Actually I just want to refer you to the longish piece written by Michael E. Porter, a Professor in the Harvard Business School that focuses on competitiveness issues. The title of his essay, reported in Businessweek is, Why America Needs An Economic Strategy.
In a broad sense, you can read the essay with occasional interpositioning of Malaysia instead of U.S. just to make the read more interesting.
UPDATE Nov. 2: Courtesy of walla, further references are a snapshot of Porter's Diamond Model and slides from his 2003 paper on Malaysia's Competitiveness: Moving to the Next Stage, where Porter introduced us to the concept of clustering and elements of the process that is commonly called the supply chain.
And, don't ignore the many, many, many underlying value-laden terms used by Porter like competitiveness and, labour productivity. This was probably another international seminar that Malaysia's economic managers attended and all they heard was "clusters" and the imagined call by Porter to "build more venues for FDIs".
The economic planners completely side-stepped the issue of productivity growth that Porter was highlighting. Maybe Malaysia's economic managers don't understand what productivity means, which should make everyone wonder what the Malaysian Productivity Council (MPC) has been doing all this time and, what the MPC has done with its funding?
The ineffectiveness of Malaysian economic programmes that focus only on venue-providing comes from the failure, refusal and ignorance of the economic planners to even attempt to understand many of the underlying assumptions that all consultants and advisors use in the course of submitting an advice. It is no wonder that we are left with many white elephants like the Port Klang Free Zone (PKFZ). The focus was on acquiring land and building infrastructure and buildings. Once those deals are completed and all parties duly paid, there is zero regard for how the place is to be managed and operated. The Malaysian economic development motto seems to be: Build lots of hardware, ignore the software.
UPDATE Nov. 2: Courtesy of walla, further references are a snapshot of Porter's Diamond Model and slides from his 2003 paper on Malaysia's Competitiveness: Moving to the Next Stage, where Porter introduced us to the concept of clustering and elements of the process that is commonly called the supply chain.
And, don't ignore the many, many, many underlying value-laden terms used by Porter like competitiveness and, labour productivity. This was probably another international seminar that Malaysia's economic managers attended and all they heard was "clusters" and the imagined call by Porter to "build more venues for FDIs".
The economic planners completely side-stepped the issue of productivity growth that Porter was highlighting. Maybe Malaysia's economic managers don't understand what productivity means, which should make everyone wonder what the Malaysian Productivity Council (MPC) has been doing all this time and, what the MPC has done with its funding?
The ineffectiveness of Malaysian economic programmes that focus only on venue-providing comes from the failure, refusal and ignorance of the economic planners to even attempt to understand many of the underlying assumptions that all consultants and advisors use in the course of submitting an advice. It is no wonder that we are left with many white elephants like the Port Klang Free Zone (PKFZ). The focus was on acquiring land and building infrastructure and buildings. Once those deals are completed and all parties duly paid, there is zero regard for how the place is to be managed and operated. The Malaysian economic development motto seems to be: Build lots of hardware, ignore the software.
3 comments:
It's been a long time since the last reads on Porter's Competitive Advantage of Nations and his other works introducing his diamond model and the five forces of competitive strategy:
http://tinyurl.com/ltvrg
(truncate back for the others)
Over here, we are primarily a trading nation, not one known for the types of innovation that nations like the US excel in which make them competitive.
If you read the usual government annual reports, reviews, national plans and so on, there's no stable strategic framework built upon a critical gap analysis of what must be resolved first before setting targets for achievement. The enablers for success of each project are not identified with sufficient candour before plans are rolled out and then rolled back after reality hits in the process of which funds are wasted if not confidence shaken.
For instance, by now we should have our own triple helices of universities, industry and government up and about, with technology transfer offices, angel networks and venture capital mechanisms operating smoothly in incubator parks and so on. There should also have been some progress reports on the masters-level research programs in our research centres as are notable in countries like the US and Japan.
That we have nothing substantial in these presents us with the very sort of dilemma which attends any formulation of a sustainable economic strategy. Do we continue to enhance our low-value trading capability or start developing some really meaty research-based competitiveness? Do we build clusters of specialized industries by state that can act as bridges across borders independent of federal dictates or do we continue to follow the old ways of federated control over how to treat investment, development and innovation just because some of the states are under the opposition? Do we have a vision and game plan for what we want Malaysia to be as an international role model in the 21st century? Can we even think about how to innovate the process of innovation?
You won't find the answers here:
http://tinyurl.com/68sfbp
but it is time to get answers to them.
In the heydays of conceptualising the MSC, it was envisioned that it would be so big you can drop the island down south into it. If we take this action generically, we can shortcut the visioning process and then snapshot the new targets for development based on the differences noted. What can be done for one state can be done for the others; they needn't be that island.
Taking up on the blogger's update, one suspects the economic planners do know about the imperative for productivity but they also work for political bosses whose time horizon is about four years maximum and if you walk into any one of the subMNC-level plants or offices that pepper the country, you will come out with confidence shaken that the workers can improve their productivity within those four years. The equipment is simple, the workers laborers, the supervisors static and the management defocused from critical issues until they appear too much too early. So how to improve productivity?
That's why the FDIs have remained so important for so long. They bring not only capital and technology but also markets and techniques. Unfortunately they reap most of the rewards while exercising the least commitment to longstay.
Since the economic planners can't penetrate to that micro-level of familiarization with the actual bric-bracs of running such MNC-level operations, their output will continue to remain focused on hardware with little appreciation of the software that makes or breaks the survivability of enterprises in the modern age.
But that is not all. There will always been an element of need for continuous improvement, even for simple aspects like maintenance. Take training and supervision, and look at the operations of a JV hypermart, for instance. When the foreign partner comes to help start it, things are tight in the first month - items are neatly placed and thoughtfully arranged, price tags are updated and positioned right, counter staff are effusively polite and clear queues efficiently, items are replenished on time to show a well-stocked shop, perishables look fresh and so on. Months later, there's too much salt on the fries, the burger is packed semicold with the pattie in suspect condition, the icecream has melted, and if you ask for chili sauce, you will get tomato, and no receipt.
Regardless whether you have jumped from Tesco to McDonald's, the problem is endemic.
The genesis of it all is probably leadership. Since the ones before us are only shaped by money politics, there is therefore truth in the old adage: money is the root of all evils.
Hi walla
Another good set of references.
You've previously given some excellent links on the matter of productivity. We'll need to re-visit this theme very, very soon.
Krugman, Porter et al, great contemporary economic thinkers, all look at productivity as one of the key performance indicators. So, regardless of how Malaysia's economic managers pretend to use other KPIs, it is productivity that remains as an important benchmark.
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