n lr.,,' LrEli\h 1tr ollrd lm!ur8cs pnnribifuJ lh. A:iir Nlin.! FNbiished l'' Ntrnhl\ l! lh.,\!h Inttitut!.t \l.r!g( !$t lil(onil ()ril.!: A\irn l.rtihrtt n \l.nrg.nurt, .nJ ,\J\.n,\nlg Eug$ni L.F.z li)undahon, Jotcph It V.\1 ,ilnrg Cnnpur, l2lI'dr.o.l.l{o\a.,Cit\ of \liLih, Phrlifpi $ T.l:(.:12)8e2 . r l )l l 2 i r r c l L ) r r i 4 T r 8 ! 1 : l l l l | . r \ : ( h ] l ) . l i 9 l 1 r i I ' h . l o t\ lhr,\l\l I ruin lnphsuu..J l'nntd b! Trnlr Prnrt.r 11. I l.l, sifgn,rtrr Th.Asi r M.n.F.r MITA (t) le6,/lll,/e

V. Chandrun, MBM'74 by Robert Lookinto themirror andaskyourself,"Am I playing an honestgamewith my partners?"

ll{'ngtong: I'imfl.r (lrov, fix (ll5 2) ll3-15ell0 \iogltxh: Teddv Ian, Far (6i) +J08i60. IndonN Rim.5hnet, Fi\ (622l ) 799!090,7971711.1 rhhrtn': C.f nr \8, l:i\ 1601)717il70 I n d i { \ n b - l o n ' . n t M $ l i . , s o u l hA \ i d l P ) l - t d ,

. y' ucusr-SEITEMBER THEAsrANMANAGER 1996

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I / itselfin providing a 40of coursesmorgasbord management thought.We tookWestemcaseshrdies aboutGeneralMotorsand SiliconValleyandmixed themwith our veryown Asiancases on BuenoCatsup andSanMiguel.Wetook by Prof.Henry frameworks Mintzbergand Prof.Michael Porterto contrastagainst modelsbv Prof.Ed Morato andProf.VicLimlingan.Add to thatmix enoughstudents fromAsiaandtherestof the world to discuss therich cases andtoolswhichwe pacedat a rigorousrateof threeperday-about 800 in andsundryreadings cases totalfor a Masterin Business (MBM)student, Management for example, overtlvoyearsandwe produceda 24,000strongbodyof learnedmen and women\a'hoarereadyto do battlewith thebest in Asia. enterprises Buttherigorwasnot we enough.In theprocess, a soregapin alsodiscovered our bodyof knowledge. Some government officialsaskedus lf AIM a pointedquestion: couldhelpurbancorporationsmakeprofits,couldit not alsodo thesamefor the rurd poor?No doubt,our toolscould management balance a productionlineor a marketingcamenergize paignbut thesametools couldnot turn arounda backwoods Asiancommunity better in needof thebasics: food,betterclothing,better water.And oncewe could find solutionsto tum around thecommuniryhow then couldwe sustaindevelopment?In short,our Western toolshadneglected theissues counhies: of developing growthandequity,poverty ruralversusurban alleviation, 4

FnouTru Dnrron PROFESSOR RICARDoA. LIM

Delelopment llanagbmenl AlM.discooered a ioregap in its bodyof knou.sledge.

development.The Westhad neglectedthesesubjectsnot out of selfishreasonsbut becausethev simplv had no practicalexperiencebasein development.Surelvthev went through their development stagestoo but prosperity had sinceerasedthe collectivememoriesof Westemmanagement practitioners:The time rvas now and the Westhad to move fonvard . For AlM, the time was alsonow and we too had to move forn'ard,albeitin differentdirectionsfrom the West.We had to find our own "TrueNorth." Beginningrvith our Rural Development ManagementPrograms (RDMP)in the 1970sthrough our Programfor Developing Managers(PDM) in the 80s, we built our management tools from scratch.We got help from agenciessuch as the Asian DevelopmentBank (ADB), the CanadianIntemational DevelopmentAgencv (CIDA), the Ford Foundation, the US Agencyfor International Development(USAID), the Konrad Adenauer Foundation,and generous others.We traveledin pickup

trucks to the backu,ater communitiesin Thailancl;n'e spokc b farmersancl tor-nsfolk in the Philippines; u'e coordinatedrvith nongoyernmentorganizations (NCOs)anclgovernment pcoplt-alike in Incionesia.rnci India; n'e built our olr,n unique f ramelr'orksthat aliol'ed all thesecommunities to operaieW'ithlin.itecl rcsources.Our lateDean GastvOrtigassptarheadecl this movement,even through his temporarvexilein the US from the Philippine dictabrship in the 80s.All these effortsculminatedin the proud launchin 1990of our uniquc Masterin Development Managemcnt(MD\'1) degreeunder the aegisof our Centerfor Developmeni Management(CDM). Todar, CDM canboastof nore than 1,300committed,energized graduates!\to are out there in Malavsia,Indonesia, Thailand,Bangladesh,and Nepal rvorking to der,elop their own goycrnment agencics,NCOs, and communltres. It n'as not easv lVe had to reconcileour natural profiimaking orientation\\'ith the

developmentorientation.To this dav,AIM prolessorsstill frei over thcsccliffcrences; if .rnvthing,rvc hayeagreedto clisagrt'e, but to keep pulling AIM tou,ardsTrueNorth. lVc iht'reforehaclt0 find sone middlc grounclrhere clevel0pmentand profits coukl mergt in ,r rvin-rvin rvar,,long beforeit n as fashionablcor imperatir,efor corporatiorst() be environment- and communitvfrienclllrAnd u e.rre'lockit.tg stepsantl moving fonlard. ln the past,fbr examplt',it rvasnormalfor an MBM professorb push ior bottom line iiguresin classrvhilc igrroringthe eifectsof pollution anclpopulation Todar',that ciisplacement. profcssor hasretooled same into tht' developrnerrt orieniati0nand knorrs that a factor,rcannotsustainiis profits unlessit c,rresfor the childrtn in the contmunitv incl treatsthe \\,asteit dumps into nearbvriyers.An envirorunenta)impact siud1,, lor ex.rmple,is nol rccluisite for anv MBlvl malagemenl researchreport (MRR)thesis presert,rtiul. This issueis de\'otedb a richand emotionalbpic: It managenrent. deVelopn1eni is an omnibusof n,hatAIM is doing in the field todav This issucis clcdicatedkr all .rspiringand committed deveJopmentm;rna;;crsout there.It is alsocledicatetlkr all of vou cnterprise,forprolit man.rgers. Readon anclvou n ill be surprisedabout horv developmcnt mana[iementis not so dissimilarrviih uhat you are cloingnon. Justbctng informeclaborrithis subject will meancertainprofits for . otl. P r . l R r , f t / , ' 1 . l r rh n i l . r I T , r r J , l , J l r r r ( r r f t ! r la a r r r r r l r , r r r l r rrkt r r l r ' f t l ) , r r J J , J F I l f , i , j , i 1 , , !/ r r , r r r , r :

i996 . THr Asr,\\ MANACER AucLsr-SEPTENlBER

CownSronv 1 r - _

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By PRoFEssoR EDLrAnLro A. MoRATo,JR.

Redefining the GlobalDevelopment Paradigm Rediscover that peoplearo lhe elrdol'andnot tho nleansto dorkrpment.

, ' ' t t r n r l e r i e r e l , ' l c Je ( , , r r , ' nri.* .rrl rlllrr;- irorn lh. t fd . $ ' . , ' ' " t . r t l e r " l , ' l ' r ' r r rl r' lrr i ? 1 , , . , ' f h rt h , t rn t , t \ t n I / \, t , , . tlav's procluctioniviihout anr, t'mpathv for ihe future.Theyhale tradecltheirchil c1rt.n's l clfarcfor thcir orrn.Countricsrn theSouthhave.rlkrned rr antonerploita tionof theirnaturalrcsources,rnel f,rlorecl I , ' ; ; Lr - . r n r r tr,. . , l r l , i( , ' r l r n l ( ' r \ i .i lrl- l l | I ] : md[inatL.s io cxtr,rctihe bonntit'sof n,riurc at anv cost.Fort'sishavebecl n'ipeclout, r\tter svstenlspollutttl bv nint tailings, agriculturelanclspoisoneel bv cht'rric,rls, l,rkcsclrit cl up, .rnclcora1rccfs c1t'stror,ccl bv greed-a)l in the r1an1e of rievelLrprrcnt. Mealwhilt, majoritvof iht'pt'ople ren.lin poor or nr;rrginalizerl.Nligration from tht ruralart.as to thc citits,and cltlr rellectthe high levelof people's abro,rcl, 6

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Morbidit,,'isrising.Crimer.rtes.rre high. Kidnappinghasbecome,rfavoritesport. EconomicactiviiiL.snrc focuscdon ion'

r',rL-reaclclt'el agriculturc,nanuilcturins, ;rnclscrvices.(,rrlemmentsare ridr'ller'l \\'ith huse debts,rndl,rrgt fi.scal elcficrts. This ble,rkpictureof nranvrlevelopi n L , , ' U n t r i ( .i n t l r i \ " l r t l t i . , , r t c, l clisemponered citiztrrrits man,rgeclbl \ , r r r u f lf , , \ ( n . n t ( l - . i t i - r l r Lr ' r r p r . ture of a proeluction-cttt it'rccl econonrt thal st't'sptoplc as a siclt bcntiit of e1c1 1 1 , ' p t t t .el t i . l l r eI ' i .r L i r 'r, i , r- f , l " r - 1 . , custtl parrrlign thnt ia\'orsceniralgo\t'rnrncrrtburcaucracics olcr th,rtol local areagovr.m.rnce. It is the pictrrreoi (iNP

lill,rsts ancl elisnr.rntlethe rnonoliihic stranglcholtlof largt and corruptcentral Thev are redesigningtire bure,rucr,rcies. measuresof rltvclopmc'ni io pronote both grolth.rnd t'cluitvand lo irtcirdrr r,rtherth,rnercluclethe margin.rlizedand poor majoritriThtv arereinveniingtheir Earth-not as perspectilesaboutN,tother a limitles::ourceoi n e.rlthbut .rsa finite resourcethat shallbc ktpi in b,rlancetor hum,uiir"s ol n s,rkr'. T l r i ., r r t i r ' ef r c - e r ) t . . ri r . r n t e r r ' o iroLr reshapingtht globaldo'tlopment para of peoclism. It outline:thech,rracteristics rrorrlh ii\atio11rvithoutrcrarclkrr portrtr',rurl r.c}ritr:It is thc Pictureof short- plt'ctrittrt'cl vt'rsus production-centered g.rjusoler long-term rlc.r'elopmtrrt,stctor vs,rrea-basedder,eltun unsust,rinable sustainablt. bt ncfi ts. opmcnt,rnclgrohlhJerl versusequityJctl Fortunateh; rlo clopmcnt.lt alsosynthemostglobalelelelopment sustainatrlc throughan institutions,rnrlmanr rlevelol-ring coun- siztsthisnol g)obalparacligm triesarr'\\'akiucup to auothcrp,rraclignr. Integr,rteci Strateer DevelopmcntMotlel. Ther,arerer]iscor ering people,1sthr.r/rr/ lfer elopntent of ,rn,,lnot the nreansto tlelelopment. P.{)pl{LCe[l(rr(rd Thet',rrt' rct'ngirrccringgnYcnllncntto ['eople centerer]developmcnt puts tlnpor!er pro\'inces, r'listricts, kl\\'ns,,rnd p , r ' p l . . r . t l r r r t r . t \ ' rp r , ' p e l l e r . r nrdn , r i l r

TrrEAsr.\\ M^N,\CFR. Atic;LsrSFrrF\JBFR 1996

recipientof development.It is peoplefirst, peopleworking for other people,and peoplefullyachralizing themselves asfulfilled human beings.This perspective challengesthe mainstreamconceptof development asoneof maximizing ecoPeople-Centered nomicgrowthwith theferventhopethat its benefitswill tdckledown to the peoExploitationof natural Enhance humangrowthand ple. This perspective assertsthat develresourcesto producegreater well-being,equityand opmentis aboutpeople,for people,and Logic amountsof goodsandservices sustainability. Balanced by people. andcreatemassifiedconsumer humanecology. The new yardsticksof peoplesocieties to absorbthem. centereddevelopmentvalue healthbecauseit providesa good life; nutrition Largeorganizations Individualsasactors (corporations because it enablespeopleto work; eduandbureaucracies)defining goals,controlling cationbecauseit transformscharactet Delivery maximizingthroughputsvia resources anddirecting moldsminds,andbuildsskills;safetybeMechanism centrallyconholled,functionally processes thataffecttheir causeit allowsfreedomof actionandofdefined,andgloballylinked lives.Localinitiativeand ferspeace; leisurebecause it liberatesthe participation. Processes. bodyand the mind;and happiness beSelf-organizing systems causeit suffusesthespirit. built aroundhumanscale, Giventhisdefinitionof development, organizational units.SelfshessfulGNPrat racessimplywill not do. reliantcommunities. Theoperativeword is totalactualization growthwith human Economic Humangrowthin realizing of thehumanpotential.People-centered well-being as by-produci. full potentials. High quality developmentendeavorsto make each Objective wealth, Creation of trickle-down of life. Community welfare memberof sociâ&#x201A;Źtya functioning coneffect on social welfare. first. Economic surplus as tributor to overall developmentwhile by-product. derivingfull individualsatisfaction in the process. Valuesystem.Social Comrnandsystem. lf peopledevelopmentis to be purClassical physicalsciences. learningprocesses. sued,thefocalpointswill be communiSocial Functionaldefinitionof Territorial(area)perspective ties,not industdesor sectors. Therewill Techniques production. defineproduction. bea departurefrom themyopicthinking Analyticaltoolsthatexternalize Humanecologyframework of equaiingdevelopment solelywith the peopleand.environment. thatinternalizepeopleand acceleration of industrialandagricultural env[onment. growthtowardsdevelopment whichharnesses thefull potentialsof peopleliving in a givenarea. Summarized andinterpreted by EduardoA, Morat6,Jr,,AsianInstituteof Threeconceptsemâ&#x201A;Źrge:First,develManagement. opmentis a communityor societal effort. SourceDocument: People-Centercd Deaelopmenf, Editedby DavidC. KortenandRudr Second, development is a collaboration, Klauss,KumarianPress,1984. meaning thejointharnessing andutilization of resources by peopleadopting mutuallybeneficial strategies. Third,developmentis not for the privilegedfew Peoplemustbuildtheirown capabilities stresses the maximizationof goodsand but for all. Centralto theconceptof peo- to providefortheirbasicneedsandmore. services produced.Theformerrelieson inple developmentis peopleempowerdividuals,households, and communities ment.Peoplemustgetinvolvedandfully People-Oentered l)evelopment asmaindeliverers to themselves whilethe participateinthesocial,economic, politi- versus Productlon-Centered latter is anchoredon largecorporations cal,culhrral,andspiritualaspects of their l)evelopment Theformerseeksthe and bureaucracies. Theymusthaveaccess development. to Korten,in People-Centered Deoelop- floweringofthefull humanpotentialwith r e s o u r c e bs e , t h e y f i n a n c i a ln, a t u r a l , ment:Toward A Frameloolk, while contrasts peo- economic surplusastheby-product physical,or human.Theymustthenbe- ple-centered development with produc- thelatterstrivesforcontinuous economic gin to controltheseresources for themto tion-centered develoDment. He claims growthwith humanwelfare.Theformer controltheirown lives.Finally,theymust that people-centered developmentfo- underscores value systemsand interachavethecapacityto managethemselves, cuses on humangrowthandwell-being tive, expedmental,and heuristicsocial thet organizations, in a teritorial setting and their resources. whileproduction-centered develoDment learningprocesses t)

Aucusr-SEpTEMBER 1996. THEASIANMANACER

while the Iatterrelieson a hierarchicalcommandsystem that utilizesmechanisticand algorithmicphvsicalsciences in functionallydefineddevelopment.r The actionthemesof people-centered development are: enablingsettings; self-organizing structuresand processes and territorially-organized production-consumption systems. In contrast,production favors centered-development professional bureaucracy as a monopolisticdeliverer;the todevelopbluepdntapproach ment programming;and, a moreglobal,national,industrial,and sectoralapproachto growth.Kortenproeconomic posesthat in order to push people-centered development, creationof a new socialorder, n e w s t r u c t u r e sa, n d n e w mechanisms shallbe put in placerather than destroying theoldin aconfrontational and radicalway. A comparative analysisof people-centered versusproduction-centered d e v e l o p m e n t ,b a s e d o n Korten,is summadzedin Tables1 and2.

1. Professionalizeddeliverers of services usingThreeEs: Efficiency,Effectivity,and Economy.

Enablingsettingsfor peopleto meettheirown set of needs. Deliverersandrecipients of services areoneandthe samecommunity.

2. Blueprintapproachof bureaucratic monopolies.

Self-designing, self-organizing communities. Localgovernance. Systems, structures, andprocesses.

a) Premised on economies of rale.

a) Premised on smallis beautifulandmore productive.

b) Hierarchical, depersonalized chain of commandanddeliveryof services.

b) Useof informal networks, mediating structures. Lateralas well as vc'u(d,,,r'^dEr(D.

c) Government asneutralplayerin development, sometimes co-exploiter of localareas.

3. National,Global, Industrial, and Sectoral a) Meet national needsand give

Ar.e-a-Based control to thosewho can best l)evelepment competenationally or intemationally Area-based development assumesa local government b) Global interdependence. orientationwheretheintegration of an area'smultifarious interestsare deemedparamount.In area-based developc) Stmseslogicof poduct andproducen ment,the overridingconsidof producls.Ownenhipandmanagemmt integraerationis thebalanced notlinkedto place.Acmuntabilityto tion of various sectoralconindustry/sectordevelopment. cernswhich includepolitical, economic,social,ethnic,religious,and environmental interestgroups.Theperspective takenis the areamanager's, whoseprimaryresponsibility is to all his churchgroups,communities) to increase presentandfuture. areaproductivity,provideequitablebenor herconstituencies, is to hamess efitstoall,andassurequalityof lifeof the Theareamanager's objective arearesources(human,physical,eco- peopleandcontinuedsustainabilityof the n o m i c ,n a t u r a l )b y m o b i l i z i n ga r e a environment.Area-based develoomentis (individuals,businesses, differentiatedfrom sectoraldevelopment, stakeholders socialorganizations, politicalinstitutions, industrialdevelopment, or economicdeTHEAsrANMANAGER. Aucusr-SEffiMBER1996

c) Government asdefender againstassaultof elite,idea buildel catalyst,hainor, andadvisorSourceof socialsupport,innovation, andsocialaction. Territorial(localarea) Production-Consumption. a) Meetlocalneedsand controlby localsof tellitorialresources. reliance. b) Self-sufficiency, Communitylinkagingand goingup interdependence to nationalandto global. logicof place, c) Shesses peoplein place.Ownership andmanagement linkedto place.Accountable to tenitorialdevelopment.

velopmentwhich all tend to takea limited perspective. TheUNICEFprovidesa comparative deanalysisofsectoralversusarea-based velopment.'Area-based developmenthas integrated, location-spea multi-sectoral, cific focusin contrastwith thenational/

sectoralfocus of, sav, agriculture health, education,etc.The former is gearedtorl ard loc,rlplannrng.rni implemcntJtion u h i l , r h e l . r r l tr i designedfor centralizedgovernancc Are.r-b.r-ed m,rn,rsemynl Jc,tlrr rll l u c , i l i / e di - : u e . . t a r g , r l . . r r r Jp c r Iormancecritcria rr hilc sccror.rlrn.uragemenirelir. r'n -t,rndarLijzcJ frl grams and performancemeasures. The area manageris morc of ,r generalist rvhilethesectoral manaser is more of a spccialist.Thc forntr deals\\'ith local structuresand com munitv-cenieredinstitutions;thc latter dealsrnore$ ith ser!iceertension units of nationalbureaucracies. Are.ab a s e d d e v e l o p m e n tb e l i e v e si n participatiVeprocesses/ people involvement,socialmobilization,and the broadening of economic,social, and politicalbases. Sectoral der,elopment atlheres to thc provision and deliverv of servicesthrough standbv techard packagesdisseminated nical manpon'er.This differentiation betweenarea-basedand sector.rldevelopmentis summarizedin Tablc3.

SectoralDevelopment

Area-BasedDevelopment

FOCUS

National,sectoral

Lmd areaspecific;rnultisedoralrntegrated

SITUATIONAL ANALYSIS

A tool for central management

A tool for local planning

PLANNINC

Ceniralgovernment

Consultative;decentralizedwith Iocal govcrnment and communitiesi devolution

MANACEMENT Slandardfargetsand

Locallv-determinecltargetsand performancc; criteria performancecriteriaestablisherl appliedthroughcommon through relevant process measures.1ndpr()i|drr,ll interventions guidelines

MONITORINC AND E\ALUATION

Cuidelines/indicators

FINANCIAL Centrally-directed MANACEMENT

Cuidelines/indicators areaspecific

Central+ LocalCovemmentUnit Community-basedfinancing

CAPACITY Technicalmanpower Local institution building and Area 0lanagcmcnl BUILDINC anclorganizational Byand large,thereis a lackofapcapacityenhancement preciationfor areamanagement. Bv VOLUNTEER/ Extendedmanpower arm Communitv-based link for vertical area, \{'c mcan gcographic political COMMUNITY of servicedeliverv sen'iceintegration,micro-macro units suchascountries,isJancls, pror, WORKER mechanism level contribution i n c e s .c i t i e s ,m u n i c i p a l i t i t ' s a , ntl barangavs.In pursuing econolnic SOCIAL lnformation-sharingand Broad-basedsocialpreparation, grouth, manv economic man,rgcrs MOBILIZATION provider-oriented do not considerthe area's"siancling communityorganizing.and PARTICIPATION sen,iceutilization leadershipmobilization values or u.hat resourceshave been retained in the area ancl rvhat reCOINGTO SCALE Expansionaccordingto Ad\.ocacyin acti01and testing sourceshave been lost forer,er" Artechnicalmanporver/ ground for rapid acceleration eashave just becomeplaygrounds financial feasibilitv for investorsand rvcalth cxiracftrrs, wiihout great regard for the area's REPLICATION Through standard Through socialmobilization witl.r clegradation,deprir,ation,and dcnupackagesgovernment cost-sharingand Iocal communitv dation. We must look at both the resources presentproductivitv of an area ancl direction and resources its abilitv io producefor tomorroiv's needs.PresentproductiYitv relies more on economicanalvsis,inr,est Source:UNICEF,ABSDc/o Dr VictoriaBautista, UP-CPA. menrs Senerauon,maxlmum Production of goodsand services, .rnd immetliate benefits.Futurc productivity emphasizes environmental account taskis themultiplicat(rn,circulalion, and nomicmanagers is C\P or grossnational ing, human resources.rnalvsis,and area recvclingof resourceswithin the area, product l hich is onlv partial develop assetbuild-up.Area managementtraces avoiding massivt ltakagesthat tcnd to ment, at besi. Tht CNP grorvth fetish of the inflol's and outflorvs of all v,rluesto shriytl an arca'sl.roteniialities.' manv â&#x201A;Ź.cononistsprevents them from n r t r o m t h e l o c a l r r vI .l r e , r r t - r, rn , r n , r { t.- r The prevailingmeasureuseclbv eco qualitatir.eiyanalvzingits components. Aucrusr-SFprE\{BER 1996. THEAslANMANA(;ER

Many growth factorsPertainto unbeneficialproduction,like armacholesterol-laden ments,cigarettes, andnon-essenfood,pornography, production tialluxuries.Moreover, at thesacrificeof is steam-rollered like cleanair, vital arearesources safewatet bountiful flora and faura,beautifulscenarios,and healthyhumanbeings.GNPdoes activinot includedevelopmental informal secthe tiescaniedoutby (like garvegetable backyard tor dening)or life-givingandsustaining human activities (like and physicalexerbreastfeeding cise).Finally,GNPutilizesmoney thesevalues valuesand compares countrieswithoutadjusting across power for theirrelativepurchasing in eachcountry. The deficienciesin economic haveled develoPmeasurements to seekotherYardmentmanagers sticks,suchasemploymentlevels o r m i n i m u mb a s i cn e e d s( i . e . , health,nutrition, education,longevity,sanitation,water supply, andhousing).TheUnitedNations hascomeup with the humandeof litvelopmentindexcomposed eracy,lifeexpectanryandincome. Theseyardsticksfocuson socialindicators. More recently,environmentalists theuseof environhavebeenadvocating the quality mentalaccountingto assess andthe endowments ofnationalresource impactof humanity'sinterfacewith nafure. needto synthesize Thereis a pressing social,andenvironmental theeconomic, into an areabalmeasures development ancesheetwhich listsall arearesources or assetson one sideand the claimants on or assets and usersof theseresources or assets the otherside,Arearesources monintlude humancaPitalresources, fromotherareas, receivables etaryassets, inventoryofgoodsand nahrralresources, services,physicalinfrastructures,ecosocial/religious/politinomicstructures, cal structures,and intangibleassets. C l a i m a n tas n d u s e r si n c l u d ev a r i o u s in the area,includingthe stakeholders "foreignlocalsor resident-stakeholders, "outsiders," andgovemment ers"or of an area'syearlybalA comparison are ancesheetwill revealwhich resources

D"r"lopt"nt tor sFu'3tlrii"1bt" rramewort< Upland Lowland Coastal Urban

PEOPLE

/r\ |

GOVERNIEIIT \ Policies \ Stralegies \ Slructu€s \ Programs \ Proiecls \ Laws and Reguiatjons \ \

\ ECONOIY

Agriculture/Aquacultu€ Industry Services Intormal,Unorganized

Land Forest En€rgy

Preparedby Prof.EduardoA. Morst6,Jr', Asian Instiluteof Management1993

the presentwithout compromisingthe ability of future generationsto meettheir own needs."They recognizedthat the challengesof sustainabledeveloPment are both interdependentand integrated, and approaches requiringcomprehensive popular participation. Interdependency and integrationare critical becausesustainabledeveloprnentis not a fixed state of harmonybut ratheraprocessof change whereexploitationof resources(ftorn the environment),direction of investments (for economicwell-being)and institutionalchange(for peopleandtheirorganizations)aremadeconsistentwith future TheWorldComaswellaspresentneeds. new eraof economic to a missionDoints -one be basedon polithat must growth, Susiainable lf evelopment: the environexpand sustain and cies that Interdepcndeney and Inlegra. growth, the Such base. mental resource tion of Peopler Their DconomY' esis absolutely postulates, Cornmission and The EnvlronmenL is that great the to relieve The WorldCommissionon Environ- sential Povety the developing most of in mentand Development Producedtheir deepening seminalwork on sustainabledevelop- world. In essence,the Commissionbement in 1987.The Commissiondefined lievesthat peoplecanbuild a future that thetermas "onethat meetstheneedsof is moreprosperous,moreiust, and more

fastincreasingandwhich onesarefastdecreasing.Onecanthengaugewhetherthe will or decreases directionof theincreases One for whom. not and be beneficialor can likewiseassesswhetheror not the over overallmix of the area'sresources that favors time hasa healthyequilibrium continuousassetregenerationwithout any onesectorincurringsiSnificantsacrifices.Anotherinterestinginsightfrom theareabalancesheetis thedegreeof conhol thatoneclaimantor groupof claimThisinantshasoveranarea'sresources. sightcapturestheabsoluteor relativedistdbutionof theassetsin theareaamong its claimants.

. Aucusr-SEPTEMBER 1996 THEAsrANMANAGER

to must itself be sr.rstainable to ensure the secureand that theglobaleconomyand cies,laws,and regulatorvmechanisms properexecutionof its mandale.If it beglobalecologyarelockedtogether.r ensurethat the threecomponent5are in visu- harmony and act svnergisticallvtorvards comesunsustainable,it r,,'ill suffer from WhattheCommission therefore lackof resources, lackof moraland Iegal alizesis a modelof development thatin- a more sustainable development. terweaves theissues of poverty,5ocialjusaulhoritv and lack of crediblegoverntice,ecological balance, and economic Government ance. prospenty. as A lfevelopmont Instiauai0n We canregard govemment as the key The Environment The linkagebetweenpeople,their is stressed institution that must espousesustainablc Thc environment is the arena of suseconomy, andtheenvironment by DalyandCobb(1989)wherethel' de- development.Governmentis the man- t a i n a b l ed e Y e l o p m e n tI.t i s t h e l o c u s manda paradigmshift awavfrom look- agerofthe countrv,prnr,ince,town, or vil- u'herepeople,institutions,econom\';and ing at economicdevelopmentas mere lage.It servesasthe institution that must ecologv meet. lt is both a resourcebase bidsfor personalfreedomandfreeingin- determinepolicies,strategies,structures, and a habitat.It givessustenance but at authority. programs,projects,laws, and regulations thc sametime suffersfrom abuseand misdividualsfrom hierarchical Insteadof ftonoecoronrcus aspureindi- that would govern the area and its sus- use.As both locus and resource,the envidual,heor sheis person-in-community.tainable development.Government is vironment proviclesland, forests,ait n aThusthe new economics of Daly and both harnesserand allocatorofresources, tet energy,minerals, seas,lakes,rivers. Cobbbecomes moreconsistentwith other law-giver and law-enforcer,svnthesrzer As a habitat, it is home to men, animals, socialsciences.Theyaverthateconom- and integrator of all developmenteftorts and plants. goodiswhatecologi- as well as the separatorof functions and The governmentis given so\,ereigntv icsforthecommon callsfor,and evenmore, disaggregatorof sectoralconcerns.(On and eminentclomainover the environcal humanism whatstewardship ofcreation callsfor The this last aspectthe government,in its ment. [n so doing it, must answer to the proponents of thisneweconomicc believe drive to reducenanagementspanofcon- peopleat largeor thepublic.It is thepeothatbothmarketsystemfailures(inequal- t r o l , s p l i t s i t s e l f i n t o m a n v u n i t s , ple that, in most ir.$tances,determinethe ity,inju5tice. inhumanity) dndpublicsy\- oftentimeswith conflictingobjectivesand legitimacy of government. The governtemfailures(inefficiency, ineffectivity,and approaches.Hence,the interdependency ment is mandatedto uplift the quality of chain is broken and the integrative har- life of the peopleunclerits jurisdiction incompetence) shallbe addressed.i T h e t r i a n g u l a t i oonf p e o p l et.h e i r monizationrequiredin sustainabledevei- rvhile at the same time ensuring that the economy,and the environmentmay be o p m e n ti s l o . t . )C o v e r n m e n ti ,n i t . b a l - qualitv of the resourcesprovided bv the depictedin Figure1. Governmentmust ancing act of maintainingpeople,eco- environment remain high and maintain assume anactiverolein pushingfor poli- nomic, and environmentalsustainabilitv their long-term sustainabilitv This nexus betweenpeoplelvelfareand environmenis oftenbrokenbecause tal sustainabilitv the peoplethemselvesare not one monol i t h i c e n t i t v b u t a n o r g a n i z a t i o no f stakeholder..vearningrnJ a.piring for their individual, their group, and their collectivegoals. Ren€dbn: Evallation and

CincopudrEd by Prof EduardoA. MoEr'6.Jr..Aean Inshruteo, Manalenenr

People Peopledevekrpmenthasbecomesvnonvmouswith economicdevelopmentby manv govcrnncnts although economic developmentdoesnot encompasssocial, political,cultural,and spiritual aspectsof development.Hor,vevetsincemany governmentsvieu' economicdevelopmentas theharbingerofall formsoftrickle-down benefits.it has gained a promrnent role that has marginalizedmany, especiallv the poor, outside the mainstream of economy.It has also beenpursued to the detriment of the environment,leading to e c o l o g i c a ld e s t r u c t i o n ,d e t e r i o r a t i n g health statisticsand economicdownfall. It is important, therefore,to vie$' the people as critical stakeholdersin the integrated model of sustainabledevelopALTGUST-SIprE\4BER 1996. THEAslAN MANACER

Table4 Comparisonof Growth-LedEconomicversusEquity-LedSustainableDevelopment Growth-Led Economic Development

OBJECIIVE Toaccelerate economic development throughmaximum productionof goodsandservices for market consumption PREMISES 1.lndustryshouldmaximizeexploitationof resources as AND necessary inputsto theoutputsof development. VALUES 2. Focuson presentneedsandwants; presentconsumption bias. 3.Growthwill generate enoughwealthto alleviate conditionsof thosewho arenot in themainstreamlike thepoor 4. Narrow-basedbut shongcapitalistclass.Exclusiviry Preference for thos€ who will surviveasthe fittestbecaus€ they a.e the strongest. 5. Shonglybiasedtowardswantsof aJfluentconsumers. Non-essentialgoodsand consumerismencouraged. 6. Undervaluesnaturalresources and discouragestheii conservanon. 7.Valuesany increasein economicactivity. 8.Assumeslaborerexiststo s€rvethe economyratherthan the otherway around. MAJOR 1. Creationof wealththroughenterprisesand industriesby STRAIEGIES capitalizing on competitive advantage andrapid exploitationof resoucesto maximizeprofits.Wealth generatedis oftenconcenhatedto allow fastergrowth. 2. Prcmoteinvestmentsthroughfastcapitalmobilization suchasloans,largecorporatesavings,grants,forefn mvestments, taxes,etc. 3. Growth nodes,industrial centers,urban sprawl.Industrial enclaves.Exportprocessrng zones.Inbsazfuire.

Equity-Led Sustainable Development To balancetotal developmentthrough integrationand harmonizationof ecologywith peopleand economy

1. Eath haslimited rcsourcesthat must be usedpdiciously 2. Futureviability is just as,or evenmore,important aspresentconsumption. 3. Include thosemarginalizedat the beginningto broaden thebaseof development. 4. Broad-based ownership. Inclusivity.Provisionof econornic,social,and poiiticallifeboatsfor all. 5. Stronglybiasedtowardsall p€oplegettingthe opportunity to pursuebasiclivelihoodfor themselvesin the useof the earth'sresources. Discouated non-essential consumption. 6. Highly valuesnaturalresources and encourages their conservation. 7. Valuesmaintenance of decenthumanliving standards. 8. Putspreeminence in rights of individual, family,and communitvto own and conholorcductivercsouces. 1.Area-baseddevelopmmtwhich assuresthat onesectoris not sacdficedfor anotherand the futur€ is not prpardized for the present.Theshatety is to ensue that peoplehave propervaluesand orientationto manageresourc€s well so that they arercSenerated and not deshoyedor wasted. 2. Promoteinvestmentsthroughcommunity,equity,family savings,self-helpschemes.

3. Agropolitaneconomies, self-reliantcities,dispersed development.Peopldsorganizationstlnt areinterlinked. Corporatecitizenship. 4. To accelerate gawth, import capitalgoods,technology,and 4. Relianceon indigenousmateiialt own resources, and technical assistance. capabilities. 5. Speciallzeon industriesand productswherecountryhas 5. Economicdiversficationat all levels:Focuson oroduction comparativeadvantage. thatwouldmeetbasicneedsof localpopulahon. 6. Liberalization,deregulationbut still selectiveprotectionof 6. Self-sufficiencyProtectionof disadvantaged. strong. 7.Capitalconcentration 7. Capitaldispersal Legrtimizesconcentrationof ownershipand productive Promotesdemocratizationof wealthand politicaldecisionassetsin corpontestructuresand largebureaucracies making.Broad-based distributionof capital,power,and but sep€ratres thecontrolof theseassebfromthecommunities assets. that dependon them. 8. Foreignownenhip and conholis encouraged. 8. Localownershipand conholof rcsourcesis preferred. 9-Exportasmain impetusis preferred,localneedsrnetasa 9. Surplusof high valuelocalproductionis the onegearedfor result. exDort. 10.Largeis powerful.Intensiveindustrialization. 10.Smallis beautiful.Intensivesmallholderagricultureusing high productivity;bio-intensivetrhnologies. ll. High priorityto sophisdcated te(hnology. High 11.High priority to educadorycapabilitybuilding of the productivitlthrough advancedmachinery many to takechargeof own r€sources and to participatein and equipment. local,national,and globaldecisionprocesses. 12.Covemmentis given the taskof promulgatingand 12.Sharedresponsibilityfor well-beingof all community implernentinglaws that pinpoint responsibilities and membersand rcverencefor commucationbetwempeople accountabilities for variousstakeholders. and nahrre. Sumarized ahd inte.ptutedbv EduardoA. Morat6,Jr, AsianInstituteofManagment. SOURCE DOCUMENT: G.lr' ng to The27stCtntury, Dalid C Korren, Kumrian PEs, 1990.

THEASIANMANAGER. AUCUST-SEPTEMBER 1996

ment. Stakeholderanalysismust vlew "stewards"of peopleas"inhabitors"and areas,suchasupspecificenvironmental lands,lowlands,coastalareas,andcities. Economy analysismust also take Stakeholder business entitiesandlivelihoodpursuits into account.Theyarethepdmemovers in economic developof andparticipants classificament.A broadbut convenient analysis tion for thislevelof stakeholder ofagriculhrre, is thesectoral classification Within theagriculindustry,andseruices. may include agriculture tural sector,one fishery, and foritselt livestockraising, The industry sector activities. est-based possesses a broadspectrumrangingfrom of agriculturalraw mabasicprocessing terialsall theway to syntheticchemicals andmanufachrreof armaments.Theservfinancing,tradicessectorencompasses ing, government,communirypersonal, business,political,religious,and other formsof services. Intâ&#x201A;ŹeFlatâ&#x201A;Źd llevelopment Model Toprovidea Irameworkfor the new globaldevelopmentparadigm,we proposethe IntegratedStrategyDevelopthatdevelopmentModelwhichstresses havethedelicatetaskof mentmanagers propellingbalancedgrowth,riding on the economic, threewheelsof environmental, (people) development andsocio-poliiical vehicle.Theymustfollowa wholisticapproachthatwill bring thesethreedevelopmentwheelstogetherin an integrated strategy. Otherwise,the vehiclewill not (SeeFigure movetowardsits destination 2). Environrnentaldevelopmentinvolves of a geographicarea,the themanagement industriesand sectorsoperatingin that area,and the developmentagenciesor institutionsinterveningto promote growtlL productivity, and quality of life in resources andof naturalandphysical dethat area.Thekey to environmental (whereoneaspectis velopmentis brlance not sacrificed for the other) and (whercthefuhrreis not sacsustainability rificedfor thepresent). The economicdevelopmentprocess into ininvolvesconversion of resources vestments,investmentsinto goodsand goodsandservices intoincome, services, or benand incomebackinto resources 72

efitsdistributedto intendedbeneficianes. Fourprocesses areinvolvedhere:(1)the multiplicationof area,industry,sectot (2)thereducandinstitutionalresources; bentionof factorsthatsubtracteconomic efits;(3)theadditionof higherandhigher valuesto economic activities;and(4)the on an eqdivisionof benefitsgenerated basis. uitableandsustainable Humaninfrastructure andinstitutlon buildingis the objectiveof the socio-politicaldevelopment process. It is a social processbecause it concernsindividuals relating to oneanotherwithinanorganizationandgroupsinteractingwith other groupsandtheenvironment theylivein. It buildssocialsystems thaIareresponsible for determiningthebehaviorof combecause munities.It is a politicalprocess it involvesthe dynamicsof influencing, goveming,andempoweringpeople.Both dealwith socialandpoliticaldimensions the art and scienceof peoplemanagedevelopment,Hencethesocio-political mentprocessmustencompass the totalbody, and ity of thehumanbeing-mind, peothetotalityof spidt. lt mustembrace organiple'sinstitutions. theirideology. zation,andvalues. Concephrally, thedynamicsandinterfaceof environmental,economic,and (or people)development socio-political processes are depictedin theIntegrated Development Modelasshotn in Strategy Figure2. Comparlson of Growth-l,ed Eeonomie versus Dqulf-Led Sustainable llevelopment In his book,Gettingto The2:1stCent ,,y,Kortenadvocates for an equityled development versusthetrasustainable ditional mode,pursuedby most countries,which is growth-ledeconomicdeand velopment.6 Theauthorsummarizes integratesthe two paradigmsof Korten in a tabularcomparative analysis. On onehand,equityJedsustainable development batsfor balancedtotaldevelopmentthroughthe integrationand harmonizationof the ecologywith the peopleand the economy.On the other hand, the objectiveof growth-ledecois to accelerate economicdevelopment nomicdevelopment throughmaximized formarproductionof goodsandservices Thepremisesand valket consumption. uesof the two paradigmsand their cor-

The sociopolitical development

processmust enGompass the totality

of the human being-rnind body, and spirit. respondingstrategies arelaid out in Table4.Thenewglobalorderdemandsthat the growthparadigmper semust yield to a newonethatgivesequalor moreimportanceto equity.Crowth,however,is neitherto be altogetherlaid to rest.But poverty growthmustneitherexarcebate nor rob future generationsof their dghtful claimto our planet'snaturalmagnificence.

FOOTNOTES: r David C. Korten,"People-Centered Development,TowardA Framework," Deuelopment, edited Irom People-Centered Rudi Klauss, by David C. Korten and KumarianPress,1984. ' UNICEF,ABSDby courtesyof Victoria Baustista, Unive$ity of the PhiliPpines,Collegeof PublicAdministratron. 3EduardoA. Morato,Jr.,Strategic lnManngers; Vol feraenfion for Deuelopment Deuelopment umeII-The Entironmental Pro.ess. AsianInstituteof Management, 1993. aWorld Comissionon Environment Future, Our Common and Development, OxfordUniversityPress,1987. s HermanE. Daly andJohnB. Cobb, Good,BeaconPress,BosJr.TheCommon ton,1989. 6GettingtoThe2LstCentury, Voluntory Actionsnd TheGlobalAgenda,David C. Korten,KumarianPress,1990. Z Gaslon A. Moratdlr.,is theInslilute's Prcf.Eduardo Otligas Prolessor lot De\elo?menlManagemPnt Intel ef: <eamonto@aim.edu.ph>.

1996 . THEASIANMANACER AUGUST-SET'TEMBER

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TotalQualiqt'-

Govemance OQG) IheatingTheCitizenasCustomer Totalqualitygovemmentleadsto serYicequality eommifnent. andcitizen-customer

atisfyingthecustomeris fundamenof anyenterPdse. tal to thesuccess no sucNo customersatisfaction, Towardsthisend,firms cessfulbusiness. havedevelopeddifferentwaysof hearing from the customet suchascustorner sr.rweysandinterviews,customerfollowsuggestion up, focusgroupdiscussions, bores,and variousothermeans.By responding to customerconcerns/cussatisfytheir tomer-drivenorganizations their enterand strengthen customers prises. Theliteratureon totalqualitymanagement (TQM) continuesto attestto the makes impactthat customersatisfaction piowas Since it success. corporate on various Deming and by neered Juran, continueto be invented to lisprocesses 14

ten and respondinnovativelyand effecYetwhile private tively to the customer. hasmadeleapsandboundsin enterprise satisfying,evendelighting,the customet much remainsto be desiredin how govAs with theirconstituents. ernmentdeals Henry Mintzberg(1990)poinisout, many view their peopleonly as governments subjects(whopay taxesand obeylaws), notascitizens(whodeserveto betreated equally regardlessof rank or status),or customers(who deserveto be served well). process Whilethiscustomer-odented in the literahasalreadybeendiscussed of govemment ture on the management (e.g.,Osborneand Gaebler, 1993; CrornptonandLamb,1986),it hasyet to permeatethe practiceof govemments.

in theworld,view the Fewgovemments peopleas citizens;much more as cuswhencitielections, tomerExceptduring many votes, for their zensare courted deliver governments local nationaland basicserviceslate, poorly,and arrogantly-as if governmentfunds come from their own pocketsand not from taxesleviedon citizens. Why tlie Cltizen ls Ranely the Oustomer Thereare at leastfour reasonswhY are,in general,rngovemmentagencies sensitive,evenindifferent,to citizenconcerns:rFirst,the budgetof government is not dependenton citizensatagencies isfaction.Governmentagenciesdo not receivetheirfundsdirectlyfrom theciti-

Aucusr-SEpfiMBER1996. THEASIANMANAGER

zens but from the legislative assembly and the treasurv When a businessdisIablo 1 pleasescustomers,salesdeclineand profThe Priority Govornance Matrix its plurnmet.When a govemmentagency fails to deliver services,nothingbad happens to it. Government agenciesaim to Perceived Low please,not the customet but thebureaucSeverity Problem racy and its bosses.Thereis no incentive to satisfy the citizen as customer. Government notdoing Area ofHigh Priority AreaofIndifference Second,government agenciesare problem {AHP anything aboutthe {A0r} monopolies. They have no competition that will prod them to be efficient,effecGovernment doing Area ofLower Pnority AreaofSatisfaction tive, and innovative.Their employees,in problem IALP} (A0sl something aboutthe turn, can afford to be arrogant, complac e n ta . n d d i . p a r a A i nogf t h ep u b l i c . Third, nationaland localgovemments (at least.democraticonesrare only replaced through elections.For the Philiptomer-driven systems in local govern- govemment agencies. The1991LocalGovpinerand otherpre,identialdemocracier. ment aSenciesin various areasin the ernmentCodecalled for theestablishment terms of office and election periods are United States.The featuresof thesesys- of localspecialcouncilsto ensurepopular fixed. Electedgovernment officials can- tems are pattemed after businessprac- pdrticipation but thesecouncils, [or varinotbe changedin betweenelections(save tices,suchascustomersurveys,customer ousreasons, havenot beeninstifutionalfor extraordinarycases). Thus,inbetween contactreports;customercouncils,com- ized(Bolongaita, 1995).'What bodeswell, elections,there are no serious disincen- plaint tracking systems.These systems though,for thedevelopment of suchcustivesfor officialsto seryecitizenswith ex- were successfulnot only on the basisof tomer-orientedsystemsin government cellenceand innovation. citizen satisfactionbut on other critical bodiesis the willlingnessof variousnaFourth, majoritv of the citizens have aspectsas well. tionalandlocalcivicgroupsin thecounhi:toricallybeenaccustomed to poorperIn India, Paul (1995)describesthe de- try to pushfor greateraccountability and formance of governmentsand have not velopment of a "citizen report card" on performance from their local governdevelopeda culture ofcomplaint for bet- t h e d e l i v e r y o f p u b l i c s e r v i c e s r n ments. ter seruice.The long lines in many govBangalore.Using a varietyofcitizen feedernment officesare acceptedas a matter back mechanisms-random samplesur- lloveloping Toaal Quallty of fact, the arroganceand incompetence vey, in-depth interviews, focus group Gor ernan<"e ITQG)! Tneating ofmanv governrnentemployeesare con- discussions,casestudies,documentation The Citizen as Cuslomer sidered part of the process,and the of other information-Paul'g Public AfTherevolutionary impactoftotalqualsloppv and slipshod servicesare viewed (TQM) in improving fairs Centre identified eight public utiliity management as something that might as well be ac- ties most often dealt with by citizens, qualityin the manufacturing andservice cepted. To be served effectively, many ranLedthe:eagencie5 in term5of cifizen sectors may be adapted to the publicseccitizensknow all too well that "pay-offs" satisfaction,and analyzed problems en- tor (Milakovich, 1995). Thepublicsectoroften do the t ck. counteredby citizens,suchascomrption, government agencies andnon-profitpubOf thesefourconditions,the first three excessbilling,and poorservice.The Cen- lic organizations-canlearnmuch from r t m d i n u n c h a n g e di n t h e P h i l i p p i n e s . tre's report was published by the local innovations in servicedeliveryin thepriCovernment agenciesdo not losemoney pres: which forcedtwo or threedgencies vatesector.Government canlearnmuch e r e n u h c n t h e y p e r f o r m p o o r l y ,t h e y to respondand remedy someoftheir de- from business.Businesscan also learn h a v e n o r o m p e t i t i o nf o r t h e j r . e r v r c e s , ficiencies. much from govemment,particularlyin and the electoralrules of the country still While customer-orientedgovern- how government agencies dealwith mulfeaturefired term. and lqguldr .1.a11ar.. ment is not new to the Philippines, ner- tiple stakeholders, conflictinginterests, The fourth condition, however, has ther is it common.The GauarlGnlingPook a n d i n t e n s ep r e s s u r e lrom politician :hon n sign' of change,in pdrt owing to (Mitzberg,1996). administered by the Asian Institute of growing citizen dissatisfaction.Faced Management (in cooperation with the Thereis no reasonwhy servicedimenwith arrogant and incompetent govemLocal GovernmentAcademy of the De- sionsemphasized in theprivatesectorment agencies,many citizensno$' fume partment of Intedor and Local Govern- suchastimeliness, accuracy, courtesy, reat the disserviceand clamor for change. ment) has identified casesof excelent sponsiveness, variety,convenavailability, citizen-oriented local governments.r ience, etc.-{annotbesuccessfully applied Dxamples of Cltizen.0rienled However,in the Philippinesand in many in thepublicsectoraThe methodsfor cusGovernanee other developing countdes, customer- tomerfeedback usedin theprivatesector, For instance,Osborneand Gaebler driven systemsare not institutionalized :uchasclstomersurveys andinterviews (1993)discusscasesof successfulcus- in the operations of national and local and focusgroup discussions, may be TI IEASIANMANAGER. AUCUST-SEPTEMBER 1996

adopted by public sector organizatrons (as demonshated bv Paul's experiences in lndia and by innovative government organizationsin the United States). In lhi5 regdrd.the Ptrlitit. and CovernanceDesk developeda citizen-customerfeedbacks1<temdesignedh' as.ist public scctorortdnizdtionsin ds5ei\ing their delivery .rf serrice.. Unlile previous and prevailing practices where assessmentof the quality of service deliveryisbased on employeereportsor some other mechanism, the citizen-customer feedbacksystemwould solicitevaluation from the end-userof the service.If in the p vate sectot qualitv is ultimatelv determined bv thc cu5tomcr,\o shouJdqual ity in the public sectorbe. The feedback sy:temwould enablel heieorSanizdtions to a\sessspecilicdimen'ion. r'I serlice delivery, such as transactiontime, courtesy, responsiveness,and personalized service. The feedbacksysternwas also designedto identify and prioritize city probIems and issuesbased on citizen-customer concerns.More often than not, leadersofpublic sectororganizationsrely on subjectivemechanismsto identify and prioritize issuesthat their orSanizahons needto address.Thesemechanisms,such as informal interuiews with key personnel and staff, are likely to be biased,filteredb1 theprismof theleader'sper.pectivc or th,lt o[ lhe dominantcoalitionin the organization. The feedback svstem was devised to correctbiasesinherent in

a non-scientificapproach to identifying and prioritizing,problems.Cr-rnsidering the technologiesof survey research,the feedbacksystem is able to identify and prioritize problems of citizen-customers morepreci'elythdnpersonali.tic per.pettives could ever hope to do. The Politics and CovernanceDesk of the AIM Policv Forum, in the spirit ot combining lessonsof managementfrom b o t h b u s i n e s sa n d g o v e r n m e n t ,h a s coined a systemcalled total quality governance(TQC). It mav be distinguished by severalprinciples such as meeting (evenexceeding)citizen customerneeds, markct-orientedmechanisms,missron ratherthan rule-d ven governance,focus on outcomesnot lnputs, preventlon not cures,decentralization,participation,and teamwork. TQG is fundamentally based on the overridir.rgprinciple that the greater the participationand commitmentof a governmentemploveein formulating organr zational goals to service cluality, the harder and better that employee will lvork to achievethem. However, TQC is notjust about empowering employees.lt is also about inspiring them through experiencedvisionary leadership.Just as importantlg it is about ensudng that citizen-customersand clientsare involved in performanceevaluation. The TQG model is being developed to apply to various forms ofpublic sector organizations,such as national government agencies,local governments, and

govemmentcorporations.To testthis system, the Politics and Covernance Desk applied a TQC review of Makati City, the c o m m e r c r ca al p i l aol i t h e P h i l i p p i n e s . The TQC revien of Malati wa: designedto measurethe performanceof local governmentofficc. in dcliveringbasicservices.Theseperformancemeasures rvoulcl, in tum. be used as the basis for b e n c h m a r l i n gi m p r o \ e m e n 1r5n . c r v i c e delivery.ln addition,the TQC revieu,r.as also designed to generatea governance n.rapthat identifies and prioritizes problems and issues.i The lDatabase Data collectioncame from a representativerandom sample of 200 adult m a l ea n di e m a l er e : i d e n tor f M d k d t C i it). The sampling followed the sun'ev industrv practiceof multi-stagerandom respondent selection.ln the first stage,the survev team made a simnple random selectionof ten barangaysin eachof the trvo congressionaldistricts of Makati. In the secondstage,the team did a systematic samplingof ten householdsin eachof the ten barangaysselectedin eachdistrict. In the last stage,the team choseone quali[ i e d a d u l t h o u s e h . , l dm e m b e r u . i n g Kish's probability selectionkey. Thus, there were 100 respondentsin each district. The citizensfeedbacksurveywas conducted bv district to note interestingdifferencesin citizen perceptionsbetween the two dist cts, should there be any,

Table 2

Priority GovernanceMatrix

(based on Citizen Feedback for Makati City's Districi 1) {A0S) Areasol HighPrioritv{AHP) AreasofLowPrioritv {ALP} AreasofSatisfaction l. lllegal Drugs L Traffic Repairs 2.Road Gambling ?.lllegal 3.Prostitution 4.Squatters Parking 5.Public 6.Public Housrng 7.Police Abuses 8.FireProtection/Control g.Hold-ups/fheft 10,Flood Control 11.Pornography l2.Carnapping 13.IndecenVBold Shows 14.Police Assistance

Areas of Indifference {A0l}

1.Potable Water l. Garbaoe Collection 2.Road/Street Cleaning 3.Control ofSidewalk Vendors 4.lssuance ofLicense/Permits 5.Maintenance ofRoad Lights 6.Maintenance of Neiohborhood Parks Centers 7.Maintenance of Rec;eational Transportation 8.Public 9.CitvBeautification 10.CitySanitation andPestControl I L Marntenance of CiwSchools 12.Maintenance of CityHospitals 13.Maintenance of Public Markets 14.Vandalism l5.Terrorism

1996 . THEASIANMANACER ALCUST-SEPTEMBER

which might stem from their different socioeconomiccharacteristics.District 1 coversaffluent barangayswhile Dstrict 2 encompasses lessaffluent barangays.

Dfficlency and Serr'fue nesultg of TQG Bevlew ol Dla}atl Olty Thefint part of theTQQsurveyaimed to find out theusage,efficiency,andservicequality of city govemrnentoffices.The resultsshowthat city governmentoffices are visiied frequently by citizens.However,about a fifth of the respondentsin District t have not visited any office in the pasttwo years.This finding suggests that the city governmentshould make moreknown and availableits servicesto citizensin District 1. The transactiontime of Makati citizensto completetheir visits to city govemment officesvaries accordingto district andoffice.Theresultsshowthat citizensin District 1 appearto be served faster than citizensin Dstrict 2. In this regard,city govemmentofficesin Dstrict 2 need to improve their efficiencyby matchingthe efficiencyrate of Dstrict 1. Theaveragehansactiontirnefor both dishicts was about 30 minutesbut the citizensof Makati want io cut this by half. TheCity Treasurer'sOfficewasfound to be theslowestservingoffice.Thisinefficiencyis mostunfortunatebecausethis is the office where the city earnssignificantrcvenuesin theform of taxpayrnents and issuanceof businesspermits.In this and all otlreroffices,the city government maywant to establisha serviceexcellence program that will improve efficiencyin Dnases, ln general,morerespondents in Dstdct 1 cited negativeexperimcesthan respondentsin Dstrict 2. About a fifth of therespondents in District 1saidthat civil made servants them wait while doing somethingelse.Slightly lessthan a fifth said that govemrnentemployeespassed the buck to somebodyelse.Thus, alihough citizens in District 1 are served fasterthancitizensin Dstrict 2,theyhave morenegativeexperiences. To increasecitizen satisfactior!the Politicsand GovernanceDesk recommended to the Makati governmentthe establishmentof a programthat will increasepositiveexperienceratingsandreducenegativeexperienceratings. On ihe positive experiences,the city

govemmentneedsto tartet for improvementthe following with low positive ratings: . employeessaying, "Thank you" to citizencustomersaftertheir transachon; . greeting citizen customers, "Hello" or 'Good morning/ afternoon;" and r calling citizencustomersby name. On thenegativeexperiences, the city governmentneedsto work on the followint: o employeesmaking the citizen wait while doing somethingelse; . employeessending the citizen to somebodyelse;and . employeessmoking, eating, or drinking in the office. The changein theseexperiences should proceedin stages.The city govemmentshould try to move,in the first phases,towardsreachingandthm match.ing the averageratings.Then,in the succeedingphases,the city governmentcan work to attaining and subsequently matchingthe bestratings. Problems and Prlorltler of Oltlzens nevealed by thc TQG trevlew The secondpart of the TQG survey aimedto determinethe cihzens'perception of priority problems.Citizenswere askedabouttheir rating of se,i'erityfor 32 city servicesandconcernsaswell astheir perceptionof thegovemment'bresponse to eachof theseproblems. A high priority problem is one that scoreshigh in problemseverityand low in governmentaction.A low priority problemis one ihat scoreshigh in problem severitybut high in governmentaction. An issueis in theareaof satisfacuon if it is low in severitybut high in government action.An issueis in the areaof indifferenceif it is not viewedassevereand the govemmentis not doing anything aboutit. TheTQGsystem,thus,includesa priority indexof city problems.Theindex of eachproblem is derived by muttiplying the intensity ratingsof problemseverity and govemmentaction. For Dstrict 1,the surveyidentifies14 problemsof high priority, two problems of low priority, 15 issuesin the areaof

. Aucusr-SEpTEMBER THEAsrANMANAGER 1996

waste,and oneissuein the areaof indifference(SeeTable2). The survey shows that among the problemsof high priority, themostprioritizedarethefollowing: 1stPriority: Illegal Drugs 2nd Priority: Illegal Gambling 3rdPriority: Prostituhon 4th Priority: Euatters SthPriority: PublicParking For Dstrict 2, the suwey identifies12 problemsof high prioriry two problems of lower priority, 13issuesin the areaof wastg andfive issuesin the areaof indifference.Thetop five problemsof high priority for Dstrict 2 are: lst Pdority: Illegal Drugs 2nd Priority: Illegal Gambling 3rdPriority: Pomography 4thPriority: Prostituhon 5th Priority: Indecent/BoldShows With the exceptionof severalproblems (notably illegal drugs, illegal gambling, and prostitution), citizms of Dstrict 1andDstrict 2 identify differentpriority problems. Pornographyranked third priority problemin District 2 but only I 1th priority problemin Dstrict 1. Indecent/Boldshowsis rankedthe fifth priority problernin District 2 but a mere13thpriority problemin Dshict 1. Squattersrankedfourth priority problem of Dstrict I but not considereda Driority problemat all in District 2 (lt is in the areaof waste). Public parking is ranked as the fifth priority problemin Dshict 1but it is only in the areaof indifferencein Dstrict 2. Fire protectionand control is ranked asthe eighth priority problemin District 1 but it is consideredin Dstrict 2 as an areaof waste.

Tabl6 3

Priority GovernanceMatrix

(basedon Gitizen F6edbackfor Makati City's District 2l {A0S) {ALP} AreasofSatisfaction IAHP)A.easofLowPrioritv AreasofHighPriority

{A0l) Areas oflndifference

l. Traffic l.llleoal0ruos 2.Garbage Collection 2.llledal canibling 3.Pornography 4.Prostitution Shows 5.IndecenVBold Abuses 6.Police 7.Tenorism 8.Hold-ups andThefts 9.Potable Water Housing 10.Public ll. Carnapping ,|2.Sidewalk Vendors

1.Maintenance ofRoad Lights 2.Police Assistance 3.Vandalism 4.Public Transportation Parking 5.Public

1.Boad/Street Repairs 2.Road/Street Cleaning Liqhts 3.Maintenance ofRoad 4.FireProtection/ContIol 0fRecreati0nal Centers 5.Maintenance 6.FloodControl 7.CitvBeautification andPestControl 8.tity Sanitation g.Maintenance ofCitySchools 10.Maintenance of CityHospitals ol License/Permits ll. lssuance Markets 12.Maintenance ofPublic 13.Squatters

' \ l \ 1 . . l . r n r r . r nl q ' , ' \ \ i r l r h r - J r ! F ( - r apprcciatjon to I'roft'ssor Ftlu,rr,.loI . anll ,rssist.nct' Ilobcrtofor ltis inr',rluablc supportin this projt'ct. Cronrpkrn,l. L antl(. \\. Larnb.I9ll7. Sr'tt'trr':. attrlSrrctrt/ MriItr'littq(ltrt'r't'tttttr'ttl I-.ngJeurrotl Cliffs,N. f.: Prcntict'Ha11. Lipskl \lichacl. l9t(1.-Slr.rtI fil18rr ti Tlr Iudi|iLlualtu |rarir-rnt-V: l)r/r'rirrrrrr' Ncir' \irrL, N\': Ilusst'lI Irr|/ic 5r'r.;'itr's. Sage. \lilakovich, lt4jchaclE. 1995.ltttprtr,' I llqlt1l'rlirt'ttt ,{ /rir';'ttrt iri,q-Sr'r'i'lr'r' Qrarlilvr rrrirl Pt'tt,rtir'Sr'r:/ot's. Sirtitt Tlrt Itrbli,. 'tlct FOOTNOTES: gapore: SSN,1li. F t , r i n - d (p l h I n l r r J . l r l l ! . r l l J . , , l l l r i l . l i l l i \,lintrlrL.rg,Henrv. lv{ar'-June1996. anrlysesof whl' this happcrrr.seeProttas '\1.tt . r : t t r ' -t ' ' ' \ , r I I | ' I I' ' t . C ' ' t " t ' l i t r : ( 1 9 7 9 )r n d l - i p \ k ] '(.I 9 i t o ) . I \ l . t n . t ; , r n ,t r . / / . , ' . / / : . . ' i , . / l / ' . Conelusion This asards plograrnis patlcfncdlller7a ii3. Thc TQG reviervof Makati Citv thc I-orclFoundations Inno!lltionA\\'arLls Osbornt', Dar itl ancl lecl (,at'blt'r showed that cusbmer feeclbacksurvevs r t t u t t i rJL ,h. \ H i r f \ . r f LI lr r r \ f r \ r l \ ' \ 19c)3. Rfi//i,. li { Lir.r'rrtttcttl:l1oa,?ltt mav commonlvuscdin ihe privatâ&#x201A;Ź'st'ctor K e n n e d yS c h o o lo l G o \ c f n r n c r t l .f h r I/tr' -(Trilili' Itrtttst'rrlrrtittt Lnlrtytcucrtritl be applicd to publicsectorunits,suchas FordFoundltion.togcthcru ith olhct do\cu ' l \irrk: I)lurle. ( l u , l l l t v Pll,lic -5r'r Irr'. , proriclcdsubstantillsuppotl l ,' . . r 1t o r e r n m ,t t t . .t o r ' \ . rl u , tr e noragencies. ",4 I',ru1, 5amucl.Julv 19q5. Citi,frrRfteedback I o G u vo d G u l i t t ql \ t o k . sen'ice.The citizen-customer r v . t e m - u $ $ c - i .t h a lT Q V i . , t t r a n - l e r - ' For a compaftrtirelinrl\sis ol tht'prob- i,r,flCrrfrior/ |Jritrr 5i f,'rii5:Mirl/i! ilrlrks o c r l r p c c i i t l Lttulliift:?" I',rper prcscntccl,rt thc l:orcl ablc technologvto assessand improvc l e r n si n i n s t i t u t i o n a l i z i nl g orr Confr'rence rt'ct,'r. rcrr rce.lclitl.rr in the puhlrc irr b o d i c si n A s i i i l n d ; \ 1 r i c r . s c e N l l t n o r Ijould,rtionintL'rn,rti(nr,rl AIivl. DecentralizatLon, dimensionssuchas timelincss,courtesri ( 1 9 9 5 ). .-,,' - F o r - ad i s c u s s i oonl - s e r v i c cq u a l i l vt s l ' n ' t t , ' -. \ 1 . 1 . 1' . t ' . , r 1 l,' and availabilitv The TQC rcsponsiveness, /rtrlrltr-\r'tt' /iri,.l1]r.rri iri I cr,r'1 llir' 5l['r1 r e r , i e w o f M a k a i i C i t v r e v e a l e d s u c s s. e cD o m i n g o{ 1 9 9 6 ) . -l ' \lA: I f \ i n g t o n , r r I t , t t r i t r i i t t s . rcr B cfficienciesandint'fficienciesof localgor' Thc rcsullsol lllc QG rclicu u e'rcprc Ilooks. Lc\ingt011 sentediil a (runcllablcconlcrencc0n Nliir ernmcnt officesfrom thc point of vierv of TheTQG identified 1 2 . 1 9 9 6r t A I M . its citirell-customers. ' _ , : . probiemareasthatdcservehigh and loiv , i ' , I i ' , I I , L / L ' I r ,/ I/ Lr Irr,,Ji,' i I I ' Jr I l , , r 1 , r r lr), 1 . r . , r i l i 1 to prioritv ast'cll asareasof satisfaction REFERENCES: , r l J r r ,|/! 1 ,r 1 1 , r i i ,r,/f! l l , , i l \ i r ' r r Ji i r , l / ' i J "/i'lliitttitr,l n r l ; ) , ' ,r ' r i r x , citizens.For the city govcrnment, the Bolongaita,Emil P 1995. i . , L / , )\ l, , 1 r ,1. ) , r , r/,, r , i r , r |/ ,/ 1, r l :) l n r , r , \ lr ' t r . r l h e J p f ual . l m . t l t . t c c Pit licilutt)rvCoi,L\urrrrir': / /tr'Nrrit-/ttslt/ti / , r t , r ' r l i l k ! J , r / / -, ri r! j, ri , i r r \ r , 1\ , ], t| , fl l r r r L / i i r ! , r f r r 1 Q L r r r r e wb c i . r m e irr. 1 / , r 1L, , r/ : r ' , l' ) r ' i r r , i ' l r r r m e n t t o o l . I i i n f o r m c d c i t v o f { i c i a l s f ionLtliznfictn oi LocnlDr'it'iolrrrtr'rtl Crrttttr-i/:." ,-1 r, ri -' Li r . ' , l , , r r r , r, rr .rr 1 . r \ 1 r i . 1 , , , 1 r ' r 1 , r x r / l r l r i r/,' , ) i r , 1r i , ' ,r ' , i j l h r , ' u q l .r r . v . l e m , r t i cp r , r c r * - , t h o uP( ( r - PolicvIlcscarchl)aperNo.2, '\lNl l)olio' / r , r l r , r \ I 1 / \ J / ' , ) /rr/,, , r r " r l i n r i i r j . l i l i r i ' , ) i ! h r J c c p t i o n sa n d p r i o r i t i e so f i t s c i t i z e n s Forum, Asian Instjtuteoi Nlilnagcmcnl , r , i , r , J ' 1\ 1r i,.r tl ( r ( r r/., r n ' r i l i , r , 1 , ' i r l , ' r , d r r . ' l r : , Flooclcontrol is ranked as tht'tenth prioritv prob]emin District l but it is irl ihc ,rreaof wastcin District2. is consideredthe l.lth Policeassistance prioriiv problemin District1 but ii rs rn the areaot indifferencein District2. Contrarv to prt'dictionsprior to thc sun ev thattrafficnould rankhigh in the T Q G s u r v e v ( M a n i l a ,a f t e r a l l , o f t c n comescloscto matchingBangkok'sno. toriousgridlocks),traflic is not considerc'd a prioritv problemat allbv citizcnsof both Although it is considereda seclistricts. vere.problem in both districis,citizens view thegovt'rnmentasalreadvaddress ing it.

u'hich in someareasrlid not necessartlt' and priorities coincidcu,ith perceptions ' , 1( i l \ , ' l l r l , r l .l n t h i * r , r r ' r 1 r . T Q ( , r . r,ici,r'ht'lpeclio ensurethat supplv l'ouLl meet demand (and thus, result in lcss u'astt).BtcausetheTQC}rc'r'it'ul'rs c,rr ried out in an irnpartial anel obiectilo r n . r n r . ri.t d o p o l r r i c i / rtJl r " , \ . rl rr . r t r ' ,rr' i' the servicedeliverv proccss,inclp()tcI1l i , r l l r p u ' h L r ll h L ( l t ! l , ' \ \ . r r J -I n , ' r , i r l its citi/ennovati()rand betterservicL'for cu5tonler5.

l99tr. TLlr Acl'\\ \'1.\\,\(lFR ,\LCL.sr'SEprL\rLll,R

I}ImncnmENT-I,PDATT:

Dnwrormnnr

BY PROFESSOR EDELC. CUIZA

Managing A local Governance AwardsProgram:

TheGalingPookBxperienc (JalingPrxrkn'inntm provethal derolutionworksin the Philippines.

ince its launchrncthreevt'arsago, Crrrrird Caliu,g Poolor Excellence in LocalCuvemanceAu',rreishaclalreaciV captureclthe ittcntion of manv 1(lcalgovL'rnment units(L(lUs)in thecountrl,. Even PresicleniFidtl \'. liamos notccl that Cnlil{ Prrol-programs anclprojt'cts r J r ' -r(\ \ ' t u b r '( n r l r l , r t , rl1, r;h , r , ' l . i. t n . lr r k)lci as models for other krcal gotertrnrentsin iheir continuingqucstk)r r.\celicncc. Cnlirtg Pook u'inners iracl been slror,casecl in nriorrs local,natiorral, ancl int!'rnationalconferercesasmoclelsot erct'llt'ncc.Bcc,rustof thc rigor an(l integritv of the selectionprncessspcarhcadcci b v a N a t i o l a l S c l t . c t i o nC o m n i t t e e , CmtnLiCtlitt;4Pookhas becomea muclr covetedawardarrronglocaI goYernmen ts THtA't \\V\\\(,t

ti.Al ,.Lr -5t

anrl ,r rich source of information and teachincmattrialson local liovernment p r o g r a m s .C r r / i r g P o o kr v i n n e r s h a d shol n thaiclevolutionrvorksin tht' PhilrPPrnrrs.

tion, and other planswere stalledbecause decisionshad to be madeat the national level before any substantivemeasures were effected,particularlv when large monetary considerationsrvereinvolved. There was no decentralizationand local 'lhr. lmpr.lus: Thr. l99l l,oeal autonomy to speakof. LCUs were pracG(|r'ernm('nl COd{. ticallv dependenton the central governD L r rn t t l r c V . r r u r . a J m i n i : t r a t i o n . ment. which spannedtn'o dccadcs,the PhilipU n . l e r t h e A q u i n o a dm i n i s tr a t i o n . pine governnent\\'ascharacterized bv a which cameinto power in 1986,Republic ( ( n t r . r l r , / c.dr ' . t e m , ' f J e t i . i , r nm a k i n g Art 7lb{1.entitled"An Act lroriding ior ,rnclresourcesmanagement.Thc prcvail- A Local Covernment Code," was signed ing localgoVernment codethenwasmore into law in October 1991.The code was regulakrrvth,rn cnablingin orientation con:ideredthe mo:t comprehenriveIeganrl arlminisiration.LGUs had limited islation on decentralizationand local aupon,ersin their respcctivcjurisdictions. tonomv to be passedby the fhilippine Delivervof basicservices, locaidevelop- Congress. mcnt, ccononic upliftment, industriahzaUnlike the previous law on local gov-

t \ ' t { ,t i l u u o

ernance, theCodeof 1991devolved substantive powers and responsibilitiesto 77 provinces,1,543municipalities,65 cities, and 41,293 barangaysin the countrv Theseresponsibilities include, among others,the administrationof health,agriculfural extension,social welfare services,local infrastructures,and managementand control of natural resources.The objectiveof this new Codeis to transformLCUs into selfreliantcommunitiesand activepartners of the national government in the attainment of national goals. Consequentlv the implementation of the Code, which took effect on January1, 1992,drew mixed reactionsfrom local governmentofficials. With limited time for preparation,someLGUs felt the approval rvasuntimely.Othersfelt it waslong overdue and the time had come to finally prove their capabilitiesas worthy public servantsand effective areadevelopmentmanagers. Backgr.nund / Bationale A confluenceof needand opportunitv gave birth to Cauad Galing Pook.The promulgation of the 1991Local Government Code (LGC) and the recent proliferationofcivil societyorganizationsat the local level offeredunprecedentedopportunities to promote good local governance.lnthe shortterm, however,the Code has createdenormous challengesfor Iocal public administration. Local officiais have had little time and, in some cases, insufficient funds to prepare for the s w e e p l n gc h a n g e sm a n d a t e d b y t h e Code.SeveralLGUstookup the challenge and initiated their own programs rvhile others had some difficulties with the devolution. A mechanismlyas neededto inform local government officiais about programs that work effectively and in' spire them to strive for excellenceand creativity in local governance.Such a mechanism is GawndCaling Pookwhich was launchedin August 1993. The awards program is spearheaded ( omby a l5-memberNationalSelection (NSC) mittee thatdetermines thecriteri,r, design the selectionprocess,and choose the winning programs.The NSC includes leadersin government, the NGO sector, academe,and media, and representsa 20

SocialServices 3 Education 4 Environrnental Management 11 lntegratedArea Development 4 HealthandNutrition 11 Resource Mobilization 4 Infrastructure Development 2 PeaceandOrder 2 Cooperative Development 2 Culture 1 HumanResources Development 1 Agriculture 2 Partnership Building 4 Livelihood/ Enterprise Development 3 Housing/ HumanSettlements 4 UplandDevelopment 2 TOTAL 60

or provincial lcr,els;2) must have been in operationfor at least one vcar prior to their application;and 3) must haveshonn measurable results. At each stase of the screening \ lrr (.\. thelroqr,tm i. er alualc.i.tccorclinglo five basiccriteria: 1. lltr'rfi,'crrcss of -ScllictDclitttnl -re'levarrce of ,r program in respondingto thepressingneecls ot tts t,rrgetbeneficiarics and the capacitv of thc LCLj to deliversen ices 2. Positii'rrSotittLtnuuic audior Ft]r,irotuttcttttl InrLtscithe abilitv of tl.r!'programk) sisnificantlvin]prove social,rndnaterialliving conclitions of theclientcommunitVand theoutconc'of the prograruin conscr\,lng, Protectirfl,and rehabiliiatingthe enyironmcnt.

3. PrLut)liln 0l PNplL,'sEnrStoTl,gyr/ldrl-the cxtcnt to \\'hichthe program hasfacilit,rtetl access and control o[ rr'."urce-I'r tlrc l,',al peop[ ; h u i l t t l r c i rr , r p , r b i l i t i r .n n r . r n , r g i n g thcir rtsourcesanclorganizingthemhealthv cliversitvof Viel's, genclcr,gco- sehes lo demandchangts;and actively participat!.in local government decrsrot] 8 r up h i c , tllo c a t i o n . , r ntde c l t n i c ,et lr p e r tise. rnakilg, implemcntation, and evaluation. -the [,,1,t/ f,ai1r11 f,1'l 'relr r,' recoAnizc 1.TttusicrtbiliIy andSustnnnltilify LGUs u,hichhar,ccndeavorecl prove to clegrccto ivirich the program l ill be conthat higher levelsof pcrformanceand tinuetlbevondits crurentadmirlistration g r e a t eirm p d ( tm , r vb c . r c l ) r ce \d t l r r i ' u g h and its potâ&#x201A;Ź'nii.llto get the support of thc jr.rdiciouscxerciseof porvers thev har,e successor; thee\tentto rvhichtht bcncfits been vtsted \\,ith bv thc appioved 1991 oithe programl'ill continut b flou,to its LCC. The trvo underlvinggoalsof thrs b t n . [ i c r . t r i . .*l e - p i l c. r L l r . r l g ei n l e a J e r programare:(1)to publiclvre'cognize io- ship anclfunclinr arrangtmcnts;the clecal governmentinitiativesthat succcss- greeto u'hich the prol;ramrvill inspirc rcpfullv addressprcssingsocialancl eco- licationbv otherLGUs. nomic needs;and (2) to ir.rspircrephca5. Ct'cnlii,r' Llsr'ofltilcrs aspioi,irlrdlrrT tion of suchinitiatir,esil'rothercomnru Tlrr'LCC-suchastaxation,landuseplalrnities in the countr\,. ning and \lrluation,resource mobiljzation andutilization,crpenditurcmanagcmcnt, lfanagcmenl 0f The .{N ards Iocal tnlerprise developnrent,creclrthThe fd(ultv.rnd ql,ril of rheCentrrtt'r n a n ri n 5 . g r , r n l . L l o n n l i , , ,nr ! , l i l m e n t DevclopmentManagement(CDM) of the l i n k a g i n g \ \ ' i t h N C O s a n c l I ' O s , a n c l -timul.ttinp g r, i r . t r e. c c i , ' r Asian Institute of Management(AIM) P.trtr(ipnti,'r). administcrthe screeningancl sclcction proccssin cooperationwith the Locai Scrcenirgand Selection C o v e r n m e nAt c . r d c n r,vl L A , , i h er r , r i n The proct'ssstartsrvith an applic..rtion ing arm of the Departmentoflnterior and through the submissionofa in o-pagepreLocalCovernment(DILC). Iiminarvformbyan LCU ora nomination bv Ian \GO orl anr.organizationto AlM. Eligibility and SelectionCriteritl Upon receipt of the nunination iorms, To be eligible for thc arvarcls,the proAIM acknorvleclges the nominatorsand gram 1)must be initiated.rnd/or man senclsthe prcliminarvapplicationforms agedbv an LCU at the municipal,citl', to the nominatedprograms.The prelimi AL L L: I-SLtTtr1B.Rl99o . I r r. A:lA\ \4ANAL,LI(

't994-95

1993-94

1995-96

KaunlaransaPagkakais a (Cooperative Development) Provinceof Bulacan GovernorRobertoM. Pagdanganan

SaveThe Mangroves Kalibo,Aklan MayorDego M. Luces

Sustainable FoodSecurity Provinceof Davaodel Norte GovernorProspero I. Amatong

TaxComputerization CebuCity MayorTomasR.Osmefla

TiansformingMalalag into A ProvincialAgro-Industrial Center(PAIC) Malalag,Davaodel Sur MayorAndresB.Montejo

MarineConservation Masinloc,Zambales MayorJessuE.Edora

BantnyP erto (Watchingthe Port againstIllegal LoggingandFishing) PuertoPrincesa City,Palawan MayorEdwardS.Hagedorn

CommunityPrimaryHospital/ Community-Based Resource Management Provinceof NegrosOriental GovernorEmilioC. MaciasII

Municipal Infirmary and HealthAssistance SanMiguel,Bohol MayorSegundino M. Hencianos

Solid WasteManagement OlongapoCity MayorCynthiaCajudo

Acquisitionof A Complete EquipmentPool Muioz, NuevaEcija MayorEfrenL. Alvarez

GovemmentComputerization NagaCity MayorJesse M. Robredo

Metro NagaDevelopmentCouncil NagaCity MayorJesse M. Robredo

Kapit-Bisig (NeighborhoodAssociation) Sampaloc, Quezon MayorAgnesV S.T. Devanadera

OplanLinis (OperationCleanand Green) PuertoPrincesa Ciry Palawan MayorEdwardS.Hagedom

Nutrition, Food,Environment, and Medicare Binrnaley, Pangasinan MayorJoseA. Fabia

MunicipalBondFlotation for Low-CostHousing Victorias, NegrosOctidental MayorSeveroA. Palanca

AgoraMobile School for Streetchildren Cagayande OroCity MayorPabloMagtajas

Build-Operate-Tiansf er: CommercialCenter/ PublicMarket MandaluyongCity,MetroManila MayorBenjaminAbalos

SaveThe Marikina River Marikina,MetroManila MayorBayaniF.Fernando

EcologicalWasteManagement Sta.Maria,Bulacan MayorReylinaG. Nicolas

PeaceZone Tulunan,Cotabato MayorRodolfoP Peiiafiel

ProductivityImprovement NagaCity MayorJesse M. Robredo

LoteparasaMahirap (Lotfor ThePoor) SanCarlosCity,NegrosOccidental MayorRogelioR.Debulgado

Kabalikat fubb er Development Provinceof Cotabato GovemorRosarioP Daz

IntegratedApproach towardsSustainable Development

AIay Paglingap (Volunteerism) Provinceof Bulacan GovernorRobertoM. Pagdanganan

/-..^_.^D^-.^.^^

MayorManuelP Santiago IntegratedAreaDevelopment Irosin,Sorsogon MayorEddieG. Dorotan

CulturalDevelopment Eco-Walk Provinceof Bulacan BaguioCity GovernorRobertoM. Pagdanganan MayorMauricioG. Domogan

* Theprograms arearffinged according program t0 thei respectire npplication numbers. . AuGUsr-SEprEr.lBER THEAsrA\MANACEIT 1996

Asidefrom the GnaadGnlingPookawardees, noteworthyentriesmadeit to thefinals-all winnersin their own right. 1993-94

1995-96

1-4.95

Partnenhip forComrnunity HealthDevelopment Sulat,EastemSamar MayorErnestoA. Palines

WaterSystemfor Evâ&#x201A;ŹryBarangay Baybay, Leyte MayorCarmenL. Cari

Management of HumanSettlemenb MuntinlupaCity MayorIgnacioR. Bunye

LGU-NGOPartnership Calumpit,Bulacan MayorRaulV Mendoza

NasaBuwbMo Ang Atinghogrem (Taxfor Progress) Binangonan, Rizal MayorlsidroB.Pacis

SatelliteHospitals PuertoPrincesa City,Palawan MayorEdwardS.Hagedorn

TaskForceon Streetchildren CebuCity MayorTomasR.Osmefra

Barangay BuluanganFishport SanCarlosCity,NegrosOcidental MayorRogelloR. Debulgado

SatelliteLibraries PuertoPrincesa City,Palawan MavorEdwardS.Hagedorn

lntegratedEducationSupport Pilar,Sorsogon MayorManuelT.Sia

SaveTheMaasinWatershed Provinceof Iloilo CovernorArthur D. Defensor

AltemativeSdreme for SustainingHealthServices Malalag,Davaodel Sur MayorAndresB.Montejo

PropagationandDistribution of llang-Ilangand Sanpaguita

Low-CostHousing PuertoPrincesa City,Palawan MayorEdwardS.Hagedorn

EarlyEducation andDevelopment NagaCity MayorJesse M. Robredo

EmergmcyRerue NagaCity MayorJesse M. Robredo

FederatedWomen'sClub for PrimaryHealthCare SurigaoCity,Surigaodel Norte MayorSalvadorC. Sering

UplandAgricultunl Development Magsaysay, Davaodel Sur MayorJhunG. Reyes

ProvineialEnvironmentalProtection and Management Provinceof Zamboanga del Norte GovemorlsaganiAmatong

Emergency MedicalService CebuCity MayorTomasR.Osmeia

PotableWaterfor All Barangays Clarin,Bohol MayorSaturninoB.Salera

FamilyIncomeAugmentation Hindang,Leyte MayorAuroraB.Mantele

MassPmductionof Trichogramma Provinceof Davaodel Norte CovernorProspero S.Amatong

in Diligence) Sipaglalcs(Strength MayorRubenL. Umali

Kaantabay st Kausutagan (UrbanPoorasPartnersin Development) NagaCity MayorJesse M. Robredo

Primary Health Care Balilihan,Bohol MayorEdgardoM. Chatto

PeaceandReconciliation Provinceof EasternSamar CovernorLutgardoB.Barbo

Hillyland Resoures Management andDevelopment CebuCity MayorTomasR.Osmefra

IntegratedPrognmfor EconomicEnterpriseDevelopment

Comprehensive Cooperative Development New Lucena,Iloilo MayorBuenS.Mondejar

/-...-.^D^-.^.^^

MayorManuelP Santiago

D^:^Lt^---

r--^^.,^-

MayorAlbertaO. Quinto

L'Pd uL),

udrd,'6dr

* Theprograms arearranged according fo theirrespectiue program application numbers. 22

i\L (;LIT-SEPT E\1tstlilt)q6 . Tflr i\5r,\\ \1 \\ \cFIi

GawadGalingPook ScreeningandSelectionProcess

Preliminary Application Screeninglirl trli!rhrlit\

igible? L C t r l n i l i L r t e/ d Mrnlgcd - One Yeu in Opcriltior - A t l c i r \ l$ i t h S i s n i l i c a nRt e \ u l t \

Erlensire { o n l i r r t i o nf n ^

FirstScreening B\rJr. sirccnc^ (llnfrLrn \hLfrlr\r

SecondScleeningB\ rhcsctucncA (lirful:lftlShonl n

il';:'ili:""'"'l'""i*l S i t eV i ' i t r r t i oor tr S e m iF i r n l i . t . .fi i;:\r. 1 +."

Selection ol Tuentv Finalists I n r c r v i c rnn d S c l e ( t i l no l T o l T ( n

1,,1r,,.

THEASIANMANAGER. AUGUST-SEPTEMBER 1996

i i

l4f 23

nary applicationsreceived are pre-screenedbasedon the eligibilitv criteria bv AlM. AII eligibieprogram entries arc pror.idcd with a more extenslVequestronTotalProgram TotalProgram nairetobe submittedon or Regions Applicants Winners beforc the sct deadline. LUZON Eligible program enNCR National CapitalRegion v 3 tries for screeningare subI Ilocos 59 1 j e c t e dt o a p r e l i n i n a r y Ii Cagayan 7 ranking bv a group of CAR CordilleraAdministrativeRegion 60 1 screenerscoming from the IIl Central Luzon 86 1 0 InternationalAssociation ry SouthernTagalog 117 8 of ProfessionalDer,clopmentManagers(IAPDM), V Bicol 8 AIM's Master in DcvclopVISAYAS 18 ment Management VI WestemVisayas 1t7 6 ( M D M ) g r a d u a t e s ,a n d VII CenhalVisayas 72 7 representatives from the VIII EastemVisayas 71 5 media,academe,business, MINDANAO TO nationaland/or local€iov WestemMindanao 72 1 ernments,and NCOs. Northern Mindanao 81 1 The first screeningof XI Southem Mindanao 77 5 program applicants is a XT CentralMindanao 27 2 shortlistingactivity where ARMM AutonomousRegionfor Muslim Mindanao 9 0 programs arc assessedas CARAGA 13 7 A for potential rvinners,B for maybc potentialwinners but neeclmore inforTOTAL 1,,059 50 mation, and C for those that are not Vet in the potentialwinners'leaguc. A second screening is again underon tht se.mi-finalists, the NSC agair.r mects V Ramosconferringthe awardsto the ten taken by a much smaller numbcr of b choose2lj progr,tmfinalists. ninners and the ten finalists.Eachrvrnscreener. u.inSthcr,rmeproceJuret,, lu rner receir.esa plaque and a cashgrant of ther assessthe shortlistedprogramsto be Interuieut of Fintrlists PhP100,000 for the documentation,exrecommendedfor sitc visitation to the and NSCDelibcrotion P , r n . i ( , n,., r r r f l i c , i t i t ' no f t h e r r i n n i n g (tht localchiefex- program.In 1995,PresidentRamosgave NSC.TheNSC reviervsthe recommenclcd Tr.o representatir.es programs and arrives at a consensuson ecutiveanclthe program director) arc lneachn'inner an ambulanceto shorvhis semi-finaliststo bc site visited. \'ited for ,r final intervie'rl in AIM. Thev apprecratlon. A selectgroupof evaluatorsconducts arc rcquestedto come a clavbeforethc an on-sitee\.aluationand validationof the inten'iervfor a brietingon CallrrgPookarrcl Th{. Program Applieants semi-finalistsusing a site visit report an orientationon ho* ihe finalintervieu and Winners: I Srrmnrarl guide.The site-visited programsarcthen is conductecl. During thc intcrvic\\' Caa'nr/ Calil,qPookhasa totalharvest calibratedin rel;tion rr ith the preriorr. propcr.t ,rclrprogr.r6 11n611.1 i. qrren 2q o I m o r , . t h . r n. r t h , ' u r . r n ..l r p p J i c a t i o n winners and other programs n'hich are minutes,tcn ninutes fbr presentationand cluringits threevearsof implemeniation: of similar nature.With the site yisit rc- fifteenninutes for the cluestionand an- 2E5on its first ve.a1363 on its second portsasadditional sourcesofin{ormation srrer poriion. Aftcr the program preselveat and .111on its third vear.LGUs in tationsand inten ieu's,the \SC deliber 16 regicusnation$'ic1e sentapplicahons atcsand selectsihe ten outstandingpro- of various program tvpes:agriculture/ grams. . r ( l u a c u l t u reHJ.u c a t i , ' an n d t r a i n i n ge. n v i r o n m e n t a l m a n a g e m e n t ,f i n a n c i a i AzuarlsCerennml m a n , t s e m e n th. e a l t ha n . l n u t r i t i o n i.n This clcnt is thc formal announc€.- frastructure development, integrated Municipal 27 ment of th€'ten outstandingprograms. areader eJopmenr. p,lrlner.hipbuilJ ing. ZJ City Theactivitvis heldat thcCcrcrnonial Hall public safctv-public cntcrprisc,social Provincial 8 oi Malacananl'alactrvithPresident Fidel u'elfareand services,burism, culture,

Au(iLsr-SEprEN,lBEn 1996. THEAsrANMANAGEn

and sports. Basedon programorigin by region, themostnumberof applications received du ng thepastthreeyearscamefromRegionVI with 117applications, followed by RegionlVwith 111, andRegionlll with program app]i8 0 . f r o ma t o r a l o [I , 0 5 q cants.Eachyear,20 programswerereca total ognizedin an arvardsceremony, of 60programssinceits launchingthree yearsago.Themostnumberof program winnerscamefroml{egionslll andlV,followedbv RegionsV,VI, VII, andXI.

theseexperiencesmay be of great value t o L C U s , N C O : . u n i v e r s i t i e st r, a i n i n g centers,students, and businessgroups who are interested in varied concerns such as community participation, resource mobilization, capability building for empowerment,developmentof alternative financing and strategiesfor more effectivegovernance, Documentationand publicationof the winning programsaim to: 1) disseminate information about the winning programs through the printing of books, monographs,casematerials,teachingmanuals, lDoeumentation and aids;2) providetrdininBinstitutions and Publications and universitieswith teachingmaterials/ Forthepastthreeyears,Caiuad Caling aids on local governanceand other spefool hasaccummulated a wealtho[ in- cific functional areasof management;3) formation/datanot only aboutits pro- assistlocal government officials and ingramwinnersbut alsoof themorethana terestedstudents/casereadersin identithousandprogramapplicantsnation- fying and acquiring skills in developing wide.Thesematerials providea richda- innovative conceptsand ideas on local tabasefrom n'hichcasematerials,teach- governanceand public management;and ing aids,manuals,books,and mono- 4) assistin the designof capabilitybuildgraphsmaybe preparedand published. ing programsfor LGUs particularlyin the Documentation and dissemination of managementof programs/ projects.

POOK EALTNG

(NSC) groupoI individuals TheNational Selection Committe consists of a distinguished lrom the government, non-government organizations, academe. business sector,and media.(STANDING L-R:Dr DelfinJ. Ganapin., Atty.Aquilino"Nene"PimentelJr, Ka OcaSantos. Mr ReneD.Garrucho, P EreietaJr.SEATED andAtty.Ramon L-R:Dr.Emma Porio,Prof.PuritaR.Sanchez, Prof.EdelC, Guiza,andDr ErlindaM. Burton.NOTlN PHOTO: Ms.CarolynO.Arguillas, Dr Ledevina V.Cariho,Dr AlexB. Brillantes Jr,,Dr. Cecilia Dr Milwida M.Guevara, delCastillo, andMs.Marites D.Vitug.

THEAsrANMANAGER. Aucusr-SEPTEMBER 1996

treplieation Theawardees of Galing Pookhavebecomethe centerpiece of the Integrated CapabilityBuilding Program(ICBP)of the DILG.ICBPprovidesvenueswhere LGUs,particularlyGrfingPoo,twinners, cansharetheir success storieswith their peersto encourage replication. Innovationlaboratories werealsoset up to serveas modelsof innovations in localgovernance andinformal"schools" for LGUson localgovernance strategies. GalingPookwinners can showcasetheir bestpracticesto inspireother LGUsto emulateand replicatethem.Studyvisits Poolrwinningprogramsareorto Grzling ganizedin supportoI theLakbay-Aral program to ensuresharingand transferof programrnnovatrons. Otheractivitiesto ensurereplication of bestpractices includeactivemonitoring and documentationof GalingPook winners,conductof training/capability building activities for LGUs, and showcasingthe bestlocal govemment practices fora. in localandinternational Prospoets for Instltutlonallzlng Gawad Galing Pook To ensurecontinuedoperationsof GnlingPook,the awardsprogramis proposedto be hansformedinto a foundation.It is, therefore, importantto generatesuppo for the settingup of a foundationandendowmentfund for themanagement oftheawards,andfor thedocumentation, publication, of andreplication bestpractices exemplified by thewinning programs.The institutionalization of GalingPookis an allirmationof thebelief in thecapacity oftheLGUsto achieveexin governance. Morespecifically, cellence thepurposesfor the institutionalization of GallngPootareasfollows: 1.to continueto search, nurture,and recognize outstandingprogramsof local govemments; 2. to translatewinningprogramsinto casestudies,teachingmaterials,films, slides,ind videosfor teachingand dispurposes, semination 3.to ensurereplication of thewinning programsthroughtheoeationof learninglaboratories thatwill serveassources for policyagenda/reforms, theory/concept/modelbuilding on local governance,and crossfertilizationof learnings amongLGUs;

4, to act as a resourceinstitutionor repositoryof materialson the bestlocal programsandpractices; and govemment 5. to providea solid baseof support for GallngPookthroughthecreationofan endowmentfund that will financeand sustainits operations. Thesustainedimplementation of the LGCdependson thecontinuous capability buildingandinstitutionalstrengthenlegislators, ing of LGUs-its executives, and their staff.GnlingPookprovidesrnputs,incentives, andinspirationto LGUs to continuegivingtheirbestin theirpartin nershipwith thenationalgovernment and the the effectivedeliveryof services of theirareasinto self-retransformation liant communities. Thefollowingstrategies areadopted to ensurecontinuousoperationand of theprogram: sustainability 7.ActiaePromofion andDirectMnrketirg. The continuoussuccessof Garuad GalingPookdependsIargelyon its ability LGUswith good to attractandencourage programs to or innovative applyandparticipatein theprogram.

JULY {

MBM Registration starts

BasicManagement Program(4w)

ProgramandProject Devilopment (4w) Manag6ment

MBM Classes begin

People'sForumon APEC (Geireral Consultation) Manila MarketingStrategy Course(2w)

AUGUST 12 AdvancedManufacturing ManagementCourse(3w) 22

(3 d) ADSGMConference

2 . C n r e f uS l e l e c t i oonf C o t t y t e t t t t f training materialsare prepared using ad Distirrguished NSCMembers. Cnllrl Pr,okrvinners'erperiencesas inScreeners To ensurethe integdtyof the screening puts to capability building programs. and selectionprocesses, the program Workshopsand learninglaboratoriesalso identifiesandinvitesonlv themostcom- showcasesuccessfulprograms that inpetentscreene$/evaluators with thenec- spire other LCUs to emulate them. It is essaryerperience ande\pertiseto screen, envisagedthat the continuouscapability shortlist,and validateoutstandingpro- building and strengtheningof LCUs will grams.Likewise,distinguishedNSC result in the sustainedimplementationof members members in tari- the LCC. arerespected linkage. ousfieldsofendeavorwho havecommit5. 5/rnl,1r / irrknl,:.Strategic ted to supportCnlirr.q Rnt. are nurtured and enhancedwith all local of User-Friendly Materinls government leagues,academic institu3.Production on Winnhg P/ogrnrns. Selectionof out- tions, NCOs, the media, the p vate secstandingprogramsis only a meansto tot the church, national government in managinglocal agencies,socio civic organizations,and identifybestpractices govemmentprograms.Thedocumenta- donor agenciesto ensuresupport in the tion, publication.and disseminationof promotion ol Cnu:ndGnlingPookand in inspireandencourage the search,recognition,and replicationof theseexperiences other LCUSto replicatesuchpractices. outstandingprograms. Productron of materrals aboutthe r,'inningprogramsis alsovaluableto NCOs, ProtElt:lCui:nisn lturllvn tllt:C.|ttt fir Dcl,thv universities,trainingcenters,and other l\tl Mrt ptn\tln il tht:Dirr'cloroi i/rr'Gnaril Cn/rrr3 Sroups, 4. StLpltort to RtltlicttionInifinfilcs0f LGUs,Tofacilitate replication of theseoutinitiatives innovations, standing and

2'J BuildingEquiry:TheSiateand Development tif theSoutheast AsianExchanges at The'Turn of TheCenturi (3d) (Shangri-La's EDSAPlaza Hotel)

26 AdvancedBankManagement Program(6w)

BasicManagement Program(4w) Awards Bangkokl\4anagement oI Aiia (MAA)Night

O(]TOBER 2

KualaLumpur MAA Night (tentahve)

SingaporeMAA Night

ManagementDevelopment Program(8u') HongKongMAA Night

1O JoboFemandezCenterLecture Sâ&#x201A;Źries(tentative)

NOVtrMBER

SEPTEMBER 2

| )d/i.Irl11rrr1r<.!/./Orrs(rs@di'r>.

BasicManagement Program(4w)

Programfor Development

Forum APECBusiness

Legend:d - days w - weeks

I996 . THEASIANMANAGER AUCUST-SEPTEMBER

M,mlcnntnNT UPDATI:

Dnnropmnnn

Tov T: B. LOIIZ,JR, B\ PROFE>SOR

TheSocialMarketplace Business, WhereGovernment, InstitutionsCompete andDevelopment marketplace. in the de'velopmenl Thr rilizen is the beneficiary

fllh,r,

i . , t ' r r . . ' l l r . t h ' r" l , l t . c t t ' * i o n , , r r h * r " l . r t r , , n - h r l , , r r ) r ,{ I, tl dl s | I n ' 1 , * , l r r . r j ( ,frl . r \ i r - r n . i r ' r tl , 1 rlon-govr'rnnrcltt:goYCrnlr('r'tt, truslne5s, nrenl cler.ehl,mtrrtinstitutions,alld so( r r ' r \. \ l l t , r ' , , i t ( r rl .l r ep e r . f c ( l r \ if r L scrrtccl is orrlt,fromone st'ctor.Friur ihe no]r go!ernmcllt uc\\'poll1t,goVenlmellt necessit\,and is stur as ,r rneclcllesorle buslress,an expkrltatilt'anclruthle:sbc' ht rnoth.Covcrmentsccsth('currcntpro liftrationof ron tor'ernmentiltstitutions - , I t . r . l , r nn. l,' f , \ i t \ ! r l l A o , ' u t , \' f, ' r - r r ( sotrn.But busircssis cliiierent,govL'rnis th!'catdlvst for eco mcntsays.Business norlic gron th, to bc courtedanclu'ooecl ir1ta\cs arrrl so it c,rr rh()\\'errtsiargr.ssr. r.mployncnt (ln socielv.For busincss, N(,Os ;rrcnuis,rnccs, sonletil'nes surren-

This paperdoesnot espousea particucleredkr. Governmentis a necessarvevil, lar perspective.EnouFh treatiseshave businesssavs,$'hich must be boughtor avoidedif businessis to proceed.In the been developed to promote an itleology meantime,societv the citizen, ber.refici- favoring one scctorof societv.Rather,this paper proposesan analvticalframework ,rrl',anci customcr-is left to fend for it. e l t .t l r Hi a r g e tl f c o m n c l r l i t L ' p r e s \ L r r ( sfor . determiningthe curent stateofaffain at timesintcnseandconfrontational,other in societv describing the forcesat work l i m r * c o n J c \ c n d i n g t, u, t a l r r a v :o m n i - with societvsotl.Iatthe manager,whether he is fron government,non-govemmeni, present. "thenr Despitethis and us" attitude sector or businesscan identify strategic oppodunities in promoiing the interests among major developmentplavers,not a single5ect()r neithergovernnlent,non- of his sector. govcrnnent, nor business can ignore Th(. B[siness Markelplaee: the eristenceofthe others.Thev existrith their oun agenda;mobilizing and deplov- The Customer is l(ing The framt'rvork is rooted in the maring their own rcsourcesiaffecting,influthe Lctrng paradrgmrlhere the cu:tomer is changing the behavior of encing,and rvhere the enterprises,in ser\'king and which each one same parts of societ\", icing his needs and u'ants,trv to ekeout itsorvn market. thinks comprise exclusive

1996 THl,Asr,\\ N4,\\.\cFn. AL(;Lsr-S!l,l E\,IBER

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rected at and evolved from their target beneficiaries andmembersareat the heartof social change. In Thailand, concernedcitizens realizedthatthedeteriorationin the country'senvironment was compounded by community apathy.To The BusinessMarketplace combatthis indifference,the group embarkedon anallmediacampaignto a rnutually satisfyingand dynamicrela- promoteanti-litteringamongchildren. tionshipbetweenthem.The enterprise Usinga magicalcartooncharacter called developsandmarketsproductsand servicesto satisfy consumerneeds andwants.If andwhentheproducts Basic satisfy theseneedsand wants adequatel, the consumerresponds with his pahonageof the products and servicesin the market and the companythen benefitswith profits generatedfrom the exchange.

ciaryof socialchange in themarket,it also proposesthat thesedistinctionsarenot exclusive;thatsocietyis all of theaboveand respondsto changestirnulias all of the above;thatgovernment mustlookat the citizen astheconsumerandtargetof social change;that non-government developmentinstitutionsmustalsoacceptthat beneficiaries arecitizensand consumers; thatbusinessmustaddressits customers as citizens,and beneficiaries of social This is change andconsumers. because societyis at once,andat thesametimesubject to simultaneous, ongoingpressures govemment, from socialchangeinstitutions,andbusiness. The genericcustomeris societyand competingfor his attentionandloyaltyare major institutions-government,Iarge tions, scalenon-government socialinstifu andbusiness. Therefore, to betotally effective,governmentasprovider of basicservices, businessas provider of productsand servicesto satisfy consumers' needsandwants,anddevelopmentinstitutionsas intervention mechanisms for socialandeconomic change-thesemain society influencersmust, at the very least, understandsocietyin everyaspect, Ihe Martet for benascustometcitizâ&#x201A;Źn,andchange Governaneer The Oltlzen eficiaryTheymustrecognizeandunbeingimplefu the Oustoner derstandthe shategies Thereis the citizen ascustomet mentedby otherinfluencers aswell. with govemment providing basic In someinstances, the relationfacilities and servicesfor his needs ship amongtheseinfluencersis inas a tax-payingmemberof society. The Marketfor Governance deed competitiveand confrontaThis "marketing" relationship betional.Socialhistorianshavechronitween tovernment and societyis cled classicstrugglesamongsocial for currently being studied through quanti- Magic Eyes,the campaignsuccessfully players.Inthecaseoftheenvironment tative researchmethods.rInitial results raisedenvironmentalawareness of Bang- instance,governmentand development show that citizen satisfactionruns high kok childrenso muchso that when govemment take6on a customer the childrenthemselves(80% sewicestanceand designsits servicede- asshownin a post-campaign livery systemsand policy formulation suruey)actuallythrew litter processes with citizen satisfactionasthe into garbagecontainers.2 Nukey oliective. If a fit existsbetweenthese trition plannersin Indonesia activitiesand the citizenry'sneeds,then havediscovered thatmothers the citizenspeaks.In governance, cus- shift to nutritionally enhanced tomersatisfactiontranslatesinto political recipesfor their babieswhen mandate. theythemselvesparticipatein the formulation of enhanced Ihe llevelopment Morkeqrliaes baby foods using common The Clilzen ls the Benefrelary and readily availableingrediol Soclal Change ents, While the framework recEven non-governrnentinstitutions and people'sorganizationsare finding ognizesthe dimensionsof the The Development Marketplace di- customer,citizen,and benefiout thatmarketingskillsandprocesses

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AUGUST-SEPTEMBER 1996 . THEASIAN MANAGER

equateto deliver substantiveinterveninstitutionsact as society'swatchdogs tionsin thecommuniry and audit the impactof businessactivi Despiteeachplayer'suniqueagenda NGOscriticize tieson theenvironment. for its sector,collaborationand compperformance andcompete government's lementaritybecomeviable shategiesbebothpublicandprivate,to for resources, causeof the needsof societyat thetime. roleasprovider takeovergovernment's Theinadequacyof oneplayerto fr.rlfillits of society'sbasicservices. missiondoesnot makefor thedominance In the caseof sociallyundesirable of the interestsof another;rather,it Proinenterprise anddevelopment products, vides for an opportunity for compstitutionsactuallycompete,to influence in Because lementarityor collaboration. aswell. not only societybut government the end,what is at stakeis not the PreIn thefaceof massiveattacksfrom healtheminenceof govemment,nor of business, institutions, ciSaorienteddevelopment at stake. institutions, nor of development spend rette and alcoholmanufacturers Society as Customer,Citizen, more, interest-nothing It is society's self dmountsfor communications enormous and Social ChangeBâ&#x201A;Źneficiary nothingless. and lobbyeffortsto forestallmorestringentgovernmentregulationsin the proIn time,farmers REFERENCES: makefarmersbankable. motionof theseproducts. becomeviableand lucrativecustomers. 'Emil P. Bolongaitaand EduardoL. astheyenable Robeno,Ihe Citizenas Customer:CitiDevelopment institutions, Soclely lfetermlnes lessprivilegedcommunitiesto be eco- zen'sFeedbackand ktcal Government Its Influencers ac- Performance,Policy ResearchPaperSeandprofitable, competitive In theend,it is societythatfinallyde- nomically AIM Policy Forum, termineswhichof theinfluencerswill pre- tually create community-based ries (Philippines: and becomeinvolved AsianInstituteof Management,l996). vail. As environmentaladvocatessuc- microenter-prises and 'EduardoA. Morato Jr. and Ver F. M. development. Business cessfullyconvincesocietyto acceptmore in enterprise Mogic Eyes,(Thailand:Asian normsforbusiness governmentactivelycollaboratewhen Penarar'da, radicalenvironmental grantincentives andbenefits Instituteof Management, 1990). to follow, businesswill comply.Only govemment in sunto theearlyrisk+akingenterpdses whenthereis finally a geen customerwill B. Lopez,lr.is a corefacull! oflheMos' anddevelop- Prof.Tomas Government greenproductssucceedin the market- riseindustries. (MDM) pro|tuffi. ! Managenent ter in Derelopme place.For as long as societyis uncon- mentinstitutionsengagein community Hisarcasol specializstion includesocialm|rketinS, wheregovem- enltepreneurship, ofalcohol andciga- developmentpartnerships vincedof theill ef{ects and straleStcmonagefient. resources or caDabilities arenot ad- Ihtet he| : 4 ommy@aim.e ment du.ph>. to at will always try rettes,business 8o greatlengthsto satisfysociety's preferencefor theseproducts. BusinessDoingAdvocacy America'straumaticexpedence oftheprohibitionclearlyshows that governmentregulations without popular support will not work andwill usherin the proliferationof other ills, like corruptionandcrime. Butat timestoo,influencers complementand collaborate Society with oneanotherIndustriesin Developmentlnst. Development the rural areasfind that they DoingBusinesa lnst. haveto providethe mostbasic for Development BecomingA health and of services-water, sanitation,powet education PoliticalForce which govemmentshould be providing.Financeinstitutions banks and agriculture-based provideeconomicinteruention to improve the quality of the Businesses Being Development livesof farmerswhentheycreaEmb.acing More tivelygo aroundthetraditional Development Developmental financinghurdles,Iike collaf as Stralegy eral,rigid repainnentterms,and high interestratesin trying to 1996 THEASIAN MANAGER. AUGUST-SEPTEMBER

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BYPROFESSOR L[o\ARDOIl. SlLos

0rganizational Assessment as A Development Tool 0rganizations aro 6'islands of ronsciousponer in this oceanof unronsriousrooperdlion.!!

-! ur asscssement of ()rg, tizations r . l ' a . , r , l , n , ' r r rr) , ' l i o n ,t'llr c , . r 61. (' r)rr r . e t l i t , r r r r z r t i ' furfLr\'ol $- i ft f . tI t , ' r ; ,r t ti z t t r .r n r . r * l . t L r l r . l rar J. the entirerationalcfor its cristence, it beconcs thL'kc\'\ ariablekrr er',tluation. Wc can rationallvr.lttt'rnincwhetheror not rcsourctsart bcing tfficientlvancleffective'lvused.Organizational capacitvand performancc,mtmbers,stmctures,processes, strategies, evcn culturemav all be c l a l u a t c d . r g a i n s ot r g a n i z a t i o n apl u r pose.It scrlcs,ls,r rrnilers.rlframertork f()rortanir.ltionalasrcssntcnt. T l rr . i r . r r , r r ,' r l l . , t t t, t f p l r i , t t 'i r, r, ' i . r more gencralfr,lmerrorki goal r,rtionalitrr rreans-encl rationaiii\,,or functional rationalitr,.\\hat "iunctional" (in tunctional ration,rlit\')arlclsto goal (in goal r,rtionaliiv)is c()ntext,trthtr intcrnalor erternal.l\ hcrriht' firrrctional vieu is er . l u . i r , l r f , ' Lrr . L r lr n ! \ . r r , J - , ,tnl r r o r ! , . l r i z a t i o n ,i t v i e i ! s t h e 0 r g a n i z a t i o na s a .* $

closedsvstemof intc.rrlependent p.rrts. lunctions,thc hctir,rit \|Irf! thf orgarl lVhen tht org,lnir.iti()nis vielt'cl in tht isn. Br .tnaLrgr', an organizaiionsenr's conte\t of ,r larecrsr,str.nr, it is an open lhc lalrrr sr str.ml ell br pcriormingits -l svstcn n'ith lessprtcisc organiz,rtional sl.t'cializcd firnciionl t ll. husorg,rnrz,rboundaries.The organizational purpost' L , r n \ . t r ' 1 . 1 , 1, l1- ' i , , ' 1 1 . ,1 ,1rr 1r, ' r r , ' i tr is vien'ednot aftrmisticallras a go.rlof this ()rf,rnot unconscious cool.cr,ltion,' this organizationbut,rsperforrlingotrh . rn , \ f ( r r Ln \ l r I |l,l , j \ . l . r r < r rr r r i l -l ri r r ri : one functionamonqmanr'. iblc h,rnd. Setin a largercontc\t,orgnnirnti(nral ll aoopcr,rti()n is thc \\1)rk(it uncollscious a bit norc complc\ th.tn nlnrkets inste,rtl of consciousar.l l.rurposc'becomes goalraiionalitvmieht.rtiirst m,rkcrrsbe- n t i t t r . l r r. , ' nr l ' 'r , r - I r r l ,r r r , , lr. l . r r r "r lieve.Definingtffcciileness,rkrI.,r'comes thc ()rg,rni/.iionkr c,rlibr,rtt' its urissrorr morccomplicatecl. li becornrsclcrr rlrort' withirl tirr.larger\\ stcnr.It nr,rr t'r't'rtbe complicatedin thc contc\t oi qlrbaliza- . , r ' 1 u, 1 , r l r , r-ll r . l r ' . r . i l . \ , t r ' . r ' - . r r'r,ir tion considt'ringcnrss-cultural environ tion nrat titpttrcl on hirtr'.tuhrnontirusiv mcnts. it can rtlt trn jts trrln rcsorrrci's,tnd pro With this picturc,dominantmorlern tectits ()\\'nintercsts.r\tomjsticgoal rntraditionoffer:,r simpliiicatitrn.It rs titd tionalitvrt't'mtrgt,srr ith a r t,nge,rnct'. q r i l l , t ' 1, . 'r r . r l l . t ,r r r t , ' rr ,r t r , r . l r ' , . up u,ith sptcializationl hich is irr:rpar,t ble from the functiirrral vitir'. Thai,tl or- p l i u a n c o o f e r , r t i o r rn,r o r cc r o s sf u r r c ganizationis p.rrtol a largersr':ttrl of in tion,rl si ntrgi; lnorL.t(.anlwork,morc terdcpcndentfunctionsciocsnot cl't,rngr. n , r t r , ' r tl r ' - .l l , ' r , - l r . ' r \ ' - t, .r l l t . r r -r , , i r r its specialmission.Tht bcttcr ,ul ()rgnn -'ch()rt, r11()r(' ar)r/ja/r)r1! aolrpfratron. r \ L G L s f - S L | T r \ r B1F9R9 6. T rr FA \ r . \ \ \ ' 1 . \ \ \ ( i r , R

I shallrelatetheseconcemsfor more consciouscooperationwith a developmentalapproachto organizationto its assessment.l shalldosoby firsthighlightpatterns of thetraditional ingcertainbasic I shallthenshow informaltradingsystem. how thesepattemsarereplicatedin two examples,in the giant tradingfirms of RuralUruvertheexperimental Japanand sity in Colombia. The lnformal Seetor of theinformal Theusualassessment sectoris far from sympatheticevenin developingcountries.Profiteeringand usuryoftencommandmostof theattention so that the entiresystemis viewed as fundamentallyexploitative.It is pera feudalrelationship ceivedasreinforcing of masterand serf.The rationalframetendsto steeraswork,like a switchman, sessment alongtheiron track of goalrationality,Thistendencycanprecludeany realinsightinto the workingsof the rnformalsystemasit leadsto a dichotomy betweenformalandinformalsystems. Therelationshipamongactorsin the informal system,say,betweenthe rrce traderand the farmeris ratherstraightforward.The trading cycleis simple enough:thetraderbuysricefrom a supplier andsellsit to a buyer However,to completethecycle,severalactivitiesfollow a pattem. The farmer Finsnciallntermedialion. to producerice.The musthaveresources firstintervention of thetradertakesplace at thisjuncture.He providescreditto the farmerwhich may constitutea seriesof interuentions.The farmer may require funds for fertilizer,pesticides,fuel for running the irrigation pump, parts for rcpain, etc.He may evenrequirefunds for domesticneeds.Notethatthe trader mayprovidecreditnotonlyto thefarmer at the other but alsoto the wholesalers Thetrader-monendofthetradechannel. eylender,thus,links the producerto the buyer Technical Infermedialior. Sincethe wantsa good hartrader-moneylender vest,he might,besidesprovidingcredit, passon technical informationfor increasing the harvestor improvingits quality. or a He mayeveninvestin a warehouse graindryeror a ricemill. Markethry Intermediafior. Creditis usuprovided the condition that the ally on

producebe soldto thelenderat harvest of the time. Upon taking possession grain,the traderpaysnet of the loanto the farmer As far as the farmeris conhehas cemed,thecycleisnow complete; producedand soldhis product.But the traderstill hasto transportthegrainand The sellit to buyersin themarketplace. tradercreates and developstradechannelsfor theproducer Thesethreemaiortypesof intermediationhavea costthoughtherernaybe no stricttalk of interestor feesattached Theyaretakeninto to loansor services. accountin theform of a discounton the priceof the farmer'sproduct.Here,the haderis accusedof usuryor profiteering: Hebuyslow andsellshighat theexpense of both producerandconsumerAt this point, we may completelymisreadthe informalsystem. Formalmodels mightpointto theinequity of the structure,especiallythe perpetualcycleof dependenceof the farmeron themoneylenderDependence has beeninstitutionalized.Part of the blameis placedon the farmersthemon therr selves,on their complacency, Iackof entrepreneurial spirit,aboveall on their cultureof dependence. The remedyis typically conceived alongtwo setsof changes: empowering farmersand disempoweringtradersmoneylenders. lt seek to removetheintermediationfunctionsof the tradermoneylender eitherby placingthemin or the handsof the farmersthemselves by mainstreamingthe farmersinto the formalsystem.Eitherway,it envisions radicalstructuraland culturalchanges througheducationand training of the larmersandcreationof moderninstihrtionsto replacetraditionalones. Themysteryis why the farmercontinuesto dependon the trader-moneyandaccessilenderdespitetheexistence Butthe formalsystem. bility of a cheaper mysteryis dispelledwhenwe realizethat the interuentionsof the trader-moneylenderare perceivedas servicesby the farmer In reality,thetrader-moneylender is a customized, one-stopshopand that is what thefarmeris apparentlywilling to pay for Thetrader-monSysteffis Management eylenderlinks the entirevaluechainfor the farmerfrom productionto point of was sale.Justas Moliâ&#x201A;Źre'sgentilhomme

. Aucusr-SEpTEMBER 1996 THEAsrANMANAGER

pleasantlysurpriseduponleamingthathe spokeprose,the trader-moneylender mightbeassurprisedto leamthathe is a systemsmanager No singleagency,in the functionally formalsystem,is norrnally differentiated of providing sucha packageof capable multiple services.The idea,after all, is functionaldifferentiation.In the formal system,if thefarmerwantsa loan,he has to go to thebank.Buthe cannotgo to the bankto sellhisgrain;for thathehasto go else.If heneedstechnicalservsornewhere he ice,again hasto seekit from someother source, the Without the trader-moneylender, bring his product to farmerwill haveto The themarketplace andall thatit implies. roadscanadd conditionof farm-to-market costto the marketingactivconsiderable doesnot ity.Also,thetrader-moneylender usuallyaskfor collateralwhilebanksdo, aslaw requires.Whatservesascollateral for the hader is the producepromisedto him andsohe hiesto makessurethathe getsa goodharvest.Thefarmercanpay backhisloanin kind anddoesnothaveto accomplish thebatteryof formsbeforethe formalsystemcanevenbeginto move. bankloansfrom thetnFurthermore, formalsectoraregenerallyuneconomicostsareusuallythe calsincetransaction samewhetherthe cedit providedis big or small.Ifbankswereto takeadditional transactioncostsinto account,they would, if they were not constrainedby regulations, becharginghigherthannormal interestrates.If all thesecostsand risks are quantified,the usury of the becomessomewhat trader-moneylender lessusurious. It is not our intentionto makea hero or denythe out ofthetrader-moneylender but to learnaboutthe of abuses existence system his intermediationhelps to To havea bettergraspof operationalize. thesystem,let us turn to anotherinstituthegianttrading tion in a modemsetting, in iapan. companies The Sogo Shocha I termfor a tradis theJapanese Shos/ra on the other ing company.Sogoshosha, hand,refersto giant tradingcomPanies of Japan,althoughliterally it merely means"a generaltrading comPany." haveso far earned Only ninecompanies thetitle of sogosios/u.In theorderof salet

theyareMitsubishi,Mitsui, Marubeni,C. Itoh, Sumitomo,Nissho-lwai,Toyo Menka, Kanematsu-Gosho. and Nichimen(Yoshihara, 6). Evenin lapan,"the sogosfiosira is regardedasa somewhatmystedousentity, difficult to know aboutor understandbut universallyacknowledged asa powerful economicforce.In bothJapanandoverseas,outsidersknow relativelylittle about how and why they operateas they do" fioshinoandLifson.3). The sogoshoshais probably mystedousbecause we try andfail to locateit in a functionallydifferentiatedmodel.We automaticallyseekto classifyit as elffter a commoditytraderor a merchantbank o/ a manufactureror a mining company or an import-exportfirm or a forwarder o/ someothercategoryWeareat a loss whenwe find it operatingnot like anyone of them but like all of them.The functional mindset automaticallyreacts againstthis diffuseness of purpose.If it hada sayin thematter,it might evensuggest,in thenameof efficiencyandeffectiveness,to breakdown anddistributeits many functionsinto so many autonomousorganizations. If we wantto knowhow andwhy the sogoshosha operatesas it does,we have betterchances of success by lookingfor iis prototype in the humble trader and moneylenderof the informal sectorwith his integratedapproachto trade. Theierm sogosftosftabeganto beused only around1954.Tobe a sogoshosha, the tradingfirm hasto be a giantoperation; engagedin foreigntradewith officesin variousparts of the world; dealswith manyproductsof manycompanies; providesfinancialmarketing,andtechnical services.But its principalactivitymust still be trading.Thesogosftosfta hasbeen distinguishedfromJardineMatheson,for instance, on thispoint. startedasa hading JardineMatheson companyaboutacenturyagobutby1979 its hading togetherwith light industry operationsconstitutedonly 307oof its profits.The restcamefrom othermajor operations:services,financialoperations, nahrral resourcedevelopment,and real estate.It was not clearfrom the report how much hading alonecontributedto profits but what was clear was that JardineMathesoncouldno longerbeclassifiedasa hadingcompany.

On the other hand,when in 1971 "Mitsubishi Shojichangedits English namefromMitsubishiTradingCompany to MitsubishiCorporation,797,'to 80Va of its profitsstill camefrom trading" (Yoshihara, 12{3). lt is a genernltrader,therefore,not merelya marketing arm of a manufacturingfirm, suchasToyotaMotor Sales, which is not considered. a sogoshoshtalthoughits salesare comparable with thoseofa sogosfioslra.The sogo shosha isa hadingcompanylike theHudson'sBay Companyof Canada but,unlikethelattet itengagesin a lotmoreancillaryand, at first glance,non-ancillary activities. It haslongbeenobservedthatthefinancialfunctionplaysan importantrole in Japanese hadingcompanies. Similarr ties have beennoted betweenBritish merchantbanksand thesogosiosl?r. Pe-

In the trickle-down rnodel, sarvloe ra a "many thing." ter Druckerhas observedthdt the sogo shosha isnol a tradingcompanybut a financecompany.ln a surveyof 100peoplein differentlevelsofa sogos/rosfta, the largestnumberof respondents replied thattheircompanywas"a moneylender with knowledgeabout commodities" (Yoshihara, 175). In conhastwith financialinstitutions, the sogosftos/m lendsto enhancetrading operations andmanyotheractivities outsidetradingareundertakenfor thesake of trading.Justas the dce tradermight investin aricemill or warehouseor transport vehiclesto supporthis tradingactivities,sothesoSo sftosfra investsin shipping,warehousing, raw materialsdevelopment,mining,manufacturing, aspart of its strategy"eitherto protectthetrade channels alreadyestablished or to create "12-13\, new ones"(Yoshihara,

Every sogoshoshahas specialrelations with a largecommercialbank which is its majorsourceof credit.The bank,in turn, usesthe sogoshosha asconduitfor loansor investmentsin firms which might be financiallytoo weak to have direct accessto commercialbanks.The sogosftosfta cantakefinancialrisksbanks arenot allowedto take,suchasextending creditsto small and medium-sized companieswithout collateral.The sogo shoslais quitecapableof handlingsuch accounts. The businessrelationshipbetween the sogoshoshaand its satellite firmsis typicallya closepartnership. almosta family relationship. Like the moneylenderin a smaller scale,it makesit its business to beclosely involvedwith clientfirms,ableto provide servicefor themin almostany aspectof thebusiness. It sources materials for them, providesindustryand marketinformation, brings togetherbuyer and sellel mediatesioint ventures,createsnew trade channels, and looksfor businessopporhinities.It actsasbroker,purchasingmanager,financier,marketingarm,technical adviser-generallya link to the outside world. Its globalnetworkallowsit to be more than adequatelyinformed about movementsin marketsand industries worldwide.Thesogosftosha, moreclearly than the informal trader-moneylendel actsasa systemsmanaSer. Strueture and Culture Firmswithin the systemare clearly interdependent.None of them would probablysurviveor prosperwithoutthe other:the firms without the sogosftoshn or the sogo shosha withoutthem.Whatis sustainable is noneof thepartsfunctioning autonomously. On thecontrary,mutual dependence is thelife of thesystem. Thesogoshosfta thusretainsandwhat in theinformalsystemhasbeencalleda feudalsystemofdependence. Thatis thefirst pointI would make. But unlike the trader-moneylender who is adjudgedthe villain of the informal system,thesogosftosfta hasearnedthe title of being"the vanguardof theJapaneseeconomy." Althoughthesogoshosftn hassometimes beenaccused of greedand profiieeringby theJapanese publicit has beenmore generallyrecognizedas an engineof development.The systemis typicallydevelopmental in character.

Aucusr-SEpTEMBER 1996. THEAsrANMANAGER

Tlte sogoshoshaplays a role in accel- betweentraditional and modernsectors. Thefunctionalmodelfrom a developis a trickle-down deerating economicdevelopment.Because With its division into differentdisciplines mentalperspective "inflexible functions," it produced velopmentmodel.Likebanks,it provides it mobilizesan already existing system, and who,findinglit0euse creditto thosewho arealreadybankable. developmentdoesnot have to be pre- functionalspecialists for professions in the countryside, their The sogos/rosfta and the trader-money- cededby anyradicalstructunl or cultuml to lendermaketheir clientsbankable.The change.It hastheadvantageof hiiting the naturallyBravitated urbanareas. The Rural University sought to be a informalsystemis especiallydesignedfor groundrunning.Not wantingto suffer thosewho aretypicallyin needof assist- ihe fateof Chinawhich wasdominated catalystfor economicand social develMeiji Japan opment by linking educationdirectly of theirbusiness. by foreignhadingcompanies, ancein someaspects with rural communityneeds.Tothis end, is, in a strict sense, usedandassistedits own hading firmsThe sogoshosha was it recruitedstudentsfrom thecommunity whilebeing,inan equally the first to be so commissioned developmental It is its business, Mitsuiin the1870s-toengagein foreign itselt taughtthemto be promoters,techstrictsense,a business. In the tradeasa meansof accelerating economic nicians,and engineersof rural well-beto assisteventhe nonbankables. "many development.Japanwas thus able to ing, with skills to mobilize community trickle-downmodel,serviceis a need mainstreamits haditional hade patterns action and to seekand apply alternative splinteredthing."Differentservices each morequickly by hitching themwhole,as technologiesrelevantto production.Benot normallycomein onepackage; causeits traduateshad their work cut fragmentedserviceis soughtseparately. it were,to globaltrade. to packIf we arecorrectthat thesoSosftosldis out for them in the community,they It is thebusinessof the sogo shoshn merely the corporatecounterpartof the would not haveto mi$ate to thecity to for theclient. agetheseservices then thereis noth- find work. In theinformalsystemaswith thesogo trader-moneylender, The exDerimentwas deemedto be a inshlsha,strate1yfollows structureand ing mysteriousaboutthesogosftosftr; structurefollows culture,reversingthe deed,thereis nothing really Japanese succestwi-thmanyadiustmentsalongthe is merelya mod- way.For instance,becausetheRuralUniusuallogicaccordingto whichorganiza- aboutit. Thesogoshosha tional culture and structurefollow strat- ern corporateversion in global propor- versitywasinwardly focusedon thecomThatthe muniry it spentmuch time settlingsuch egy(sinceshategyfollowsorganizational tionsof the trader-moneylender. sogoshosluhasbeenableto managesuch questionsas which technologiesand purpose). Organizationalculture is viewed dif- complexityin such a large and global which production processesweneto be An organiza- scaleis a gloriousachievement of Japan. introduced?The Rural University Proferentlyin two approaches. in- duceda new setof professionalsrespontion must have a culture that promotes But thebasicmodelis not a Japanese In an organiza- vention;not evenparticularlyAsian.It is sive to the needsof the community but its missionandstrategy. who would hire them and pay for their tiongovernedby goalrationality,organi- simplya traditionalmodel. sewices?The engineersdevelopedtechzationalculture,aseverythingelse,is connical irnprovernentsthat would benefit ceivedand used instrumentallyas a The Bural Unlverslty Conveniently,we find from another thecommunitybut wherewasthe capimeansto an end,that is, organizational continent,a report on the experimentof tal to producethem?Having produced culturels goalrationality. Thecultureof theinformal system,on the Rural University ifl Colombia them,who had the resourcesto apply or the otherhand,is identicalwith ihe cul- (FUNDAEC).'The trader-moneylender buy ihem? Apparently, the community hrreofthecommunityitself,thatis,a cul- and the sogoshoslaapply a developmen- did not necessarilyhavethe capacityor tal approachto business. TheRuralUni- resourcesto usethe servicesor products hrreof solidarity.Thebasicculturewithin the sogoshoshafamily of firms is identi- venity experimentson makingeducahon it actuallyneeded. The informal hading systemand the callythe cultureof Japanand its basic directly developmental.Onecannotread havea built-in advantagein strategyisbuilt on thetraditionalculture it without noticinga qirnilarityof issues sogoshosha which is nothinemoreor lessthan the and approachbetweenthe RuralUniver- thisregard.Theyadd importantvariables culhrre of communiry Although compe- sity and the informal system.(Thepaper in the muation: marketsand resources. the reportsthe university'sexperienceof ten They areable to link and dircct technoltition is not absentor discouraged, famrly yearsuntil themiddleof 1982.As I write ogy andproductionwith theneedsof the motivating forcein the sogoshosha not this, I achrallydo not know how the ex- market and to developmarketsand reis not competitionbut cooperation; perimenthasfaredsincethen.However, sourcesfor the needsof the community. competition, but competitiveness. Thereis no needto provehow com- sinceI usethe Rwal University in order The Rural University linked education petitivetheperformanceof thesogosftoshr to evokeits approachrelative to that of with communitydevelopmmtwhile the and their satellitescan be. Evenbanks theinformalsystem,it servesthepupose, sogosftos}clinls communitydevelopmmt with marketsand resources. havedifficulty competingwith thehader- whateverits prcsentstatus.) differencesin detailand Nonetheless, The Rural University decidedon an moneylenderUnlike the trickle-down do not detract from the io emphasis not leave the interdisciplinary approach community framework,thesystemdoes "ha- commonalityof approach.What the Ruln its the to their own ingenuity but looks to development. assessment, actors their reciprocalinterests.The systemof ditional" universitywasnoi helpingmo- ral University was seekingto produce dependence apparentlycan motivateand bilizeknowledgefor counfysidedevelop was somekind of systemsmanaSement: doesnot necessadlyleadto complacency. ment;on theconhary,it reinforcedthegap consciouscooperation. . Aucusr-SEpTEMBER 1996 THEAsrANMANAGER

Organlzatlonal Assessment yet only tangentiallvservingthe actual What distinguishesan organization needsof thecommunity. fromotherhumanassociations is thepriThe call for interdisciplinaryand macyof odentationto theattainmentof cross-functional cooperation in theformal a specificgoal.The orientationof other systemsuggests thatthisintegratedand socialtypessuchasfamilyor community developmental approachis not a parois not so specificallydeterminedbut is chiaJ concern peculiar to communitie5 ur saidto bedl.flirse. Wecanseewhy goalra- societies thatarenotyet"modern."lt also tionalityis thebasicframeworkfor assess- clarifiesthe natureof the desiredcooping organizations. We canalsoseehow erationfor it evidentlywantsto go bethe orgalrizationsimplifiesassessment. yondtheanalogyofa naturalsystemthat The purposiveorganizationis perfectly operates unconsciously. Thepursuitof the suitedto beassessed instrumentally, that commonpurposeis not left to unconis, in its ability to seryeand promoteits sciousmarketsbut is madethe concern specificmission. of conscious administration. The purposeof a family or commuTheinformalsystemsuggests a basic nity is diffusebecause its purposeis the shategyforoperationalizingthir cooperdfamilyor thecommunityitselfin its con- tion. Insteadof trying to changeit, the creteness as its people.The community strategyrelieson and mobilizesthe exis the farmerwho hasto plant and sell isting structureand culture of mutual his crops,the family who needsshelter dependence and reciprocity and andfoodto eatandcleanwaterto drink, operationalizes its essentiallydeveloptheyouthwho go to school,themenand mentalcharacterBy meansof strategic womenwho needjobs... alliancesand linkages,it createsopporThespecific purposeo[ an organiza- tunitiesfor growthanddevelopment. The tion is extractedandabstracted ftom the sustainability in questionis thenlessthe diffusepurposeof the communityat sustaindbility of eachorganization in isolarge.Thatis anotherway of sayingthat lationthan the sustainability of the sysdifferentorganizations servespecific temof interdependence, needsof thecommunity.Itis thepurpose The communityis sustainedby orof purposes; it is thecommonpurposeor ganizations thatserueits specificneeds. thecommongood. Organizations aresustained by thecomTheintegratedapproachof theinfor- munity that legitimizesthefuexistence. mal system-thesogoslosftnandtheRu- Thedevelopment circlemustbe kept in ral University-does not negatefunc- mind in assessing anyorganization. tionaldifferentiation but presupposes il. Theinformalsystemtakesit for granted thatthefarmerperformsonefunctionand FOOTNOTES: thetraderanother,justasthesogoshosla 1.Principalsources for thes0,q0 slosln: grouptakesit for grantedthatits memYoshiharaKunio, SogoShosha: The ('[okyo: bers havetheir respectivefunctionsto Vanguard ofThelapanese Econony perform.Assessingthe organization OxfordUniversityPress,1982). againstits purposeis essentialand necYoshino, M. andThomasB.Lifson,Tlr purposeis not Int:isible essaryBut organizational Link:lnpan'sSogoShosha andThe (Cambridge, appraised in isolationbut in relationwith Organimtion ofTrnde Massathesystemor subsystem it serves. chusetts: TheMIT Press,1986). Thatanorganization mustbeassessed TheUnique\ttlorklol The SogoShosha in itscontextis nota platitude.ltrcminds (Tokyo:MarubeniCorporation,1978t. usthatanorganization maybeadjudged 2. FarzamArbab,Rural Uni'oersify: excellentin fulfilling its givenmissionand Learning aboutEducntim nndDeuelopmenf still be irrelevantto the communityit is An unpublishedmaterial(IDRC-231e, supposedto servebecause, for instance, 1982). it might presuppose a technicalor social infrastructure thatis not there.Thatwas the grievanceof the Rural University Prci.bona laR Silos halds tfu PLDTPr)fcssorinl Chni againstthe "traditional" university fot BusilrssMnwgtne t at tht AsinnLt*ihn eofMn which,as a producerof functionalspe- a\orcnlIntentt:4easil@aim.&1u.l1h>. cialists,might be doing an excellentjob 34

1996 PHILIPPINES GOVERNMENT DIRECTORY Wilh an ndex, lhrs drcclory co.ta ns nam.s, addr.ss€s, la and phone n!mb.6 ol ofiies in lh. lh.6e bra.ch$ ol qovernmnl, incl!ding pfovncial, city,h! nicDalauthoriii.s,emb.ssi$ and ens ulates ol lh6 PhrIppines, governmentcorpo.anons, consl ulpnal bodEs,slale @llegesand unive.sities. P550! copy h lh€ Phlllppln... USS30a @py tor oveBe.s ord66, inclusta o/ natttng and hahdling.

1996DIPLOMATIC & CONSULAR DIRECTORY O n l h . o r 6 s sJ u n e1 0 ,l 9 9 6 w t h l d A l e b D h o n 6 nomb66, th€ cohprehensiv€ &-pEg. dn€dory conlarnsupn.ied 6ls ot 1) embasses. @nsulales, i n l e r n a l i o . a o r O a n r 2 a l r o ni sn M e l r o M a n i l a ,2 ) emb.ssr6, consulal.s, honor.ry co.sulal.s ol lh. Phi rppi.es,3) OFAofircr€ls,OFA anacheda9.nci.s. otlic.s in lh6 province; a.d 4) ambaesado(.1 lncludesthe Dlplomrilc 56ltl Urlg€, 6 gude lor U. S. Repr.s6nlalivcsandth€irtahili$ Doblish.d by rh. Foroisn Servce t.strtute,U. S. State D.p6rlrent. WashingronO. C. This p.ot@ot guiii. may aiso be lsetullo olh€r dplomats, gov6mm€nt otlicials, r.l.rnslional bu.iness exccltves. school olticials,l.achers and studentsol ror.ign seryice. P250.copyhlh. Phlllppl..r. us$15acopy ioroverseasordeb,nclrrlwol na hg aod hahdhng.

I996 AD.MEDTA.PR DIRECTORY With an Ind6x,lhis is a 06-pagednecloiy ot limedia and all€d orgEnizationsh th. Philippines, includr.g Filipinoli-med a based m other @untnes. P35,0. copy In lh. Phllrppln... US621a copy torovers.as ordeE, /rclusr6 of mi ljng and handlh g.

THEDIPLOMATICPOST This is . rcnihly seruc6 n.wsDaDer that pubksh.s w€lul inlo.mtion about olhe. @uniios includrngvisa regulat@ns,dircctori.e, buiietns and P20O.nn|r.l .|]brcrlpilon In lh. Pnlttpph... US$20lor oveE€s s0bscnDlions.

For oyer3gas otders Paymentshouldb. r.nittedthro!gh t.tesraphic lranslerroU,S,Doll.rA@ouniNlmber5294-0009 44, Th. DiplomaticPosl P! bli5hingCorporation, BPI FamrlyBank,EDSA, Malib6ygranch, 16 C- Jos. Si. coher EOSA, Mailbsy, Pasay City, M.tro Manrta

For orders In the Philipplnes Pl.ase add P60lo cov.r pne tor miling end handling,P.ymenr may b. in I ) demanddraftto Th. Diplonalic Posl PublrshingCorpo.anon,P-O. 8o( 4216 MCPo 12A2, Makatr Cityi o. 2) t.t.gaphic l.ansl.r lo Ac@unl Nomber 5?9-30-5556-6,The OiPlomaticPoslPublEhngColporalron,BPI Famity S a n l ( M a i b a yB r a i c h ,l 6 C . J o s eS t . 6 h e . E D S A , Mahbay,Pasay City, Metfo Manrla1300Phitrppines. Alto.Y.l l.b l. 1n M.tro ut n Il. book eto Bt, hot el., altPofL.r.l othat outlat.ln ludtDg792 F. Ctu, St,, U. bah P.t.y Ctly,

What to do after palm€nt ls sent Faxlo 833-3858or e-har (dDOmzeh.comt l r l l o o l p u b l i c a l o n so r d . r s d a n d c o p v o l l a n k .emnanc6 lo the crculalron Manes6r.upon recelFt ot rcnllt.nE., copte. w t b. rul.d tmm.dtilcty wllh olll.l.l r€celpl. Foreign ofde6 attow iwo to lhre6ws6ks delNery.L@.1 ordeF onelolwoeeeks.

For

. F'I: 833-3!58 C.ll:{632)a33-281 I, 433-9a50 E-m.tt: TDPomolcom.com

orw r. P.o.Bor42a6 itcPoi282,xlkrUclty. Vltlt ow homep.ge on th€ Intsrmt Hltpr vww,mor.om,corwu.€rndp/hoh..ntml

Ar.rcusr-SEpTEMBEn 1996. THEAsrANMANACER

MTCnMENTUPDATA:

Dwnropmnrur

PH.D, A. HERNANDO, BYPItoFESsoR SOLEDAD

Manager: TheDevelopment Ridingthe Crestof Change Derelopmentmanagerc,AIMalumni, are changealienls, breathingin nervlife to inslitutionsopeoples'and nations.

eet the Asian Developmcnt Managersat the crest of changestaking place in the most dvnamic region of the world. Theyarc the graduatt'sof the Developmcnt ManagementProgram of the AsianInsiitutcof Managencnt. V ql,nli-;irtl|wrll r. VDV lqq4.He norks rviih lndia's foremostdevelopment financialinstitution,lndustrialDevelopment Bankof lndia (IDBI).Vt'nkatis mana g r n gI D B I- p r ' r r i o l i oo [ i n \ e . t m e n t ti n sharesand otht'r capitalmarket investmentsof ioint stockcompanies. In a reccllt visii b India, we learnecl thatlDBI holdsequity sharesin more than 800 companiesand debt illstruments ol morc than 170companies.Thc total accluisitionvaluc of theseportfoliosis tn of Rs25B(aboutUS$700M). excess Venkatbclicr,esthat the crur of his job in the bank is in tl.rerigorous implement.rtionol the b,lnk - d( \el,,Pmenlobiec

"to enhancethe quality of lateral tiver sen'icesto sustainthe market." IDBI took vadous stepsto developmarket intermers to tdP ,.1iarie: to encourageentrepreneu reresources market for their the capital quirement.At the primary market level, t h e m i n i m u mn u m b e ro f . h a r e rp e r , r p _ plication in an IPO is kept at a bare n.untmum. As a large section of the populat i o n i . p o o r , . u c hs m a l l. i m u u n tp c r . i p plication permitsand encouragesthem to invest in sharestraded on capital market. Similarlv the trading lot in the secondarv narkct is kepi small.This helpsevcn the smallestof investon take part in aclive traclingin the capital markct." D a o V n n H u u g ,M D M 1 9 9 5 .H u n g teachesbanking anclfinancecoursesat t h e N , r t i ( l n . rFl c o n . r m i c[-' n i t e r ' i t v i n Hanoi,Vietnam. Oncehe is out of the classroom,Hung is preoccupiedwith attending to simultaneousconcerns,all brought abor-ltbYre-

. ALCLST-SEnEMBER 1996 TrrEAsrA\ MANA(;ER

centdevelopmentsin Victnam'sfledgling marlet econonrv.He i. a much soughtafter consultantamong bilateraldonor agencieswho are keen on taking advantage of the governmenl's policv to eftect a smooth transition in the country's economic :yslcm. He hn. cho'en lo tct deeplv steepedin developingmodelsand systemsthat will institutionalizemicroenterp se credit mechanismswithin the country's banking systcm.One such prototvpe is the modcl he designed of a bank to be owned by poor shareholding rvomcn in Vietnam. Hung n.raintainedthat the poorestof the poor wcre the rural women and u'omcn-headedhouseholds.With little accessto social selvicesand production in factors,thev had becomemargir.ralized the processof structured reforms.He bclieves tl.rataccessto credit is a key inter\,cntionforpoyerty alleviationin rural Vietnanl.

Venkaisswar J.yanthy Industt iaI DeveIopment Bankof lndia

Dao van Hung NationalEconomics University Hanoi,Vietnam

lla Puspadewi YayasanLembaga Konsumenlndonesia

Zaim Uchlowi RepublikaDaily Newspaper,lndonesia

Robert Nebrida Jaime V Ongpin

RobertNebrida,MDM 1994.Robert AlongsideSAM, Robertintroduced andIra in consumerism. headsa leadingPhilippine-based corpo- the PositiveValuesIntegrationand Ira is presentlv Headof Business Deratefoundation. As Executive Directorof Behavioral Enhancement SupportPro- velopment in Yayasan Lembaga the JaimeV OngpinFoundationInc. gram (+ VIBES),an organizationalre- KonsumenIndonesiaand alsoworksfor (JVOFI),the socialdevelopmentarm of newalprogram4imedat creatinga cul- Womenin Politicsprojectof theAsiaFounoneof thecountry'sbiggestminingfirms, turesupportiveof theprinciplesthatthe dation. Zaim has beenpromotedfrom BenguetCorporation,hestrivesto harmo- institutionalstrategyrestson. ManagingDirectorto Deputyto the Edinizethebusinessinterestsof BenguetCorZaim Uchrowi and lra Puspndewi. tor-in-Chief of theRepublikaDailyNewsporationand the needsof variouscom- MDM 1995. Ahusbandandwifepartner- paperwith thelargestcirculationin Indomunities the corporationhas to work ship that hasgonebeyondthe confines nesia.Both are firebrandsin their own wiih. of the hometo the excitingarenaof ad- way-fighting for what they believein. The corporatefoundationusesthe vocacy, ZaimandIra wereclassmates at Theywin somebattles;theylosesome but (SAM)model AIM. After the program,both returned thisdoesnot stopthemfrom carryingon Shategic AreaManagement asthebasisfor establishing anddevelop- to lndonesiato resumetheircolorfulca- with theircrusadeandmakinssomedent ing relationships with miningcommum- reers-Zaim in professional journalism in the consciousness of a peoplestriving ties in three areas:in to achievepolitical matuItogon,Benguet, a highfity. land agrilmining town; Fivevignettesof thedein Masinloc,Zambales, a velopmentmanagerfunccoastal agril fishing tioning in four different power-generating town; worlds.Wherevertheyare, and in Buhawen,San developmentmanagersput Marcelino, Zambales, an to good use their broad uplandagri-miningand knowledgeof thesocial,polahar-affected area.SAM litical,andeconomicforces represents a radicaldeat work in their environparturefrom the tradiment.Like a grandmaster, tional modeof viewing theyproceedto choosethe the corporatefoundapaththeyhaveto takethen tion's community inmaketheirmoves,oneat a volvementasa "philantime,carefullyanddeliberProf. Hernandowith a crosssectionof MDM graduates,now all thropic," one-wayrelaately,as they achievethe practicingdevelopment managers in different parts of Asia: (L tionshipto one that foendsthattruly matter.They to R) .Purwoto RuslanHidayat,ForestryRegionalof West Java, cuseson themutualand havelearnedtheintricacies I n d o n e s i a . Y a d aK b u m a r C h a p a g a i no f N e p a l .L a l F e r n a n d oo f interdependent useof reof changemanagement and SarvodayaMoratuwa, Sri Lanka.VenkatJayanthy of the Indussourcesand opportuniso they go about their mist r i a l D e v e l o p m e nBt a n ko f I n d i a ,B o m b a y ,I n d i a .J o M a n g i l ao f tiesby all stakeholderssion of infusingnew life NationalPowerCorporation,Philippines.BariChowdhury,Comtheminingcompany, the munity DevelopmentCenter of Bangladesh.Shawkat Hossain, intoinstitutions andorganicommunity,and thelocal InternationalCenterforDiarrhealDiseaseResearch,Banoladesh. zationswith empathyand discernment. Theyare not JO

AUCUST.SEPTEMBER 1996. THEASIANMANAGER

foolhardy ancl hastt'.Tht'v are con sidcratcanclsensitive.Trainedin the The Development Manager clisciplintof tliscor,eringand enrichDevelopmenthasto be managedconsciously.As a goal, it must be constantlynuring rclatronships insteacl of isolating tured, the vision kept clear and pure. Thus, the developmentmanager. and alien.riine, thevarâ&#x201A;Ź'ableto prcDevelopmentmanagersplan. They think. They strategize.Developmentmanagdict thL.outcomcsof actionsand de ers lead, at the sametime, they develop people,multiplying themselvesthrough othrisjolrsthat cone \\'ith changc. Thert' are nranl others like ers.They network, linking with othersinvolved in the samework. \ienkat, D.ro I Iung, Iiobt'rt, Zaim Developmentmanagersare integratorsofskills and resources,of hard-nosedbusitht' path, leading and Ira...clc.rring nesstools, and an abiding vision for the bettermentof people,of communities,of natirt' rvar,',breaking nen grounds. tions in harmony h'ith their culture, environment,and dreams. Thereis (,ittrtlopt':-llov,\IDM Prof. Eduardo A. Morato Jr. 1993.Her effortsto popularizescicnct' t',.luc.tiiou among thc I'hilip ROOTS... chilpint's'populouspublic -school In 1975,just sevenyearsafter its founding, the AIM faculty and board of trustees rlren through an innovativctcle!isionprogr,rmmarkecla majorbreakand governorsdecidedthat for AIM to be truly relevantto the developmentofAsia, it throughin clevelopment communicould not iust be involved in businessmanagement.Given this mandate,AIM imcatlon. merseditselfin developmentissuesby doing consultancy,haining, and researchwith hr Nepal, pioneeringn ork in t'ftovernment, non-government,and funding organizations.Through thefinancial sup fccting coordinaiioll anrong nonport of funderslike FordFoundation,the CanadianInternationalDevelopmentAgenry, p,ovL.rnn.rcntitl organizationsin the and Konrad AdenauerFoundation,someprofessorsled by our cunent president,Procountrvhasbeentakenthroughthe fessorFil Alfonso, went to the villages,talked to farmers, communist and non-comfor SamuhikAbhivan(Organization munist activistsalike, and startedto learn about people'sneeds,conscientization,orDt vclopmtni lnrovations) bv Rallrrn'R. Rr,trli and BitttLtlCltLrytLrgLtitt, ganizing-what developmentwas all about. Soon,the rag tag group called the Rural Development ManagementProgram or RMDP was training managersof organizaboih NIDM 1996. tions like the National Inigation Adrninistration, the Ministry of Agriculture, MinisI-ivervvear,Bangladesh to sends try ofAgrarian Reform and Natural Resources,and other agenciesboth in the PhilipAINl stltral dL.\'clopmcntpraciirvho in tioncrs har,ebeel immersed pines and in ASEAN like Malaysia, Indonesia,and Thailand. RMDP also advised rehabilitation a n d r e c o n s t m c t i o n NGOSon how to systematizetheir activitieswith the grassroots. u'orkamongthccountrv'svill,rgtrs. Ten years later,in 1985,the RMDP offered its non-degreeprogram, the Program Evtry vtat Bangladeshnelcurnes for DevelopmentManagers(PDM). In this one-monthformal training program, AIM back a r'oreoi ,..1evelopmâ&#x201A;Ź.nt ndnagbeganutilizing training materialsthat it developedin its ten yearsof hands-onexpeersbnrrginghornerr'ilhtherna neu dence in development. Four years later, the first degree program in Development outlookin der,clopmcntu'ork. Management-the Masterin DevelopmentManagement-first not only in the PhilipFr. Josc..tlt PttttlPc:headsthe Scr pines but in the whole o{ Asia-Pacificwas offeredto 48 studentsfrom differentAsian cictr, of Itsus in Bombar..He is seen countries.By 1991,another development-orientednon-degreeprogram was offered bv his Jesuitcolfrere!is a manager by AIM, the Program and ProjectDevelopmentand Management(PPDM). (leternined to bring his org.lnizatiorl To date,AIM'S DevelopmentManagementProgram, now known as the Center to,r rr.n,rissancc of sorts. for Development,hasproduced closeto 2,000trained professionaldevelopmentmanThe rlevekrl,nent scenein thc p a s t f e u ' v e d r s i n A s i . rh a s b e e n agersfrom all over Asia and other regions.Fittingly in 1995,AIM was conferredthe s\\'cpt b\' \'arious [ro\'('nlcnts anc] RamonMagsaysayAward (the equivalentofthe Nobel PrizeinAsia) for International revolutions all expres:ionsof atUnderstandingfor "settingregionwidestandardsfor excellenceand relevancein traintenpis nt breakingsocial,political, ing Asian managersfor Asia's development." ,rnc1cconomicproblcms bcsctting Prof. Victor E. Tan lhe peoplesof Asi.r. AssociateDean i D c ! r ' l o pm e nt n r a n a g e r s ,a s Center for DevelopmentManagement shapcclbr ,\l\1, art txptctccl io bc ,rt the helnrof theseeflortsto introrluct rtforms anclbuild up support for ing.Thel :hould be ableto bring institu- sccto it thai the changebreathcsin ncrv l i t c r , ' i r r * l irl r t r , ' r rF. .r r l . l ,* . r n . nl a t i r , n . change: th,rt uill make life beiter for tions,organizations, groups,,rndcommu Asi,r'stecmingpoplrlations. Tht'varc t'x- nities to rise above their presentinad"superior pectcdto offer strategyin the ctluacics,rndileaknesses .rnclfact ch,rl- I ' r , l 5 , , 1, 1 , r , 1 . /1/ r , ' i , r i i , , l r r J / , . . , , I i , n. l ] r l l f O f faceoi inftrior rtsoLrrcts"(a quott from lengesthai.rboundirr ihe en\'ir0rrment. . r / { ) l r r . I l ' U n , m q f l , l r ' 1/ )lrl , \ r ' i , , r , ) i i l r.f1 5 / / n/ , r ! i / i l r k . i , u r r r , r { , 1 I f i r 1f ./ , r i r , t i 1 5 ,5, 1f f , r l i r , , r i r , , , r , r ( l r i ld' f CD\4's ProiessorVick)r S. Limlimgan) [)evclopnrcnt nranasersare never i I l { } , r x . , r lf r l r ! r i r l ) r l r J J , r i i r t r / i r l ) l l J, ]f/i r ' / r ] r r k l r l borl of carelulstudvand groulcleclsens fcarfulof changc;thcvcrcatcchanges ancl l r n \ i t t : . : n l a r r , t l t | 1 1 > . ALCLSTSFPTF\IBFR IHI.AsI.\\ N1,\N.,\CI.R I996

ilIaruncEmENT UPDATU:

Dnmopmnnr

Bt lttot t-r-t'n \4 \ RroA\ rr,\'o C. Lo|uz

SocialResponsibilit)' TheNewBusiness Philosophy Nervrelationships harr:evolvedamongrariousstakoholdeni as theypuniuebusiness and forporatesocialresponsibilih:

usinessanclmorcafflutnt ncmbers of societvhave the responsibilitv io use their blessingsto hclp matcriallvpoorcommunity membersout of povertvand to develop their full humanpotcntials. This is the cmerging,and cnlighttncd, phi]osophvof business.Living out this philosophf is difficult.It is difficult discardingtheold and simplephilosophvof making profit as the onlv responsibilitv It is difficuiidefiningneu'reofbusiness. sponsibilities. What keepsus continuouslvsearch ing for rvavsof helpingour fellorlsis ihe knon ledgethat rveall needa minimum of lifc-sustainingmatcrialrcsourctsbt' fore.u't can use all our hunan faculhes f u l l v a n d r i 3 l r r 1 rT. h , r ln r i r i r n u mh , r ' elude.d..rmajoritv of our people.\\'e rc.r1izc that rr'r. art part of thc l'cb of lifc. Whateverhappensin anclto anv part oi the web affectsall of us soontr or latt'r. Thereis muchselfinterest in "enlightened Butmoreoi it resultedfrom selfinterest." g c n u i n tc n l i g h l e n r nn,t l o . r n t r r J c f i n i -

tion of our relati(Dships to evervthinrin tne unr\.erse. This nov philosophvrvasbehind the socioeconomic deveiopmentplans that gave us thc Dragon Economiesoi Asia, l h c \ e r r E r , ' n , ' m i ,I ' o l i . v o f V . r l . n : i , r anclthe cali from Presicleut Suhartofor the IndontsiankouNlonrrnt to help mral cooperatrYes. For more th,u 25 vcars norr,,Philipp i n , R o n t . t nC . r l h , ' 1 li .ci J t , ' p - , t n Jh u . r nessnen(collaborating ivith manv cxpatriatr',non-Catholicmanagersarcl reli gious) havt bcenlorking at rlefininga more completesetof socialrcsponsibilitic.ol hrt-in,'rT . h c A . i , t r Ir r ' . t r t r r t, L' l Management,u hich includeclllusiness Leadershipancl ll('sponsibilitV in its lrst of coursessinct 1968,hasbeeninlolr erl irt thi: continuingjoumtt, inclcpt'ndcntlv and as part of the TechnicalConmitiee of ihe Bishops-l3nsintsslncn Confcrcncc (BBC)and ihe for Hulnan Deve'lopnrent Conrnrittee orrTt'achirrg SocialIitsponsrbilitv (TSIt). lVidesprcarlpovertvancl iack oi.le

velopnrcnt,rnronr nrajoritr, of the Filipirro pcoplc continueto lrc i l'najornational -fhe concern. concernlerito thci,sLrblish menl of thr LIUCin 1971io :t't'k nlvs of gettin{ the mirrc prir ilcgerlnnd nlatcriallv bltssccistgmtntsol tht [:ilipinorrco"theaclvance plc k) iike an,rctilcrolc in ntentof out pqlrplqkrr\arrlsa ilrllt'r hnnan litc," In 199i1,BBC rtu orrlcrl its rrlissron .l,llL|]run 1 l, .r , . r L,ir - l ' , l l . , r r - t , ' h r t t t , r h , ' ur rh l u [ ' l i l l i l i, , 1l l ] ! ( l L r .tr\l , ' r l i i c' i i l r , f i l i f i r r ,l'l r r , ' t r ' l: ll rr , l , r ' ' r r t o r i l ri -t ,' ' ci.rljrrsiice.rnd throughin incrL..lsc of thL. nation'sl't'alth th.t ir equit.ll'l\,distrrh utcrl in hrlrl rcjcctionof po\'r.rt\,inthis coulrtr\r" I ' a r to f t h i s c o r l i i r l L l i r n l gr i s s i o nh a s trr.tntht consisttnt,rttr.lnltk),urs\\'crthc " rltrcstions,lir whorl (arrclfor whom)arc n e resl.onsiblt'to, for ilh.tt, .tnclwhr'?" r\r'rsivcrirrg thtst'tlucstlonshasbeenthe consistentthemt' oi all BBC sponsort'cl fora an,.lthc olcrriclirrgcorrcernof .rll its prolccts. ln 1976,thefirstfonrlal.rttr.lnptto d&

AL (;Lsr-SFprE\rBER 1996. Tlr!;\srA\ Nl,\\.\ctR

fine (for BBCmembers)various stakeholders in the development processtook place. The TechnicalCommitteedesigned a special conferencethat showed the impactsof government and businessactivitieson communrtles. Panel members thought that negative impacts of large projectson communities werc not limited to government projects such as the construc',\ tt ,Vr tion of the Pantabanganand 'r \. 't \, tt / , / 'a t\ best t. Chico dams. Despitetheir a. ,' ,, ,' ,' . . 't\ t intentions,privatecorporatrons ..,'. ii ,, -jin several instancesmounted projectswhich fosteredrather than alleviatepoverty. The dependenceon the sugarcentrals by the surrounding communities was a pdme example. dition of accessto all pertinent informaThe 1976conferenceparticipantshad tion. To the old, more cynicaladmonition a chanceto discussfiveexperienceswhich had poverty alleviationand peopledevel- of cateafemptor(buyer beware)hasbeen added the equally strong admonition of opment components from the govern"seller beware." Dramatic casesof dement and businesssectors.They examfectiveproducts aggressivelysold to the ined the dynamics that led to less than successful,often dreadful, results of the mars marlet dnd with dire results,including death,made people demand for projects.Onecase,a localgovernmentinitiative, was seento have brought longer grealerlidbilitiesfor the producerCurlastingpositiveresultsevenasthey lacked rent definitions, in many caseswillingly thedramaticimpactsof the largeprojects. adoptedby corporations,further include the responsibilitythat their pdmary goal The model that emergedfrom the disis customer satisfaction and recognizethe cussions,which was later used in the first primacyof the customerinbusiness. Asian BusinessConferencesfor Human 2. BetweenCorporation and SuppliDevelopmentis shown in Diagram 1 The model maps out relationships ers. The same relationship exists as bewith various stakeholdersany govern- tween corporation and customet with ment or businessentity had to consider the corporation now in the position of customer Financiersand lendersare ofin putting togethera project. tenconsideredsuppliersaswellalthough This model goesfar beyond the original and more limited Llefinitionof busi- they often take primacy over othersin ness and corporate social responsibility their claim to corporatefunds. 3. Between Corporation and Ownas only that of making money for stockers/Stockholders. The relationship rnholders and other owners while providvolves assuring stockholdersof fair reing jobs to peopleand the expectedprodturns while e\pecting of them a miniucts or servicesto customers. mum level of risk{aking in investing These new relationships, including their money and a commitment to the many of those spelled out in the old perpetuityof the corporation.The divimodel, are as follows: 1. Between Corporation and Cus- dendsareenjoyedwith the attendantrisk tomer (the pdmary relationship).The reof loss. 4. Between Corporation and Emlationship retains manv of its original components:valuefor money,delivery as ployees. The relationship remains to be promised, prompt pavment of financial the principal obligation of a fair day's obligations.But it now includesa st cter wagefor a fair day's wor[.. But to it hds compliancetoAdam Smith'soriginalcon- been added other dimensionsof em-

ployeewelfareandgrowth.Anew unwrittencontracthasemerged havetheresponthatcorporations sibilityof assuringpeopleof continuing employabilitythrough educationandtrainingprograms and of full humandevelopment by makingavailablevenuesfor physical,mental,emotional,and spi tual growth. Therewas an attemptto differentiatebetweenregular employeesandmanagers andexecutivesbecause of theperceptionof quantumdifferences in the treatmentof the two groups.The executivegroup wields inordinate while powerovernon-executives exercisingheavy influenceon to stressa moree8aliowners.But tadanapproach,all wereput togetherin the categoryof employee. TheGovCorporationand 5.Beh,vâ&#x201A;Źen relationship expects corpoemment.The rationsto pay appropriatetaxeson trme while governmentcontinuallyprovides can wherebusinesses the atmosphere front-ending investprosper,including mentsin goodphysicalinfrastructure. had beenformuTheserelationships underlatedundercertainconditionsnow stood to haveundergonechanges.The discovered otherramimajorstakeholders to all the ficationsof their relationships othersin the diagramthat had not been takeninto account.Other relationships that demandedattentionhad beenomitwas ted.Thus,asecond setof relationships added(SeeDiagram2). 6. Betwâ&#x201A;ŹenCorporationand The between Cornmunity.Overmanydecades AdamSmithandthebirth of themodem peopleassumedthatby takcorporation, inthecorporation ingcareof employees. directlytookcareof thecommunity. W i t h c h a n g e si n t h e n a t u t e a n d the old asof urbanization, magnitudes fromthestart,began sumption,erroneous More to showsomedramaticanomalies. peopleflockedto urbancentersin search for opportunitieswhich often were not available.Many peoplewerein needof resources but had no meansof securing them.Poverty, cdminality,anddisgruntlement with the existingsystemsbecame wasin theair. widespread. Rebellion protected thesystem Manybusinesses

...:t::''Q-i::::::

+ - o - C

1996 THEAsrANMANACER. AUGUSr-SEI'TEMBER

and prosperedwith a more deliberatesharing of its bounty with those who could not.Corporations like Johnson& Johnson0&J)singledout communitieswhereJ&] operatedand took active responsibilityfor them. 7. BetweenCorporation and Ite Competition. Old specifications of colporateresponsibility did not include anythin8 on competition,except to beat it out of existencein a Darwinian definition of fitness. Firms resorted to questionabletacticsnot only to lift themselvesup but to put competitiondown. Peoplefound the results of this cutthroatpracticesrepugnantand beganto insist on honorablebehavior. In the late 1960s,a seriousconcernfor global ecologywas articulatedin Rachel Carson'sSilentSpringanddramatizedby The Club of Rome'sLimits to Growth study.Thisled to two additionsto thediagram (SeeDagram 3). 8.The Corporatiorj Ecology,andSustainable Development. Growthrequirestheconsumption of greater amountsof ultirnateVfinite resources.The excitementover theinvalidatedMalthusian"natural checks"gaveway to the soberingacceptance that the checksdid exist after all. A ravagedenvironment becornesthe breedingground for all I I kinds of pollution-air, water,soil.Poorenviron- -l<mentcontdbutesto lowr l er humanbody defenses as they help propagate disease-causingmicrobesand help bring about"subdinical infections." Peopleget sick but not sick enoughto stay in bed. They go aboui their normal affairs with reducedpro-

Mostpeoplehavedifficulty conceiving the future. Dealingwith thepresentis difficult enough.Havingto think aboutsomethingthat is not too conffeteand not tooimminentandthercfore not too compellingis often seenas an addedburden. Many cynicstake consolation in the words of Lord Maynard Keynes-"In the future,we areall dead."sowhy bother? Severalpeoplepointed out emerginginconveniencesand problematic conditions--suchashaffic, flash floods, inflation, among many-as symPtomsof the future must be remedied now. Others cited the marketing disciductiviry At worst, the conditionsbring pline's practiceof "putting a face" to an aboutepidemics.The ravagedecology anon)'mousmassto focusattentionand alsocannothelp us producelife support achon. materials-water, food, raw materialsThemostcompellingirnagefor thefuas much as we need them. All these ture for most peopleis that of their chilthreatsto our survivalleadto a morecriti- drenandgrandchildren.In all of us is the cal,but admittedly more hazy,responsi- wish to turn over to our childrenand biliry grandchildrena world better than what 9. The Corporation and The Future. we lived in. Formany,ceating thatworld becomesthe focus for taking responsibilityfor building a betterfuhrrc. The iourney is far from over. Debatescontinue and heat up. The targetmoves, ramifies,complicates. We often get lost in the ever enlarging forest.But thereis greater urge to use our facultiesto think out arrangementsthat achievebetter, more enlightened ways of living and act appropriatelyso as not to wastetheworld thathasbeen entrustedto our stewardship _ for futuregenerations.LJ

,t .rt ,t . ,t ., ,'

Ptot'.Ma o AntonioG. Lopezis the PilipixosShellCorporation Prclessor ot' PublicAdftinistration.His.urrcntinlercstsare m|ftagelialdeoelopmet, deoeloprnenL fiarlagemefil, cross-cultural nanagement, and projectdmelopfiefilond management. I ternel: <magIopez@ain. edu.ph>,

AucusT-SEpTEMBER 1996. THEAsrANMANAGER

MmIcnm[NT UPDATI:

Dsvnropmnnr

EMMANUELA. LEYCo BY PROFESSOR

Mobilizing PrivateResources for PublicProjects infrastructure. LGUs meetthe demandfor socieconomic

Balaneing neonomle l)evelopmenl through Polltical Deeentralization Code Whenthe LocalCovernment wasimplemented almostfour yearsago, pointedoutthatthe someof itsadvocates unevendevelopment of the Philippines was a greaterproblemthan the overall backwardness of the nationaleconomy. The wide incomedisparity amongthe populationwasconsidereda moresenousproblemwhenviewedin thecontext of thecountrv'suneveneconomicdevelopment.Over507'of the populationare poorandmajoritvofthemlivein far-flung ThenewCode barriosin thecountryside. wasviervedasan opportunityto let the peopletake the future into their own handsby decentralizing politicalauthority and distributing the country'seconomicresources.

Almostfouryearsafterimplementing theCode,muchof thepoliticalrheto c rs gone.Publicattentionis now focusedon (LGUs) howsomelocalgovernmentunits wereableto copewith the demandsof particularly [inancing theirconstituent:, socialandeconomicinfrastructure. Overdependence on Revenue Sharing with the Natlonal Government The new Codedevolvedservicesto local governmentswhich requiredtremendousamountof financialresources. 'en icesincluded These healthcare,agrideculturalsupport,and infrastructure velopment. Localgovernments neededto generate revenues to supporttheseservices.Buta studymadebytheDepartment of Financein 1995revealedthat LGUs remainhighly dependenton their share

1996 THEASIAN MANAGER. AUGUST-SEPTEMBER

of the nationaltax rcvenues.In fact,loonly cally generatedfunds represented in 1996. about207cof theirtotalrevenues Closeto 52%of theirrevenues camefrom theirshareof nationaltaxrevenues. Limited Besourncâ&#x201A;Źs Lead to Llmlted Capltal ErTendltures In fiscalyear 1996,LCUsspent40% of theirbudgetongeneralpublicservices and 43%on combinedsocialand ecoln the sameyear,LGUs nomicservices. spent;bout PhP36B for personalservices,PhP26B for maintenance and other operatingseruices, andonlyaboutPhPl8 AlthoughfundsgenBforcapital outlays. eratedboth locallyand nationallywere not enoughto cover neededservices, LGUsdid littleborowing.ln 1994,LGUs devotedonly 1.07%of their totalexpendituresfor debtservice. 47

mercialpaper,and municipal bonds.Anotheroptionthatthe wasthebuildcity considered mechanism. operate-transfer 25000 In 1990,the PhilippinelegislaturepassedtheBuild-Opera t e - T r a n s f e(rB O T ) / B u i l d 20000 Transfer(BT) Law intended"to mobilizethe pdvatesectorin 15000 the financing,construction, of operation,andmaintenance publicinfrastructure projects." 10000 This law providedthe policy frameworkand implementa5000 tion guidelinesfor BOT/BT projects. Mayor BenjaminAbalos 0 1994 playeda keyrolein addressing 1990 1992 the problemsof financingthe lt,n'",'",'o project.When askedwhy he favoredthe BOT financingof soude Depanmentor F na^ce t h e p u b l i c m a r k e t ,M a y o r Abalossaid, "Therewas no The Need Tb Rebuild bechoice. Bondflotationwasnotpossible The Publie Market causeof the urgencyof the project.You Toaddresstheneedsof thedisplaced Mayor Abalos needanagencyto structureit for you and marketvendorsand the communityat and His Finaneing Options The city considereda numberof sellbondsto investors." large,localofficialsprovideda temporary According to MayorAbalos,municispacefor the market.Oneof the streets creditfinancingoptions.Underthe Lo"bondswill neversell in the Philipwasclosedfor this purpose.Butnot every cal GovernmentCodeof 1991,LGUs pal by wereallowedto transactloanson therr pinesunlessyou payhigh interestrates." displacedvendorwasaccommodated this temporaryarangement.Somehad behalfto financetheir projects.These He estimatedthat,giventhecurrentmarincludeddi- ket conditions,they haveto pay at least to rent from pdvatelot ownersnearthe creditfinancinginstruments make- rectloansfrom banks.debtnotes,com- 24%a yearHesurmisedthat,beinga govold marketwheretheyconstructed emmententity,theywould have s h i f t m a r k e t s t a l l sw h i c h Theapto payabout18cl.interest. causedproblemsfor the city proximatecostof thepublicmarandthecommunity. ketwasaroundPhP50M. At 1870, The closureof the street he estimatedthat they would causedtraffic congestionin haveto raisePhP9 M a year His Lackof a the neighborhood. estimateof the annualcollection systematicwastecollection from the marketwasonly PhP2 systemcausedserioussanitaM . B a s e do n t h e c u r r e n t5 0 tion problemsin thearea.Furcentavorentalratepersquaremethermore,vendorswho retet hedoubtedthattheycanever sortedto rentingfrompdvate make that kind of annual debt lot ownershad to pay much payments.He even doubted higher rent comparedwith PhP whetheror nottheestimated what the city charged.Resi2 M revenues could coveroperdentsofthecommunityaired atFg expenses. numerouscomplaintsabout Mayor Abalos,a lawyerby thistemporarymarket.Thus, professionand a former judge, felt comthecitygovernment 1988 1989 1990 1991 1992 1S93 1994 1995 1995 from learnedoftheBOTconcepts pelledto rebuildthe market. law of the newspaper coverage But thecity alsorealizedthat serl""" e*nori" s.ri"." lo"n",alpuotic f I became conHe it and studied redid not have enough they "o",",,"rv,"." vincedthat BOTwasthe answer sources to financetheproject ! to his problems.He thoughtthat despiteincreasingrevenues Source: Oeparfnenl of Financâ&#x201A;Ź assetof thecityfor this thebiggest generatedfrom collectionof project was land ownership.He fees. taxesand The llandaluyong Bulld-Operate-TFansf er Proreet Mandaluyongis a newlycharteredcity just outsidethe country'scapital.Itsimpressive investmentgrowthratesof over its robust 1070characterized economicactivitiesin the last few years. But on August 25, 1990, publicmarket Mandaluyong's was completelygutted down by fire. Althoughnew private marketsand shoppingcenters emerged,the city govemment the felt the needto reconstruct public market.Beforethe fire, thepublicmarketservedsome residents ofthecityand 300,000 its adiacent communities.

f-'1",**"

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""","" ffi "*,,"o"o,

1996. THEASIANMANACER AUGUST.SEPTEMBER

PNO EONO PUBLICO. T h e p u b l i cm a r k ect o n t i n u etso residents of servesome300,000 commuthecityandits adjacent nr t | e s .

;'n .a '

REASON TO SMILE. vendors haveIound market Formerlv disolaced opportunities. newhopein newbusiness

fl !

publicmarketand A PHOENIXREBORN.The l\.4andaluyong centerrisesanewfrom ashesandsoarsto greaterheights. commercial

Although convinced that the private sector would definitely benefit ftom financing the constructionof the public market, Mayor Abalos was not sure how to sell this idea to his intended partnerc. He decidedthat he will have a much better chancewith thosewho were considering long term investment. He sought those investors who could see t h e o p p o r t u n it i e s with the changing business climate in M a n d a l u y o n g .H e concluded that merelv re-building the public market would not attract p vateinvestors.He 1992 1993 1991 ' .-..' - TolalSlrplus decidedthat a multilevel shopping complex was requiredto

also thought ihat the long standingcollaborativerelationshipof the city government n'ith ihe pdvate sector could provide the clincher to initiate private sector involvemenl in financing this project.

1988 -

1989

1990

opear.g slrp us

Sotrrce Oepadmâ&#x201A;Źnror F na^ce

THREE.IN-ONE. To attractmoreprivateinvestorsandcustomshoppingcomplexanda rec ers,a multi-level reationcenterbecameaddedfeaturesto the o r i g i n apl u b l i cm a r k e t .

1996 THEASIA\ MA\AGER. AUCUST-SEPTEMBER

stimulate interest in the project.Convinced that hc had the right packageto attract investors,he set out to invite bidders for the BOT project. Macro Funders and Development Corporation won the bidding for the project.The organization was formed to undertake the project. Incorporators of the organization came from a disting u i s h e dc o m m u n i t vo f i n v e s t o r ri n Mandaluyong.The companythen had an authorizedcapitalstockofPhP170M and around PhP100M paid up capital stock. Macro Funder. thou8htthat competition for marketsharera'asstiffand therefore thev needed to establishtheir own competitiveadvantage.Theydecidedthat the project should provide an accessible one-stopshopping and entertainment centerfor all consumers.

The Proreea and The Tlnaneing Plan Used The project consistedof a seven-storey building on a 7,000squaremeter lot

owned by the city of winning bidders the right to Mandaluyongwhere the develop and use $'ithout burneddown publicmarket charge the spaceabove the was strategically located,at (ln [,'lillionPesos) m a r k e t s t r u c t u r e .M a c r o thebackof commercialestabFunderswas given the right lishments.Accordingto the to operate tl.replace for 40 plan, the first and second years.Under this arrangefloorswill containcommerment, the city govemment cial shopsand department did not have anv right to stores.Therewill also be a sharein the revenuesgenertwo-levelparkingareato acatedbv the businessesin thc commodatecustomerson the compler, except for the althird andfourth floors.Bowllowable local taxesand fees ing laneswere plannedfor to operatethe business. thefifth floor whilethesixth floor was reserved for The Citation moviehouses. In 1994,Mandaluyong's Under the proposedfi1988 199r 1992 1993 1994 financingschemeof the pubnancingscheme,theciiy gov--+--lic market project won a a TotalExpenditure Debt Service Oullay emmentprovidedthe Iand prestigiouscitation from the Source:Departmenl of Finance while the winning bidder GcirradCclingPookadminisprovidedthefundsto finance tered by the Asian lnstitute theconshuctionof theshoppingcomplex. emment.In May1993,thebox-typestruc- of Management and fundedby the Ford Thefinancingschemeinvolvedtwo ma- turewasturnedoverto theciry Thegov- F o u n d a t i o n .C a l i n gP o o kc i t e d t h e jor featuresof theBOTlaw:Thefirst fea- ernmenlthenundertooktheconstruction. project'spositive impacton theeconomy ture involvedthe useof theBT arrange- The govemmentand the stallowners andtheenvironment. ment.Upon completionof the ground equallydividedthecostof theconstrucfloor which housedthe public market, tion of 520concrete Prof. EmnnntrclA. L.vco spr..talizesin prbli( stalls. MacroFunderswassupposed to transfer Thesecondfeatureof the financing ltoliclt tnalysis, public litnnc, heallhcn fi t1ot1ae, d d inlernilion0!dci'claptlrcnt iss ts. ownershipandoperations to thecitygov- schemeinvolved the BOT which gave l]1| ertp| : <enlt i tn.t:d.ph>. vco@n

A DevelopmentPhilosophy PeoPleare the focusand centerofdevelopment. The Asian Institute of Managementbelievesthat it is man's needsand aspirationsthat should generateeconomicand socialactivities.And the common good dictatesthat we must pu$ue such activitieswithin the contextof preservingthe finite resourcesofthe earth.AIM believesthat developmentmust go beyond the mere production of goods and services. The promotion of business, as well as technological, agricultural, and industrial growth are merely some of the means towards development. Developmentconsidersthe totality of the human potential and harnessesthis for the good of the people. It examines social values and stmctures.It assesses political situationsas well as ideologies.It evaluateseconomicpolicies and progtams, lt pursueshealth,education,nutrition, and goals.It respectspeople'sculture and religion aswell asnature and the envtronment. True developmentis holistic.It discardsthe myopic lensesof a single discipline,usestools from vadous disciplinesto help createfor themselvessustainablecommunitiesof healtht productive, happy families and individuals. Development looks at Mother Earth as the nurturer, the life source of the global village. Slnce the earth's resourcesare finite, developmentseesto it that theseare well managedand used for the benefit, not just of a few, but of all humanity. The Institute realizesthat Asia sheltersthe greatestnumber of the earth'spoor It hasthereforeplaced the alleviation of poverty at the centerof its development philosophy.AIM recognizesthat if it is to succeedin improving the lives of the people of Asia, it must elicit from the poor their fult participation in the task of development. AIM is dedicatedto the educationof professionaldevelopmentmanagerswho are skilled and knowledgeablein their fields, and endowed with a deep senseof social lesponsibility. Prof. EduardoA. Morato Jr

Aucusr-SEpTEMBER 1996. THEAsrANMANAGER

PoucrFonum"

BY PROFESSOR FRANCISCo L. ROMAN,JR. ANDMATI L. MARTIN

Competitiveness Revisited: Backto ProductiYity Iirugmanconcludes thatproductivity is thekeyunderlyingconcept behindcontinuingeconomicgro${h of nations.

n earlierarticlediscussedthe competitivenessprocessand the growing concern over productivity which affectboth developing and

developedcounhies.Thisarticlerevisits theissuesof competitiveness andproductivity. Theconceptof "competitiveness" or "competitive in its latestand advantage" most popular form was developedby guru and MichaelPorter,management authorof threebestsellerspublishedbetween1980and1990.In thatdecade, both business leadersandpublicsectorpolicy makersadvocated competitive advantage asfheway lor theindustryandthecountry to advancein theglobalmarketplace. PaIt of this articlefocuseson argumentspresented by a respected economist from MIT and now at StanfordUniversity,PaulKrugman,who noteda "dangerousobsession" amongdecisionmakeIS.

viewof Competition and Compe'litiveness essence, holdsto thismercantilist Krugmanlooks into TheCompetitfue export.(3) Anotherramificationwhich (Porter, viewis thatthe Afuantage ofNations 1990).Hefirst supportsa "protectional" notedthat competitiveness hasits sup- moreimports,thefewerjobswill beavailporters,even among economicpolicy able. makers,"TheimageofcountriescompetHowevet the real world is not that ing with oneanotheril world marketsrn simple.Thethoughtfu I economist realizes the sameway that corporationsdo de- thatrealwages,which affectthelevelof rivesmuchof its attractiveness ftom its employment,dependlargelyon theoverChanges seemingcomprehensibility,' l.e.,thatUS all productivityoftheeconomy. and Japanare competitorsin the same in wagesor profits that are not reflected sensethat Coca-Colacompeteswith in importor exportpdcescannotchange Pepsi."' overallnationalincome,asit canonly reAccordingto Krugman,that "com- distdbuteprofitsto onegroupwithin an monsense"argument is flawed.Consider economyat the expenseof another. the conflictbetweeninternationaltrade Moreover,Krugmanmakesasimplecomjobcreation. anddomestic Thesetwo eco- parison:For a corporationto exist and nomicvariablesappearto havea simple grow,it mustmakeprofitsandoutdoits regardrelationship:(1) Freetradeis desirable competitors. However,countries, do because it providesmorejobsaroundthe lessof their economicperformance, world. (2) The moreindividual natrons not go out of business. Krugmanfurther suggeststhat the export,the richerthey becomeand the morepeoplewill beemployed. |apan,in conceptof trade balanceas a nation's

THEASIANMANAGER. AUGUST-SEPTEMBER 1996

"bottomline"is flawed.Tiadebalance, as measure, meansthata a competitiveness country has to sell more than it buys abroad.However,Mexicoshowedthat tradesurplusmay evenbe a signof nawhen tionalweakness. Thiswasapparent Mexicowasforcedto run hugetradesurplusesin the 1980sto pay intereston its foreigndebtasinternational investorsreThis fusedto lend it any moremoney.3 situationdid notindicatethatMexicowas a competitivenation,givenits debtcnsrs srtuatron. Lookingat Europe,Krugmannotes advocates are also that competitiveness incorrectin sayingthat European unemploymentwasdueto lackof competitivenessin the USand Japan;that the solutionwasa program of investment, sayin andin hightechnology reinfrastructure searchanddevelopment.Othercausesare immorerelevant:Taxesandregulations posedby elaboratewelfarestatesin Europemadeemployersreluctantto create newjobswhilea relativelygenerous level of unemploymentbenefitsdiscouraged low-wagejobs,a workersfromaccepting measure thatlikewisehelpedkeepunemploymentcomparatively high(in theUS). Likewise,Krugmanasserts thatinterwas neither nationalcompetitiveness the centralissuenor the only causefor the ofAsianeconomies. Althoughthe success SouthKorea, Asiantigers,likeSingapore, and Taiwan,rapidly transformedtheminto indusselvesfrom peasantsocieties trial powerhouses and continuously achievedgrowth ratesseveraltimes higherthan the advancednations,they did not sharethesamefaith in freemarketsas their Westerncounterparts. Paul MythofAsia's Krugman,in hisarticleThe Miracle. emphasized thattheseeconomies did not adhereto Porter'sfree market competitiveness but insteadinsistedon limitingstratetakingcharge,sometimes gic choices in the interestof economic growth. Krugmanconcludes thatproductivity is the key underlyingconceptthat acc o u n t sf o r t h e c o n t i n u i n ge c o n o m i c growth of nations(Porteralso credits productivityand innovationas key elementsin competitiveness.) A country's livingstandards shouldbedetermined almost entirelyby domesticgrowth and rateof its productivitygrowth. Eventhe US,an openeconomy, exportsonly 10% 46

of its GNP;almost90%of its economy producesgoodsandservices for its own use.Krugmanusesstatisticsfrom 1973 to i990 which he classifiesasa period of long-runstagnatinglivingstandards for theUS.Thedatademonstrated a 91% declinein economic activityattdbutedto thefall in domesticproductivitygrowth.r Krugmannotedthatthegrowthrate of living standardsdoesnot dependon success relativeto any foreigncompetitor

Dangerous Obsession statedthata country like Singaporegrew not becauseof any inherenthi-techexpertisebut because of heavydosesof capitalspendingand an expandingand educatedworkforce.s Youngaddedthat both capitaland (human capitaladjusted)laborinputsgrew fasterin Singaporeduring its considerably periodof rapid growth. He pointedout that,"Capitalaccumulation explains101% in outputperworkerin the ofthe increase Singaporean economybetween1970and 1990."Productivityin Singaporedependedon a risingcapital-tolaborratio: Eachworkerhad moreand moreexpensive equipmentand assetsto use:from electrichammersfor constructionworkmachines for facelsto computer-assisted tory workerc. Likewise,citing an entirelydifferent theimmense growthin the1950s economy, oftheoldSovietUnionwaslargelycaused by effortsof Stalinistplannersto move millionsof workersftom farmsto cities, pushingthe labor forceto work longer hours,pursuingrnassiveprogramsof eduprocation,and plowinganever-growing portionof thecountry'sindustrialoutput backinto the constructionof new factorate ries despitea virtually non-existent growth.s On the other hand, of efficiency HongKongachievedits "miracle"on the mainlyin strengthof increased efficiency, industries. its expandin8service Technology adaptationseemsanother pathto pushingproductivity. Based onthe Far EastemEconomic Reaiew articleby Howard Davies, a business BruceGilley, Prodtrellvlty professor at HongKongPolytechnic Uni Othereconomists usetheconceptof versity,suggestedthat the Hong Kong productivityto accountfor apparentecG govemment shou)dfocusonhelpingfirms to maketheir nomicgrowthin excess of theincreases adoptexistingtechnologies in laborandcapitalinputs.sLagging Pro- operations inChinabecome moreefficient ductioityGrowth,(1990)concludedthat and not on trying to invent new ones. "capitalaccumulation whichis 'new andimprovement "Supportfor development in total factorefficiencywere the two to theworld' isunnecessary andunlikely importantsources he said. of aggregate economic to be successful," growth."6This maybeinterpretedasaddition of capitalresources and efficient Pr.oducllvlly: The Japanese usageof thesecapitalfactorsof produc- Experlence tion,from factoriesto computers. WhentheJapanese talkaboutproducAnotherrecentshrdy(1990) madeby tiviry theydo not referto a singlemeasis MIT economist Alwyn Youngsuggested ure which,in the Westemeconomies, that Singapore's economicgrowth was usuallytheinverseof a unit cost,e.9.,100 largelytheresultof "brute-force capital outputunits per $1 laborcost.TheJapaaccumulation."T neseconceptof productivityrecognizes but focuses An observationalso shared by theoutput/inputrelationship Krugmanin hisarticleClmpetitioeness: A on theelements within outputandinput.

Krugman

concludesthat

productivity is the key underlying

conceptthat accountsfor the continuing economic growth of nations.

AUGUST.SETTEMBER I996 O196 AsIANMANAGER

The great strengthof such productivity thinkingis probablyits standardization for economicpurposes,'bothat themacro PastYear CurrentYear %Chanoe%lnflation NET theJapan andmicrolevels.Forinstance, 20yo 100,000 120,000 Volume annuProductivityCenterhasproduced, (10y"1 30% 40% VALUE 100,000,000 140,000,000 ally,for the last two decades,a widely and ofProductiaity usedPracticalHandbook toISmustbemeaswedovertime.Corsider, This publication(also and qualiry LabourStetistics. for lackof space,only laborasthe factor. referavailablein English)is an essential Laborproductivityis definedas the academi- Product Produetlviiy encematerialfor economists, interested Productivitymaybeusedto measure outputper unit of laborinput.Theusual executives cians,andcorporate performance of a prod- unit is in numberof working hours. perlormance becau"e it gives thevalue-added in business otherunitsareused,suchas trendsand levelsof labor productivity, uct. Industrialsurvivalin a hyper-com- Sometimes increasingly the numberof employedpeopleor conwag,es andprices, andinternalcompari- petitiveglobalmarketplace sons.Its valueliesin the simplifiedand dependson thedegreeto whichincreas- stant wagecost of labor.On the other formatso that man- ing value may be addedto a product, hand,output is measuredaccordingto easy-to-understand GDPyardsticks. inputs.Counhiesmust conventional of fig- givenits resource agersmavreadilvseethemeanings economydataas products havehigh Using thePhilippine for labor neensure that itse\port indices, as a basis uresand (see Table 2), laborproducexample value. Product productivity an customer gotiations. asfollows:On oneend tivity roseby an averageannualrate of Thereis a myth that high Japanese maybe classified (HVP). 1.3% between1993and 1994.If wages productivityresultsfromuniquecultural is thesocalledhigh-value-product high and productivityin a countryriseat thâ&#x201A;Ź indication that customers attach which therefore, nontransferOne factors are, product patronsamerate,thenlaborcostof producinga perhaps value to the is continued This claim is exaggerated. able. givenamountof outputremainsconstant. price inflation. The product's p r o d u c t i v i t p y r a c t i c e s age despite M a n yJ a p a n e s e Notethatproductivitymayriseat differrate of deceleration is slower than that of ratherthan werederivedout ofnecessity (LVP). levelsfordifferentfirmsor industnes product LVPs are the ent the low-value beingpa of theirculhrre. within an economy. bulk processed commodities, such as Historically, the Japanese, had one haveexpertIndustrial economies feature goalsince1945:fullemploy- grains,becausethereis no distinct fundamental growth in productivity enced a slowdown in LVPs to differentiate one ftom the other Accordmentthroughindustdalization. gains I970s but Europe's illustration since the early may success Considerthe following ing toAlanStainetJapanese (see (1) those of the USrr remained larger than Table1).Assuminga 10%inflation be attributedto: output factors,such "losing perception of price is 30%. hence the US mod- rate,thenetvaluechange in asinvestmentfor high technology, in value(407o) is greaterthan ground."Europe'srealwages,including ernfactoriesandfacilities,andinvestment Theincrease (207o) (2) groups,continued theincrease in volume andthepnce thoseof lower-income for new productdevelopment;and real wages slowedand to while US climb input factors,suchas skilledlaborand increaseexceedsthe inflation rate;this the lower end of fell sharply at characterizes theHVP On theoiherhand, achrally physicalresources. the other hand, unemployLongbeforetotalquality management the marketshareof LVI commodities, thescale.On in Europein the past (TQM)becamebuzzwords,Japanese pnn- like rice and corn,grows throughin- mentskyrocketed it remained relativelylow in volumenot in value,as infla- decadewhile ciplesguidinglaborasinput focusedon creases "real" pricesactuallyfall in theUS. Europeexhibitedstagnantjob motivationand stability; in tum, physical tion-adjusted growth comparedwith substantialUS resources attainoptimalusethroughwaste overtime. werefar employmentgains.Europeans reductioryandutilizationof modem,clean, Factor Productlvlty: l,abor productivity than Iessconcernedwith and environmentallyacceptabletechnolproduction refer to the level Factors of evidenced with reducingunemployment, ogy.")Grayson andODelllist fiveproducto adaPtto the indusiryin- of input resourcesutilized in production perhapsby thereluctance of theJapanese tivitystrengths (1) from one such as: labor, output derived greaterflexibilityof USlabormarkets,In cludinganemphasison leamingandrapid Cul- unit of laboror outputproducedfrom one contrast,the Americansfocusedon the adjustmentto changingconditions. "drive" and unit of labor-hour;(2)capital,output de- needto boostproductivityto fosterreal tural aspectsincludenatural a lessadversarial societythan the West. rived from oneunit of capitalexpendi- wagegrowth and reversethe trend toAll thesefac- wardincomeinequality. Japan,investsmorc in both productivity iure-R&D, amongothers. UniA studymadeby Northwestern RobertGordon,reversityprofessor, vealedthat Europe'sproductivitywas 1994 %Chengo partly a by-productof its rising unem765,691 4.3% 734,'t56 RealGDP{1985prices,M pesos) lagploymentwhilea sourceofAmerica's (thousands) 2.9y" 24,443 25,|66 EmployedPopulation gingproductivitymayactuallyhavebeen 1.3yo 30.03 30.42 GDPperworker(laborproduclivity) thesluggishwagegrowthit purportedly caused.He citedthat,in recentdecades 1996 THEASIANMANAGER. AUGUST-SET.TEMBER

in Europe,union militancyandrninimum wagehikes periodicallyboostedlabor costswhich initially raisedboth unemploymentand productiviry as reduced hiring meantexistingplant and equipmentwerespreadover fewerworkers.ln America,thewaningunionizationanda pluggingrealminimumwagedepressed wagesand the fallingcostof laborrelative to capitalencouragedhiring andlessenedthe appealof labor-savinginvestment, placing downward pressureon productivitygrowth. Hence,outputpercapitamayriseonly (2) if (1)laborforceparticipationincreases, thenumberof hoursper workerincreases, or (3)laborproductivityinoeases.Neither of thefirst two waysof inoeasingGDPper capitamaybesustainedat significantrates overlong periods.

SalesValue Labor Costs Net Olher Costs

PastYear 100,000,000 80,000 100,000

CurrentYear 120,000,000 88,000 105,000

2 0 Y " - l 1 O Y o + 5 o / o=l

H e s i d u a l ,r =

50/o

HongKongandSingapore," NBERMacroeco nomics Annual1992,April 1992,pp. 13-54. 3BruceGilley,"New Model,"FarEaslerr 21,1995,p.5'1. Ecofiofiic Reaiew, December 'Alan Stainer"Prcductivity Management: DeciTheJapanese Experierrce," M0 agemetlt sion,Vol.33. tatbid.,p.9. I'GeneKoretz,"A ProductivitvParadox," lNeek, Business July10,1995,p. 10.

REFERENCES: ' Paul Krugman. "Competitivenessr A Dangerous Obsession ." Foreign Affairs.Yol.73 No.2 March/April1994, p.39. ' tbid.,p. 29. 3tbid.,p.31. ' Ibid.,p.33. s Elliot S. Grossman,"How To Measure Productivity,"Handbo1k Meast'1tPtoductioitll urcmetlt nndltnpru)ement ,1993,pp.6-13. "Charles R.HultenandMeiloNishrmizu, "The Importanceof ProductivityChangein TheEconomic Ibtal tractors Produetlvlty GrowthofNine Industrialized "1980, After decomposing GDPgrowthinto Countries," Ilggittg Prcductioit!Grouth, a portion attributableto growth in the pp.97-98. TAlwynYoung,"ATaleof TwoCities:Faclaborforceand to capitalaccumulation, tor Accumulahon and Technical Changejn "residual"

the portion,not dueto theincreases in thesefactorsof production,is in totalfactorproduccalledtheincrease in TFl, is a rivity (TFP).The increase measureof the increasein efficienry in whichbothlaborandcapitalareused.To geta measureof a nation'sTFPit is necessaryto estimatethe ratio of labor to TFPis capitalin its economicprocesses. justoutputdividedby theamountof "total factor"usedto produceit. This"total factor"is.measuredasa weightedaverageof thecapitaland thelaborused.Or sinply, TFPis derived by deducting all TFP factorcosts.Thisresidualrepresents which might be appliedat the company in this and industrylevel,as suggested hypoiheticalexample(seeTable3). The positivevarianceindicatesproductivity contribution.While a crudemeasure/a companyor industrycancollectdataover time'to createand assessproductivity trendsandpatterns.

usa

Prcf.Frakcisco L. Rofiat1, Di/.ctotof lr. tstheExecutk'e . lheAIMPolicy Folum. Intonet:<fnnkidAaim.edu.ph> nl lheAsialhstituleol MatlL.Martinisa Researcfur Managemenl railhsrycialihlercstin inforfiatiafitech nology anda Facull!atIIECollege of Business Admin' islnitioh oftheU il.prsilltalthe Philipries.

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Ooneluslon This articlerevisitsthe relevanceof for productivityasan€conomicmeasure growth. Productivityas a conceptand tool preceededcompetitiveness, and revival. This artrseemsto be enjoyinga cleis unlikelyto be the lastword of the ongoingdebate.

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The MBA Career Guide 46 DelanceyStre€t, United Kingdom Fax:+44 (0) 17| 267 l94l FREEINFONA,TTIONAVAILABLEONLYIQ MBAGUIDE SUBSCRIAERS

A}nA/1

1996. THEAsrANMANAGEIT Aucusr-SEpTEMBER

{ f, ne of mv closestfriends a. a buiinessunderlf; " f[ graduatern California rvasa Colombiannamed Guillermo.Cuillermocame io America to study and learnEnglish.When I first met him, he barelvspoke anv Englishso we conversed succcssfullvin his native tongue,Spanish.In time,he not or.rlvpicked up the languagebut also the manl' euphemismspopularin California.From thenon, he preferreclto acldressme in Engtish. I realizedrve rvere starhng to have a communication problem u,hen hp

ri o:rino

c,,nol:c<e<

and u'ith a beachtowel in hancl,droppedbv one sunnyafternoorrand informed me that he n'as going to "catch Ray." I rvonderedwho Rav rvas and rvhat on carth'hc had cloneto make Cr.rillermo lv,rnt to catchhim. I later realizedhe was using the popularCalifomiaterm "catch for sunbathing, someravs." Irostgracluatervork in Nerv \brk rvith mv friend L ealle[rom franceleo to manv passionate cliscussionson mediaand communications. One d,rv,rve l'ere debating the n-Icritsof multimedia like thc conglomeraies, Disnev Compan\i rvhen "The Cecileblurted out, Donaldis a capitalistpig." Bervildered,I rvondered horv Donald Trump had creptinto our conversation,but amicablv prcpareclto pursue her train of thought.I found out Iaieron ihat our c.iebate on the moral r,alue of Disnevempire rcpreseniedbv Donald Duck,in Cecile'stranslahon-was an areanpe \\'ith culturaland language time bombs. I nas not lr,ithoutblame either.N{\.accentoften causeclconfusion.Once, when I jokinglvcalledan Italianclassnatea male chauvinist,he looked

Kong,I couldjump in any time.But I hadto be preparedto havetwo other peoplespeakat thesame timeor interrupting,even beforeI hadthechanceto finishmy thoughts. Thesepersonalexperi' Bv PnorEsson enceshavebeenhumorous ManreMrncnosT.Gencre but an innocentmisunderstandingin theglobal business arenamayresultin disasterandsendshock wavesthroughthecorporation.Whilemy cross-cultural trainingwaslargelyspenton my feetin thecorporate battlefield,I would have comprehenappreciated sivecross-cultural trainingbeforegetting RichardD. Le\,!is,in his book l{lrrrr CrrltunsCollide:Manngitrg Successsentout into thefray. Cr/lirrr.s, aitempts to assist the globalmanager on thecomplexiirl1ld.,?ss Thoughmanycompanies ties of inter-culturaiexchangebv definingvariousbusinesscultures recognize themeritsof throughout the world. ln his book, he recommendssome points global managerscan look upon iheiroi{n beforeventurin8out in theglobalplaycross-cultural trainingfor ing field. overseas andexpatriate History and Climate.Lewissuggeststhat behaviorof the membersof managers, thelearning anv culturalgroup is dependentalmostentirelvon the historyof the peohasbeenleft largelyto "While ple in that societ)r. mostpeopleforgetto learnlessonsfrom thepast individuals. and mistakesare often repeated-in the long run, peopleadherecollecWhenall elsefails,the tivelv to the setof norms,reaction,and activitieswhich their experience mostusefultoolsin thâ&#x201A;Ź and developmenthaveshowntobe mostbeneficialto them.This includes globalbusiness settingare thingslike: migrations,invasions,conquesis, religiousdisputes,crusades, empathyandhumor tempest,droughts,subzerotemperatures,disease,pestilence.They may " Theseallowyou to cross bruialit\,,oppression, alsohaveexperienced or near-genocide.But thefact that they havesurvivedmeansthey havebeensuccessful. culturalbarriersless Language.Lewis also suggeststhat the mental processof a.ultural gingerlyandapplya little group is ofien dictatedbv the natureand characteristias of the languageof morepatienceand that group. "The restrictionsand libertiesof a languagewill have a prounderstanding in the found influenceon the person'scuitural vision,personalcharisma,emocommumcatlon Process. tion, poeticfeelinâ&#x201A;Źi,discipline,and hierarchy." In thisway,offenseis not Cultural Classification.Lewis alsotries to makesituational,cultural takenwhena German forecasting a liitle easierbv classifvingtheworla'sculturesinto threerough colleague asksyou when caiegoriesi your "deathline" (deadli,rcdl n.lii'rs.Thoser{ho plan,schedule, organize,pursueactionchains, do one thing at a time.Cermansand Sn'issarein this group. iirre)is.Thismeansasking Mr/iinclri,r,s.Thoselivelt loquaciouspeoplewho do many things at for a clarification when once,planningiheirprioritiesnoiaccordingto a time schedulebutaccordyour Japanese clienttells ing to ihe relativethrill or impofiancethat eachappointmentbringswith you to take"a fastwatch" it. Italians,Latin Amerjcans,and Arabsaremembersof this 8roup. (4rickloo/r)at themarket. Rm.ti.rs. Thoseculturesthat priorifizecou esyand respect,listening This alsomeansthat quietlv and calmlv,and reaciingcarefullyto the other side's proposals. whenyour Finnishboss Chinese,Iapanese, aid Finnsarein this group. you arelookinga suggests lvhile it mav be difficult io placenn individual into any one group, littleill andyoushould Ler^isattemptstoprovidearoadmapforrvhatcouldpotentiallybeaminetaketwo "trucks" field of emotionand misunderstanding. And while thesecategoriesmay (drugs=prlls), they may serveassta ing run the dangerof drawing culturalcaricatures, you can points in analvzingthe environmentmanagersmay suddenlyfind themalwayssmileandsay "thankyou for your selvestn. kidneys"(kirdness).

Memcnnmut Communrcnmon

Mvfatheris a docton mymotheris a typenriter.*

disturbed.Lateron after class,he cameup to meand askedme rvhyI hadcalled him a male"shopping list." Eventuallyenteringa globalworkenvironment,l foundthat,whilethe jargon commonbusiness

. Aucusr-SEpTEMBEII TrrEAsrA\MA\A(;ER 1996

madetranslationeasiet culturaltiming in conversation wascrucial.ln New Yorkitwasokayto jumpin off. In andcut someone me"or Canada, an "Excuse "l'm sorry"beforeI jumped in wasnecessary. In Hong

. (tvpist) Ptofr.;or DeeDe?Cnrcinis lhc of tfu ManagcEtec tir)eDircctL)r ,nenfAltnrdsof Asia.Sheis nlson facullv nrcnlbctfor manngetenL cot tnunicnlionsin lheMastel it1 BLtsitress ManngefienlPro|ra'n im.edu.ph>. lntcrnet: <tfignrcia@a

nnd crcntitNeed,ettthusiasnr, itrlareproytellnnts ftn'fhedeal. Ego, selfishttess nttd grced , killersof tht flnnr. ring a lawver to the deal and he n'ill sinp;le handedlvkill it. Sooneror later,problemsare dug up from the grave... have becomeworse and seeminglywithout solutions. How do you guarantee someonefor somethingthat is not definecl.hr the nameof conservatism,manv clcals have been killed. Most of the time, simple oversight will be classifiedas someone trving to pull the wool over the other.It onlv takesa phone call and ask them whv they haveinciudedcertain clauses.Most of the time, they have picked up these clausesfron some standard forms without much thought given to its impact or it is the job of an over eagerlawver who is trying to justify his fat bill. Horv do you keep the deal alive and get her to completion? Beforeany deal, make sure vou have the right motives. Mosl dealsget killed when egosget entangled. It startssimplv with one party asking for the impossibleand rationalizing that it is a reasonable request.When the other partv refusesit becauseit is impossible,both become intransigent,unwilling to meet halfway.What should be a positionnegotiation ends up with mangled egos and dead deals. The next one is selfishness or greed.I am not surervhich is the root cause.Thev both rear their uglv headsat the sametime. When vou try to cut a pie with the larger portion to younelf thinking that you havemorepower (monevor position),it leaves 50

Enrnnpnnununts

0onnnn

ROBERT V CHANDRAN MBM,74

DealKillers such a bad tastein the mouth. Even if the other partv agrees,he looks for ways and meansto take the rest of lhe pie back later This happenswhen a professional managernegotiateswith an entrepreneur.The professionalmanagersqueezes more out of a deal feeling that he has to do this to flex his "muscles."Anv clever entrepreneurcan seethrough this and may be forced to take in more from professional managerswho put theircreativethought processesto work. Once this happensthe seedof discontent and mistrust is planted. The entrepreneurfeels justified to avengethe insults. I have learnedthis lesson the hard wav I refusedto plav when someonetried to do this to me. I decidedI didn't haveto spendall rnv time being creativeand even out thc dcal later.I want to lo()k in the mirror in the morningand be proud that I have plaved an honestgame wlth mv pafiners. The rrextkiller is vour over jealousneed to bag the deal.The end justifiesthe means.Problerns are rationalized; what thev do not

understand,they c1onot have to know. This is a strategymanv entrepreneurs take becausethey don't deal u'ith the guys rvho make the decisionand are afraid how thev will be perceir.ed.These things have a lvay of surfacing in the most inopportune moment. The other party all of a sudclenrvonders:how many moreare hidden? Once lhe trust is gone,there is not much vou cando to redeemvourself.A common caseis vour negotiationrvith banks.As entrepreneursdo not meet thc crcdit committee,thet sometimestend to overlookissues.With deals taking months to }rappen, problemstake time to surface.Once the problems are out, thev are stuck n'ith no options but to find a new bank anclstart all over again. Overstatementof profits or understatement of costs0r vital issuesin a long-term contractare all areaswhere vou seet|Is. Horv l.rardshould vou neg0tiateis a questionvou askvoursclftinc and again. Doesanyoneevernotice lvhen vou leaye monev on the table?Do people lorget all the issuesaftera deal is done and vou start all over

again?This is rvherevou can havc opinions on both sides depending rvht'ther vou are a cvnic or a believer in humanvaluesof fainress. Let mc tell you rvhat I do. I used kr push the deals k) its bitter end and squeezethe last nickel and nore rvhen I n'orked for others.I thought I u'aspaid b do so.I was the hired gun. I did this for sevenvears:I knerv how to breakanv deal from 1974till 1981and did not think about squeezingmoredealsfor the nr' time.Whc.nI left mv job and dccideclto start a companvthe chemical industry that dealt r'r'ithme heaveda sigh of relitf. I had left an unpalatabletastefor manv of them. I changedmv viewpointand starteda new leaf.I startedlooking for dealsin the nriddleground.I try to do a deal that doesnot make one, not even mv opponent,look like a fool. We tliscussthe risks and lrorv oil price changescould nake us look citheras a geniusor an idiot. We do a iair deal todavand let the markettake lts course. In the oil industrywhere dcalsaredoneat a hectic pace,moreand more ptople follow this strategv.We har.e to liye rvith one another. How often have I sccn that 'h'hatthe major oil companv rvastrving to sell me was betrveenthc ds'il and the cleepblue sea.Ilstead of takins the flesh closestto thâ&#x201A;Ź' heartI d0 a dealas if it is a normalevervdavdeal.The othcr partv rloesnot have to recognizeit immediatelvbut ashe finds out I had thc gun but did not drarvbiood,they "Thereis honestv couldsav .rmongthitvtsl" M,: R,t'r}t l,l Clrdr/,ir",ris lrr I \rsil! tt t.f Cl tL\t )il anryt)mth,n. lt'Dtiil I ntt t>. t/ S.A.r,h11,itr<RL/C(rlCl

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