Monthly Archives: September 2015

Legacy building: the Hapee Toothpaste story (part 2)

FROM being a household name in the Philippines, Hapee toothpaste is now being exported to the Middle East, Papua New Guinea, Russia, Vietnam, Hong Kong and other Asian countries. His company, which he named after his grandmother, has also expanded to provide dishwashing liquid, anti-lice shampoo, fabric enhancer, detergent, feminine wash and Gumtech, a special gum-formula toothpaste, among others.

Not giving up

Pedro is slowly winning the battle and gaining market share, but the toothpaste war is far from over.

He said Colgate and Close Up usually occupy the best grocery shelves in supermarkets, making their products more visible to customers.

Hapee, on the other hand, has to make do with a small spot in the supermarket.

Despite this, Pedro said he is not giving up, especially now that he has gone this far.

“And besides, I now have millions of customers because of my toothpaste. That’s something to be happy about,” he added.

Corporate social responsibility

Corporate social responsibility is a very important part of Lamoiyan’s way of doing business. Mr. Pedro says, “In Lamoiyan Corporation, we believe that we can make our presence a blessing to society. These activities are focused on dental missions, helping the deaf community and taking care of the environment.”

Lamoiyan’s corporate motto is “to make a difference for the glory of God”. Hence, in thanksgiving to the Lord and in keeping with his faith as well, Mr. Pedro gives opportunities for the hearing impaired by employing and providing them with free housing. Sign language is the only means of communication between the hearing-impaired and hearing personnel, so he has also required his managers to learn it. To continuously extend his gratitude, as the chairman of the Deaf Evangelistic Alliance Foundation, Inc. (Deaf), he grants scholarships to at least 200 hearing-impaired students through the said foundation.

In 1991, Cecilio Pedro was the TOYM awardee for Business Leadership. The following year, he bagged the Agora Award for Outstanding Achievement in Entrepreneurship.

Building a lasting legacy

Time is a variable for any kind of business. The test of the viability or feasibility of an enterprise depends on generational creativity. Business survival or leaving a legacy from generation to generation requires hard work and commitment. It means believing and living the vision of the founder by his successors.

In Cecilio Pedro’s story, his actions and decisions as a founder/visionary were very apparent. He wanted to leave a lasting legacy for the next generation to emulate. Values that go beyond profit. Values that also embrace people and planet.

Creating a family business legacy is a challenge for owners of family businesses. The past and the present stature of a family business will determine its future existence or demise. Much of course depends on business and talent management and stable or liquid cash flow.

A recent Harvard Business Review article identified traps that can hamper generational success and compromise the legacy building efforts of the founder generation. These traps include: the mind-set that there is always a place for a family member in the business; that the business can’t grow fast enough to support everyone; and that family members stay in silos according to bloodline.

Proper training and skills are vital to generational success. It means that the visionary or the senior family business owner can have wrong expectations as far as business succession planning is concerned. It also does not follow that belonging to a family business entitles the children to continue running the family business.

“Research shows that a family business beats the odds if they last for more than three generations.”

There is even an Italian saying, “Dalle stalle alle stelle alle stalle,” which means, “From the stables to the stars and back to the stables.” It is an indication that the challenge facing family businesses is universal across our world and a never-ending process of governance, succession and the family business mindset that the world is your oyster.

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A story of faith: outperforming and outthinking giants

IN our fast-paced, hectic world we all need a daily dose of faith, hope and love. Stories of heroic struggle against odds, survival and eventual triumph have always inspired people, given them hope, courage to fight, and egged them on to persevere.

When you read inspirational rags-to-riches stories, you’ll start to see a few common threads. Hard work, passion, determination, and drive are all common elements of these stories. Surprisingly, obstacles, failure, and incredible odds are also elements of these stories. In almost every case, the main character of the story would never have been expected to achieve so much in a single lifetime. These individuals, however, overcame tough odds, surpassed difficult obstacles, and laughed in the face of failure.

“Things aren’t always what they seem.” If you have faith, you just need to trust that every outcome is always to your advantage. You might not know it until some time later. I am sure Cecilio Pedro’s story would ignite your never-say-die spirit and inspire you to become all that you can be. His company, Lamoiyan Corp., is the manufacturer of Hapee toothpaste, the first homegrown toothpaste in the Philippines.

I first had the opportunity to exchange notes with Cecilio more than a decade ago when he was our speaker in an Ateneo MBA roundtable meeting with fellow professors. Then a little more than a year ago, we had the rare opportunity to share stories when we were both invited as resource speakers in a family business conference at AIM. Knowing the man up close and listening intently to his inspiring story gave me goose bumps in a positive way and today I want to share his story.

Reflecting upon it, the key to success is the owning of the family’s devotion to the business, its resilience in coping with disappointment, and the intensity of its long-term commitment to the business. That in a nutshell best characterizes the country’s Toothpaste King.

It is my fervent hope that family business owners and visionaries can learn so many lessons about Cecilio’s values, faith, tenacity and vision for his company.

Cecilio Kwok Pedro is an entrepreneur who made it to the top after his failure back in 1985. His principle is much grounded and to quote this man of humility, he once said, “We are competing against the giants. Without faith and without the intervention of the Divine, it is really difficult to survive in this industry.”

Twenty-five years ago, people thought Cecilio Pedro was crazy for competing head-on with global toothpaste brands Colgate and Close Up.

Before he went head-to-head with Colgate and Close Up, the two multinational toothpaste brands were Pedro’s only customers. His first company, Aluminum Container Inc., sold aluminum toothpaste tubes to these foreign firms from 1978 to 1985.

“At that time, I was thinking that toothpaste is something that everyone uses. And multinational firms will be here for the long term, so I thought it was a safe business,” he said.

All was going well for his company until plastic toothpaste tubes were invented. Both Colgate and Close Up decided to switch to plastic tubes in 1985, forcing Pedro to close shop.

“I never thought that they would switch to plastic tubes. My business got in trouble when they left,” he lamented.

Relying on a few customers was Pedro’s biggest mistake yet. Money stopped coming in, and he was left with millions of aluminum tubes.

Deeply mired in debt, he could have committed suicide had it not been because of his deep faith in God’s power and mercy. He turned his crisis into opportunity when he opted to compete with Colgate despite its being a multinational. With faith, guts and hard work, he put up a “David vs. Goliath” type of fight. When his sales started to dent Colgate’s, they offered to buy him out but he answered, “I don’t think you can afford my price.” Lamoiyan has now captured 30 percent of the market and is still growing.

Now, Hapee toothpaste tubes and sachets are selling like hotcakes in the Philippines, making his company, Lamoiyan Corp., the country’s first homegrown toothpaste empire. Part 2 of his story will follow.

Socorro Ramos: the pillar behind National Book Store

ALL life demands struggle. Those who have everything given to them become lazy, selfish, and insensitive to the real values of life. The very striving and hard work that we so constantly try to avoid is the major building block in the person we are today. That quote from Pope Paul VI best epitomizes this amazing lady.

Socorro Cancio-Ramos is the matriarch of National Book Store, the Philippines’ leading retailer of books, office supplies, and greeting cards — a rare example of a businesswoman who watched her efforts fail multiple times, then rose from the ashes to succeed with one more try at the same venture.

Socorro or “Coring” as she is fondly called, was born into a family of shopkeepers who were thrown into poverty after losing the family business. While working for her brother-in-law, Coring met and fell in love with Jose Ramos. They got married and the couple founded National Book Store in 1940. Unable to afford extra help, she worked not only as manager but also as cashier, purchaser, saleslady, janitor, and helper – all rolled into one.

After the Japanese occupation, the Ramos couple was able to rebuild a shanty in the corner of Soler and Avenida Rizal in time to catch the boom of post-war business. Using the door of their house as a counter, Ramos again started selling textbooks, notebooks, pad paper, and pencils in time for the first postwar school year in the country. Just like that, National Book Store made its transition from being a general merchandise store to a store that sells books and more. Business went well mainly because only a few stores sold school supplies during that time.

The building that they built was damaged when typhoon Gene entered the Philippines, destroying dozens of houses and property. Their house and store were taken down and all the merchandise soaked. But this did not bring down the Ramos couple. They worked harder, they slept for only three hours a day spending the rest of their time rebuilding the business. Eventually, through will and determination, the Ramos couple was able to construct a two-story building complete with mezzanine that would be their store for years.

In the 1950s, Socorro Ramos thought of producing a line of greeting cards and postcards using Philippine views and artwork. By creating a distinct design, it promoted Filipino culture to the rest of the world. The company later acquired the national franchise for Hallmark Cards. It was also at that time that they began a publishing program with the assistance of international publishers such as McGraw-Hill, Prentice Hall, Lippincott, and Addison-Wesley.

After more than a decade, Ramos acquired a nine-story building along Avenida Rizal, and in 1963, the construction of the Albecer Building (Albecer taken from Ramos’ three children – Alfredo, Benjamin, and Cecilia) began. Little did the Ramos couple know that the Albecer Building would be the first of many buildings they would build. Socorro Ramos now has more than 2,500 employees in over 80 branches of her once-small stall. From a humble beginning, Ramos’ National Book Store is the Philippines’ biggest book store chain and an icon in the country’s retail industry.

Today, she has expanded the National Book Store chain into an empire that spans a variety of various businesses, including publishing, a music store, a department store, and several other convenience and gift stores. What has become the Ramos family business has not stopped growing since, having opened Powerbooks in 1996, a popular specialty book store. The best part – she has successfully kept the family business intact, employing all three of her children as well as grandchildren and other relatives.

During the 70s, National Book Store sold reprinted versions of foreign-printed college textbooks for 75 percent less than their usual cost. Thus, students, especially those coming from poor families, were able to save huge amounts of money. According to her, she remembers her cash-strapped childhood, so she’s committed to lifelong learning. She tries to make the books affordable to customers at all economic levels.

Coring has been recognized for her outstanding success both in the Philippines and the larger world. She was the 2005 winner of Ernst and Young’s Philippine Entrepreneur of the Year award. Other notable awards include: Agora Award for Outstanding Achievement in Entrepreneurship (1991); DTI Outstanding Filipino Retailer Award (2001); The Outstanding Filipino (TOFIL) Award (2006); and Filipino-Chinese Federation of Business and Professional Women of the Philippines Award for Business (2007).

With all her awards and wealth, Socorro Ramos stays humble and credits her success to values. She constantly monitors the business landscape. She says there’s always something new to learn; successful business people must remember this and keep their minds open.

Alfred Yao: the juice king of the Philippines

EVEN with a great idea, thorough research and hours and hours of hard work, one rule still applies: nothing is certain in life and in business. No one can unfailingly know if one will fail or succeed in life, how investors will receive a startup idea or whether a company will survive past the one-year mark. So, how can one increase the odds of, well, beating the odds?

Determination is a key attribute sought after by recruiters of graduates and for many, it can be more important than sheer intelligence. It is sometimes referred to as drive: “the determination to get things done, to make things happen and constantly look for better ways of doing things”.

Alfredo Yao is one of the most admired businessmen in the Philippines today. The two flagship companies of his sprawling Zesto Group are the Zest-O-Corp. and Zest-Airways, now Air Asia Zest—enterprises built on the foundation of Yao’s enormous enthusiasm for finding another way. His other core business is the RC Cola, another turnaround story worth discussion in a separate column.

Fred’s story is yet another rags-to-riches tale of a self-made businessman who rose from poverty through hard work and determination. I first met Fred close to two decades ago when he invited me to drop by his two-story office in Manila to discuss a townhouse project. It was aptly called Villa Soledad in honor of his mother.

Yao became a breadwinner at an early age after his father died when he was only 12 years old. He is the eldest of six children. Being penniless, he started to work to help the family because his mother’s earnings as a sidewalk vendor could not support their needs. He would accompany his mother to Chinese gambling dens to sell.

Through the help of a relative, he was able to finish his elementary and high school education. However, he was unable to complete his college education at the Mapua Institute of Technology.

Yao worked hard and did odd jobs such as working in a warehouse of a packaging company. Through a cousin who was employed in a printing press, Alfredo Yao learned the ropes on printing cellophane wrappers for candies and biscuits and went on to venture into operating a printing press business. It was the birth of Solemar Commercial Press, named after his mother. The business thrived for about 20 years.

In 1979, while touring Europe, Mr. Yao came to discover the packaging format called ‘Doypack’ in one of the exhibits. It was then the latest European packaging technology. He bought the machine and tried to market the idea of using the Doypack format to local juice manufacturers in the Philippines but nobody seemed interested.

Never one to lose faith, Yao began making juices enthusiastically in his own kitchen and packaged them using the equipment he had just bought. His optimism was not misplaced. Zest-O orange drink was launched within the next two years. It became a hit with moms who saw the practicality of putting the light but tightly packed orange drinks in their kid’s lunch boxes. Children loved it that their chilled fruit drinks stayed cold and fresh till snack time.

Today, Zest-O drinks come in 12 variants and command 80 percent of the market for fruit juices. It has expanded its business to China, Australia, New Zealand, Korea, Singapore, the US and Europe and has helped revitalize the fruit growing industry in the provinces, particularly the Philippine’s native orange variety called “dalandan”. The doypacks are being recycled by local cottage industries into handbags and are now being exported to other countries.

Popularly known as the “Juice King”, he is not just the CEO of Zest-O Corp. but also the founder of a clutch of firms – Philippine Business Bank, Asiawide Refreshments Corp. (franchise of RC Cola), Summit Hotel and Resorts Specialists, Semexco Marketing, SMI Development Corp., among others.

Some of his notable achievements include being the: (1) 2014 MVP Grand Bossing Award; (2) 2005 Ernst and Young Master Entrepreneur of the Year; and (3) Most Admired ASEAN Enterprise Award for Innovation. He also served as the special envoy to China for tourism cooperation.

Thus, Alfredo Yao proved that choice, not circumstances, determines success. As Geoffrey Gaberino, 1984 Olympic gold medalist says, “The real contest is always between what you’ve done and what you’re capable of doing. You measure yourself against yourself and nobody else.”

Asked about his secret to success, he said: “…hard work, perseverance and foresight, plus having the right people working with me to develop and sustain the business are key elements to my success.”

sorianoasia@gmail.com

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I am excited to deliver a very timely Real Estate talk on Sept. 25, a Friday, at the AIM Conference Center in Makati. The one-day talk will singularly focus on a very relevant topic entitled, “Anticipating a Real Estate Bubble? Manage Your Growth During Uncertainties”. To reserve slots, please call the session organizer, Octopus Branding, at 0915-9108686.

The Ayala Corporation: 181 years of brand leadership and steady growth

IN THE world’s most dynamic region, family companies occupy the commanding heights of capitalism.

Ayala Corp. is one of the longest-running family businesses in the Philippines. For almost two centuries of its existence, it has become an icon in the business sector, as it continually adhered to its core principles and ideals for seven generations. The corporation started in 1834 and was founded by Domingo Roxas and Antonio de Ayala. It has been in existence for the past 181 years.

The family started out in agriculture then diversified into everything, from construction, to water to telecoms. Since then, the family has been moving towards a clear vision and adhered to an “enduring set of values”.

Currently, the organization is led by two brothers from its 6th generation–Jaime Augusto and Fernando. The siblings run the holding company that sets the strategy. Three children from the 7th to 8th generation are working their way up the corporate hierarchy.

Family businesses must have a shared vision to grow

Jaime Augusto has a glowing vision of the company as the driver of his country’s modernization. The company has always taken a leading role in this, from building infrastructure to supporting corporate philanthropy. But, in recent years, it has increasingly focused on the mass market in an effort at “nation-building.”

Sharing about how the family has maintained business leadership for generations, Fernando said that he takes a “professional, independent, and disciplined” approach to running its businesses. He explains that the Ayala family has remained united, and ensured orderly leadership succession through the years.

The success of the Ayala family is evident in the corporation’s diversified portfolio and increasing profits. They have professionalized and focused the company in recent years. The six main businesses, namely water concession, property, telecoms, electronics, call centers, banking and recently, infrastructure and energy, have been listed on the stock exchange and put in the hands of professional CEOs, but the family remains at the heart of the firm.

How does the Ayala Group view expansion?

Jaime once said, “We’ve always believed in the possibility of mergers and acquisitions as a way of expanding.”

That explains why the conglomerate has achieved partnerships with business leaders locally and internationally. As it is but natural for the Ayala Corp. to seize opportunities as they come, the time is right as the ASEAN Economic Integration looms. Jaime adds, “There’s a positive process that’s taking place. The momentum of lifting all the standards in the region to a new level is good for all of us. We’re all growing as countries, and the region has increased its trade among our countries. It’s an exciting time for all of us.”

He further adds, “Very entrenched domestic industries that have lived in a fairly protective environment will have a tough time, anyone who has not had the kind of pressures to bring down cost, to be more efficient, to take productivity up, to look for talent that is imaginative, find solutions. Anyone in industries that have been very closed will have a tough time adjusting.”

Ayala extends its reach to the huge ASEAN market

Among the 10 member nations of the ASEAN, Ayala has built a significant presence in Vietnam, joint venturing with the local utilities company, SAWACO (Saigon Water Company). I used to regularly visit their five-man operations in Ho Chi Minh City in a small decrepit building, and every year I was witness to positive changes in their operations.

Their expansion in Vietnam can be attributed to their huge success in 1997 when Ayala won the concession agreement from a Philippine government utility company and formed Manila Water. Today it offers reliable water supply to more than eight million customers. That success paved the way for their confidence in expanding their presence overseas.

Ayala/Manila Water’s start up years started with lending their expertise in a Word Bank-funded consulting engagement with SAWACO. Today the five–man team of water engineers has become a full-blown joint venture agreement focused on water concession. They are currently aggressively pursuing water expansion projects in Indonesia and have quietly extended their reached to ASEAN’s last frontier, Myanmar.