A Special Session with Prof. Michael Porter

Michael Porter making a point during his presentation to AMP Class 182 at Harvard Business School

Face-to-face With An Icon

One of the best things about the Advanced Management Program (AMP), and I suppose it's also because I am after all in Harvard, is that you have special presentations from larger-than-life persons, such as Professor Michael Porter. Mr. Porter, for me, is the rockstar of the business world. I would never have imagined that I would be in the same room with him, much less come face to face with him. If I could have it my way, I would have gone up to him and had my photo taken with him. But no, this is Harvard and we're not supposed to do such a thing, after all having a restrained intellectual disposition is supposed to be the norm. Being Pinoy however, I couldn't help myself and somehow found a way to, at the very least, document that him and I sat in the same conference hall.


His Talk: A Perspective On US Competitiveness

A lot of instrospection has been happening in the US since the American dream collapsed, or to put it in another way, got derailed. Harvard has initiated a system-wide review of what ailed the American economy, its educational system and what are the next steps to cure it and prevent it from happening again.

Mr. Porter talked at length about US competitiveness. His core points are:
  1. There are 3 determinants to competitiveness - endowments, macroeconomic competitiveness, and microeconomic competitiveness - all of which are interdependent and may follow a chronological path
  2. Endowments create a foundation for prosperity, but true prosperity depends on its productive use
  3. Fiscal policy, monetary policy, human development, political institutions and rule of law are the ingredients that determine macroeconomic competitiveness, but does not sufficiently assure high productivity
  4. Ultimately, productivity depends on improving the microeconomic capability of the economy and the degree of local competition. This is fueled by
    • the quality of the business environment
    • sophistication of company operations and strategy 
    • the state of the development of business clusters in a particular area or geography

My Thoughts

Needless to say, his perspectives are US-centric, however I felt that it had a flavor of protectionism about it. Creating business / economic clusters within the US would necessitate the return or at the very least the holding back of investments in other markets that have these efficiencies. But then again, if I were an American what Mr. Porter said would make perfect sense, since the creation of clusters would create employment, improve consumption and eventually increase economic growth. Taking this farther, there is no escaping the reality that it is in the best interest of the global economy to see the biggest economy in the world get up on its feet once again.

If I were to localize his points on competitiveness and apply these in the context of the Philippine economy, I cannot help but be troubled. I suppose, I would ask the following questions:
  1. Endowments
    • Is the Philippines resource rich?
    • Do we have the right natural resources or susbstitutes that the economy needs to grow?
    • Are these resources accessible?
  2. Macroeconomic competitiveness
    • Do we have the appropriate fiscal and monetary policies in place?
    • Are we properly invested in human development?
    • Have our political institutions and rule of law reached a level of maturity that will enable it to sustain economic development in the short and long-term?
  3. Microeconomic competitiveness
    • What is the quality of Philippine environment?
    • Do our domestic industries / businesses have the appropraite operational and strategic capabilities?
    • Are our business / economic clusters strong enough to compete in a global environment?

Conclusion

I supppose the answers to some of these questions are pretty obvious, for some it requires a fair bit of data gathering and soul-searching. As I further my appreciation and deepen my understanding of factors that lead to economic growth and its increasing interdependence, I cannot help but feel envy for those countries that have progressed significantly and have consequently provided a higher standard of living for its people. Yet on the same breath, I cannot help but feel a great sense of uncertainty about the future prospects of our country - the Philippines.

It's time once again for me to work on my cases. As I go through all my subjects, I am finally able to crystallize an approach to the Personal Case that I am supposed to put together at the end of the course. The beauty is that as the approach evolves it gets richer and multi-dimensional.