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  • ICD Institute for Corporate Directors

GOVERNANCE UNDER FIRe

Updated: Mar 17

A speech by Jesus P. Estanislao, Ph.D.


Introduction

Each day reminds us that we are living in a world very much different from that into which we were born. We now have Airbnb, the largest provider of hotel rooms, which owns no real estate; Uber and Grab, the biggest providers of taxi services, without any car fleet; Alibaba and Amazon, the largest retailers, without any inventory; and Facebook, reputedly the biggest media provider, without producing any content. And so the list goes on, bringing much bewilderment to people my age, and perhaps even to those who may be much younger.

We are told, we are in the midst of the 4th industrial revolution. It features, among many others, robotics, artificial intelligence, designer babies, longevity which can soon make the age 80 as the new normal, bitcoin and other digital platforms, which threaten to render obsolete most of what we had been used to.

The first industrial revolution with its railroads and steam engines may have been mainly mechanical. The second, with electricity and assembly lines may have brought about Charlie Chaplin and mass production. The third may have been more “digital”---with the semiconductor, computers and the internet of things, with which some of us are still trying to grapple. But now, even as we are catching our breath trying to catch up with the consequences of the third industrial revolution, we are told that we have entered the 4th industrial revolution. It features drones, artificial intelligence, machine learning, and several smart connected machines that are re-shaping “what we do, how we do things, how we organize ourselves, and even who we are”. If I sound out of my depth in providing even in broad-brush terms the basic features of the 4th industrial revolution, truth to tell, it is because I feel inadequate.

However, Klaus Schwab*—-of the World Economic Forum—-who wrote the book on the 4th industrial revolution (or simply FIRe thanks to Rex Drilon’s creativity), has done us all a favor by suggesting “ways forward” in meeting its manifold and complex demands. It is these demands I suggest we focus on.

Basic Demands of the 4th Industrial Revolution

First, an observation: FIRe tends to “individuate” us even more: it can cut us off from much personal inter-action with the people immediately around us and with our local community. We have more means to cater to our many individual demands, desires, and dreams with ease, speed, and variety. We can choose the networks that cater to our preferences, regardless of boundaries imposed by space, time, blood relationships, civic ties, and other traditional bonds. All this empowers us and makes us—-as individuals—-the key assets (or liabilities) of the new age that is already upon us.

Thus, the most basic demands of FIRe are upon individuals, and there are four aspects that individuals need to take very good care of:

· Our mind, for contextual intelligence. To understand the emerging mega-trends and connect the dots, we need to plug into diverse, inclusive networks, to form holistic perspectives that need to be integrated for sustainable change. Whew! This means: no thinking in silos; not having fixed views about the future; no artificial boundaries; and the absolute need to forge effective partnerships through multi-sector and multi-stakeholder engagement. In other words: be a fox (agile, flexible, adaptive and integrating); and never a hedgehog (defensive, enclosed, immobile, anti-septic).


· Our heart, for emotional intelligence. To create an environment for the generation of ideas and fresh initiatives, we need to be self-controlled and self-propelled, with wide open empathy and great social skills. Foster collaboration and team work within a flat organization with a thin hierarchy!


· Our soul, for inspired intelligence. To satisfy the search for meaning in life and work, we need to share a sense of destiny: raise the level of collective, moral consciousness; work together for a shared dream; build trust; and get others to join hands, hearts, and minds in advancing the common interest, instead of limiting themselves to the pursuit of only individual and sub-group, tribal, feudal objectives.


· Our body for physical intelligence. To care for our personal health and well-being, we need to keep fit and stay calm under pressure. Sleep, exercise, nutrition, and good nerves are critical to our ability to address simultaneous and complex challenges.

A world under FIRe is a world under continuous disruption. The change it is bringing in its wake is unprecedented in terms of its “scale, scope, and speed”. The individual who cares not enough about continuously honing up intelligence in mind, heart, soul and body would soon be marginalized and left behind. Thus, the imperative for continuing personal development: not just education, but formation; not just getting a degree, but life-long learning in all facets of life: from the physical, cultural, and professional; out to the social, financial, and environmental, and finally up to the spiritual.

The four consequent demands upon individuals under FIRe relate to a fundamental characteristic embedded in the DNA of every person: this cannot be altered by even the most sophisticated scientific advances of any industrial revolution, past and future. It refers to our fundamental need for inter-personal relationship: for inter-action, mutual trust, friendship, and love, upon which we build our social, economic, and political systems, which shape the culture we live in and then bequeath to the next generations after ours.

These four demands of FIRe due to our fundamental need to inter-act and inter-relate with others at home, at work, with friends, and with others in the wider world about us relate to how well we all contribute to the effectiveness and efficiency of:

· The internal value chain we have at home and at work. That value chain is made up of small groups of individuals, within a family or within a team at work. The call is for bringing various hearts, minds, and hands together to work in close collaboration and friendship, in order to deliver transformative outcomes and shape a brighter future together…with each other! Shared responsibility is inclusive and participatory. It is carried out with a deep sense of duty, mutual support, and a commitment to continuously innovate and get things done more efficiently and effectively. It has no room for compartmentalized thinking and for narrow, un-systemic framing of accomplishment and success. It makes for happy homes and high-performance teams within competitive enterprises and institutions.


· The external value chain in a region or in a sector calls for conversation, cooperation, and collaboration. It reminds enterprises and institutions that it has key---multiple---stakeholders, with whom they need to work closely to ensure that connections are seamless and that the chain, of which they are a part, is without any kinks, flaws, and gaps. This entails giving everyone a voice, a role, and a responsibility for contributing to the competitiveness and further development of either the area or region, and of the industry or sector that the chain encompasses.


· The wider community that may be much bigger than the administrative regions we now have---and indeed, the nation as a whole---calls for a “whole area” or a “whole nation” approach to seizing the opportunities that open, competitive markets put on offer. Indeed, wide, open markets should not be feared; they need to be nurtured as the most effective drivers of wealth creation, of job generation, and of growth promotion. However, great care must be taken to ensure that values and ethics are at the heart of individual and collective behavior and of the systems—economic, social, political—they nourish.


· The human family that shares the same planet earth: the common challenges we face from climate change, free navigation through the high seas, free movement not only of goods and services but also of capital and labor. These demand fairly shared responses, born out of a deep sense of solidarity for all men and women. Indeed, all persons must be regarded not only with tolerance and respect, but also with compassion and the regard we owe them as brothers and sisters under a God who is our common father.

FIRe makes four basic demands upon us as individuals, and other four consequent demands as persons who absolutely need to inter-relate with others at home, in teams at work, and through enterprises and institutions with the much wider world around us. How may we answer and meet these demands?

Ten Governance Essentials under FIRe

The answer is shaped by ten governance essential points. They are:

1. The challenges are systemic; so must our responses be. FIRe presents us with a package of challenges, and it brings about disruption and radical change. It demands transformation: and this is delivered by a package, headlined by governance, which is the other face of anti-corruption, intimately linked to anti-poverty. In addition, governance is closely tied up with productivity, which paves the sure path towards over-all development itself. Thus, the governance nexus or system!

2. Enterprises and institutions matter. They are the instruments by which persons get organized and come together to work for shared purposes. Core values shape the mission they carry out, and the vision they seek to realize. They then choose strategic priorities, which have to be brought down to concrete initiatives, subject to measures and targets of performance that must be delivered.

3. For transformative outcomes to be delivered, governance has to be sustained and cascaded down to individuals. Under FIRe, individuals need to become the ultimate governance assets by meeting the four basic demands of taking good care of mind, heart, soul, and body.

4. Individuals commit to continuing personal improvement and to life-long learning. They are made to push themselves to the frontiers of their potentials and to the full use of their talents, by taking advantage of the opportunities opened ever wider for them, thereby enhancing their personal dignity.

5. All facets of life and work are integrated. They are made to support and reinforce each other. Personal governance has to be comprehensive and all-encompassing such that following ethical norms, consistency between ideals professed and actions taken would enable individuals to become persons of integrity.

6. Fairness and friendship mark out personal inter-action with others. Individuals give meaning to their life by sharing responsibility for pursuing a mission and realizing a dream through a culture of trust, cooperation, collaboration and “communion” with others. Down with silos and compartments!

7. The family is the basic unit for solidarity. Homes need to be oases of peace, joy, and of mutual support in building and shaping a better, more accomplished future for everyone.

8. The work team is the basic unit for subsidiarity. It harmonizes work of individuals so they contribute positively to team performance. It calls for initiative, creativity, agility, and flexibility in responding to challenges presented to the team, as it works responsibly with other teams to secure an effective and efficient internal value chain within an enterprise or institution.

9. As an island of good governance, the enterprise or institution builds bridges. It connects with its multiple stakeholders. It works closely with other links in its external value chain, which thereby is made to function more seamlessly, more competitively, without flaws and gaps in its process of delivering a service or in getting a product to market.

10. We are a family, sharing a common home, under the providence of a common Father. The “commons” and the wider progress for all prevail over individual benefit and the narrower interest of a few. Local communities, sectors, regions, and nation deepen and broaden our responsibility. Thus, voice, participation, and shared duty need to be provided to individuals, enterprises, and institutions so all can meaningfully and substantively contribute to the common tasks of facing up to the multiple dynamically changing challenges hurled before us as citizens, and as members of one human family on planet earth.

Why These Essentials Matter

In an age of disruption and of radical change, it matters a great deal if we can hang on to a few essentials, by which we can survive, more than simply keep pace, and even thrive.

We had been given the most precious gift that can be given to any nation: our faith. We just have to hang on to it, nourish it and allow it to nurture us through.

In addition, put within our reach these past two decades is a second precious gift: a package, headlined by governance, which delivers transformation, competitiveness, and over-all development. We now have more than a few islands of good governance. We need to scale up. We need to multiply these islands so we become an archipelago of good governance. Should we do so in the next two decades we can then realize our Dream Philippines!

Manila, December 2019









*Klaus Schwab, 2016. The Fourth Industrial Revolution. New York: Currency, Penguin Random House. All ideas and references associated with the 4IR are directly owed to Klaus Schwab, World Economic Forum.

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