Chief Guest Address to the CIMA Business Leaders Summit
Thank you for the invitation by Chartered Institute of Management Accountants to speak at the annual Business Leader’s Summit. Since its inception, CIMA has produced highly-qualified business professionals who continue to drive forward the country’s business environment. It is an honor to be amongst the country’s top business leaders tonight and I look forward to meeting you today and at future events.
This year’s summit focuses on turning a good organization into great one. Management guru Jimmie Collins defines a great company as one that achieves sustainable superiority. I think he is right, and I would add that good leadership and management do not just apply to commercial enterprises; they are equally applicable to the public sector as well.
[US Ambassador Robert Blake, File Photo]
I am delighted that I, a humble government official for the United States, was asked to speak to such a distinguished group of business leaders. My undergraduate peers who know I was a history major and witnessed me suffer through courses in micro and macro-economic theory would no doubt be amused and perhaps even a little alarmed that I have been given this platform tonight.
Rest assured I will not try to give you advice on mergers and acquisitions, nor predict Donald Trump’s next business move. But I can talk to you about the importance of effectively managing a government organization in today’s rapidly changing world and offer some thoughts on how Sri Lanka can position itself to build on the economic success it already has enjoyed.
I would like to tell you how the organization I work for, the U.S. Department of State, has broken away from traditional public sector practices and become more effective by operating more like a business and managing for results.
American diplomacy in the 21st century is still based on the same fundamental beliefs that have guided it for 200 years. Our mission remains to advance security, democracy, and prosperity for the benefit of the American people and the international community. The world, however, is a vastly different place than it was even 20 years ago. It is smaller, more interconnected, with both traditional and new transnational challenges that threaten global prosperity and security.
Adapting to this changing environment, American diplomacy has become more diverse, proactive, creative and flexible to confront these challenges. The transformation of the State Department has made a good organization into a great one.
The Secretary of State has two functions: he or she is the President’s principal foreign policy advisor, and the Secretary is also the person who runs the 57,000-person State Department — its CEO. To be successful in both roles, the Secretary of State has to make sure that the department is properly organized, equipped and manned to conduct America’s foreign policy.
Secretary Powell and later Secretary Rice launched a two-prong strategy to transform the institution. The first was to remedy management deficiencies in terms of budget, information technology, and other infrastructure. The second was to create a leadership culture. They succeeded in both.
Powell went to Congress and explained that the State Department had been under funded relative to its importance. He reasoned that each dollar of preventive diplomacy could save hundreds of dollars in future conflict-related costs. He promised to deliver better results in exchange for a budget that would enable him to hire enough people to do the job and to equip them with the tools they need.
To improve productivity, Powell created a “State of the art” State Department by getting modern technology to its employees so they can do the best job possible. Now every employee is linked to a secure computer network and has the ability to instantly connect to their colleagues overseas and to other US government agencies.
To ensure that State was really working on its priorities and to put the “managing for results” mantra into practice, he completely revamped our strategic planning. Today, every bureau and every Embassy in the State Department has an annual performance plan with specific and measurable goals and objectives. These plans enable both management and the public to better monitor the organization’s progress and value.
But institutions are not only about IT infrastructure, plans and strategies. They are mostly about people. Secretary Powell was fond of telling us that the State Department does not have fancy equipment or weaponry. Our number one tool of diplomacy is our people, he said.
Today the State Dept has a first-rate recruitment and marketing program to increase the diversity and quality of its officers and specialists. Powell and current Secretary Condoleezza Rice, both of whom are African-American, set about to create a diplomatic corps that reflects the great diversity of the United States. To recruit the best and the brightest from all backgrounds, geographic regions, academic majors, and ethnic groups, the State department participates in diversity fairs, offers fellowship programs aimed at women and minority students; and partners with employee organizations such as the Asian Pacific American Foreign Affairs Council and Blacks in Government.
Secretaries Powell and Rice were not content just to recruit the best people. They wanted to build their leadership skills while they were on the job. They believed that every supervisor at every level has the power and responsibility to transform his/her department into a dynamic and flexible one. So they made leadership and management training mandatory for all officers, with a round of training at the entry, mid-, and senior levels.
Uniquely among U.S. federal agencies, the State Department has an “up or out” promotion system. That is, officers who are not promoted within a certain period are “selected out.” Every employee has specific objectives to accomplish each year and receives a written performance evaluation that determines promotions. This system encourages leadership and pro-active diplomacy and is good for morale. Moreover, it allows the most talented employees to move up through the ranks, which in turn generates motivation and job satisfaction.
This kind of management explain why, for the second year in a row, the State Department was the highest ranking government agency in Business Week’s survey of the most desirable employers for college under-graduates, ranking only behind top ranked Google, Walt Disney and Apple computer.
Secretary Powell’s and Secretary Rice’s leadership and management lessons can be applied to businesses and government here in Sri Lanka. CIMA’s success in training large numbers of accountants and establishing rigorous standards has not only made accounting a leading edge of Sri Lanka’s business, but has also helped position Sri Lanka to attract business process outsourcing investment in this sector. CIMA, then, is a perfect example of the model that Sri Lanka should follow to help position other sectors to compete in the 21st century.
For Sri Lanka’s companies to succeed and compete successfully in the increasingly competitive and globalized world of the 21st century, Sri Lanka must do what Secretaries Powell and Rice did: develop a national strategic plan and build the skills of your greatest asset, your people.
Let’s address the plan first. Traditionally Governments are good about thinking how they will spend taxpayer funds in a variety of sectors over a five or even ten-year horizon. The Mahinda Chintana is a good example. But such plans are only a beginning and the private sector must play a strong role.
Sri Lanka needs an overarching strategy to develop your full economic potential, not only for the next year, but also for the next ten years. What will be Sri Lanka’s niche in the international marketplace in 2017? What sectors will lead your country’s growth then? For example, will you still be able to count on strong exports from the garment industry or is it wise to assume that new suppliers with lower cost bases will emerge to successfully compete against you? As wages rise here in Sri Lanka, will so many of your citizens be so eager to seek jobs outside the country? What steps should your country be taking now to prepare the A-level and college graduates to ensure your country can successfully compete and prosper in 2017? These are the questions a strategic plan must address.
In the new increasingly knowledge-based economy of the 21st century, what will ultimately propel Sri Lanka’s economy forward is the knowledge and training of its people. You begin with a significant advantage of South Asia’s highest literacy rates. But that advantage is eroding. The education system in Sri Lanka is largely a public sector monopoly that is not delivering the volume and quality of education required. Approximately 85% of Sri Lanka’s youth who qualify for university are not admitted because Sri Lanka’s university system lacks the capacity to train them.
Yet study after study has shown that higher education is the linchpin of any country’s educational system. As Sri Lanka’s economy continues to progress, wages will rise and knowledge-based industry is likely to increasingly dominate your economy as it does those of India and the United States. America’s highly diverse and extensive higher education system has given all Americans the opportunity to compete and succeed and is a pre-eminent factor in the competitiveness of our economy.
Sri Lanka, by contrast, is uni-laterally disarming itself in its future fight for global competitiveness by not giving 100,000 A-level graduates a year the opportunity to seek higher education in their country. This is an enormous missed opportunity, and one that must be addressed immediately. You could do so by encouraging more private universities over the objections of one of your political parties, and by seeking out partnerships with colleges from the United States and elsewhere.
Higher education here would benefit from more of a private-public partnership approach, where the productive sectors of the economy collaborate with the public sector to advance shared educational goals. Let’s take a concrete example. A very large percentage of those Sri Lankans who are fortunate enough to attend university graduate with degrees from the Faculty of Arts and subsequently find it difficult to find a job. To remedy that problem, universities should partner with businesses to establish fellowship programs, internships, and on-the-job training so that universities turn out the trained labor that your growing economy needs.
Programs like this have already proven their value here. Virtusa, a dynamic American IT company with offices here in Sri Lanka, has collaborated closely with prestigious Universities like Peradeniya and Moratuwa. Virtusa invites university staff to attend its in-house IT and management courses. Virtusa also sends some of its best technical experts to teach courses at the universities. Further, the company sponsors and supervises research projects that provide real world challenges for students to tackle.
Sri Lanka’s business leaders tell me that another major constraint they face in hiring qualified entry level personnel is the lack of English language skills among prospective employees. Almost all internationally-competitive companies demand English communication skills. Sri Lanka had a strong background in this respect at one time, but it has lost its edge. Many employers here report that they would hire more English speakers if they could, and are ready to train them in other aspects of their work.
The United States is helping meet this demand. The U.S. Agency for International Development has teamed up with public universities, local villages, and the private sector in a variety of English language training programs.
-Under the Accelerated Skills Acquisition Program, 25,000 young adults are trained in employability skills such as English, career skills and computer literacy.
-USAID is also investing $368,000 to train 150 English and IT teachers to use computer-based English learning at eight computer centers across the island.
-With the Ministry of Education, we are providing technical assistance to develop a Center for Excellence in English Language Teaching at Peradeniya Teachers’ College.
A third constraint in building Sri Lanka’s international competitiveness is the low level of literacy in information and communications technology skills. Sri Lanka’s dynamic Minister of Science and Technology recently estimated that Sri Lanka’s ICT literacy is only 10%.
Some efforts are underway to bridge the “digital divide” between Sri Lanka’s urban and rural areas. I am encouraged by the e-villages that are being established using private sector funds to bring inexpensive internet connectivity to remote areas. Another program I am excited about is U.S. AID’s Last Mile Initiative, launched here in Sri Lanka last month. Private firms, such as Dialog, Microsoft, Qualcomm, Lanka Orix, Infoshare and National Development Bank have matched one-to-one the $380,000 investment made by USAID to establish within the next six months 25 internet and communications centers in rural areas around the country.
This program will increase productivity and provide new opportunities for farmers, small businesses and other organizations in rural areas that do not currently have access to the web. Wimax and other connectivity technologies will enable the centers to teach English language, agricultural practices, computer use and small business skills, while making a profit in doing so. Once these pilot projects show the way, we hope the private sector will duplicate the experiment on a national scale.
Another priority should be to reform Sri Lanka’s public sector to make it a catalyst for the country’s growth and prosperity, rather than the obstacle to progress that bureaucracies too often are. One of the surest ways to get a laugh at any public gathering in America is to announce “I am from the Government and I’m here to help.” Perhaps Sri Lanka’s bureaucrats could get a similar reaction. Any management consultant would likely advise some combination of the following actions to make Sri Lanka’s public sector a force for positive change:
-Reduce the number of Ministries with overlapping responsibilities so there is one Minister clearly responsible for achieving results within his or her area of responsibility.
-The culture of government must change from one in which people join government to enrich themselves to one where young talent joins government to serve their country. Part of that answer must be higher salaries, particularly for senior government officials, so that they do not need to seek ways to supplement their meager income. Part of the answer also lies in greater government transparency that right to information laws such as that in India would provide.
-The global trend toward e-government should be encouraged here in Sri Lanka. The more that Sri Lanka’s citizens can go online to get simple forms and information, apply for services or pay utility and other public sector bills, the more service will improve, valuable time will be saved, and the opportunities for petty corruption diminished.
One of our most inspiring American Presidents John F. Kennedy once told the American people “Ask not what your country can do for you, but what you can do for your country.” All of you represent Sri Lanka’s best and brightest. It is up to you to take the lead your selves in creating opportunities for other talented Sri Lankans, and in working with the public sector to think through a strategic plan and create a favorable business climate to help Sri Lanka realize its promise and potential.
For example, Sri Lanka has one of the most competitive garment sectors in the world that has maintained its market share in the face of stiff competition from China, Vietnam and others in the wake of the lapse of the global Multifibre Arrangement.
That success should be duplicated in other areas of manufacturing, particularly since you have duty free access for many of your products into the large and growing markets of India and Pakistan.
Your tea industry is now a globally recognized brand to the point where Sri Lankan tea is able to command prices that are up to 30% higher than those of its competitors because of the quality of your product.
Why not duplicate that success in other commodity areas such as rubber?
Sri Lanka now derives over $2 billion a year from remittances of capable Sri Lankan workers overseas. Yet many of those workers are semi-skilled labor who could be doing much more. Instead of sending maids and construction workers to the Gulf, why not train these same workers as nurses, educators or IT engineers so they can double the remittances they send back?
A skilled and talented young workforce is Sri Lanka’s niche in this competitive, globalized economy. It is your responsibility, as the country’s business leaders, to set achievable goals, promote professional development, mentor colleagues, encourage technological innovation, and to collaborate within your organizations, your industries and with the government.
Let me conclude by mentioning Sri Lanka’s biggest challenge of all: resolving your longstanding conflict. I don’t need to tell you how your economy has been held back by war. The opportunity cost of the war is estimated at two to three percent of annual GDP growth. That amounts to a lot when compounded over the 23 years of the conflict. It means that GDP per capita today could have been 50 percent greater than it currently is. It does not count the cost of the brainpower of the hundreds of thousands who have left the country. It does not reflect the foreign direct investment foregone, or the money that Sri Lankans chose to invest abroad.
The most important thing to enhance the climate for business is for the Government of Sri Lanka and the LTTE to reach a durable peace settlement. A sustainable peace would not only end the killings, abductions and other problems that have plagued Sri Lanka, it would also bring a virtuous cycle of new investment into the country and a return of Sri Lanka’s brightest minds from abroad. That is an outcome that would truly exemplify the spirit of “good to great.” It is also an outcome that is within reach and possible if everyone is committed to achieving it for the sake of your nation.
Your cricket team reached the glory of the World Cup final on the strength of performances by men who represented all faiths and ethnic backgrounds. Let their team’s success be an example for us all. In America, you will find a strong friend and partner through it all.
6 June 2007, BMICH, Colombo
[Courtesy: US Embassy News, Colombo, Sri Lanka]