Managing change through exhortations

Advisor Commerce rightly laments the absence of 'export culture' in the country. But he doesn't tell us why this is so and what he is doing about it.
As a small example of the missing export culture, we brought to his notice the case of a hundred percent exporting joint venture whose new production facility faced delays as Customs threw the book at them. They had paid the duty and taxes on the import of machinery, as demanded, but then the consignment was selected for examination, and the file kept flitting from wing to wing.
Customs' right to do so is unquestionable. But if the 'culture' was right someone in the hierarchy could have taken the decision to release the consignment, pending full examination, and let the exporting unit get on with its work instead of chasing the file. The investors couldn't have decamped after their several million dollar investment and an impeccable export record of forty years!
The trouble, as any number of investors will tell you, is the contest between 'process' (that the bureaucracy has been trained for) and 'outcome' (that investors look for). The courts and NAB have also, unwittingly, contributed to crowning process at the cost of outcome. Safety first, is the new normal of bureaucratic culture. 'Feeding the file' has become an end itself, not the means to an end.
In purana Pakistan, EPB used to intervene on exporters' behalf. Today's TDAP thinks its only job is to expand the EXPO centre and sponsor trade fairs, neither of which promotes exports.
Our regulatory structure (on which 'process' is founded) best typifies the bureaucratic mindset. The moment the machinery feels an investor (or any supplicant, for that matter) has found a way to get around the regulatory maze (to achieve his 'outcome') it promptly imposes another tier of regulation. It is a constant battle - with the regulatory mountain growing in the name of good governance.
But there is always a clever guy in the bureaucratic chain that can show you a 'workaround' - at a price, of course.
Over-regulation is the slayer of enterprise and breeder of 'speed money'. You regulate for reasons of fairness and social equity, but when you over-regulate you defeat the purpose - you kill the goose that produces public welfare and social advancement.
Regulations are part of subordinate legislation. But does anyone - government, courts, or the parliament - ever examine, on a systemic basis, what regulations defy the spirit of law, have become redundant, or are anti-investment?
Most reasons for our declining investment ratios have been well-examined. Over-regulation, however, is an under-studied subject. The general perception associates business success with venality, which can only be checked through regulations. There is little recognition that over-regulation, often poorly enforced, actually causes unfair competition. It encourages asymmetry of information, leading to adverse selection, moral hazard, and entry barriers.
A badly designed and seldom updated regulatory framework, coupled with fear in bureaucratic ranks, defines the anti-business 'culture'.
Exhortations, on a string of one sentence clichés, will not bring 'tabdeeli'.
When a company contemplates change - in strategic planning, marketing system, or its HR policy - it invests a lot of time in 'managing' it through workshops (often led by outside experts), retreats, and retooling. The Armed forces do the same; indeed, they have institutionalized change management.
The new government has come in on the promise of change, but there are no signs of a deliberate change management policy. Vacuous Fawadisms cannot be a substitute for policy. Nor does striking fear among the bureaucrats help - it may buy you subservience but won't change the corporate culture.
To get the culture right you have to fight on two fronts: regulatory framework and bureaucratic mindset (in many ways one feeds the other)
Pakistan's low ranking on the Ease of Doing Business Index (that seeks to establish optimum level of business regulation), and more remarkably its descent from 85 in 2008 to 137 now, ought to provide food for thought to Naya Pakistan. Regulate business all you want if it gives dividends in the form of greater consumer protection and public welfare. We suspect if there was a global index on consumer rights and public interest, chances are very good we will find ourselves near the bottom there too!
Clearly, something is amiss. We need to revisit the whole gamut of our regulatory infrastructure.
A good starting point would be to have each Ministry (and province) justify to a specially constituted committee what regulations should stay and what should go or modified. Bodies like Business Council, Overseas Chamber, and Institute of Chartered Accountants could chip in with identification of regulatory-creep as well as regulatory gaps.
We understand Sindh and Punjab Boards of Investment have already done some useful work in this regard but have been flailing against the bureaucratic Olympus. Their work needs to be mainstreamed through greater political ownership.
Changing the bureaucratic mindset is the greater challenge. We will be surprised if the many training programmes under the National School of Public Policy focus on issues of 'culture': how to ensure that 'process' is a means to the end of achieving 'outcome', and not an end in itself.
We would be more surprised if the civil service performance appraisal system seeks to reward contribution to a culture that promotes public and business interests. Unless there is a professionally designed Performance Management System (that clearly lays out goals tied to public/business interest), it should surprise no one if the 'gotcha' mentality persists.
The government has charted for itself a huge agenda. Everything here is needed, but some more than the others. Government would need to prioritise its ambitions and sequence them. It will be unwise to try to make welfare, low inflation, high growth, and macroeconomic stabilization sail together in the first boat out.
Change management is critical but it requires clarity of purpose first. You have to know where you want to get to, what will it take, and what will success look like. If you can't translate your vision into a fully resourced mission with clearly marked milestones you risk ending up with a laundry list of pious hopes.
Exhortations won't change culture. Tabdeeli cannot come in a forest that does not allow light to filter through. You would need to chop a few trees - many regulations - down.
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