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Annual Report of the Secretary-General
“Sustainable Productivity, the Way Forward”
by Dr. Santhi Kanoktanaporn
Ladies and Gentlemen:
It gives me great pleasure to welcome APO Directors, Advisers, and Observers to the 59th session of the APO Governing Body (GBM) in Tehran. I would like to express my deepest gratitude to the Government of the Islamic Republic of Iran for hosting this year’s GBM. It is an honor and privilege for me and Thailand to address the meeting as the APO’s eleventh Secretary-General, and I appreciate your strong support and the confidence that you have shown.
In my New Year message, I emphasized that change is the only constant. Next month, the APO will be celebrating its 56th anniversary. Considering that 56 years is longer than the average lifespan of a Fortune 500 corporation, we have done well in the past, thanks to your continual strong support. In this new-age economy, however, when we live in a time of extreme turbulence, where the world faces huge political and economic uncertainties, and where rapid evolutionary changes take place, the APO must embrace change. We must transform to become a leader in productivity and transcend the expectations of member countries. This will require a digital transformation.
During a recent visit to an Industry 4.0 expo, a German manufacturer producing smart factory components shared the information that it had far more software engineers than production workers. That is not surprising, since a 2016 McKinsey study revealed that 78% of the time spent on predictable physical work could be automated using current technology. Imagine the impact on cyberphysical manufacturing that advanced automation and robotics technologies will create in coming years. Digital transformation is also disrupting long-established agricultural working methods, in a good way, by freeing farmers from their fields and using Internet of Things-enabled agricultural solutions to measure soil conditions and crops remotely. In the service sector, it is predicted that by 2020, 85% of customer interactions will be managed without a human. For example, the “Just Walk Out” shopping technologies of Amazon Go, once adopted by retailers, are capable of transforming the entire retail value chain, improving productivity, and delivering an incredible customer experience.
Today, technology has become a game-changer, disrupting all areas of the economy, automating jobs done by information workers through deep learning and other forms of artificial intelligence, and creating new business models. What will the jobs of the future be like in a world dominated by high tech? This has implications for the APO, which has been focusing on building capacities of member countries using tried-and-tested productivity tools and know-how designed for current business models. As an organization, we need to focus on the strategic opportunities and threats driven by technology to help member countries continue productivity growth.
After assuming the post of Secretary-General last September, I had the pleasure of meeting heads of NPOs and agriculture delegates at the last WSM in Malaysia. They shared a common vision with me of transforming and future-proofing the programs of the APO. They agreed that the APO should focus on developing inclusive, innovative, future-oriented smart initiatives that are aligned with their national development plans. They wanted the APO to become the leading productivity organization in the world.
After the WSM, the Secretariat underwent an internal strategic planning exercise to review its organizational goals. We revisited the national development plans of member countries and identified trends that are shaping the world. We revised the plan to focus on strategic areas that will help us reach the goals of the APO Roadmap to Achieve Vision 2020. The exercise also allowed us to identify and communicate our strategies throughout the Secretariat to ensure alignment of individual and organizational targets. We will repeat the exercise every year to review our strategies so that they will be up to date and responsive to the needs of member countries and the changing environment.
At the end of the exercise, it was clear that sustainable productivity is the way forward. At the organizational level, the key to sustainable productivity lies in its ability to shape its environment to take advantage of shifting markets or risks created by them, as evidenced by the many well-known global companies that have fallen by the wayside in the past decade, such as Nokia and Kodak did as a result of the then-emerging smartphone and digital photography trends.
The Secretariat will elaborate on sustainable productivity tomorrow morning. I would like to thank the Governing Body for approving the APO Sustainable Productivity Summit. The biannual summit will be a signature event to promote and reinforce the message of sustainable productivity. Through this event, the APO aims to expose high-level policymakers in member countries to new future trends so that we can develop appropriate action agendas together.
A 2015 study by the OECD titled “The Future of Productivity” highlighted challenges to global growth in the coming decades, as hampered by obstacles to raising productivity. While the most productive firms globally continue to leverage technology extensively, there are even more which are laggards where technology uptake remains very low. The study highlighted the massive productivity growth gap, an average of seven-fold, between those most productive firms and the laggards. The process of diffusing new productivity-enhancing technologies among firms within individual countries has become ineffective.
For the APO, there are key takeaways. The technology and know-how to improve productivity are out there. We have to stay ahead of the curve by seeking out these new knowledge and technological trends, learning from governments whose policies have been effective in helping grow productivity, and finding better approaches or business models to diffuse knowledge to SMEs in our member economies more effectively.
How do we stay ahead of the curve to serve member countries better? Within the APO, we will need to build up our strategic foresight capacity. Sustainable productivity growth in today’s rapidly changing world is a complex issue, cutting across multiple domains including government policies and issues related to industry, agriculture, climate change, etc. Acquiring new long-term planning tools to help policymakers formulate strategies and developing national foresight programs will help strengthen the APO’s roles as a regional adviser and think-tank. At the enterprise level, it is also critical that business leaders are equipped with strategic foresight capacity and better scenario-planning tools to detect opportunities and threats in their business context.
The APO has been conducting self-learning and videoconference-based e-courses for more than 10 years. This has been a promising platform where we have trained thousands of professionals keen to improve their productivity knowledge. However, we can do much more with the help of our NPOs. Earlier, we launched the eAPO, a new initiative to promote massive online open courses and mobile training for a manifold increase in the diffusion rate of productivity knowledge and technologies to SMEs and individual professionals. With NPOs, we also aim to co-create training contents customized to the needs of individual countries. Furthermore, we plan to offer professional certification programs that will help build up the skills and capacities of practitioners. For a start, this will include courses in the fields of productivity management, strategic foresight, and advanced strategic planning.
Currently, the APO is conducting many multicountry projects to diffuse knowledge and conduct training. We will continue discussing with member countries how to improve on current efforts by finding more cost-effective approaches and adopting new business models to implement future projects. For example, we can convert the more basic training courses on productivity knowledge and tools into mobile-learning courses to increase their diffusion. Future APO face-to-face training topics should be targeted more at advanced productivity fields such as Industry 4.0 and digitization. We may conduct such advanced training in model factories to allow participants to obtain deeper insights into new digital methodologies.
The revolution in manufacturing spurred by Industry 4.0 has also impacted agriculture, which is now set on a path toward smart agriculture, precision farming, and “future food.” We will shift our focus to work with individual member countries on piloting technology-intensive agriculture and food projects. These new technologies could include vertical farm factories, farm systems with Internet of Things-enabled networks, precision farming with drones and sensors, urban farming in smart cities, etc.
While the APO strives to create new forms of projects that respond not only to current needs but also to future ones, there is one major area in which the APO and member countries can improve significantly. I would like to seek your cooperation in working with the APO to continue the follow-up work after project implementation. NPOs have a vital role to play as multipliers to disseminate information and diffuse technologies and knowledge within each individual country. The APO as an organization has limited resources. Only by working closely with NPOs to ensure that postproject follow-up actions are carried out can we become more effective in delivering the desired result of raising the labor productivity and competitiveness of economies.
Before concluding, I would like to touch briefly on some of the activities undertaken by the APO last year. Overall, the level of APO activities has increased significantly over the past three years. The number of projects increased from about 170 in 2014 to about 200 last year. The number of participants also jumped by 50% in the same period.
The details of these APO projects and other activities are available in the comprehensive APO 2016 Annual Report. Some of the activities I would like to highlight are:
I would like to thank the Governments of the Republic of China, Japan, and Republic of Korea for providing cash grants enabling the APO to implement additional projects. In particular, the generous cash grants from the Government of Japan increased the APO’s operating budget for the next three years by about 25% annually. The Secretariat will take this opportunity to increase its own productivity by building up capacity and new strategic capabilities that are relevant in the digital economy.
In closing, I would like to paraphrase the famous words of Professor Paul Krugman: In this period of profound transformation, productivity isn’t everything but timing is everything; we need to be more agile; we need to respond faster to future trends; and we need to achieve sustainable productivity. With your support and cooperation, together we can shape the future of the APO.