Embracing the knowledge paradigm Business Page Stabroek News September 24, 2000 BUSINESS PAGE is dedicated to providing objective information an opinion on issued of interests to the business community and the public at large. The articles in Business page are prepared and contributed by CHRISTOPHER RAM. Christopher Ram is the Managing Partner of Ram & McRae, Chartered Accountants, Professional Services Firm. Introduction In the midst of the spate of company failures which we have witnessed recently two events have caught the attention. Ernst & Young Caribbean hosted its expanded Caribbean Entrepreneur of the Year award in Barbados. Nominees were drawn from all the major Caribbean territories from Belize in Central America to Guyana in the south. To the disappointment no doubt of all Guyanese not a single one of the finalists was a Guyanese. Then last week the Chartered Association of Certified Accountants (ACCA) held a graduation ceremony to recognise eighty-three students who had successfully completed the Certified Accounting Technician (CAT) examination. The two events just do not seem to gel very well. There is a view among many in Guyana that brains or knowledge do not matter much when it comes to business success. If we looked around us we found persons who came from nowhere and were huge financial successes. Things have begun to change and the world economy, which we are so fond of describing as global, now has a new and even more challenging feature - it is knowledge based. It is characterised by new employment patterns with less long term security; no entity or industry is insulated from competition; developments in information technology are bringing about increasingly rapid, revolutionary and, in the short term, painful change which will have such enormous impact on the economy, the way people live and work and will even test the limits not only of people but indeed the environment around us. Change surely has a way of surprising and confounding us. No one predicted even a couple of years ago the development and growth of the Internet - arguably the most important innovation within the past hundred years and to which at least 150 million people are now linked. With a history of surprises we can expect a number of cataclysmic changes over the next ten to fifteen years which we cannot now even imagine. Even Wilbur Wright got it wrong. In 1901 he predicted that a heavier-than-air flying machine would not be possible for another fifty years. Two years later his flimsy biplane was in the air. Too intelligent for people? Computers in the next few years will become too intelligent to be used for simple communication or word processing; it is predicted that by 2015 computers will match humans in overall intelligence and access to knowledge; by 2020 they will be considerably smarter than people; and by 2050 they will approach the limits imposed by physics. These are not sci-fi predictions but a logical development of what has been taking place and is now taken for granted. When one considers our collective attitude to intellectual capital, it is almost hard to see a place for Guyana in this global economy in which the key asset is knowledge and the key skill is knowledge management. Knowledge capital is now as important if not more vital than financial capital. This country has regressed to a point where despite the performance of a few outstanding individuals we continue to do very badly in education. The entire system has been so badly damaged that it is difficult to see how we can achieve the level of education which we need to compete. At all levels in the education system there are serious deficiencies. The University of Guyana is often the butt of some of the most cruel and in many cases unfair jokes. How often do we not hear employers say they will not employ UG graduates because they cannot even spell. Of course not only are some of these same employers just as bad, but worse they themselves do not recognise that education is a continuous, lifelong process and that they enjoy no exemption. Too many of our top managers still 'boast' that they do not know to switch on a computer and are therefore missing out in perhaps the greatest opportunity to regain lost ground. Even so they must also realise that the revolution which we ascribe to electronics was really brought on by innovation and imagination combined with applied knowledge. The principles and direction Too many of our managers think that seminars, workshops and reading are for lower level employees while their own responsibilities and duties are limited to merely attending formal sessions and opening ceremonies which offer no value other than to be there because some politician or the other will be speaking. They are far from confident in engaging in serious debate and often take at face value the latest pronouncement from the politician. They operate their business using outdated techniques, irrelevant information and inappropriate values. They forget that the economy is one of openness and competition in which the customer is central. They complain about the skills shortage but forget that leadership is not only an attribute but a skill which they can and should develop. Their own deficiencies make them suspicious and fearful of younger, brighter people. They lament the absence of capital but ignore the importance of a brand and a set of relationships. They love to talk about what an important asset their people are but they do little to invest/re-invest in them. Capital is of course extremely important but the financial market will and does respond to companies which demonstrate a capacity for innovation. The plastic card company VISA which handles more transactions than any other organisation has no other asset but its brand name. Its founder Dee Hock attributes the success of the company to compelling principles and a clear sense of direction. John Harvey Jones, former Chairman of ICI saw it slightly differently. He thinks that success comes from maintaining the highest rate of change which the organisation and the people within it can stand. He holds the view that unless an organisation is progressing the whole time it is in fact moving backwards. And Matthew Barrett, the new Chairman of Barclays Bank believes that the companies that will survive and prosper are those that have learned how to change their business model. In Guyana many of our top leaders fear change and behave as if it does not affect them. This thinking is a recipe for extinction. There will simply be no place for its practitioners in the new economy. Change What all of this tells us is that our entrepreneurs and business managers need a complete reorientation in the way they see and run their businesses. Even the most successful strategy has to be subject to robust and rigorous review. As the pace of change increases, the ability to adapt and embrace new ideas is going to be essential to the success of both companies and individuals. Our managers' obsession with confidentiality makes them fear accounting and accountability and results in their not having the most basic information they need for business decisions. They distrust their employees and do not seek to understand their suppliers and customers. While the developed world is increasingly responding to stakeholder-type of governance too many of our leading companies are still taking the minimalist view of disclosure. Least number of accountants Our managers need to understand that they need to put in place measures that would attract, train and retain the best people that are out there. Guyana has the least number of accountants to population anywhere in Caricom. Yet I am not aware of a single company that has recently given any scholarship to anyone to pursue training as a professional accountant. Despite its many virtues the degree in accounting from UG is not the same as a professional qualification. The professionally trained and qualified accountant is a key player in the knowledge economy whose role is no longer scorekeeping but a critical part of the management team. This article began by referring to the graduation of some eighty-three persons at the technician level accounting examination. The structure of the hugely popular ACCA examinations allows for these persons to move into the professional examinations. As a country therefore we should be aiming to turn out in the next couple of years about a dozen accountants per year which should help to alleviate the acute shortage of accountants. The difficulty which these 83 persons and others like them will face is that the resources to take them to the next stage are not available. Where is the loan scheme or the scholarship fund to provide the financial means? Do the private schools which have sprung up across the country provide the opportunities for students to prepare for the demanding professional examinations? What should be the responsibility of the government in these matters? Why should there be loan schemes for degree programmes but not the professional examinations? University of Guyana Institutions of higher learning like the University of Guyana, which are acutely short of resources, have to make some very tough decisions on the type and range of courses which they should offer. It is often suggested that they should concentrate on programmes relevant to the needs of the country and sacrifice the pursuit of academic excellence. This approach however appears more appropriate to the technical institutes than to a university. There is a compelling case for more resources to be placed at the disposal of the University which should also be allowed greater academic and administrative freedom. It seems that too much time is spent or rather wasted on both internal and external politics. Salaries need to be upgraded and conditions for work and study made more conducive. It is not easy for those companies which pay their taxes to have to donate further sums to government institutions. Yet the private sector has to see itself as a major beneficiary of the UG output and for some time yet its members will need to support the University as the New Building Society and the Beharrys have done. Individual members of the private sector should make their expertise and their time available to share their knowledge and experience with the students. The private sector must continue to provide work study opportunities and allow as much exposure as possible to the undergraduates. The tough decisions The government has to make some tough decisions on really supporting education from the bottom up. Schools have to offer information technology from primary school level and the delivery of education should be made available using modern technology. The case for the Berbice campus appears not to have considered the possibility of distance learning and we will have to wait to see whether the decision is correct given the limited resources available to the University. Our future depends on the success of our private sector and our ability and adaptability to cope in the knowledge economy. We have to recognise the magnitude of the task and be prepared to act on it fast. Our survival depends on it. Follow the goings-on in Guyana in Guyana Today