Satisfying Infrastructure Needs

infrastructure

Lunchtime.

My boss got slightly philosophical for a bit and lamented that infrastructure developments follow not the pace of the fundamental demand for infrastructure but simply the fiscal plans of government. Traditionally, infrastructure belongs solely to the domain of the government. The vast amount of capital needed was typically only mobilised by governments in the days when economies were much more domestic and cross-border capital and investments were heavily channeled towards industrial output and real estate assets rather than infrastructure.

In fact, through the recent downturns, all the talks about infrastructure seem not to stem from the need for infrastructure to catch up with growth and development but for fiscal investments into infrastructure as a means of generating growth. Even Knowledge@Wharton wrote any article co-opting this viewpoint. Yet for most part, this is largely a kind of illusionary financial play – actual growth can only really be generated out of making fundamental, strategic investments that will support the growth of those areas that will boom when the demand uptick arrives.

Assuming this, is a downturn still a good timing for governments to do infrastructure or to invest in infrastructure? It critically depends on financing costs; and in a climate where governments have flushed the entire world with liquidity and max-ed out their monetary policies, financing costs have been artificially reduced for a while. Nevertheless, the fundamentals will still have to be matched: infrastructure projects that taps on cheap financing will ultimately need to have the proper guarantees and safeguards to the lenders in order to match the kind of returns profile of the appropriate lenders/investors.

Doing the Tough Stuff

technology

Organic Growth for companies. Most of our Singapore’s small medium enterprises grow organically despite the introduction of much Merger & Acquisition support from the Singapore government such as M&A Tax Allowance (which was enhanced following the 2015 Budget) . In challenging times, even larger companies may still want to conserve cash to be invested internally rather than go on an M&A ‘spree’ – that is if they believe that they will be able to emerge larger after the temporary downturn.

To the end of doing the tough stuff called sticking to organic growth, McKinsey has a couple of pretty good questions to ask oneself when planning strategically for value creation along short to long-term timescale.

  • How balanced is our portfolio? If we take our portfolio of growth and innovation initiatives and plot them against NOW NEW NEXT, how balanced does the distribution look? Do we have a perspective on which of the six “growth plays” would be successful in our business?
  • Who is thinking about disruption? Are we as systematic in NEXT as we are in NOW? Is anyone tasked with disrupting our core business—or are we leaving it up to competitors? What are we doing to explore additive business models?
  • Are we limiting our horizons? In exploring NEW opportunities, do we impose limiting mind-sets on how we define consumers, our category, or the addressable channels?
  • Do we use advantaged insights? Do we rely on the same data and insights as our competitors—or do we have a source of distinctiveness?
  • Are we agile enough? Have we been able to accelerate our time-to-consumer and time-to-market? Or are we still stuck with cumbersome and slow innovation processes?

Source: Now, New, Next: How growth champions create new value.

Ultimately, these questions may also start leading companies to consider acquisition in the mid to long term horizon where threat of disruption may force even very niche companies to place some hedging bets through incubation of related peripheral technologies.

Grace-Pace Living

nature-musings

We get burnt out not so much by sheer hard work or exhaustion. Most people who work and work and eventually gives way, either through Karoshi (death from exhaustion) or committing suicide; not so much because they are being made to do more and more. Too often, it is because work life involves many things that one may not be comfortable with. And I thought to highlight a few matters that I find really burns people out.

  1. Misrepresentation: Whether it is figures or qualitative facts, work in modern world often involves some form of distortion of truth (which is not necessarily outright lying) either to fit a narrative or make a case. This simply doesn’t sit well with our natural inclination towards truth and in long run, one starts doubting not only the information they receive but also themselves.
  2. Buying into worldly motivations: Frankly, while we know that we are not genuinely motivated by colleagues’ recognition or money, but these are rewards of life that seem a lot more within grasp than the elusive feelings of security, affirmation from friends/family. So we work for the easier fulfilment and realise only later they do not fulfill.
  3. Lack of completeness: The breakdown of work into bits and pieces that increases productivity makes all crafts just a series of tasks handed out to different stages of work. And as a result, most of us are only involve in part of the production. As long as we cannot see how our exact inputs feed into the eventual output, we find a lack of completeness in our work. Worst, because we are not a real assembly line, there’s less clear demarcation of when the work leaves our hands. So most ‘work’ just drifts off after we touch it a little. Craftsmanship is lost, and so is the pride along with it.

So I was really grateful for this article on grace-paced living. Frankly, I haven’t really been appropriating the grace that is extended to us from God – especially not so for the workplace. And perhaps I should really start.

Economics of Development

future-development‘Developmental goals’ in business has become a bit of a bad word; and it seem to imply that projects are not optimised to make commercial sense but more to ensure that people have better lives. There is this implicit zero-sum game mentality here that thinks that wealth is accumulated through diversion rather than creation. Yet the very business of development is about creation of wealth. From the economic point of view, value is unlocked through collaboration, realising of ideas, some bits of moving of factors around as well as making good use of knowledge that is already embedded within the system. Having longer time horizon and building up long-term trust (social capital) can help communities unlock the value.

I’ve seen a young farmer in Ghana going from a hired labour to owning a farm 5 times the size of his original employer. And this young farmer was investing into irrigation pumps and other productivity-improving equipment, that original employer farmer was just complaining about how the government has not done enough to improve the lives of people. Being able to take control of one’s fate and making the sacrifices for it is important; successive generations of being able to maintain that attitude helps accumulate wealth especially during times of macro-growth. Development usually takes place this way and deployment of first-world capital into third-world normally involves getting your hands dirty and being extremely operational but once you get started and figure out a model that works, you are way ahead of a lot others.

That is in part what happened to the many companies that first invested in Singapore; their investment often paid off many fold. The story of Singapore’s development, for most part was wealth creation and it has been done through agglomeration of those with knowledge and then putting our factors (geographical locations, people, proximal resources) into use through the know-how of global companies. Of course, over the years, as other locations have become more attractive in terms of cost competitiveness, quality of manpower and all, we have to re-strategize our development. But the basics have been cover already by now. For now, I believe Singapore is at the stage where we need to now think about how the fruits of development are distributed and should be distributed.

Schools & Creativity

Came across Ken Robinson’s TED talk. And then read about some of his critics stand. Then also about his counterpoints. He’s a witty guy and hopefully would be able to help coordinate and rally people to steer mass education away from our woeful state now.

Singapore desperately needs this sort of rethinking. But that also shows how much we have influenced the rest of the world to admire something we have which turned out to be just merely playing well in the wrong game after all.

The Curious Sport of Forecasting

After finishing Nate Silver’s Signal & Noise (which was supposedly one of my readings for a module during my Master’s where I avoided reading the book cover to cover; but instead adopted the Master’s student ‘technique’ of reading only the necessary); I moved on to reading Nick Taleb’s Anti-fragile. On a side note, I didn’t realise until now that Nate was kind of put down by some NYU professors a while back on New Yorker. Nick is brilliant as usual but his lack of tolerance for people whom he perceive as stupid fully displays itself in his writing.

Perhaps because I was reading Nick’s writing, I thought the latest entry in Buttonwood’s Notebook seemed a little disappointing. Buttonwood imagines that without the presence of rigorously prepared forecast that are probably wrong, it will be filled with vague, baseless forecasts which cannot be disproved and thus believed – though they could be correct by sheer luck. Perhaps we should learn to dream of a different world where it is possible for us to shed the dependence on such false confidence, spend more of our efforts on fortifying ourselves against uncertainty than to prepare for scenarios that we came up with.

Beauty of Brokenness

“Piang!” The glass cup broke on the table.

“The glass is broken.” says David.

“No, it’s not! See, I can still drink from it” says Natalie, picking up one of the bigger shards and then trying to sip some of the remaining white wine from it.

“You are not well, Nat. Let me call Mom.”

“I’m perfectly fine Dave. Don’t you dare tell Mom about this. Everyone will think the glass is broken. What will they say? Yes even if the glass is broken, why would you want to even hint at this to anyone else? What is with this airing of dirty laundry? I trust you so much; but everything you know, you want to share with others.”

“I can’t support you alone my dear. Sharing with others is how I can be emotionally resilient. Others knowing don’t make you weaker; it makes you stronger.”

Natalie cups her hands over her ears. The glass pieces glittered with the spotlight of the dinning table; and the white wine that spilled on the floor slowly evaporated.

I had intended to almost go into a social commentary of our modern girls and ladies being so obsessed with perfection, with that idealised image of themselves – that the brokenness inside is being kept hidden at practically any cost. And the problem it brings, at a social scale. It was supposed to be inspired by a TED talk by Reshma Saujani. But frankly, this is also a spiritual problem and maybe it is necessary to look at it more deeply from the perspective of my faith.

And the passage I’d point to is the John 4 passage on the Samaritan woman who responded to Jesus. She had some underlying desires unfulfilled which explains the serial relationships she had (to eventually have 5 husbands). She was a broken woman – yet she probably lived as if everything was alright and she was just going about her day.  The degree of amazement she experienced to even proclaim Jesus as prophet reflects the secrecy by which she has guarded this shameful secret. And in recognising Jesus as the Messiah, something within her must have convinced her that the Lord knows throughly of her brokenness and yet still loved her.

It is only through recognizing that there is beauty in this brokenness that is in all of us – that we relieve ourselves of the burden of having to live idealised, perfect images of ourselves. And seeing God’s love for us while being fully conscious of our sinful selves, our selfish desires and our pride have to impact on us in a way that allows us to open ourselves up. Can the view of ourselves by the society and others be ever above the view that our God have of us?

To go on the streets declare in John 4:29: “Come, see a man who told me all that I ever did. Can this be the Christ?”, was the woman’s response. It was bold and she broke through her brokenness. She acknowledged it but something in her cannot help but proclaim the good news of Christ’s coming. It would no doubt elicit questions about what is this ‘all that she ever did’. But I doubt she would be hiding anymore. The fountain of living water she has been promised, no one could take from her.

Why still drink from the broken glass cup? When one can drink from the fountain of living water?

Can we manufacture?

Last month, South China Morning Post ran a somewhat scathing article about manufacturing in Singapore. I’m not too sure if Jake was deliberately turning off his economics knowledge and putting on a journalist hat when he made the statement:

Singapore is not really suited to manufacturing. It is too wealthy and has too little land, labour and manufacturing infrastructure.

In any case, for a long time, Ha Joon Chang has argued that the ‘decline’ of manufacturing is mostly just a statistical illusion of outsourcing – the shifting of direct hiring of supporting services to having these workers attached from service companies who are paid to keep up with the services. Not sure whether manufacturing and services can really be thought of as mutually exclusive.

Buttonwood’s recent blog post threw out a similar point when trying to scrutinize the ‘source’ of productivity and hence value-creation:

Manufacturing generates lots of spin-off service jobs, from the accountants who audit the firm’s books to the shopkeepers who sell the resultant goods or the restaurants that feed the factory workers. How many service jobs would disappear if the manufacturing sector went bust?

Singapore has had its time in manufacturing with most of the manufacturing capacity and output generated through attracting foreign manufacturers. These European and American firms provided the jobs, training, foreign direct investment; but Singapore also worked hard – through a combination of incentives, education policies that helped to churn out the necessary manpower and produce the effective labour market. Infrastructure investments that were necessary to ease the passage of goods out of Singapore to the targeted markets were made by the government. Returns on these investments took the form of trade surpluses, higher domestic incomes, which generated tax dollars. Combined with strong state capacity, an ecosystem was bootstrapped into being.

The SCMP column hit pretty hard on a few points:

  1. Singapore’s cost base is increasingly unattractive to foreign manufacturers (Jake’s point about them being fair-weather friends)
  2. Profits do get repatriated to investors’ home countries rather than reinvested into Singapore’s economy when times are bad
  3. Overall investments made abroad by Singapore economy as a whole might not have been yielding attractive returns (Jake’s point about unwise investments) – note that this point is really harder to prove or substantiate

I have little doubt that manufacturing is incredibly important to our economy nevertheless; and while Singapore is supposedly ‘moving’ into service economy, the truth is that our domestic economy has always been service-oriented, providing services that helps to drive the (foreign-owned) manufacturing sector forward. The link between manufacturing and services is well displayed in Singapore where we are beginning to see cracks even in our service economy as manufacturing sets on a path of decline. The question then, is whether as capital and manufacturing capacity increasingly moves beyond our borders, we can continue to capture value generated by them through the services that we can offer abroad. And more importantly, how are we going to ensure that this value really pipes back to Singapore economy at the end of the day?

The next generation of our economy will most likely to show up in figures as being more service-oriented but we should actually rely on high-value manufacturing and also work increasingly with hardware that has to be integrated with software. This is an area where we can have more of an edge and more to offer since over the years, we have built a solid base of firms doing an excellent job in system integration; involving both hardware and software components, often injecting their own value add, across several industries. So can we manufacture? Perhaps in a different way from what is traditionally thought. But we really ought to shift from just incentivising localisation of manufacturing to investing into new niches that we want to get into and surpassing those foreign investors who have given us our first shot at having a manufacturing base.

Good Behaviour vs Good Intentions

If you were a parent and could only pick one trait to be taken on by your children, which one would you prefer? How about if you were a teacher and were deciding the principles by which you approach educating your students? Or if you were the government managing a citizenry?

As we get further away from an actual relationship at a one-to-one level, we tend to begin to favour good behaviour often at the expense of good intentions. Because intentions are not as quantifiable as behaviours, we choose to use the quantifiable trait as a proxy for the non-quantifiable one instead of recognizing they can be different. Yet if one was a parent, he/she knows and could probably tell the difference. So does that mean the background values/intents/principles are different in developing a child, education a person or moulding a nation?

While on the surface this might seem philosophical, there are huge policy implications and considerations when we uncover what we are prioritizing as part of our values. Carrots and sticks may make for good behaviour but that means that enforcement is external and it fosters good behaviour without encouraging good intentions. The strong ability of our government to focus on incentivization for behavioural change without addressing underlying values and intentions should not be seen positively under certain circumstances. As the country matures and people become more educated, we need to ask ourselves if it is still behaviours we are targeting – or intentions? Do we just want to stay at dealing with the hard stuff? The soft stuff are genuinely hard to handle but it must be done. We have more resources than ever to handle these – are we thinking enough about it? Or at we still obsessing over growth statistics?

Quick Wins

There’s a huge presentation that is due in two weeks; you’ve done quite a bit of research, gathered the materials that you have to read in order to begin working on the presentation slides. Then there’s 15 unread emails in your mailbox. 5 of them are just ‘for info’ emails, the other 5 are from the bosses where you have to chip in on some discussions going on about changes in the workplace or some projects that your firm is running. They are not that urgent but requires a bit more thinking to reply. And another 5 are slightly more urgent – but your colleagues who are CC-ed can reply to some of those queries as well.

What do you do?

I’d expect you to reply the 5 urgent emails first; and in order to avoid starting work on the longer emails, you might even reply ‘thanks’ to some of the ‘for info’ emails. And then in-between writing the longer emails you might fire up Microsoft Powerpoint, start doing the cover slide and the outline slides without even bothering with reading any of the materials you have gathered, just crafting out the slides based on your preconceived ideas about the topic or the light readings you have already done. This slows you down and you ended the day finishing all of that 5 long emails, satisfied with yourself. The workday ends, you’ve accomplished writing about 2 briefs and 3 updates to your bosses. But meanwhile there was no progress on the presentation – oh well, it shall go to another day.

In fact, you didn’t even think about prioritizing your ‘to-dos’ but whimsically did whatever your mood tells you to. And that is the result.

Sounds familiar?

Since I started work, I find myself so happy with these small quick wins each day I really lose sight of the more strategic tasks on hand and the deep thinking I could have done each day with the mental capacity I have. Instead, my job seem to stretch more of my attention capacity making it difficult for me to focus and deliver on any single thing to the best of my abilities. We are so addicted to this quick wins it makes us addicted to our emails and checking inbox without actually spending time or attention on the more important things that might be in the pipeline.

I’m still working out how to deal with this – I would highly recommend the Podomoro Technique if you have sufficient control of how you spend your time at work each day. But if you are like me, with meetings randomly scattered throughout the week, try to identify pockets of time where you can do deep thinking and apply the technique. Having a workflow to properly deal with the various different types of emails that lands in your inbox is very important as well. This will be my next personal work project.