Thursday, September 4, 2014

Big Idea No. 7: Be Bold

Aug 09, 2014

Kishore Mahbubani

Singapore's civil service needs to cultivate an entrepreneurial spirit.

By Kishore Mahbubani

Number seven in my series of Big Ideas for Singapore is a simple one: Be Bold. Singapore succeeded in the early years because we had exceptionally bold leaders, who were unafraid of taking risks and learning from their mistakes as they fought against major odds to survive and prosper.

As a result of their boldness, we have succeeded. Having succeeded, we face the classical challenge of all successful corporations and countries: we can become risk-averse.

The Kodak trap

A SIMPLE analogy from business will explain the challenge. As a child, dreaming of owning a camera, it seemed completely inconceivable that I could live in a world without Kodak film. But Kodak is effectively gone. What happened? The easy answer is that Kodak did not anticipate the challenges posed by digital technology. The hard answer is that Kodak became so rich and comfortable that it didn't dare to take any big risks to change course. And that is exactly the challenge that Singapore faces now.

This is why it is wise for Prime Minister Lee Hsien Loong to constantly quote the famous phrase from the former CEO of Intel, Andrew Grove, who said, "Only the paranoid survive".

Mr Grove is right. With the world changing at the fastest pace in human history, the biggest mistake is to continue on auto-pilot, assuming that previous policies and approaches will work equally well in a very different world.

Against this backdrop, PM Lee has emphasised that our civil service must remain dynamic and bold. In a 2004 speech to Commonwealth civil servants, he said: "We need people with moral courage and integrity to acknowledge and correct past mistakes, and recognise when an existing policy has outlived its usefulness and has to be discarded or changed."

Mr Lee added: "Given the pace and scale of change facing all countries, no public service can afford to be passive or reactive."

The Prime Minister concluded by saying: "We concluded our civil service needed to take more risks, instead of always sticking to the tried-and-tested."

Entrepreneurial civil service

I AGREE. When I joined the civil service in 1971 I was impressed by the bold entrepreneurs I met. One of the boldest was Philip Yeo. Indeed, he was legendary. He would take big risks. In the early years of developing our armed forces, it would have been safer to take the tried-and-tested route.

Instead, he developed a new weapon - and as he said: "The army was cursing this crazy Philip Yeo, making this new machine gun, instead of buying a proven machine gun from Belgium."

Howe Yoon Chong was equally entrepreneurial. He seized the opportunity to move the airport from Paya Lebar to Changi and to build a new container port in Tanjong Pagar.

I can tell many more stories like this about the civil servants of the pioneer generation. Let me emphasise that our current civil service is one of the best, if not the best, in the world. It gets abundant praise globally.

[An "entrepreneurial civil service" is an ethically-suspect animal. But I suspect Mahbubani is misusing the term. He means "creative", or being willing to take risks or try new things. This is an idea also shared by Prof Paul Light of New York University. The risk of a mature civil service is the "atrophy of experimentation". ]

Sir Michael Barber, an eminent retired British public servant, says: "Among public servants in Singapore, I am always impressed by their clarity of thought... The Singapore civil service sets a standard of quality that in my experience is rarely matched around the world."

Bryan Caplan, professor of economics at George Mason University, enthuses about the civil servants he met here: "In terms of pure IQ, all of them would have been in the top half of my PhD classes."

Danger of risk aversion

YET, paradoxically, even if we are the best in the world, it may not be good enough. Why? The simple answer is that Kodak had the best film in the world. It was not good enough. Like Kodak, we may move towards greater risk aversion.

To prevent this from happening, we need to find out whether there are structural reasons for any tendency towards risk aversion. As a former administrative service officer (or AO), I am told that there is a big incentive for officers to protect their "current estimated potential" (CEP) by avoiding big risks in their policy recommendations.
The CEP is an estimate of the highest level that an officer can reach in his or her career. Once they are assigned a high CEP, an "escalator" seems to automatically promote the officers to their CEP level - as long as they don't make mistakes. Since mistakes are punished and risks are not rewarded, it is natural for a culture of risk aversion to emerge.

To avoid the Kodak problem and prevent any trend towards risk aversion, we clearly need to change this incentive system. We should recognise and reward the people who are willing to take big risks. Fortunately, there is an easy way to do this. In the annual assessment form, we can ask each senior civil servant to spell out two or three "risky" ideas to improve Singapore that he or she has suggested for implementation. If the answer is zero, alarm bells should begin to ring. If the answer is two or three, the follow-up question should be: "What have you done to promote or implement this risky idea?"

Sacred cows

WE WOULD be kidding ourselves if we believed that over the last 50 years we had not accumulated regulations that have long passed their "sell-by" date. They may have been appropriate for their time, but have since become redundant and unnecessary.

One good example is the "three-quarter tank rule" that Singapore put in place in 1991. The rule was clearly intended to ensure that Singaporeans paid the high petroleum taxes in Singapore instead of using cheap Johor petrol to subsidise their driving in Singapore.

While the Government's desire to prevent the erosion of our revenue base is valid, this has to be weighed against the rule's disadvantage of discouraging Singapore's city dwellers from enjoying the weekend relief from traffic that the residents of most global cities enjoy.
When I was living on Manhattan Island, the city would empty on the weekends as Manhattanites drove out into the countryside visiting friends and relatives. This made it a joy to explore Manhattan on weekends. The three-quarter tank rule is one important reason Singaporeans do not leave the city on weekends.

[That is flawed reasoning. I would argue that the 3/4 tank rule ensures Singaporeans leave the city. The problem without the 3/4 tank rule is that Singaporeans will limp into JB on a 1/4 tank or if possible on petrol fumes, fill up their tanks, and return to Singapore IMMEDIATELY. With the 3/4 tank, SG drivers if they cross into Johor, will maybe drive around and sight see (to use up petrol) so they can buy more cheap petrol before the return. That is, they do not return immediately. The 3/4  tank rule also means that they will go across for other reasons (usually shopping and food), whereas without the rule, most vehicle owners will just scoot across, buy petrol and scoot back. 

Moreover, those that HAVE friends and relatives in Johor and other parts of Malaysia will visit them regardless of the 3/4 tank rule. In fact the 3/4 tank rule might well provide a pretext for visiting relatives: "let's see, I go across with 3/4 tank. Shop. Return. Only get 1/4 tank of fuel. If I go visit Halim in Skudai, by the time I come back to JB, maybe half a tank. Can buy more!"

Without the 3/4 tank rule: "If I can make it to JB on reserve tank, fill up a full tank, I can be back by 3 pm. Haven't seen Halim for a while. But he's in Skudai... I'll email him. Nah! I'll just poke him on Facebook."]

If there are fewer barriers to visiting Johor, more Singaporeans will do so, creating physical and psychological space back home that will increase our sense of well-being. Improved well-being could bring many unintended benefits. For example, an increase in well-being may even improve our birth rates!

[Firstly, there are more than one barriers. Removing the 3/4 tank rule will mean that 500,000 cars will try to cross the causeway each weekend to fill up. The causeway jam will be even more intolerable. But that may well serve the same purpose or objective - emptying SG. Or moving all the drivers into a long parking lot called the Causeway jam.

There are other reasons Singaporeans do not "explore" the Johor countryside. Not everyone has friends or relatives there. Not everyone enjoys visiting Johor with the inherent threats (crime), risks (corruption), and inconveniences (clearing customs and immigration, and bribing police officers and random government officials).

That said, I am all for elegant and natural solutions. 

I would also argue for the removal of the 3/4 tank rule. But for simply free market reasons. With unrestrained access to subsidised fuel, SG motorist will flock to Johor and this will either boost the fuel retailer's profits, or bankrupt the Malaysian government. We can then expect that the Malaysian govt will attempt to control the sale of fuel to SG-registered cars. We would then no longer need to enforce a 3/4 tank rule. 

But guess what? Singaporeans will not empty out of SG on a weekend. At least not to Malaysia.]

New solutions to old problems

IN ADDITION to "negative" suggestions on which old rules and practices should be killed, civil servants should also be encouraged to give "positive" suggestions on how old problems can be solved in new ways. The best way to illuminate this is with another concrete example.

One of Singapore's biggest problems is the haze we get from neighbouring Indonesia. The Singapore Government has certainly worked very hard to prevent a recurrence of this problem. However, can we think of innovative new ways to supplement the efforts of the Government?

For example, instead of just relying on our Government to solve the haze problem, can we utilise the resources of civil society to help solve the problem too?

We could encourage Singapore NGOs to visit Indonesia to understand the Indonesian perspectives and constraints, taking careful note of the political, economic, social and cultural factors at play.

Then, having come to a good understanding of both sides of the issue, they could come up with radical solutions to the problem. For example, the NGOs could assist the farmers on the ground to shift to less destructive methods of agriculture.

The slash-and-burn technique works in the short term but is not sustainable in the long term. Small farmers also have an incentive to learn new agricultural techniques, especially if such techniques become more financially viable. Can we use our NGOs to encourage them to do so?

[Speculative and presumptive at best. And are the slash-and-burn subsistence farmers the main cause of the haze? Some information are implicating large commercial operations who are also using forest burning to clear large tracts of land. It is the most cost-effective way. The problem is that we don't even know what is the problem from over here. We assume that it is the subsistence farmers.

Secondly, NGOs are not civil servants. This idea sounds like, "let's get some NGOs to solve the problem creatively, and then we will take credit for bringing NGOs to solve the problem! It is as if WE Civil Servants solved the problem!"]

Data sharing needed

ONE final example of a bold initiative that our civil servants can take is to share more data and information with Singapore universities and think-tanks. Indeed, the Prime Minister has encouraged the civil service to be more open and transparent.

In a speech at an Institute of Policy Studies (IPS) conference in 2010, he said that "it is useful for the public sector to cooperate with the IPS and to be forthcoming with information and access… This way, the Government can consult more widely and develop better thought-out policies, and IPS will be more effective in fostering informed discussion of policies outside Government."

Sadly, even though the Prime Minister made this call in 2010, the cautious civil service approach of sharing data has not changed.

As dean of a school of public policy, I know that many of our professors find it easier to get data from other Asian countries than from Singapore. Amazingly, even retired permanent secretaries cannot get access to data they once handled in service.

This is a real pity as, in the next phase of Singapore's development, we will need to tap ideas from a broader section of Singaporeans. If they are not given access to data, they will not be able to contribute.

And if we stop them from contributing, we could end up like Kodak - following safe paths and not taking big risks. Not taking risks is the biggest risk for Singapore.

The writer is dean of the Lee Kuan Yew School of Public Policy, National University of Singapore. He was named one of the top 50 world thinkers this year by Prospect magazine, a British publication.

[I don't particularly disagree with the general thrust of this article. Just with his "illustrations". A bold idea would be for the civil service to do less.

Another idea would be not to crowd out the private or people (volunteer) sector. If I did not misread his article and ignoring the misuse of "entrepreneurial", I would summarise his points, as "be bold, be creative, take risks, try new approaches. Don't just think out of the box. Think "why box?"]

No comments: