The role of Culture in Suriname’s Productivity
Going beyond mere development plans
Ir. Steven Coutinho MBA
September 25, 2014
Background
speaker
Background
speaker
Recent Publications / Seminars
• Author Thinking Outside
Nature’s Box: strategies for
economic development
(Jan’14)
Relevant Experience
• Support of Minister Economic Development with Curacao
economic strategy “Curacao’s Economic Potential” (May ’13)
• Lead UNDP consultant for Suriname’s Multi-Annual Development
Plan 2006 – 2011 (Oct ’05 – July ’06)
Work Experience
• RBC Royal Bank: Managing Director Dutch Caribbean &
Suriname (June 14’ – current)
• RBC Royal Bank: Vice President Corporate Banking DC &
Suriname, Responsible for all sovereign debt raisings and
infrastructure investments in DC & Suriname, (Jan ’12 – May ‘14).
• Hakrinbank – Executive Board of Directors (2nd largest
Commercial Bank in Suriname) (Apr ’09 – Jan ’12)
• FMO – Private Equity (+$3bln development finance institution
specialized in emerging markets – focus on Latin America)
(Mar ’08 – Jul ‘08)
• Andersen Consulting / Accenture– Senior Strategy Consultant
(Sep ’02 – ‘Jul ’06)
• Key Note Speaker ILO Latin America Conference: National
Productivity and Culture (Oct ’14)
• Het Verband tussen Sinterklaas en Economie (Coaching Magazine,
Curacao, Mar ‘14)
Education
• Key Note Speaker: UNDP ‘Kòrsou Kapasitá’, (Oct ’13)
• MBA in Finance from Wharton School (ranked no.1 globally by
Financial Times) (Aug ’07 – Mar ’09)
• Key Note Speaker: Increasing Curacao Salaries: a broader economic
perspective, Guardian Group Pension Day, (May ’13)
• MSc in Mathematics and Physics from University of Groningen
(Summa Cum Laude) (Aug ’96 – ’01)
• Over 10 local (Suriname) publications in United Business Magazine
and local newspapers (’01 – ’05’)
• Diploma Universidad Complutense de Madrid – Spanish
(Sep ’01 – ’02)
In context: some words from a Nobel Laureate
Economics is marked by a startling crudeness in the way it thinks about individuals and
their motivations, yet it builds a huge structure on the basis of these simplistic
foundations.
2
Agenda
A relationship between strategy and mental models?
Back to Economic Basics…
Adding the necessary human / cultural dimension
3
Agenda
A relationship between strategy and mental models?
Back to Economic Basics…
But adding the necessary human dimension
4
Observations from the audience at a seminar on Economic Development
last year…
It’s agriculture that will make
us rich
Leave it up to Government to
help us
We should get more aid /
borrow more money
The Private Sector shouldn’t
be so greedy
We should make a
development plan
Leave it up to Natural
Resources
If only we had the right
leaders
5
The above observations can be grouped along two clusters:
1. Sectoral Strategy (how do we become wealthy?)
2. Mindset or ‘Mental Models’ (who is responsible?)
Economic Development is driven by how people think
Framework for Action
(Strategy & Implementation)
Mental Models
 Shared framework of
development
and the roles each one plays
 The invisible parts of
change
Address one without the other and there will be no implementation…
6
Focus of Development plans is 99% on the visible parts of change…
5 building blocks of successful countries
 Ownership:
- a high-ranking political principal
- clear authority to make decisions,
 Targets:
Clear Ownership
- clear benchmarks for success (failure)
- use of automatic exit provisions when
initiatives do not meet targets,
Targets
Prioritisation
 Overarching Strategy: - clear choice selected export sectors
and their development through FDI
- each sector supported by focused
policies.
7
Overarching Strategy
All
Sectors
Focus
Sectors
Export and
Domestic
Sectors
Enabling
Sectors
Public Policy
and Enabling
Institutions
Business
Cases
 Implementation:
- reliance on agencies with demonstrated
competence, a degree of autonomy
from daily politics
- clear support from political principal
 Deliberation:
- use of deliberation bodies that engage
the private sector .
Implementation
Monitoring and Dialogue
Mental Models - understanding the invisible parts of change. Thinking is
influenced by Culture (parenting, education, etc)
 What are some of the basic beliefs that influence frames of reference (beliefs, inferences, goals)?
 Who is out there? - What are the groups that we can describe according to their frames of reference?
 Where can we start in attempting to bring those groups to a shared vision?
Every nation has leaders which fall into 5 groups:
Innovation
Looking for a
referee
Influenced by
Culture
(parenting,
education, etc)
Frustrated
Partners
Somewhat
Satisfied
Natural
Resources
Primary
Actor
Public
Sector
Indicator
IntensityDiversification
Governance
Indicator
Econ. Governance
Development Diversification
Power Distant
Power Distant
85
Uncertainty Avoidant
Uncertainty Avoidant
92
Collectivist
Collectivist
47
3Feminine
7
Feminine
0
8
Go-It-Alones
Source of
Advantage
Source:
50
Cu ltFairbanks,
u r a l Dim en
sion
Plowing the Sea.
Lindsay
Geert Hofstede, 1990
Mea su r em en t
IMF Publications
1 00
Open Traders
Private
Sector
Econ. Development
Conclusion
Only once we understand each other’s frame of reference,
our view of the world and our roles in it, can we continue on
a successful journey forward
“Sometimes people hold a core belief that is very strong. When they are presented with evidence that
works against that belief, the new evidence cannot be accepted. It would create a feeling that is
extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the
core belief, they will rationalize, ignore and even deny anything that doesn't fit in with the core belief.”
― Frantz Fanon, Black Skin, White Masks
9
Agenda
A relationship between strategy and mental models?
Back to Economic Basics…
But adding the necessary human dimension
10
The goal behind any action framework should be to attain more wealth
for more people
Wealth Framework
Wealth
Performance Analysis
Income taxed to
deliver healthcare,
education, etc
Equal
Distribution
Salaries
Added Value
(Sector A)
11
GDP / Capita
(Added Value /
Capita)
Employees
(Sector A)
What is normally focussed on: developing an “on-paper strategy”
Wealth Framework
Wealth
Performance Analysis
Income taxed to
deliver healthcare,
education, etc
Equal
Distribution
Salaries
Added Value
(Sector A)
What is normally focussed on
12
GDP / Capita
(Added Value /
Capita)
Employees
(Sector A)
Conventional wisdom: it’s the additional value created that leads to
higher salaries. It’s the higher salaries that leads to wealth
Understanding Value Add
$3
Total Value Added
to Economy
Sales
$2
$1
Purchases i.e.
- Raw Materials (flour)
- Utilities
- Rental
Profits
Labour
Depreciation
Interest
Tax
13
Creation of Value
Added by Baker
Value
Add
Distribution of
Value Added
Indeed, GDP per Capita is driven by Value Added per Employee
(productivity)
World economies ranked by productiviity
14
But productivity needs to be understood at the sectoral level to drive change.
Suriname is characterized by low productive sectors so GDP per Capita is low
Surinamese economy broken down per sector
GDP per capita
15
Curacao is characterized by some high productive sectors so GDP per Capita is
one of the highest in the region.
GDP per capita
16
Agenda
A relationship between strategy and mental models?
Back to Economic Basics…
Adding the human / cultural dimension
17
The other side of the equation…
Wealth Framework
Wealth
Performance Analysis
Income taxed to
deliver healthcare,
education, etc
GDP / Capita
(Added Value /
Capita)
Equal
Distribution
Salaries
Added Value
(Sector A)
Employees
(Sector A)
Just ‘more’
education?
Culture
18
Skillset
(Relevant)
Expanding: focus on both private and public sector (framework), but
also on individual, family and community (mindset)
Strategy
Performance Analysis
Wealth
Income taxed to
deliver healthcare,
education, etc
GDP / Capita
(Added Value / Capita)
Equal
Distribution
Salaries
AddedValue
Value
Added
(Sector
A)
(Sector A)
Strategy:
Low Cost
Employees
Employees
(SectorA)
A)
(Sector
Strategy:
Differentiated
Culture
Sector-by-Sector
Policies
Dimension
A
Implementation
Governance &
Dialogue
19
Skillset
(Relevance)
Additional Focus
Public
Investment
s
Private
Investment
s
Public Private
Partnerships
Attraction
FDI
Individual
Value A
Parenting
Education
Work
Evidence of the invisible parts of change. Culture Matters
Suriname Cultural indicators
Strength
Indicator
Governance
Power Distant
Diversification
Econ. Development
85
Uncertainty Avoidant
92
Collectivist
47
Feminine
37
0
Source: Hofstede, IMF, 2010
50
1 00
Cu lt u r a l Dim en sion
Mea su r em en t
Employees
Employees
(SectorA)
A)
(Sector
Culture
Skillset
(Relevance)
Dimension
A
Individual
Value A
Parenting
20
Education
Work
Parenting
What values are we portraying to
raise our children?
Education
What values are we teaching our
children?
Work
How are we managing our staff and
employees to add value to the
company?