I just wrapped up teaching a class on Managerial Economics for MBA students this semester at Father Saturnino Urios University. One of the topics we covered was the use of learning curves in business. In a nutshell, learning curves are used by managers to help understand how organizations become more productive over time as people get better at doing their jobs. The basic premise is that as people get better at their jobs with time, they become more productive and the organization reaps the benefits when errors are reduced or corrected. The idea is simple. But to reap the benefits, people must learn to reduce their errors and make the necessary corrections.
What do learning curves have to do with this week’s Small Business File? Well, everything! Because this week I’d like to discuss how people, especially foreign small business owners, must make an effort to learn to get better at reducing their own errors in the Philippine context. Failing to learn from your errors in the Philippines will result is more failures in business, and in life in general. There is a real danger in relying on Western conventions when undertaking business in the Philippines. Why danger? Because the Philippines does not have the same business traditions, foundations and characteristics of other countries.
Philippine Business Expo
Too many foreign small business owners try to bring what they perceive are better business practices with them to the Philippines and expect those practices to result in success. Rarely does this happen. Now I’m not saying it is impossible to introduce small changes and create incremental improvements. But I am saying it is vitally important to remember: “When in the Philippines, do as the Filipinos do!”
After one has lived here long enough, many often learn that there are generally very valid reasons why things are done the way they are in the Philippines. What may appear to be strange, inefficient, or unproductive is often not the case. Laws, regulations, norms, checks and balances, employee and management training, wages — all of these factors and many more combine to form what have become generally accepted business practices in the Philippines.
Successful foreign small business owners work within the Philippine framework. Unsuccessful small business owners rage against the system and get absolutely nowhere. Complaining and making derogatory accusations towards Philippine business practices only alienates these small business owners to others, both foreign and Filipino. Instead of swimming upstream and crusading against Philippine norms, one should embrace the Philippine business culture for what it is and learn from it! This brings us back to learning curves.
The best way to make improvements in productivity for your small business is to learn from your mistakes and take corrective actions. It’s time to stop believing western methods are ‘correct’, when in fact they may not have increased your business volume, or worse, alienated many customers. If your suppliers are having trouble meeting your orders, find out why. Don’t simply jump to the conclusion that Filipino suppliers don’t know what they are doing and care less about your business. Many small business owners burn bridges this way. They don’t realize that stocks may not have arrived with the supplier yet — shipping companies face ship break downs or weather delays which cause shipments to miss by weeks sometimes.
I remember ordering supplies from Manila about three years ago and faced such a problem — there were typhoons in Luzon, and after the weather cleared up the ship to northern Mindanao was dry docked for a week for repairs. I received my order almost 3 weeks late. But that’s hardly the fault of the supplier I ordered from. I followed up with my supplier and the shipping company and learned about the cause of the delays. Both delays are a part of doing business in the Philippines.
Another foreign small business owner faced the same problem, but instead of investigating what the problem was, he simply called up his supplier, ranted about how backward the Philippines was and threatened to never do business with the supplier again. Bad move. The supplier simply decided not to do business with him again. Of course the foreign small business owner couldn’t find another supplier and his business failed soon after. I’m sure he continues to believe the Philippines ‘just doesn’t get it’. I am pretty sure it is he who just doesn’t get it. Typhoons do disrupt transport. Ships do break down. There aren’t many other alternatives when you think about it. Claiming this would never happen in a ‘western’ economy is ridiculous. Just ask anyone trying to get something delivered in one of the gulf-coast states after a hurricane has made landfall.
The lesson here is to respect Philippine business norms — build in appropriate times for delays; make sure you have an inventory system that can handle delays; be on good terms with suppliers so they can help you find alternate ways of solving your problem. You’d be surprised how easy it is to get help by simply asking for it nicely! Filipinos are used to the idiosyncrasies of doing business in the Philippines. Why not ask them to help you navigate through it? Seems to make a lot more sense than running down the business culture and wishing things worked ‘like they do in the west’ or wherever else.
Learn from your mistakes and take corrective action. Learn how to do things in the local context. Sure, introduce outside methods if they make a difference in day-to-day operations, but don’t be fooled into thinking such methods will always work. Sometimes they won’t. Don’t keep trying to force the issue. Learn that some methods and practices just won’t work. Learn from the experience and try to find out how you should be doing things to be more successful. Make the correction and be better off for it. If you’re interested in increasing productivity, adapt to local norms. You just may learn that doing so not only makes sense but improves your bottom line.
About Martin
Hi Martin – I’d equate this as using common sense. Or to use a Star Trek phrase, one must learn to adapt. My future plans are to have some business(es) in the Philippines, so understanding those cultural nuances will be crucial. I have a few ideas, but have yet to test the waters to determine if these are viable. Still, the learning curve is so much fun and interesting as I embrace a new culture.
Martin: One of your more important articles, in my opinion, for anyone hoping to start a business here. Much of it has to do with the aggressiveness that westerners are taught when related to business.This aggressiveness can give the appearance of arrogance very easily when combined with the constraints of doing business in the RP.
My boss and I were having a discussion a few weeks ago when he asked about the stress I am under. I said, “you bet!” He then said, “This stress will pass, but will be replaced with different stress… keep your cool.”
Words to the wise, in my mind.
Hello Martin,
This is funny, I was actually thinking about this very subject, and I figured that being too aggressive, and assertive..maybe in a “outspoken” way..would not be to good for business or business relations.
Nothing wrong with being confident, but I guess to not throw it peoples faces, but then again, I wouldn’t do that here in the USA either..
Great article…take care.
Danny
Hi Danny,
Thanks, as usual, for your comments. I think the big problem is many foreign small business owners have trouble adapting to the local business culture. In response to this failure to adapt, they fall back on “well, this is the way we do things where I’m from . . . ”
It is ok to examine the contrasting styles and business practices between one’s home country and one’s host country. The problem is insisting the Philippines change their practices to suit what the newcomer might prefer! That isn’t going to work. Ever. Sure, culture and practices do change, but it takes time, and it has to be driven by Filipinos, not outsiders.
The best way to succeed in the Philippines, be it in business or life in general, is to fit in! Yes, your business needs to stand out from the crowd, but it still needs to operate and function within the current laws, norms, and generally expected practices of the locale you are operating in.
In most parts of Asia, aggressiveness is often equated to weakness — why be aggressive unless you are hiding something? It’s basic Sun Tsu/Art of War . . . When weak, appear strong. When strong, appear weak. That’s a simple lesson everyone who does business in Asia learns either with time or through a keen interest in cultural understanding. But I digress. My point with this article is to demonstrate that learning and correcting one’s errors is what really matters.
Thanks again for stopping by, Danny!
A good one Martin ..I’ve been layed off from jobs in the states cause of backorders or weather- snowstorms .boss said it won’t be here for 4 weeks or longer and we don’t have enuf work for you guys,so down the road I went ..and of course eveyone needs it by August when we are working on a school remodel.and so do a couple of hundred other contractors ..Phil R.
Hi Phil,
Thanks for sharing.
We missed you on Friday. Hope to see you next week.
Cheers!
Hi Martin:
Interesting insight. I had to read it a few times. Your points about doing business in Asia and the Philippines, can be stretched to a number of other, non-English/American systems. To complicate matters, most foreigners overlook the fact the Philippines “suffers” (for lack of a better word) from multiple personality: very western, American on one hand, Spanish on the other hand, Asian in many ways, Pacific islanders deep inside. Seeing business contracts, documents written in Latin alphabets, usually in English, or doing business in English with someone, can be deceiving. Interpretation of issues, business on hand, the nuances, can be very diverse depending on who you’re talking to and about what.
Hi Henry,
I like your response. I think you’d be surprised at how there are many foreign small business owners who do not see this as ‘common sense’. In that regard, common sense is very uncommon.
I know you’ve been a long time reader and commenter on LiP, so you should be armed with plenty of knowledge once you make the move. This will come in handy and hopefully you will sidestep many of the landmines others fall victim to.
As always, remember to start small in anything you do decide to do. You won’t regret it, and you’ll find that riding the learning curve is less stressful and what you learn as you go will be easier to understand and put into context.
Good luck with your future plans, Henry. Keep me posted!
Hi John,
Thanks for sharing your comments. You are very right. Assertiveness, aggressiveness, and excessive confidence are viewed very differently here. They are liabilities for the most part. People feel awkward dealing with overly confident individuals.
What gains respect is humility matched with superior quality. It seems to be the secret to the success of many longtime foreign small business owners. Brashness is easily taken for boorishness in Asia. However humility is a trait that is respected, especially when the humbleness comes from a foreign business owner.
You’ll notice I say nothing about offering an inferior product or service. The product or service must meet or exceed expectations. This, in conjunction with correcting errors and learning how to market or manufacture your products better over time is what results in long term success.
Thanks for sharing, John.
Hi Alex,
I’m writing for an audience with a Philippine interest, but the nuts-and-bolts of the argument are likely to hold true for other countries and cultural systems as well.
The main point of the article is that most small business owners need to fit in and adapt to the local cultural context to be successful. That means learning to make money in the local context, and not insisting on making money according to how it is done somewhere else.
The Philippines, like any other country, has its own unique set of cultural norms, expectations, and business practices. As an outsider, the onus is on us to learn to adapt, not the other way around. Generally speaking, the more we can adapt and learn to do business in the local context, the more successful we will be.
Thanks for sharing.