Wednesday, October 7, 2009

Re-emergence of the iron rice bowl will kill innovation


Recently, at a meeting on promoting youth entrepreneurship in SE Asia, I made a comment that the "re-emergence of the iron rice bowl will kill innovation and entrepreneurship". A person from the government civil services asked me if the recent economic crisis taught me nothing. I answered that the economic crisis taught me a lot, especially that there are a lot of people who claim to be economic or financial experts with very little understanding of the economy or finance. Just like the meeting he and I were in, where all the talk about promoting entrepreneurship was done by a group of civil servants who are often the embodiment of the iron rice bowl.

I will not pretend that I enjoy the tumultuous economic times we are in, neither would I want to loose my livelihood at a moments notice, but I am of the opinion that in order to enjoy progress in technology, to enjoy the ability to generate value, wealth and uplift large segments of impoverished society, we can not depend on government hand-outs. We will need to innovate, generate private sector employment and encourage entrepreneurs.
Increasingly young educated college graduates are looking for employment in the government or government linked companies/research labs. In an informal poll with graduating students in Singapore, US, and the UK, the top preference for jobs were government jobs where basically one could never be laid off. Having smart, educated people looking for the safe bet is not going to help progress. Unfortunately many of the schemes used to encourage young entrepreneurs are conceived by the very people who abhor risk and want the safe bet. So how effective are those programs going to be?
Too much risk taking caused many of the problems that exploded on us in the last 12 months. Now nurturing a generation of "rice bowler" could swing the pendulum too much the other way, rendering young professionals unsuitable for employment in the private sector. In effect many of the policies being adopted are leading to diminishing competitiveness of local populations, thereby increasing the need to look for talent elsewhere.

10 comments:

Yiannis said...

Well said Chandran. I guess one key question that the whole debate raises is the quality and integrity of performance management / development programs that most corporations have in place. Perhaps the rice-bowl syndrome is one extreme and zero security, constant pressure to shoot for short term profit and pressure for management to 'make changes for the sake of being seen to make changes' is the other extreme. I believe the western academic space is one where there seems to be a balance - not sure if its the perfect one. It consists of the requirement to work incredible hard at the outset, make significant contribution to research and it creates a peer review mechanism from peer experts (not to mention that most academics in the west have to also be entrepreneurial enough to get funds consistently). At the same time they have very good job security.

Why is it that we can drive incredible performance (productivity is too strong a word for academic research) out of leading academics and still provide job security but we can't do it in the corporate world?

Anonymous said...

I agree totally. Nobody gets fired working in Goverment Agencies. You will have to do something criminal before you get fired.

I just spoke to a good friend yesterday who works in such an Agency. He has never heard of anyone getting fired.

So does this mean that Goverment Agency has an uncanny abiliy to choose the best people?

I'm not saying that every mistake deserves firing but if the job is 'iron rice', the employee can make decision without worrying about consequences to himself. This will however affect other people's lives.

You can google many of such cases which are widely reported in local newspapers of how public servants performing badly get off lightly.

Nobody gets fired. So there are 2 rules here. Rule #1 You can get paid like top Bankers. Rule #2 You will not get fired like top Bankers even if you screw up big time.

Ken said...

Very well said. In Singapore's context, a fresh graduate with excellent results will have numerous opportunities waiting for him/her. The offers on the table would be for the taking. Overall, large corporations and government agencies share similar remuneration packages for fresh graduates. However, for those excellent graduates, the government have 'scholar' packages that do offer very attractive remuneration packages coupled to a pretty obvious performance management/development programs or growth road-maps. The comment that put across by Yiannis is highly valid (in my opinion). In the culture where the 'iron rice-bow' does exist, the question that our graduates may ask is 'Why would I want to work so hard for benefits or job security that are not apparent in the some corporate organization when the government is offering a better 'overall package' even though the job may not be 100% to my liking?'

In my honest opinion, graduates that ask this have a rather short-sighted vision; and as Chandran pointed out 'adhor risk and want the safe bet'. But yet, this point of view is debatable.

Perhaps the intricate task for corporations is to balance between driving performance and growth with attracting and retaining talented individuals.

Anonymous said...

Singapore is a great example of a well managed government that has improved the lot of most of its inhabitants. The Western "academic space" is another example of a well funded, well managed segment of the society where government funds get transfered strategically to fund research on value added endevours. For instance, most research on basic science, which is a high cost, high risk is government funded. Another example of good government spending in action is the internet: DARPA and CERN researchers conceived it. Once this infrastructure proved viable, it was set free to private enterprise.

It is popular to complain about the inefficiency of governments, specially in well developed democracies. As a matter of fact, it is actually encouraged. I'll let you all speculate as to why...

Chandran Nair said...

The writer of the previous comment is correct; Singapore is one of the best run countries in the world. It is even the easiest country for one to start a business. The point of my note was that long term innovation, even those that are of shoots of large government programs are hindered when entrepreneurship is stifled by excess involvement in business by the government not withstanding many of the things I agree with in “Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism”

Yiannis said...

I still agree with all sides. Innovation is key - employment for life without some structure for requiring and rewarding achievement can be detrimental to progress but the current job insecurity in western corporations during the period of crisis is not necessarily the perfect answer for productivity and innovation (and you can see this everywhere you look these days in large corporations were people are afraid for their jobs).

Anonymous said...

Mohammed Ameen: Iron Rice Bowl is not re-emerging... its been there all the time in India. All this talk is not going to make any difference to the babus who run the system.... guaranteed lifetime employment is got under influence and not for the deserving....

Anonymous said...

Shyam Sasidharan:
On the opposite side we have stories like GM killing the Electric Car.. Not sure any more

Anonymous said...

Chandran Nair :
Shyam this actually adds to the point, GM now a Iron rice bowl organization

Anonymous said...

Yeo Woo Yee:
I love it! But there are some whom are entrepreneur at a national level!