MTI Consulting, Sri Lanka’s leading strategy consultancy and part of the MTI international network, has shared their learnings and research on effectiveness, specifically relating it to the political impasse that the island nation has encountered.
Key lessons for both sides of the divide – if not already learnt:
Whoever rightfully prevails, the four fundamentals remains the same:
Need for a ‘systemic change’ – irrespective of who is in power!
To be a minister (under any regime) you need to be a politician. However if the main ‘qualification’ to be a politician is popularity among the masses – how can the responsibility of strategising and managing a country’s economy and its key portfolios be left entirely in their hands? It’s similar to appointing the trade union leader as the CEO of a business. This is why a country needs an independent and professional civil service (with competent technocrats) to strategise and manage, while the politicians stick to their primary role as policy makers (which is why they are called ‘legislators’). When this mechanism is weak (or made weak), the politicians are quick to fill the vacuum!
Challenge the evolved role of a Minister
If the job of a Minister is to be equated in corporate terms, it would be like a Non-shareholding/Non-executive Chairman of a group of companies. To be a Minister, neither is management competency nor subject specialisation a pre-requisite (only a handful do!). If so, they should be confined to high level policy making and in doing so they need to consult subject experts and not make ego-based decisions.
To achieve significant socio-economic progress, Sri Lanka needs independent, professional and empowered management of its state institutions, which has been progressively weakened and the vacuum filled by ‘politicians’. Capacity building is a must, but is a long term process.
The socio-economic challenges that Sri Lanka encounters today require fundamentally effective solutions as opposed to ‘knee-jerk’ responses and ‘patchwork’ solutions. This in turn, requires all relevant stakeholders to jointly engage in deep thought and sincere ‘soul searching’. Therefore, Ministers should spend more time analysing and strategising and far less time on ‘ceremonising’ and ‘sermonising’.
When a country is at economic crossroads, the policy makers should be deeply engaged in strategising, which in turn has to be based on strong rational analysis. For this to happen, the minsters must develop their strategising competencies and dedicate quality time. However, if more of their time is spent on ceremonial and administrative aspects (which should be the job of the country’s civil service), then strategic decision making may be compromised. At the end of each day, Ministers should ask the question “What has been my strategic contribution today – that will eventually contribute to the socio-economic prosperity of the country?”
Let sanity prevail in firing and hiring SOE boards
With every regime change, the entire board of most major State-Owned Enterprises (SOEs) are ‘sacked’ and replaced with an entirely new board, often with no formal transition or ‘knowledge transfer’ process. This can be detrimental to the business.
However two effective practices that can be considered are:
In appointing Heads of SOEs – pick the right process, the right people will follow
In recruiting Heads of State Institutions, here are some ‘hard’ questions for Ministers (be they blue, green or red) – to turn on their inner search lights!
We have never been short of visions just that it rarely happens – just do it!
It is hearting to know that the Sri Lankan economy will be among the strongest economies in Asia by 2023! But how will we get there and by doing what? With whom will we compete with and from whom will we gain our wealth from (as a country)?
To get there in 2023, our human and natural resources must transform itself into very high value addition and to do that we need radical changes in our education, mind-set, culture and work ethic. Having a powerful vision is a good start, but ensuring that the vision does not remain a dream, it requires effective strategy, structure, staff and systems. There are no quick-fixes for these!
Focus on the fundamentals of people – not pipe dreams!
Any country has access only to a finite amount of funding – mainly via taxes, exports and debt. Any country (i.e. its people) would have many needs and wants – which it has to satisfy with this funding. It is here that a Government (representing its people) needs to make some tough choices. This requires a scientific optimisation approach that balances all the competing forces, within the constraints.
For instance, how much to invest in transportation and in what form of transportation? Look at the state of our railways and the millions of poor commuters who have to suffer the daily agony. Interestingly, this is where the mass voter base is! Hope there will be light at the end of the tunnel!
If electoral reforms are not addressed, we will be back here soon
If I vote for a candidate from Party A, if he/she decides to switch to Party B after winning – is that not a fundamental violation of my choice? Sri Lankans working abroad are, by far, the country’s highest export earner – why are they deprived of voting?
Most candidates are in high spending mode for their campaigns. Can they all ‘afford’ this? Or are there ‘investors’ enabling them? For ROI or CSR? How does such high spending translate to voter benefit?
In case we have not learnt from the Greek crisis and Brexit
An economy, much like a household, must learn to live within their means. If what they ‘consume’ far exceeds what they produce (domestically) and what they earn (via exports), then bankruptcy is a matter of time.
Printing money and creating imaginary wealth (via risky investment tools) is only a temporary ‘pain killer’. Perpetually borrowing from your neighbours has its limits. Politicians and Regulators can ‘talk’ their way through economic performance, but you cannot ‘fake’ real economic value-addition. Don’t have grand parties (like the Olympics) if you cannot afford it and if there is no ROI. Still sounds Greek?
Consequent to Brexit, $ 2 trillion was wiped off stock markets. Where did it ‘evaporate’ to? Did this money ever exist in the first place? Human greed to make quick big money (with a simple click transaction) has driven us to place insane valuations of capital markets. Emerging markets trying to blindly ape the so-called developed capital markets should take a lesson. Ultimately, the only way humans can add value to each other (remember Adam Smith) is by producing and consuming goods and services of value to each other. This is a rude awakening to emerging markets to focus on basic human needs, SMEs and grassroots job creation and not be overly seduced by capital markets!
Brand Sri Lanka is at risk – if you turn a blind eye to violence
It takes decades, if not centuries, to build a country brand. It takes only a few irresponsible acts to significantly negate all the hard work that multiple stakeholders have put into building a country brand. The perception damage caused, locally and internationally, can take much longer to cure than the physical damages.
So, let’s put Country Brand above all and not let ‘any’ of the sub-brands negate the ‘mother brand’. The blame game will not take us anywhere. The need of the hour is reflection, reconciliation and re-building our country brand – by ‘all’ stakeholders.
Ethnic harmony is not a quick-fix, needs genuine political will
The root cause of most ethnic conflicts is the lack of integration. We are all born innocent. Thereon our families, our schools and the wider society shapes our values, our thinking, that then drives our actions. Early on in life if we learn to appreciate diversity and if we learn to respect each other’s religions and cultures, peaceful cohabitation is possible. Our schooling environment plays a major role in shaping us and builds lifelong friendships. This is where integration needs to start. But how can this happen in a society where schooling is increasingly discriminated along religious lines? How can this happen when political parties are formed on racial divides?
The solution, which looks increasingly utopian, lies in enactments (constitutional changes), enforcements and enlightenment. Wishfully thinking we had a ‘bot’ (not our politicians) to fix this!
What is our Country Value Proposition?
Sri Lanka’s economy is in desperate need for a strong FDI pipeline. The first step would be to have a compelling and globally competitive ‘Country Value Proposition’ – which should answer the question ‘Why make in Sri Lanka?’
The next step would be to map the end-to-end process – from an investor’s perspective, not from a BOI, EDB or GOSL perspective. The proposed ‘one-stop shop’ is conceptually the right thing to do, but the focus should be on its practical activation. How about locking up all the relevant Line Minsters and heads of relevant institutions in an office and let them personally face the real investor to find speedy, practical solutions? May be even a reality TV show!
The world’s top exporters (for the different sectors) demonstrate one or more of the following ‘base’ capabilities. These are the ‘platforms’ on which they enable profitable export industries.
On what platform are we?
First solve the big grassroots challenges – before making it the next Dubai or Singapore!
The stand-off between the tea plantation workers and the Regional Plantation Companies (RPCs) over the plantation wages, is the symptomatic of the wider, deeper challenge facing Sri Lanka’s legacy tea industry.
The issue, on the surface of it, is very simple. The plantation workers argue that they cannot live on the current minimum wage, hence the demand for higher wages. The RPCs argue that, they are running at a loss (or on marginal profits), hence they cannot afford to pay the increases demanded. The RPCs also argue that they fund the welfare of the plantation workers (literally from cradle to grave) and provide them the infrastructure within the plantations. Additionally, Sri Lanka’s cost of production is already higher than its competitors and here in lies another paradox.
Sri Lanka’s competition for tea production (for exports) comes from countries (and regions within these countries) that have a much lower cost than Sri Lanka, this includes the likes of Kenya, India, Indonesia and Vietnam. Purely on cost of production, Sri Lanka cannot compete with these countries and to make matters worse, Sri Lanka’s plantation infrastructure is over a century old and also does not lend itself for mechanisation (that countries like Kenya have adopted). If this is to be fixed, it requires significant investment in re-plantation and harvesting technology (to the extent it is possible). The RPCs are unable to make such investments and neither does the Government have the ‘treasury’ to do that! This is the vicious cycle the industry is in. How do you break out of this?
A country’s corporate culture largely mirrors the political culture, with few exceptions!
If a country has an independent and competent civil service, there would be checks and balances on the politicians (be they blue, green or red!) and the business community. This trend has now permeated down to the corporate level, where the dividing line between ownership and management has gotten blurred, consequently we have witnessed many cases of compromised corporate governance. If this trend continues, there would be no difference between the conduct of politics and business! Time to ‘live’ true corporate governance, not putting on a show of awards!
Find sustainable solutions for water and waste – assign the highest priority
If we continue to use (and waste) water the way we do now, catastrophic consequences seem imminent, possibly ‘water wars’. Less wastage and more equitable distribution of water can certainly help, but the biggest ‘squanderers’ are the ‘top-end’ users.
A steep tax on high usage of water may help the environment and the Government’s income. Of course this must be supported by a multitude of other incentives and deterrents. For instance Los Angeles has a ‘Water Police’ and Rajasthan has ‘Water ATMs’. Like for solar energy, consider preferential funding on water conserving devices.
If we continue to ‘consume’ the way we do, we will soon run out of space to dump our garbage. Colombo is looking to transport its garbage to Puttalam, but that is only a temporary ‘cure’ to an escalating global challenge. A few radical thoughts to consider:
Garbage is a function of consumption and consumption is a function of affordability. Therefore, it is ironic that the garbage we generate in the richer parts of a city is dumped where the poor live. Successive Governments are primarily responsible for not having stricter laws (and enforcement) on production, consumption, disposal, re-cycling and re-energising. But, businesses and consumers also have a role to play. Do businesses really think beyond getting the product to the consumer? Do we as consumers really think beyond consumption and the trail we leave behind? Should businesses and consumers be ‘taxed’ for the garbage they generate – thus driving more responsible actions? Then, use this tax revenue as incentives to start-up ‘Waste-2-Energy’ventures.
Re-think infrastructure – not just ape other cities
Except for a ‘joy ride’, traffic on the road is a derived demand. Therefore we should first challenge why are people on the road? Before we decide to build more roads. With the advancements in affordable technology and connectivity, why physically visit your office on every working day?
Why physically build big towns and big offices (and the traffic it generates) when it is possible to be small, yet be part of a bigger ‘connected’ world? Future competiveness, be it an economy, enterprise or employee, will depend on smart application of ICT. So why ‘ape’ mega cities that were built in a ‘physical’ era? Why not build our own ‘Futurepolis’?
Get the planning and budgeting disciplines right – it’s myopic to rely only on political magic
The Government and the private sector (in anticipation and lobbying) spends disproportionate amount of ‘energy’ on the national budget. What is more important and an essential pre-requisite is a National Strategic Plan. This should include a clear strategic direction, stable policies, strategically conceptualised initiatives and econometrics – covering all aspects of human life. Without this, budgets are likely to be sub-optimal.
Do we have a National Strategic Plan? Is it based on research, analytics, technocrat-inputs and wider stakeholder engagement? Or is it based on political ideation?
As a discipline, budgeting should focus on income and expenditure, be it a country or a business. Direction, policies and strategies (in that order) should precede budgeting. Shouldn’t all parties in Parliament develop the budgets on a consensus basis and then present it to the public? If this is a national budget, why should only the subject minister present it? Shouldn’t the key portfolios present their budgets/strategic initiatives which will then be consolidated by the Finance Ministry?
Instead of reading off a script, wouldn’t it be more effective to present the budget with visual aids? Wouldn’t it be great if, for every item in the budget there is a simple justification that a layman understands? After all it’s the public’s effort that is quantified as budgets!
Think ‘Green’ for next budget and don’t confuse it with your party colours!
The planet cannot keep pace with our rate of consumption. Expecting humans to take voluntary action for greater good, will only have a minimal impact. The real ecological cost (that future generations will have to dearly pay for) is hardly factored into the economic price of what we consume today.
National budgets tends to take a very short term outlook, in some cases like Santa Claus! Here are some hard questions to consider in the next budget:
Falling in love with your strategies could be fatal!
Country strategies are significantly influenced and shaped by the opportunities and challenges in the global and local environment. Therefore, strategising has to be a dynamic process, which means strategies must be open to change. When ego and emotions start to ‘surround’ strategy, organisations tend to fall in love with their strategies. Leaders tend to take ‘ownership’ of and assume bragging rights for their strategies and no one dares tell the emperor that he is naked!
Pursue with passion, but never fall in love with your strategies – be prepared to shoot the ‘bugger’ (I mean the strategies!) if and when needed.
Finally what matters is happiness of people, how do you measure that?
Countries like Singapore, Hong Kong and Dubai are often used as examples of countries that Sri Lanka should emulate. For sure, there are great learnings we can take from these countries. But should we not set our own balanced socio-economic goals – that will ultimately make the wider population happy? Should we not take learnings from a wider range of countries, e.g. ‘Gross National Happiness’ from Bhutan? Will skyscrapers and hubs translate to wider happiness? The Arab Spring, Brexit and Trump are all stark reminder that politicians have lost sight of why they exist? Will they ever learn?!
True happiness it appears can only come by making politicians less relevant
Think about making politicians far less relevant, far less intrusive and confine them to their role as ‘Law Makers’. The democratic vote alone does not ensure wide-spread socio-economic progress. It needs:
(MTI Consulting is an internationally-networked boutique strategy consultancy, offering advisory services in Strategy, Business Operations, Corporate Finance, Talent & Resourcing, Tech Advisory and Go-to-Market. Since its inception in 1997, MTI has worked on over 640 assignments in over 43 countries, covering a diverse range of industries, clients and business challenges.)
Photo Descriptor: MTI’s Thought Leadership Team comprising (left to right) Hilmy Cader (CEO), Rajika Sangakkara (Sri Lanka), Jason Cordier (New Zealand), Saima Mazhar (Bangladesh) & Naush Beg (Dubai)
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