The Digital Revolution is Has Arrived

More Barbadians are beginning to recognize the benefits of information and communications technology in business, medicine, sports and the arts as they explore new ways to do things and new things to do. Unfortunately the use of new technology tools has been hampered by a reluctance to make fundamental structural changes that would require planned obsolescence of inefficient traditional business models.

This may all be about to change as consumers are buffeted with inflationary pressures, rising taxes and increased energy cost. The challenge to find non traditional methods of distribution that creates real saving for their customers will force existing businesses to reinvent themselves or face the prospect of crushing competition from new and agile business models that eliminate many of the intermediate steps in the supply chain that forms the links between producer and consumer.

We are now in that turbulent period of an era shift where technology is revolutionizing the way we do business, learn, socialize, play and govern ourselves. Productivity increases will be staggering as the cost of goods and services drop and their quality improves. In some ways we are already experiencing the benefits. Digital x-ray and MRI scans can be instantly available to physicians and dentists for more accurate and timely diagnosis or to be shared for consultation anywhere on the globe. New 3 dimensional technologies allow for greater accuracy in medical diagnosis and through earlier diagnosis, enhanced survivability from disease.

Soon 3 dimensional printing will provide instant access to automobile parts without the dealer having to invest in high levels of inventory. Tools can be ordered and supplied in a matter of days and a whole host of products will be downloaded and manufactured with 3D printers without having to pass through the port and attract the attention of customs. The many savings are obvious not the least of which will be the elimination of paperwork and needless delay.

At the same time there is a growing class of knowledge based entrepreneurs who are designing services and products for a global market. They are only limited by their imagination as time and distance have been almost eliminated from the distribution equation, while scalability can meet a rapid increase in demand.

Everything is not positive in this new world however, and technology does not change human nature nor eliminate criminality or hostile intent. The threat of cyber attack and denial of service is becoming ever more sophisticated. Not only do we have to contend with cyber criminals and identity theft, but increasingly there are many state sponsored players that bring massive resources to bear in the economic assault on business and government entities stealing business secrets, intellectual property and a wide range of other sensitive information.

Barbados has much to gain by embracing the digital world of trade and commerce and it should be in the vanguard of those nations that would condemn digital theft and piracy while working with allies, who respect the rule of law, to develop defenses for our national networks.

We should do everything that we can to foster a competitive environment that would encourage development of robust, secure ultra-wide bandwidth networks connected to homes and businesses. As we develop more and more content there will be an increasing need for symmetrical services where the upload and download bandwidth is equal.

While it’s getting cheaper, Technology is not cheap. It also requires the right blend of disciplines in many IT areas to deliver integrated business process solutions. Our small businesses and even small Government Departments in the Caribbean do not lend themselves well to certain types of deployments. Even our larger companies are small in the global context and struggle to make certain types of IT investment. Innovation in Cloud technology and opportunities for specialized consulting firms may help bridge this. 

Finally it is the willingness to reengineer business processes from the ground up and it is this human element that will determine success or failure.

Phillip.goddard@braggadax.com

Mark Time!

Mark time! For more than four years it seems as though this is the command that has guided the actions of government as we march while standing in place, going nowhere and having nothing to show for our efforts but a sadly diminished fatted calf. With 80% of the term of office gone, there is little to show for it except a huge fiscal deficit, a few highway round a bouts, and a bloated government structure hanging like a millstone around the necks of the taxpayers.

The drift that has become the most identifiable feature of this administration is now underscored by a series of studies to be launched at the 11^th hour and promises to enact legislation to address crop theft.

The most recent initiative is the establishment of an action team to focus on the economy, business and labour with 5 members each from government, business and the labour unions. Precisely what this team is supposed to achieve is not quite clear as they are tasked to address economic problems, business facilitation and the social safety net. Styled an action committee it is not clear what action they might take and the structural authority that the committee might have to take any action at all.

There is a deep suspicion that this exercise is more of a public relations effort aimed at quieting the growing disenchantment with rising prices, increased taxation and rising unemployment. Certainly there is nothing in the estimates that would indicate that the government has any intention of putting its fiscal house in order or stimulating the productive sectors of our economy.

The malaise affecting the telecommunications businesses and the slow deployment of broadband connectivity is a glaring example of the hiatus in policy initiatives for the past 4 years. Barbados was a leading destination in the Caribbean for robust broadband networks and an increasingly competitive communications environment. Local loop bundling and number portability were to be implemented. Nothing has happened.

Technology does not stand still and there is a increasing awareness that there is a growing need for wider bandwidth to attract the investment needed for the businesses of tomorrow. Barbados is eminently suited for the deployment of an ultra wide bandwidth network with fiber deployed to businesses and the home. It will take time to achieve this but if the goal is not stated we will never achieve it.

The benefits of such a network deployment are many. They range from more efficient business models that improve service and cut cost, to the delivery of learning programs that would enhance lifelong education and improve the quality and range of teaching tools.

 It would also open the world to employment opportunities for many Barbadians, and allow the best and the brightest of the Barbadian Diaspora to interact with their native land and contribute in a meaningful way to the economic and social development of Barbados.

Imagine the impact on our island if 20% of workers could work from home. Some jobs could be full time remote jobs while others may include a blend of in office and remote. But in total, consider a net 20% remote work on our fuel import bill from the reduction in transport, easing of congestion and an enhanced quality of life. The ability to work remotely will transform the nature of the labour pool. Barbadians will be able to access employment opportunities overseas and earn valuable foreign exchange.

The action committee should focus on the core national needs. World class communications is a critical foundation for our 21st century global economy. By setting clear targets for high speed network deployment and ensuring a fair competitive framework for investors we may once again lead in this field. In so doing, Barbadians will be positioned to accrue the benefits of a connected globe.

phillip.goddard@braggadax.com

Public Policy and Expediency

The need for predictability and for protecting reliance on settled rules is vital to promoting a vibrant investment climate, stimulating economic growth, and creation of a vibrant opportunity for employment. At the same time we must not become so rigid that we find ourselves so unreasonably shackled by precedent that we cannot respond effectively to crisis or new threats as they emerge.

The response to the existential threat of HIV/AIDS at the end of the last century is a case in point. With the growing awareness, that left unchecked, the HIV virus would wreak havoc on our society it was evident that a new multifaceted approach was necessary to combat this deadly disease. It was not just a health issue but an economic one as well, that challenged the structure of our society and had grave national security implications.  We had to devise new responses to check the spread of infection and decrease the mortality rate caused by this unparalleled assault on the immunity systems of those that were infected with the HIV virus.

New systems of free diagnosis, confidentiality and free treatment were implemented for all and a public information programme was launched to sensitize the public about sexually transmitted diseases with an emphasis on the HIV virus. The programme has evolved and continues to do so with some levels of success that is in large part due to dedicated medical staff who are involved in the diagnostic, counseling and treatment services to the Barbadian community.

Another seminal event in our recent history was the financial shock following the attack on the United States on September 11, 2001. Once again, the government of the day responded swiftly and decisively. Immediately taking the whole nation into its confidence, a national consultation was swiftly held to outline government’s immediate plans and to facilitate inputs from a broad cross section of the community to generate a response that would protect our key economic interests and prevent a collapse of the economy. It acted with dispatch and transparency to analyze the situation and develop solutions. 

Alas, these past few years, as we have endured the deepest global economic crisis in nearly a century, the government’s response has been to largely ignore the severe recession and to engage in series of bewildering responses to significant business failures that largely consisted of corporate cronyism and significant dollops of corporate welfare. The long delay in addressing the Clico affair with the collapse of CL Financial and the gaps in supervision of the company in subsequent months as well as the abnormally long delay in appointing a judicial manager are inexplicable. It speaks of gross incompetence or worse.

The failure of the Four Seasons venture has been another national nightmare with a slow bleeding of the public purse to sustain a questionable business model at massive expense. Now there are calls for government intervention in Almond Beach after years of mismanagement and neglect.

The public good would have been best be served by a quick response to protect the Clico customers and to allow failing companies to go bankrupt.

There is a growing unpredictability in policy formulation, and more importantly, its administration. It is increasingly driven by ad hoc political expediency and political patronage rather than by a consistent application of corporate law. This creates an environment that extends the business community’s envelope of risk to unsustainable levels and endangers our economic future.

phillip.goddard@braggadax.com

Think for Ourselves or Follow the Herd?

A constant source of amusement is the signage in our supermarkets indicating an aisle where we might find “Foreign Foods”. Are you kidding me?! The whole shop is full of foreign food. From the meat counter to the frozen food and ice cream to the pasta and rice and fresh produce. It’s mostly foreign food. Even some of the “local food” has significant components of foreign raw materials.

Our ability to copy wholesale the format of the layout of our supermarkets from North America or Europe is exemplified by the fact that the Foreign Food sections of our stores display Japanese, Thai, Chinese and Mexican spices, condiments and specialty items in exactly the same way that one would find them in Selfridges, Green Giant, A&P or Walmart; in the Foreign Food section and labeled as such when the whole store is a foreign food bazaar.

Perhaps this explains our mindless replication of energy policy and response to global warming as promulgated by the EU and to a lesser extent by the United States. Now that Global warming has been put under the microscope and found to be somewhat less than incontrovertible the cant has been shifted to climate change. The solutions for climate change, however, remain the same as they were for global warming and the hysteria accompanying the search for a holy grail of energy that is non-polluting, plentiful and cheap continues unabated among the anything but hydrocarbon crowd. Climate change what a wonderfully nebulous term that defies definition or measurement.  It can be applied equally to warming or cooling, flood or drought.

The hoopla that accompanied the screening of a film on climate change and the announcement that the UK government will be spending £75 million in the Caribbean over the next four years to address climate change issues was good headline press. As usual the devil will be in the details as EU consultants will be hired and EU products sourced to provide us with green energy solutions. At the same time, our Minister of the Environment announced a proposed investment of 377 million tax payer dollars in a green energy centre that would produce energy from wind, solar and landfill gas as well as a developing a waste to energy component. If this is such a good deal why is the private sector not lining up to invest in it?

All this at a time when one alternative energy company after another collapses in America. The failure rate is staggering despite support through massive federal grants and loans and billions of tax payer dollars have vanished. Germany recently announced that its decade’s long subsidization of alternative energy projects, primarily solar, has not had the intended result and will be significantly reduced. At the same time T. Boone Pickens who has lost millions in his well publicized wind energy projects now sees natural gas as the solution to America’s energy problems.

The Minister of the Environment now promises a National Climate Change Policy when we do not know what climate change is taking place. The global warming that everyone has been talking about has disappeared over the past 10 years and the rate of warming for the past 22 years has fallen far short of the predictions of the UN experts at the Intergovernmental Panel on Climate Change.

The reality is that fossil fuels will provide the bulk of the world’s energy needs for decades to come. The Barbadian geographic and economic profile demands a high density energy solution that is best delivered in today’s world by natural gas.

 T. Boone Pickens has finally got it right!

phillip.goddard@braggadax.com

Problem Solving in a Complex World

There is a great propensity for us to seek simple solutions to complex problems and to offer them up with a degree of certitude that hints of infallibility. Thus if we decrease carbon dioxide emissions we will mitigate the effects of climate change. If unemployment goes up criminal activity will increase and if we expand property ownership we will create a more responsible citizenry. Faced with the rising price of oil and the concomitant increased cost of electricity we need to invest in alternative energy.

Climate change is far from being understood, recent statistics do not support the mantra of the linkage of rising unemployment to rising crime; rapidly expanding property ownership has been a major factor in the global financial crisis; and no one can explain to me why it makes sense to invest in a more expensive, unreliable energy source to replace that one that I now have.

Each problem that we face is so complex with so many facets and variables, that it is difficult if not impossible to fully understand them. Consequently the very best we can do is to approach problem solving with a degree of humility that accepts a modicum of failure as a given, in the process of trial and error while recognizing the difficulty in solving complex issues with single solutions.

Unfortunately, many business and political leaders see this as a sign of weakness instead of a capacity for resilience and survivability. Similarly our culture is one that is most unforgiving of error or failure. The reality is that a successful business, be it a small shop or multinational enterprise, is in a constant state of evolution and change. Experimenting with new ideas, technologies and processes; keeping those that work and discarding the lead balloons. The secret to success is to facilitate a culture that allows for someone to try and fly those lead balloons in the first place.

The same is true of a country or region as we try to improve the quality and transparency of governance while enhancing the widest possible public participation. As we seek to grow our economy and enhance the quality of life for all, we must develop policies that allow, and indeed encourage, entrepreneurial experimentation. Legislation and regulations should be constantly under review with a view to adjusting to the rapidly changing real world environment and to correct the ill effects of unintended consequences.

All too often we come across Dickensian rules that are quaint in their absurdity, such as the stamp tax that requires a postage stamp to be affixed to receipts. Enacted in a day when all receipts were written in long hand, it is still in force though seldom observed  in an age where receipts are more frequently received in electronic format than on paper.

Another case in point is the proposed Antiquities Bill that is presently under review. In its present form it will complicate the lives of thousands of Barbadians from all walks of life, threatening to criminalize them for not registering personal belongings that are more than 50 years old and which they may well be unaware of.

The Bill is so draconian, all encompassing and sweeping in its powers that it will adversely affect a wide swath of the entire population. A better approach to the important issue of protecting our historical heritage would be an education and public relations program to have individuals voluntarily list antiques, while providing information on the best way to preserve them and highlighting best practices to develop community involvement in a Protect Barbadian Heritage programme.

By inviting many inputs and stimulating the public to take ownership of our heritage we would, through trial and error, arrive at a more harmonious and effective solution to the problem of preserving items of historical importance. One interesting event in the UK that served heighten the awareness of antiques owned by the general population was the popular TV series, Antiques Road Show. We can surely come up with some ideas of our own rather than subscribe to heavy handed punitive legislation that will be met with hostility. The Bill was an error, now it’s time for us to try something else.

  

phillip.goddard@braggadax.com

The Bright Side and the Real Side

It is usually a good strategy to emphasize positive things in any human endeavor to encourage the team to excel and to perform beyond expectations.   But there is a danger of going too far in this direction, and ignoring critical factors that are necessary for success.

If a retail shop focuses solely on gaining more customers without measuring the cost of increasing sales, there is a very real danger of achieving stellar sales results at the expense of profit and ultimately a failure of the business. Thus a sound approach to increased sales and profit is to monitor gross profit and expenses while at the same time doing those things that encourage more people to patronize the establishment by delivering greater value for money to a well targeted customer base.

The cost of attracting new customers is a costly business, that requires expense in advertising; staff training; upgrading facilities; or in special discounts. Thus it is a sound practice to do everything possible to exceed expectations of existing customers to enhance the likelihood of repeat business and improved profitability. Above all, it is important to keep track of all aspects of the business and take a balanced view of the many success factors as well as the negative issues that need to be addressed.

This past week there were two items in the press that once again focused on the increase in arrivals of both long stay visitors and cruise ship passengers. The good news was that there were increases all around. In the subtext however, there was a strong indication that the arrivals did not translate into increased business. This is a disquieting trend that has continued for far too long and it indicates that we do not have our eye on the ball when it comes to the hospitality industry.

Policy makers and the BTA have been focused on arrival numbers and ignoring the receipts. There are continuing reports about seeking new business from non-traditional areas and developing the Chinese market while admitting that Beijing is a bit far. That’s the understatement of the year. The airlines would have to develop an in-flight refueling capacity to make the Beijing Bridgetown hop.

It is time thet we started measuring the profitability of our hospitality industry and focus on those things that add value to the visitor experience. We should use new technologies available to us in developing up market additional business from our traditional markets. By capitalizing on the positive experiences of generations of visitors we can develop word of mouth advertising.

It is time to focus on what works and the successes that we have had even in these difficult economic times, and there are some. The industry needs hard headed pragmatic individuals who have a clear perspective of the future of the industry and the direction that it must take. We need to start measuring the things that count and focus on the contribution that is made to our economy.

The steady decline in hospitality industry revenue, at many levels, indicates a policy failure of significant proportions. It is time to abandon the bottom feeding strategy to increase the numbers of visitors and to focus on high value customers and service excellence. It’s more work, but it’s worth it.

phillip.goddard@braggadax.com

The Pemberton Venture at Fresh water Bay

Fresh Water Bay, a place that was renamed Paradise Beach by Cunard Lines and mothballed by Sandals, is now referred to as the Four Seasons project by all and sundry. A private company, Cinnamon 88 purchased the property from Sandals and launched an ambitious and highly leveraged hotel and villa development complex that ran into financial difficulties and suspended construction activities three years ago.

The Four Seasons project as it has been dubbed has now become one of the most controversial of projects. It is a venture that seems to be as firmly impaled upon the shoals of a financial reef as is the Concordia on the isle of Giglio.

What started as a privately funded venture for profit by the promoters, Mike Pemberton and Robin Paterson, collapsed and eventually morphed into a project controlled by the Barbados government under circumstances that are not clear to this day. After three years, there is a growing perception that the venture has become a quagmire that is a growing financial drain on the government that it can ill afford.

First the government guaranteed a loan of BDS 120 million that was supposed to restart construction and put the project back on track. This proved to be insufficient to even meet the outstanding payables of the venture and after the money was disbursed to partially satisfy the claims of contractors and suppliers, in a remarkable display of corporate welfare, the venture remained in limbo.

Needless to say the initial investors who had paid up to 40% deposit on their multimillion dollar homes became seriously agitated and began to threaten legal action to recover their money. The lead promoter for the reconfigured project, Mr. Avinash Persaud, denied that there was any legal action being taken but persistent reports in the Irish and British newspapers contradict this.

Last year, in a last ditch maneuver, the Barbados National Insurance Board was asked to invest BDS 60 million in the project to put the project back on track and to buttress the argument for support from the Inter American Development Bank in the form of a BDS 180 million loan. The initial response from the NIS investment committee was that the investment carried too high a risk for its pension fund and declined the invitation to participate in the venture.

Subsequently, under pressure from the government, there are reports that the investment committee has reconsidered the risk and that the NIS Board will meet next week to reconsider their position on the matter. In the mean time in an astonishing display of clairvoyance, the Minister of Finance has announced that the NIS Board has agreed to the loan.

One wonders what has changed in the past few weeks to alter the risk factors for the NIS. Certainly it cannot be the claims piling up in the Supreme Court, the most recent of which is the one lodged by Mr. Aidan Heavey. Nor can it be the investment climate in Europe as the Euro Zone grapples with the continuing Greek crisis and the financial problems of Italy, Spain and Portugal.

One would have thought that after the Clico experience, we would have learnt the lesson that pension funds should not be used as venture capital.

The public of Barbados are being treated to a display of murkiness and obfuscation in this whole debacle. Mr. Persaud has sought to indicate that criticism of the financing of the project with public funds is purely political but there are legions of professional and business people who think that this is a disaster in the making.

The National Insurance Board has an obligation to the workers that contribute to the NIS pension fund to invest the contributions in stable and reliable investments. The criteria for this are well established. They should stay within the long established parameters of prudence and be prepared to resign rather than acquiesce to political pressure to do otherwise.

phillip.goddard@braggadax.com