“In his grace, God has given us different gifts for doing certain things well” – Romans 12:6
I was honoured to have been invited to participate on a panel to discuss “Innovation and Emerging Business” as part of an overall conference theme titled “Driving Comparative Advantage: Diversity, Unity and Innovation” as it relates to future growth opportunities in the Caribbean region.
This conference series has been organised mainly by Caribbean MBA students from The Wharton School of the University of Pennsylvania and Harvard Business School since 2003 and is also attended by students and alumni from outside of the Caribbean and from other leading business schools.
Since its inception, the Caribbean MBA Conference has attracted leaders from the public, private, and non-profit sectors. Former participants include Prime Minister Bruce Golding of Jamaica; Prime Minister Hubert Ingraham of the Bahamas; and former Prime Minister Patrick Manning of Trinidad and Tobago. Prime Minister Freundel Stuart was the featured speaker at the opening of this conference and Minister of Tourism Richard Sealy was the lunchtime speaker at its conclusion.
I was only able to attend two sessions at the two day conference but I gleaned that the general message was to encourage MBA students from the Caribbean to return home and contribute to Caribbean development. First Caribbean International Bank was the main sponsor of the event and clearly recognised the value of garnering, encouraging and nurturing the talent in these MBA programmes. It was an excellent diversion from the cut and thrust of shepherding entrepreneurs on a daily basis.
The recent or, some may say, current economic crisis has jolted us to reflect on the way forward and take action accordingly. A colleague of mine recently pointed out that: “history will reflect that we have relied on economists almost exclusively, since the late 1960s, to produce any practical, sustainable policy measures which could have promoted the economic development of the Caribbean.”
Also, I came in at the tail-end of a Trade Policy panel discussion at the MBA conference where I heard two telling comments: the one was that there are many young entrepreneurs who are trading over the Internet and are really not too concerned about trade policy; and the other I understood the moderator to say: “It seems that we are spending much time developing trade policy but we really do not have very much to trade” – a classical situation of putting the cart before the horse.
The Caribbean region’s economic crisis is usually blamed on a combination of adverse external events emanating from the global financial crisis. The solution is not to wait patiently for conditions to improve but to get up off our haunches, innovate and implement – easier said than done. Economists cannot do it alone. We need to mobilise technical talent (in a myriad of fields), business management resources and financiers. Entrepreneurial development is the answer.
The technical talent will innovate by developing ideas with the DNA of an elephant; the business management will innovate by developing models such as the CBET Shepherding Model; the financiers will innovate by making money accessible primarily through Seed & Venture Capital windows. This mind-set change is hastened by the reality that sugar and bananas, for example, are “sunset industries” and have to be replaced by consulting, renewable energy, ICT, film, fine art, culinary art, music and fashion, for example, the “sunrise” industries. The business environment of the future will be different; financial institutions of the future must change and move beyond their comfort zone in search of sustainability, if they are to survive; and marketing organisations will be driven by the new social marketing thrust.
It has been reported that: Mr Gordon Brown’s new book, “Beyond the Crash”, emphasises that the crisis necessitates new economic thinking. This imperative has eluded Caribbean economists. They have formulated three big ideas, all before 1970. First, Sir Arthur Lewis pointed to industrialisation of labour surplus economies by exporting manufactured goods. Apart from Trinidad, the region failed to grasp this prospect because it was caricatured as “industrialisation by invitation”.
Second, Messrs Demas, Thomas and Brewster correctly envisioned regional integration as a means of overcoming some of the disadvantages of small size.
Third, George Beckford explained how in plantation-dominated economies, multinational corporations in the sugar and banana industries impoverished their host economies.
It is now the turn of service industries to make a mark as they emerge as sunrise industries. Many of these ideas will be intellectual property based and as has been said time and time again the associated entrepreneurs, for the most part, will have no hard collateral to offer the financial institution as security. They will therefore not be eligible for a loan and the entrepreneur will become frustrated and give in; brilliant ideas capable of transforming the economic landscape will never see the light of day; and the growth in the national economy will be stymied.
Fortunately, the innovation of shepherding is promoted to mitigate the risk of failure and addresses this by tackling the root cause of failure i.e. weak management. “Shepherding as collateral” therefore may encorage the commercial bank, for example, to approve a loan without the requirement for hard collateral, thus creating a new business portfolio and growth, which it has previously denied itself.
The technical talent, the business and the financiers must by the grace of God utilise their different gifts for doing certain things well and induce change towards a sustainable future.