5 blunders in strategic planning

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Is strategic planning still relevant? For most development agencies I have engaged, strategic planning is merely an exercise to comply with the ‘requirements,’ a checking of the box so to speak. Some were even contented that they have a vision and mission statements as if those were the end-all in a long-term plan.

Strategic planning as a tool in organizational development  allow institutions to easily adjust to the changing environment and the shifting trends in the industry. It usually starts with a SWOT (strengths-weaknesses-opportunities-threats) analysis, the basis for  strategic statements that determines the directions to take, and the key activities to be implemented.

As the blueprint for action, it should guide and enable the institution to pursue its growth targets and adjust when disruptive events happen. Despite having a strategic plan, there are institutions that are dislocated and finding it hard to cope when the environment changes. Being caught unaware when change happen is an indication that something is wrong with their plan. Five of the common blunders in strategic planning are discussed in this article.

1. Erroneous internal assessment. If the staffs are primarily responsible for evaluating the strength and weaknesses of the institution, partiality and personal biases usually cloud the results. Some staffs will tend to hide the weaknesses as it may reflect on them, or deflate the weaknesses in such a way that it will not reflect too bad on them. Strengths are also padded to offset the glaring weaknesses. In the end, you look at the mirror and be surprised when you cannot recognize the image reflected in it.

2. Misreading the external environment. A comprehensive picture of the environment, including future trends, is one of the vital elements in planning. Internal experts can provide their own reading of the environment, but it is also necessary to get opinions of external industry experts. It would also be helpful to get resource persons from other industries as their movements will also affect the industry you are in. Getting the most comprehensive briefing on the trends and the directions of things will enable the institution to steer its strategies in the right direction and anticipate responses to disruptive events.

3. Failure to make decisions. Strategies are big, bold moves aimed at ensuring the institution is abreast with the latest trends in the industry. Strategic planning is the point when leadership is expected to decide and steer the institution towards further growth or adjustments in response to anticipated disruptive events. However, some leaders would rather not ‘rock the boat’ and stay on course with what is familiar and routine. And when the expected changes happen, put the whole institution into panic mode.

4. Recycled activities. There may be jargons and the latest terminologies in the document, but the activities in essence remain the same with those in the previous plans. Same activities with end-results projected in five years and divided into annual activities. Disruptive events derail these standard activities and will require special team and effort to address.

5. Reactive rather than pro-active plan. A strategic plan that does not address issues of innovation and disruption is a poor plan. The wind of change will easily sweep away the institution without a pro-active plan.

There is a saying that goes, ‘if you fail to plan, you plan to fail.’ It is the same if you have a flawed plan.

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Tools for training and facilitation

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The completion of  technical assistance to selected financial institutions in Nepal highlighted the use of  tools that hastened the learning process of participants and  expedite discussions on topics saving precious time. The key element of the tools is participation, allowing inputs from the participants  and ensuring they have ‘ownership’ of the outputs.

  1. Metaplan technique

The Metaplan Technique was developed by a German consulting firm with the same name. Using cards where their ideas are written, participants to an activity are able to share their opinions. The cards then became the collective opinion of the group. Cards with the same idea can be clustered to show the ranking of ideas. Innovative ideas show up also in the process. The process allows participation even from those who are not talking too much, and also limits grandstanding of some participants as ideas are written instead of being explained.

For more detailed information on the technology, visit http://www.metaplan.com/en/.

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2. Group dynamics

Structured learning exercises (SLE) are used as part of the activities discussed, to provide examples and analogies for the participants to have better understanding of the subject. Groups dynamic activities are also used as an icebreaker, at times when the energy level of the participants are getting low when they are passive listeners in an activity.

Variety of group dynamics used during the TA involved short activities that compete between groups; activities that lead participants to commit errors and hence liable to be punished; activities that motivates participants to discover something, and other exercises that ensures focus and active participation to the learning event.

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FinTech Hype

 

There is a lot of hype going on about providing access to finance using digital platform. Fintech companies providing loans are either providing loans directly or through peer-to-peer arrangements where loan applications are matched with funders. The companies promised fast service, few requirements and with range of amount from as low as P2,000. to as high as P300, 000.

With a list of fintech companies, I tried applying for personal loans and failed! Summary of the challenges in dealing with fintech companies:
– Cash wagon: after completing all the data requirements and going through the whole process, I received this message: 500, Something went wrong. Try again in four weeks
– Robo cash: the template required the company phone number, but the field was designed for a 12-digit mobile phone number. So when I typed the 7-digit landline, it showed error, and I cannot move on to the next step.
– Asteria: there is a requirement for a bank specified credit score which I do not have
– Loan Ranger: required a Facebook account which I do not have.
– Tala: same with Loan Ranger, a Facebook account is needed and I do not want to open one.
– Quickpera: a long list of requirements more than what traditional banks are requiring
– Cash smart: 2 proof of billing, the problem here is that I live in a place where the bills are in the name of the previous owner of our house. I do not maintain a postpaid mobile phone, so no bills in may name. And they even require two!
– PeraJet: same proof of billing requirements.

Online lending maybe practical for millennial who are familiar with the internet, but it may be a struggle for an ordinary entrepreneur or even a farmer. So talks about fintech as the relevant tool in expanding financial inclusion has still a long way to go.

Cooperative Formation and Savings Mobilization in Myanmar

Cooperative officers processing loan applications in Pathein

Member-based organizations like cooperatives are gradually growing in Myanmar. In 2017, two cooperatives in Kayin State were formed as a result of a project funded by the European Union (EU). This initiative was followed by a project funded by the US Agency for International Development (USAID) in another township of Kayin State.

The cooperative formation initiatives are meant at providing a model for the development of more sustainable cooperatives in the rural areas. Currently, the government is following its approach of ‘one-village-one-cooperative’ in cooperative formation. This approach is effective as a conduit of government funds, but it is not sustainable because of the small size which averages between 30-50 members.

ACCESS Advisory with its work in Kayin proposed a bigger cooperative at the township level or a cluster of villages to mobilize between 500-2,000 members. This will allow the mobilization and pooling of resources enough to generate resources that will support operations including the salary of full time staff. The cooperative formation model follows a three-stage process of savings group formation, consolidation and formation of cooperative. The whole process takes one year, including the period needed for the registration with the Department of Cooperatives.

A member receiving loan from the cooperative

This model was use also by the New Humanity, an Italian NGO who partnered with the Karunas Mission Social Solidarity (KMSS), with the vision of forming cooperatives in all dioceses of the Catholic Church in Myanmar. NH pilot-tested the model in the dioceses of Mandalay, Yangon and Pathein.

The main advocacy issue is for the government to support the development of cooperatives as vehicles for rural development. Cooperatives should be viewed as an empowering institution in the communities especially the remote and inaccessible areas.

Playing the China Card

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Picture source: http://www.nationmultimedia.com/opinion/Myitsone-Dam-a-new-catalyst-for-reform-in-Burma-30167013.html

The foreclosure of the Hambantota Port in Sri Lanka is a grim reminder of what is the real score in China’s Bridge and Road Initiative (BRI). The country lost control over one of the most important ports to the Chinese after it failed to pay its amortization.  Loans from the Chinese were projected as an alternative to those coming from western-dominated multi-lateral financial institutions like the World Bank (WB) and the Asian Development Bank (ADB). Countries with financing needs who cannot qualify with these traditional financial institutions were enticed to the lenient requirements of the Chinese funds.

However, the other end of the line is filled with one-sided provisions favoring the Chinese lender. High interest rate, use of Chinese instead of local workers, in some cases question in the quality of work and as Sri Lanka experienced, as steep price for defaults.  The loans now look more like a Trojan horse rather than a development tool that will help boost the economy of the recipient country.

Some countries are having second thoughts on the proposed projects to be financed with Chinese funds. In South Asia where China has developed a pool of friendly countries, Pakistan has shelved the $14 billion Diamer-Bhasha Dam, and Nepal following the footsteps of its neighbor also shelved the $2.5 billion Budhi Gandaki Dam. In Southeast Asia, Thailand has renegotiated the $5.2 billion high-speed train system between Bangkok and Nakhon Ratchasima due to provisions considered disadvantageous to the country. The Philippines despite the closeness of the current administration has not finalized any project to be financed by China.

China may be the global leader in production, but it has to prove itself as good financial service provider and diplomat.  Chinese financing and its development programs outside China is now suspect. Politically-isolated countries like North Korea and those kowtowing to Chinese interest like Cambodia finds the funds palatable.

Myanmar was able to veer away from the Chinese influence of its patron as it realigned itself to the global economy after decades of isolation and sanctions. It was able to work out the lifting of sanctions and has attracted foreign direct investments to the country. However, the recent crisis in Rakhine pointed out the fragile partnership between Myanmar and the West.  When hundreds of thousands fled to Bangladesh and reports of death, rape and torture surfaced in the global media, the response of the West was swift. It has withdrawn support to some programs, took back awards given to State Counsellor Daw Aung San Suu Kyi and threaten to impose again sanctions.

Western countries have very low tolerance with the government and has not considered the internal dynamics between the civilian government and the Tatmadaw. The European Chamber of Commerce expressed that some companies were in a wait-and-see attitude in its engagement with Myanmar. This posturing has dented the image of the State Counsellor in the West as an icon of democracy, but in the domestic audience, a substantial part of the population silently approved of what happened.

Feeling the heat, the government sought refuge in the arms of its former patron. The trip of the State Counsellor in China is a subtle message that the country cannot be threatened as it has survived decades of sanction with China’s help. Is Myanmar now moving back to the old order? With more punitive actions from the West, it is a possibility. For now, certain balance has to be attained and appropriate approaches be employed to give the government a leeway to respond to the consequences of the events that led to the crisis, and for the international community to be conscious of the dynamics among the political players in Myanmar.

 

10 things to look forward in 2018

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The year 2017 was annus horribilis for Myanmar with the ripple effect of the Rakhine crisis affecting the economy of the country.  Some institutions who granted awards to Daw Aung San Suu Kyi for her efforts in promoting peace and human rights withdrew the awards because of the perceived inadequate response to what happened in Rakhine. There were even efforts at re-imposing sanctions to ‘punish’ the government.   The start of 2018 will be a good time to focus on the issues that will define the rest of the year. Positive results of the recommended ten items will make this year a better time for Myanmar people and those residing in the country.

  1. More optimism and confidence in the local economy

A business survey conducted among UMFCCI members showed a decrease in investors’ confidence in the country.  The dip in the business confidence   were attributed to various factors, with government policies and the Rakhine crisis among the top issues.  With a clear manifestation from the business sector, the government should take a second look at how the issues expressed can be addressed, and respond to them as fast as possible.  Policy-making and promulgation of the needed laws should be prioritized to convince investors the government is serious in addressing their concerns. As for the Rakhine crisis, the government should continue to work with the international community in working out a solution, instead of looking at it as just an ordinary domestic problem.

  1. New telecom company will bring more benefits

Myanmar leapfrogged from analog to digital telecommunications in a short span of time. With three main players, telecom services became affordable allowing even those in the rural areas to have a hand phone. Smart phones are now a common necessary gadget, and with it potentials for online businesses.  The news of a fourth telecom company MyTel, was met with mixed responses. Many people expect the new provider will further make the market more competitive and that would  mean lower fees for services. There were also those who thought that the new player will only result to migration of clients from existing telecom companies to the new player, affecting the bottomline of existing telecom companies. Migration may actually happen if there is a perception that the services of the new player is more efficient, when in fact, it may be due to the initial small number of clients as it open its services in the country. If ever there will be decrease in the bottomline of existing telecom companies, it is hope that the services will not digress and the fees will not increase.

  1. Increased confidence in the stock market

Despite low trading volume, the stock market has consistently attracted companies to list. So far, there are now five listed companies: FMI, Thilawa SEZ, First Private Bank, Myanmar Citizen Bank and the latest company TMH Public Company. It is also noteworthy to consider that the listed companies are from various industries – banking, industry, telecom and a holding company. Opening up the market to foreign investors will not only induce more volume develop more trust to the market.

  1. Real estate to continue on its growth

The real estate sector is continuing to grow as the government focuses on urban development, high end properties and promotion of low cost housing. More laws are also providing impetus for the sector to be more vibrant. With the new Condominium Law, the sector is expected to attract more foreign investors and buyers.

  1. Improved facilities in tourism areas

Tourism is one of the main drivers of the local economy as tourist areas are spread out in various regions and states. People in tourist areas also benefit through the employment they generate and the related industries that supply the facilities in the areas.  As investments in tourist areas consistently flowed, the quantity and the quality of facilities also improved to the benefit of the tourists, resulting to the rise in the number of visitors. Another positive result is the reduction in price, where in some areas the price are closer to the level of neighboring countries like Thailand, Vietnam and Cambodia.  The quality of the facilities and the area makes tourism in Myanmar not only an enjoyable experience but a memorable one.

  1. Reliable urban transportation system

The liberalization of car importation increased the number of cars. Problems related to it also started to manifest, the buildup of traffic congestion. More cars, more idle time as traffic congestion is nearing the level of Thailand and the Philippines. Plans to have more roads and the improvement of existing ones have to be initiated to cope with the demand of the future.  Another concern is the right-hand driving with a left-hand traffic rules. For the commuters, there is a need to fix the operation of taxis – metering and ridesharing units like Uber.  Upgrading of the train system is also necessary to decongest the roads.

  1. More sustainable financing for SMEs

The missing middle becomes evident in Myanmar as banking regulations restrict access to finance of small and medium enterprises (SME).  Small livelihood types of economic activities are provided with financing from hundreds of microfinance institutions (MFI), while large enterprises are able to access from commercial banks. But the more than 90% SMEs in the country has nowhere to go. Policies on collaterals restrict the flow of funds to SMEs, making them prey to informal moneylenders who charge high interest rates. Some banks are pilot-testing guarantee programs and hope it can be mainstreamed in the near future.

  1. Kyats will stabilize in relation to the dollar

The Kyats has been down and continue to go down since the country opened up to the global market. The challenge is for the government to follow an economic program that will strengthen domestic production and focus on importing goods that will enhance the country’s production capacity. Other factors have to be addressed as well to stabilize the kyats.

  1. Reasonable wages for workers

Cheap labor is an advantage of the country, but as inflation eats up the value of the workers’ wages, the clamor for higher wages to cope with the cost of living will be heard. There will be a conflict of interest as workers fight for higher wages while employers will protect their profits and return on investments. There needs to be a balance where people can live with their wages and at the same time corporate income is assured.

  1. Poverty will be reduced

One third of the country is considered poor. As the country progresses, the people should also advance economically. No sector of the population should be left out.  As such, the benefits of development should not only trickle down to the poorest, but it should be sustainable. Government programs are in place and it is hoped that it will prevent people from falling into the pit of poverty. The business sector is also expected to share the burden through their corporate social responsibility (CSR) activities.

Originally published in Myanmar Insider, January 2018

Improving and promoting development technologies

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Part of the efforts to hone the skills of technical consultants are cross-country  learning activities. Successful technologies developed in various countries are shared to other consultants to appreciate and be included in the array of tools and methodologies to be offered to clients. Among the technologies featured in the ACCESS Advisory annual planning are the following:

  1. Financial product development. Participatory process of designing loan products. This is best suited for financial institutions who would like their products to fit the needs of their clients, ensuring patronage and minimize default. Extensively used in the Philippines and Nepal.
  2. Dream to Reality Financial Literacy Course (D2R). Originally designed as a motivational tool for migrant workers and their families to manage finances, the course has now become a personal finance tool enabling people to maximize their resources to become financially independent. Migrant workers from the Philippines and Nepal working in Malaysia and South Korea benefit from this technology.
  3. Cooperative Formation. Three-stage process in forming sustainable community-based savings and credit cooperatives. It allows development institutions to phase-out in a community leaving behind an institution owned and managed by the people who can continue with their advocacies. Currently used in Myanmar.
  4. Agriculture and Livestock Financial Analysis (ALFA) Agri-Finance Tool. An Excel-based tool for credit and background check to enable financial institutions to assess the risk level of agricultural and livestock producers borrowing working capital for their production activities. Commissioned by the International Finance Corporation (IFC) for Vietnam microfinance institutions (MFIs).
  5. Value Chain Development. Identifying economic activities to be engaged in based on the results of value chain analysis (VCA) of specific commodities. Business planning for start-up activities or expansion of existing enterprises linked with the agricultural or livestock production. Extensively used in Myanmar.

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