Huawei’s Culture Is the Key to Its Success

Today, Huawei is the only Chinese company – out of the 91 mainland Chinese companies listed on the Fortune Global 500 list – earning more revenue abroad than in China. Huawei’s revenue from overseas markets exceeded that from the Chinese market for the first time in 2005. In 2012, Huawei surpassed Ericsson – at that time the world leader in telecommunications and networks – in terms of sales revenue and net profit, and this trend continued in the fiscal year of 2014 when Huawei reached an all-time high sales revenue of $46.5 billion and net profits of $4.49 billion.

Customer-First Attitude

Strong leaders provide a sense of purpose to their people, and Ren Zhengfei is no exception. His first and foremost concern is the customer. Many companies adopt a customer-focused attitude, but how many of them truly live it? Huawei distinguishes itself from the competition in this regard. In our conversation, Ren Zhengfei mentioned repeatedly how in the early years of Huawei everyone in the company had to turn their eyes to the customers and their backs to the bosses.

Another example of this customer-first attitude comes from another early episode in their history that’s since become something of a company legend. In desert and rural areas in China, rats often gnawed the telecom wires, severing customers’ connections. The multinational telecom companies providing service at that time did not consider this to be their problem, but rather that of the customer. Huawei, in contrast, viewed the rat problem as one the company had the responsibility to solve. In doing so, they acquired extensive experience in developing sturdier equipment and materials – such as chew-proof wires — which helped them later on to gain several big business accounts in the Middle East, where similar problems stymied the multinational firms.

Since then, there have been other projects where Huawei experienced severe climate challenges, such as building the highest wireless communication base station in the world (6,500 meters high on Mount Everest) and building the first GSM network within the Arctic circle. These, too, have helped acquire useful knowledge. For example, when Huawei expanded their 3G market in Europe, they noticed that European carriers expected base stations to be more compact, easier to install, greener, and more energy efficient, while offering wider coverage. Based on these customer needs, Huawei became the first company to launch the concept of distributed base stations that enables radio access for large to small private networks. This innovation made it cheaper for carriers to deploy base stations, and was popular with European carriers.

Employee Dedication

Huawei emphasizes that the only way to obtain opportunities is through hard work. For example, in the early years of the company, every new employee was given a blanket and a mattress. Many of them would work late into the night, then sleep in their offices, perhaps taking a catnap during lunch again the next day. As one Huawei employee said: “The pads were to us a representation of hard work in the old days and this idea has now been translated into the spirit of being dedicated to do the best in anything we do”.

Knowing that a dedicated and committed work force makes companies more competitive is not a too difficult concept to understand. The way to promote dedication and make it accepted by its employees – as it is the case in Huawei – is, however, a more difficult nut to crack. Huawei does it in part with the type of incentive performance system the company employs. Huawei is not a public company, and is in fact owned by the employees. Ren Zhengfei’s shares account for nearly 1.4% of the company’s total, and 82,471 employees hold the rest (as stated in Huawei’s 2014 Annual report). This employee shareholding system is referred to within Huawei as the “silver handcuff.” It is a system that is different from the more common stock option arrangement, which is often termed the “golden handcuff.” The idea underlying this scheme is that Ren Zhengfei wants to share both responsibilities and benefits with his colleagues. As he puts it, he wants everyone to act like the boss. Important to note, however, is that that only those who perform well enough qualify to participate.

There’s a shared belief within the company that an IPO would result in only a few people getting very rich, and the majority losing their motivation. Ren Zhengfei has emphasized that avoiding an IPO and hewing to the current employee-ownership structure is what helps the company maintain a strong collective fighting spirit.

Long-Term Thinking

The employee-ownership arrangement not only helps Huawei attract and retain dedicated employees, but also allows the company to plan for the long term. Ren Zhengfei has also credited it with allowing them to stay close to their goals and long-term vision. For example, Huawei plans the development of the company by decade, whereas most of their competitors such as Ericsson and Motorola plan it by financial quarter or year. Being privately held has allowed Huawei to work on its 10-year plans, while its competitors struggle to follow near-term fluctuations of the capital market.

For example, Huawei has introduced the use of a rotating CEO system in which three deputy chairmen take turns acting as CEO for six months each. At the same, time Ren Zhengfei maintains his oversight role, acting as a mentor and coach for the acting CEO. This innovative management structure is inspired by a book on new leadership calledFlight of the Buffalo (authors James Belasco and Ralph Stayer). While it will make the company less vulnerable if one chief fails or derails, it’s hard to imagine a publicly held company getting away with such an unusual plan.

Gradual Decision-Making

Ren Zhengfei is known for avoiding quick decisions and forcing himself to take time to reflect. His company reflects these traits. Again, he ties this in part back to their ownership structure: it keeps the decision-making power under company control – no outside investor will gain relative control over Huawei. As we’ve seen, they have much more freedom and less pressure from the market to consider their next steps to take. Their system of rotating CEOs helps support a gradual, more democratic decision-making process. It also helps Ren Zhengfei make a gradual decision about his ultimate successor.

Huawei also emphasizes what they call “the power of thinking.” The company philosophy is that the most valuable thing is the power to think. For example, efforts are made to ensure that intellectual exchange happens as a matter of routine. Executives are urged to read books outside their area of expertise and books have to be present in each office. Furthermore, ideas are communicated frequently to every employee by both senior executives and Ren Zhengfei. Importantly, however, and demonstrating the international character of a once-Chinese company, feedback is always invited across the company to improve those ideas that will ultimately feed the future vision of the company.

As many people know, Ren Zhengfei is a man with an army background – he served in the People’s Liberation Army – an experience he credits for his drive to fight and survive, qualities that are reflected in one of his favorite slogans in the early days of Huawei: We shall drink to our heart’s content to celebrate our success (ren sheng de yi xu jin huan), but if we should fail let’s fight to our utmost until we all die (ju gong jin cui, si er hou yi). So far, Huawei has had many successes to celebrate.

Source: Harvard Business Review, June 11, 2015

Will AIIB Change Asia's Multilateral Financing Landscape?

It is a well-known fact that for any country to achieve sustainable economic growth a strong infrastructure is a key foundation, both in terms of quantity and quality. Asia, the giant who has led the tremendous economic growth since last decade (6.7% annually from 2000-2012) and increasingly assuming central role in world economy, is under severe pressure to improve its infrastructure needs and scale up to meet the global standards if it were to sustain its remarkable economic growth rates.

The changing demographics, the distinct shift of population from rural to urban areas, the rising economic power status and the growing inter-connectivity and dependence with the developed regions has led to immense pressure on creating a world class infrastructure in Asia. Currently, the inadequacies in infrastructure is proving to be a bottleneck in Asia's rapid economic growth, a threat to competitiveness and an impediment to reduction in poverty. And, the major challenge in bridging the infrastructure gap (normally defined as the difference between country's development goals and its actual capability to achieve those goals), is the lack of investment financing. The lack of public investment in infrastructure due to fear of adding to fiscal burden, the dearth of private-sector participation and deficiency of long-term capital market financing has enlarged the existing infrastructure gap.

According to the 2014 WB report, Reducing Poverty by Closing South Asia's Infrastructure Gap South Asian countries will have to invest as much as $2.5 trillion over the next ten years: one-third to be spent on transport, one-third on electricity, and the remainder on water supply and sanitation, solid waste management, telecommunications, and irrigation. And according to the Asian Development Bank (ADB), infrastructure investment needs in Asia could reach $750 billion annually during the period 2010-2020; while ADB's estimated lending approval each year is just around $13 billion! 

Thus, realizing the importance of fulfilling Asia's infrastructure financing needs, China, in October 2014, announced the launching of Asian Infrastructure Investment Bank (AIIB) backed by an initial paid- up capital of $50 billion and with authorized capital of $100 billion. The AIIB has approved 57 countries as founding members as on March 2015. The 57 founding members cover five continents, including Asia, Oceania, Europe, Latin America and Africa. 

The AIIB's main focus is to provide funding exclusively for infrastructure projects such as roads, ports, dams, bridges, railways in underdeveloped Asian countries, which differentiates it from the ADB's broader mission of reducing poverty. Besides, with the rise of trade in value-added and production networks in the Asian region, contributing to industrial upgrading and competitiveness for many countries, it becomes essential to move beyond the national projects and create a steadfast network of cross-border infrastructure. And AIIB intends to also move in this direction by developing and financing the cross-border regional connectivity infrastructure projects like road systems, ports and telecommunications network.

Though AIIB has been able to garner initial attention, it remains to be seen how far the bank will be able to deliver in terms of good governance, flexibility, transparency, predictability, which will, in the long-run determine its eventual success!

Source: www.guizzetti.org

One year of Modi govt: A glass half full

In the run-up to the 16th general election, opinion on Narendra Modi was polarized. Once again, as Prime Minister Modi prepares to celebrate his government’s first year in office, the view is split down the middle.

Constant critics, like Congress vice-president Rahul Gandhi who gave Modi a zero rating, would have us believe that this is a nowhere regime which has belied the electoral expectations aroused during the campaign. Supporters, on the other hand, would equally belligerently argue: the new regime is off to a good start and that the best is yet to come.

Obviously both are extreme views and the truth is somewhere in between. Here again the assessment would differ: whether the glass is half empty or half full. It is my argument that the glass is half full. Here is why:

First off, the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) inherited a severely damaged economy along with a nation severely traumatized by allegations of corruption in public office. If this was not enough, within a few weeks it was apparent that not only was the annual monsoon projected likely to be deficient, there were also fears of the onset of a drought (both of which actually panned out). However, there were offsetting factors too. The global commodity super cycle had ended and along with it came the fall in crude oil prices.

In response, the government undertook several measures, some of which were pure fire-fighting efforts. To a large extent the NDA’s majority win—the first in 30 years—worked to calm nerves all around. It also provided a certitude to decision-making in government, something that was totally absent from the previous regime. The oil price fall cushion was used wisely—unlike in other countries, the government did not pass on the benefits to consumers in the form of reduced prices; instead it burnished its green credentials by increasing the indirect taxes on fuel prices and the exchequer pocketed the extra returns to fund the fiscal deficit burden.

Even better, growth is on the mend and inflation is on the wane—hopefully it will convince the Reserve Bank of India to cut interest rates and set the ball rolling afresh on investments, especially in manufacturing and infrastructure.

Second, it very early showcased its ability to think out of the box and willingness to back politically risky initiatives, presumably something that exudes from the sense of power the BJP draws from having 282 elected members in the Lok Sabha. Among the earliest decisions which Modi undertook—actually within the first 18 hours after taking office—was to invite the leaders of neighbouring countries for the swearing-in ceremony. In one stroke he demonstrated vision, as well as the fact that foreign policy would be a key element of his administration. It is another matter that subsequent events have not panned out to script, but nonetheless, India conveyed its desire to reset relations in South Asia.

Third, it has rewritten the lexicon of governance in Delhi—previously defined by a cosy self-serving cabal of politicians, bureaucrats, middlemen and journalists—and undertaken initiatives to transition the country to a rules-based regime. The successful conduct of the auction of coal mines is a perfect example, where discretion in policy implementation was given a quiet burial.

Fourth, it has ensured continuity in policy, even while pursuing its own version of change, and more importantly, not allowed churlishness to define its policy choices. It has therefore retained good ideas promoted by the preceding Congress-led United Progressive Alliance (UPA). Aadhaar, the plan to equip every resident of India with a unique identity number, spearheaded by Infosys co-founder Nandan Nilekani, is a good example of continuity with change. Similarly, it brought forward the financial inclusion agenda proposed by the UPA, rechristened it the Jan Dhan Yojana and put the entire political might of the government behind it.

Fifth, the NDA has hit the reset button on the fiscal polity of this country by accepting the recommendations of the Fourteenth Finance Commission. Not only has the share of states in the centre’s tax receipts been raised to 42%, they have also been given the power to customize their expenditure—as opposed to the previous one-size-fits-all policy pursued by centrally sponsored schemes. In short, the NDA believes that the states no longer need hand-holding.

Sixth, the government has eschewed any doublespeak on business. Traditionally, most politicians and governments shy away from any overt claims (something that has invited the sobriquet of suit-boot ki sarkaar). It discovered ideological justification in its slogan: pro-poor and pro-rich. Accordingly, it has worked towards improving the ease of doing business, including repealing nearly 1,000 redundant laws.

A lot of reform initiatives in this context so far have been incremental in nature. Largely aimed at improving the plumbing, these have been panned by several critics as a waste of social capital. But then think of the consequences of a clogged drain and the objectives will be clear. Yes, it may still be a halfway house, but the improved plumbing will ensure less wastage and consequently a bigger bang for the buck.

Seventh, this government has taken the first steps toward creating a social security infrastructure for all. The idea of financial inclusion is that eventually every household will be part of the economic mainstream. Similarly, the pension and accident insurance schemes introduced in the Union budget go a long way towards strengthening the social safety net.

The idea of Swachh Bharat, which is yet to acquire a concrete blueprint, will be crucial if the country has to turn the corner on common diseases like diarrhoea; most Indians in lower income groups are considered to be just a disease away from falling back into poverty.

These initiatives are consistent with rapidly growing aspirations in society. Unlike in the past, the preference is no longer for entitlements. People would rather be taught how to fish than be given a fish—exactly why initiatives like the skills programme (again an inheritance from the UPA) are key to empowerment across classes.

By now you must be wondering why the glass should only be half full. I would argue that it is also a fact that the NDA has been wanting on some fronts.

First, it seems to have misread the rural distress. It is one thing to firefight to mitigate the damage to the farmer due to unseasonal weather. But it has failed to gauge the structural fault lines in the agrarian sector and as a result,its response has been underwhelming (in an interview to Mint on Page 5, BJP president Amit Shah maintains that a long-term response is being debated within the government).

The current crisis in agriculture has been triggered by the drought last year, the collapse of the global commodity super cycle and fears of another bad monsoon this year. The shrinking spending on social sector programmes—or death by neglect, as in the case of the Mahatma Gandhi Rural Employment Guarantee Scheme—has only compounded the problem.

In addition, the nature of farming has undergone a major overhaul. For example, horticulture has emerged as the dominant segment of the agrarian economy. Horticulture production (268.9 million tonnes) surpassed foodgrain output (257 million tonnes) for the first time in 2012-13. Given its perishable nature and link to the price cycle, it is prone to volatile risk behaviour—and this can’t be addressed by short-term fiscal sops.

Second, the BJP has been unable to shut out the distractions served up by fringe groups of the party. Not only are they fodder for their political opponents, they tend to take the sheen off the progressive image that the party seeks to project. Uncontrolled, they can undermine the best efforts.

Third, it is one thing to launch a great initiative, quite another to guarantee implementation. To be fair to the NDA, though, one year is too short a time to gauge its ability to deliver. Just like the opposition is judging it by the electoral promises that were made, the NDA will be assessed on how it delivers on all the initiatives in the next four years.

In the final analysis, it is clear then that taken together, the glass is half full. A complete verdict—when India heads into its 17th general election—will, however, take another four years.

Author: Anil Padmanabhan

Source: Live Mint, May 24, 2015

How can Europe deal with its debt?

For a while, the storm seemed to have passed and the Eurozone entered a welcome tranquil period. Now, Greece has once again triggered the alarm and, while the financial and economic resilience of many member countries has improved, their political resilience has not. Greece is special in many ways and will have to be dealt with in a different way from the other member countries, but the renewed turbulence it has caused once again has highlighted that the construction of the monetary union remains incomplete.

In the inaugural report in CEPR’s new Monitoring the Eurozone series (Corsetti et al. 2015), the authors1 call for a reconsideration of the Eurozone’s architecture. The report is available to download here.

Important institutional steps have certainly been taken, but the weight of crisis-fighting has fallen heavily on the ECB, which increasingly faces the danger of becoming overburdened – while being criticised simultaneously by those who think it is doing too much and those who wish for more.

While the ECB is not the only central bank in danger of being overburdened, the political and institutional structure of the Eurozone makes the problem more complex and potentially divisive. Meanwhile, reforms at the European level have come to a standstill and all debates on increasing fiscal and political integration have remained moot. Some countries have implemented significant fiscal consolidation and structural reforms, but others have lagged.

Slow growth and the debt overhang

Fundamentally, the Eurozone remains vulnerable because growth is anaemic. A key reason behind this is a debt overhang, which discourages investment and consumption growth. Several countries are currently caught in a low-activity equilibrium involving weak demand, high unemployment and rising nonperforming loans. With a high outstanding debt stock, a new shock – whether external or within the Eurozone – could easily set off a new crisis.

The Eurosystem remains vulnerable to fiscal shocks since there is no room left for fiscal manoeuvre in a number of countries. In addition, the diabolic loop between banks and sovereigns is alive and well. While the Single Supervisory Mechanism and the Single Resolution Mechanism are critical to reversing financial fragmentation, they are not sufficient, particularly in the near and medium terms. High borrowing costs of banks and – by extension – corporates and households in peripheral countries are still related to continued sovereign risk.

In this setting, attempts to implement necessary reforms of the fiscal governance in the Eurozone are stillborn. The existing rules did not prevent countries from issuing too much debt, nor providing liberally excessive lending, as both private agents and the governments correctly anticipated that the Treaty was too weak to make the no-bailout clause credible. Under a credible no-bailout clause, correct pricing of risk should have deterred excessive debt accumulation ex ante.

This did not happen. By now, all the potential beneficial effects of deterrence are long gone. In the present situation, with debt levels already very large and a still developing and untested institutional framework to protect countries from adverse spillovers, debt restructuring involving the private sector is not an attractive option. All that is left are the adverse ex post consequences of overly large stocks of private, but especially public, debt, including the vulnerability to runs. This is why, in the present circumstances, the difficult inheritance of the recent past is bound to frustrate and undermine fiscal governance reform capable of reining in moral hazard. Any hope of proceeding from here will necessarily require a change in the initial condition, to be brought about with a courageous and convincing Eurozone political initiative, to back a technically well-designed, sizeable reduction in existing debt levels.

Three proposals

The report, A New Start for the Eurozone: Dealing with Debt, focus on three issues because they are important and they can be addressed without a fully-fledged fiscal federation or changes to the Treaty:

1. A one-time debt stock operation to rapidly reduce sovereign debt, particularly in the highly indebted peripheral countries. The authors offer a menu of options, one of which is a debt buyback through the commitment of future revenues, which could include seigniorage, VAT or a wealth (transfer) tax. This does not involve any redistribution across members of the currency union, but it would not be sufficient to eliminate the overhang. Therefore, they discuss a number of other choices, including a European solidarity tax with some limited redistribution across countries and ‘debt-equity’ exchange with GDP-indexed bonds.
2. A strengthened sovereign lending framework for the ESM, which both creates strong market-based incentives to avoid excessive debt levels in the future and makes future debt restructuring – should it become necessary – less painful than is currently the case.
3. A set of regulatory changes that discourage and limit the exposure of banks to sovereign debt, particularly that of their own sovereign. This should be complemented by the creation of a European synthetic bond that does not require mutualisation, but would constitute a safe asset and could facilitate unconventional monetary policies by the ECB.

Certainly, the goal is ambitious. The proposals aim to kill, with one stone, the three birds of enforcing long-run fiscal discipline, dealing with the legacy debt overhang and breaking the sovereign bank loop.

This would require a concerted effort and significant investment of political capital, which may only become available if the fragility of the present situation becomes apparent. However, the solutions to these three problems are strongly complementary and would generate large welfare improvements for Eurozone citizens if implemented jointly. Indeed, the authors stress that the package proposed should not be unbundled and nor should the implementation be partial.

Source: Article by Richard Baldwin, World Economic Forum (April 16 2015)

Times of India: Farming the farmer: By tying peasants to land, political parties propagate an insidious new caste system

The moment a budget is presented in Parliament or assemblies, it’s standard theatre for opposition members to rush out and denounce it as anti-poor or anti-farmer. They paint the government to be representing corporates, intent only on selling farmers’ land to industries at a throwaway price. They demand imposition of more and more taxes on the rich and distribution of these to the poor.

The government also comes forward with the claim of presenting a pro-poor, pro-farmer budget followed by a laundry list of freebies provided for the poor. The opposition claims ‘rich are getting richer and poor poorer’.

All these suggest that budgets should be prepared solely for the poor. The middle class or rich do not exist, even if they do nothing need be done for them. Everything must be done for the poor because they vote in large numbers.

So, is poverty a virtue? Does one commit a crime by earning well? ‘Industry’ is presented as a dirty word. The overwhelming perception is that any industrialist sets up industry for the exploitation of labour, society and farmers. He is therefore undeserving of any mercy. The more merciless the government can be towards the corporate, the more popular it supposedly becomes.

‘Profit’ too is a dirty word, but unless the industrialist earns a good profit why should he set up any industry? There is no need for him to make the effort, overcoming a myriad governmental and societal obstacles.

There is not a single chief minister or prime minister in independent India who has not made untiring efforts to draw industry to his domain. Even the very pro-poor, pro-farmer Left Front government in West Bengal had to do so, at the risk of losing power. And they all do it to eradicate poverty. To create jobs and employment. To increase per capita income. To improve people’s standard of living.

Most farmers approach politicians, MPs, MLAs, ministers to get a job for their wards in industry, not in the farming sector. Because there is no profit in agriculture. While this is the reality on one side, on the other farmers are incited to resist when industry comes.

By improvement of the standard of living of the poor we mean converting an earthen house to pucca, provisioning a washing machine, a refrigerator or even an air conditioner and a two wheeler.

These rescue the women from the drudgery of washing clothes; prevent wastage of vegetables and other food items; provide more comfort leading to increase in efficiency and some leisure. And we require electricity to run them. Without industry who would provide the cement, steel, pipes, power needed for all these accessories to a decent standard of living?

Land acquisition is now encountering stiff resistance even for roads, irrigation, power generation, atomic energy and defence projects. But during the 67 years of Independence, all the cities and towns of India have expanded enormously all around, essentially on farmland. And farmers have often willingly sold their land for a good price.

Around Sanand in Gujarat, where the Tatas set up their Nano car manufacturing facility after being booted out from Singur in Bengal, international automobile companies such as Peugeot of France, the US General Motors and Suzuki of Japan have developed their factories by purchasing farmlands. The farmers losing land have told media that they haven’t seen as much money in generations as they are doing now, enabling them to get rid of indebtedness for the first time. Other land owners demand their land be sold.

So, should a farmer remain tied to farming for generations? Can’t he be allowed to shift occupation to get rid of poverty?

It sounds satisfying to say that while the rich are getting richer the poor are getting poorer. But are the poor really getting poorer in a liberalised economy? Planning Commission estimates show 22% to be below the poverty line two years back, compared to 37.2% a decade back. In most states the actual land owner has shifted to urban areas for a better lifestyle, farm labourers and share croppers are the real land owners now. They, too, have raised their standard of living to an extent.

In today’s globalised world merit is the main criterion. The more efficient or skilled one is, the more prosperous one grows. Today’s liberal democracies provide equal opportunity to all, which hasn’t happened in history before. Therefore, ‘capitalist’ and ‘industry’ should not be dirty words.

All capitalist states have turned into welfare states. They make the poor more competitive through capacity building, teaching them to fish rather than simply distributing fish. The Indian government should not aim to be ‘mai-baap’, infantilising people and making them depend on it for everything. The citizen must not be rendered a passive fatalist.

Rather, he must be taught to dream so that the dream can materialise one day. He must think, poverty is a curse. He must make every effort to get rid of it. He must not remain a beggar for government doles. Instead, the state should remove all hurdles to his becoming competitive in today’s economy.

Source: M A Kharabela Swain (The writer is a former MP from Odisha) - Times of India, April 23rd, 2015

What makes a good and sustainable procurement system

One of the most important phases in the implementation of public works and development programs is procurement — or the acquisition of good and services to deliver project objectives and results.

International development institutions, private organizations, national governments and corporations need a reliable procurement process to ensure timely delivery of services to their stakeholders. Disaster victims, for instance, could starve or die from diseases if the procurement of food and medicine is delayed or not done right. The quality of education, meanwhile, may not improve if school supplies, books and teaching materials are not delivered in rural areas.

But how can you make procurement better and more sustainable?

While there isn’t one strategy that can apply to all contexts, Steve Schooner, co-director of George Washington University’s government procurement law program, explained that a sustainable procurement system will only be possible if the legal and institutional environment allows for it.

“Anybody can come up with a very good procurement legislation, but it’s another if we can apply it and implement it well with transparency, integrity, accountability, efficiency and effectiveness,” the professor said in a procurement conference attended by Devex, adding that governments — as the main proponents of public procurement — should always engage the private sector and other stakeholders in the process.

Eveline Venanzoni, head of the ecological procurement service of the Swiss Federal Office for the Environment, agreed, saying that sustainable procurement systems take into account the environmental, social and economic effects of the process.

She explained that modern procurement systems should integrate objectives into larger development goals and aspirations — a move away from the detached view that procurement had been put under over the past couple of decades, as an industry of winning contracts and delivering them.

Some governments, such as that of the Philippines, and even multilateral institutions like theWorld Bank and the Asian Development Bank have recognized the benefits of aligning procurement processes with national and international interests. Doing so, according to Venanzoni, is “good for the whole procurement process” as it cuts costs and improves efficiencies.

Process should be clear and stable

The whole procurement process should also be clear and stable, with each stakeholder fully aware of their specific roles and the general objectives of the project — everyone is a vital piece of a huge puzzle.

Felipe Estefan, an open government strategist at the World Bank, shared that in the whole procurement process, “everyone should be aware of the goals, objectives and their responsibilities so people and other stakeholders are aware of what’s happening and what is expected. This helps in managing expectations.”

The World Bank official added that being engaged and fully aware of the process, objectives and expected outcomes of the whole project also empowers stakeholders and beneficiaries to hold contractors and funders accountable if a certain key result is not achieved or a certain good or service is not delivered — making the whole process sustainable and more effective.

Procurement should also be more outcome-oriented with a view of delivering quality results, instead of just being process-oriented. Schooner shared that “having goals is better in making procurement outcome-oriented” because it is a “double-edged sword” that always targets policy goals and value for money.

By focusing just on the process, Jose Tomas Syquia, executive director for procurement at the Philippine budget department, shared that the whole system runs the risk of becoming a checklist where stakeholders just do what is written without any “discretion.”

“Procurement is not just about having a checklist and crossing them out. There should be discretion to be able to exercise judgment,” the Philippine official said. “If there’s nothing like that, there’s no growth or no room for improvement. Crossing out everything in the checklist does not necessarily suggest and ensure success, effectiveness and efficiency.”

Having a standard is important

The implementation of standards as a way to make procurement sustainable is also key. Schooner shared that the maturity of a procurement process is the presence of standards or benchmarks where all stakeholders are required to follow.

“Think about your procurement regime and think inwardly and ask if there are things that need to be improved,” he said.

The GWU professor added that stakeholders should also be aware that awarding of the contract is not the end of the procurement process. It is rather the “first contact of business” because it is “not an assurance that you will get results every single time.”

Monitoring and evaluation of goods and services delivered from the start of the contract to the delivery of the last ones should be done to ensure that beneficiaries are getting what they deserve and expect.

These standards should be streamlined — or even centralized — in all procurement services and programs as it allows for “buying in volume, competitive pricing and coherent implementation,” among others, Venanzoni shared. “Make things measurable and set up a standard so you can assess progress and improvement easily.”

“Countries tend to measure what’s easy to measure and not what’s important,” Schooner concluded. “We shouldn’t just train [stakeholders], but we should empower them.”

Source: Devex, April 22, 2015

Anjuli Bhargava: Forget smart, make cities livable

Here's what the government should do to make our cities better - work out a plan to manage the traffic situation and make public transport more attractive

All of last month, newspapers have been full of news aboutpollution levels in Delhi and how we are losing years of our lives due to the air we breathe. The expats in India have been warned, sales of air purifiers are on the rise and I'm sure hardship allowances of diplomats in India will go up. Even the early morning walks at Lodi Garden - as one of our columnists has informed us - are no longer as fresh as they felt before.

If the Cabinet looked beyond its noses and Lutyens' Delhi, it would quickly see what a menace the traffic in the city has become - this despite the Metro taking a huge load off the roads. Start at 9 a m from Gurgaon and try and reach Noida or Greater Noida. It is easier and faster to reach Mumbai, which is 1,433 km away - aerially, of course. Senior government officials need to take a ride crossing south Delhi during peak hours for a reality check on what can happen and how long and frustrating it can be.

Driving within Gurgaon - the Millennium City - has become a challenge. As the city tries to regulate its ever-increasing traffic, roads are made one way and back the other way without any warning. Cybercity - the hub of corporate Gurgaon - resembles a large construction site, with uneven large craters (akin to the moon, I suspect) on the road. There are forks and U-turns that everyone regularly misses. Cars are often backing up into a steady stream of traffic as they realise they have missed some turn or the other - they are so poorly sign-posted, if at all.

The traffic situation in several other cities - be it Bengaluru, Pune, Hyderabad or Kolkata - is steadily deteriorating as well. Traffic peak hours in all these cities are dreaded and cases of road rage are no longer unheard of even in these relatively less aggressive cities.

I have a few suggestions that focus on Delhi but can easily be extended to other cities. First; make it more attractive for people like us - who own the majority of the cars - to minimise the use of personal vehicles and increase the use of public transport. As things stand, road space is hogged by car owners, leaving little room for cyclists and pedestrians.

I know public buses and taxis are not an option for the relatively better off but the metro is a very viable option if one plans and sticks to non-peak hours. Of course, it won't take all the cars off the roads right away (since most of the work and meetings will happen during peak times) but it will be a start.

For this to work, two things need to happen. One, you need a Metro station within one km of most locations. The Metro network - which is currently around 200 km - needs to go up at least threefold.

Second - and this is key - car owners have to change the way they think. The Metro is not only for people like "them". As someone wisely said, a society is wealthy not when rich people travel in cars but when they use public transport. If Cherie Blair - former British prime minister Tony Blair's wife - could use the London Underground to commute in the city, there is no reason affluent Indians - and indeed Indian politicians' wives to begin with - cannot do the same and lead by example.

Once the metro coverage expands, the authorities can limit access to certain areas by making it prohibitively expensive, like cities such as London do. This works like a congestion tax for cars that move into the city at peak hours.

There are other methods that cities have adopted - enforcement will remain the challenge - like designated days for even and odd number-plates. This forces citizens into some kind of car-pooling even if they have cars with both even- and odd-numbered plates.

While what I mention is just common sense, there is no dearth of expert advice on better management if someone has the will to implement it. So, even as the Cabinet and our ministers sit down to put the final touches to their plan for smart cities, I have a request. Forget smart, just make them livable.

Source: Anjuli Bhargava: Business Standard (April 23rd)