To be the best at what we do
(Following is the acceptance speech delivered by the author when he received the “MAP Management Man of the Year 2011” Award from the Management Association of the Philippines.)
Remember: You’ll be left with an empty feeling if you hit the finish line alone. But when you run a race as a team, you’ll discover that much of the reward comes from hitting the tape together. You want to be surrounded not just by cheering onlookers but by a crowd of winners, celebrating as one.
Victory is much more meaningful when it comes not just from the efforts of one person, but from the joint achievements of many. The euphoria is lasting when all participants lead with their hearts, winning not just for themselves but for one another.
Success is sweetest when it’s shared.
I thought I would start with this quote from Howard Schultz’s book on Starbucks—Pour Your Heart Into It—because it really says it all about today’s award and the Aboitiz Way.
It is indeed an honor and a privilege to speak before such an eminent gathering of Philippine business leaders.
For me to be recognized as the Management Man of the Year by the MAP is truly a great honor and certainly a reason for elation, as well as inspiration.
I accept this award on behalf of the 30,000 team members that currently make up the Aboitiz Group, as well as the thousands more who came before us. We believe the success of one is the success of all. Aboitiz is a business enterprise that took root over a century ago and we owe our success today to those who left us the solid base to build on.
For the benefit of those who may not be very familiar with our history, allow me to give you a very brief background of the Aboitiz Group.
We trace our origins to the late 1800s as a simple family enterprise trading hemp in Leyte, an island northeast of Cebu. It ventured into the shipping business, acquiring vessels that would transport the hemp and other goods to neighboring islands.
We expanded by getting into other businesses, such as copra trading, ice plants, sardine canning, sugar milling, power generation and distribution, banking, insurance, to mention a few. We were then very entrepreneurial. If the numbers looked good, Aboitiz would get into it. The only semblance of strategy was probably diversification.
As the years went by, we were driven by our mission: To Be the Best at What We Do. This meant delivering quality products, excellent service and, at the same time, being the low-cost producer.
In the early 1990s, we saw the global economy expanding at a furious pace and globalization beginning to take shape. We did not want to be left behind. In 1994, we took Aboitiz Equity Ventures (AEV) public raising capital to help fund our growing ambitions.
Yet amid our success, we felt that for us to be competitive over the long term and in a global economy, the entrepreneurial approach that had worked in the past would no longer cut it. Diversification was costing us valuable financial and organizational resources. We knew it was time for us to be more strategic.
In 1996, we reached the decision to focus on our core competencies and have more control over our destiny. We needed to shift from being entrepreneurs to being intrapreneurs, channeling our efforts to building and growing the businesses we labeled as our core businesses, namely, power, banking, transport, food and land. Subsequently, we divested of our non-core businesses and channeled the proceeds to our core businesses, where we could add more value to.
Late last year, we sold our interest in Aboitiz Transport System (ATS). The transport business had been in the family for over 100 years and it was what Aboitiz was most known for. In making our decision to sell ATS, we kept emotions aside in our quest for long-term shareholder value.
We believe this major shift in strategy has paid off handsomely and we attribute our recent success to this action plan.
Since 1996, AEV’s revenues have grown from a little over P3 billion to P75 billion as of yearend 2010. Over the same period, net income likewise increased from P1 billion to over P22 billion. And AEV’s market capitalization has grown from P15 billion in 1996 to today’s P220 billion.
The most significant expansion efforts of the Aboitiz Group have taken place in the last three years, an unmistakable show of bullishness on the economic prospects of the Philippines.
While we continued to invest and grow our other businesses, the group’s biggest investments, especially in recent years, have been in the power industry. The successful deregulation of the industry began with a landmark legislation, the Electric Power Industry Reform Act, more commonly referred to as EPIRA, that was signed into law in 2001.
As part of this reform, the government, which had been the largest owner and operator of the country’s power generation and transmission grid assets, started divesting of these holdings by bidding them out to local and international investors.
We considered the privatization process as “a once-in-a-lifetime opportunity” for the Aboitiz Group; so we concentrated our efforts in this area. We consolidated our power assets, both in distribution and generation, into Aboitiz Power, then took the company public in 2007. We were able to raise capital to give us the war chest to participate in a significant way in the privatization effort.
While frankly we never expected Aboitiz Power to be where it is today, we were able to build a portfolio of competitive and complementary generation assets that has catapulted our business to a different level.
Since going public in 2007, Aboitiz Power’s net income has grown from P4.2 billion to P25 billion by yearend 2010. Over the same period, the company’s market capitalization has jumped from P38 billion to P217 billion.
For those who participated in the ride, we are very happy to see loyal and trusting shareholders rewarded for their conviction in AEV and Aboitiz Power as long-term investments.
With government’s efforts to privatize and deregulate the power industry gaining traction, we foresee a dramatic change in the power sector landscape. The days of providing power, collecting revenues and securing rate increases will be a thing of the past. We anticipate operating in an environment of heightened competition, confronted with the realities of a more empowered consumer, with higher expectations and new demands.
With open access imminent, new market channels for our power will become available. Deregulation and open access will redefine the rules of the game while simultaneously introducing new opportunities and threats. We also see a consumer with greater concerns for the environment. We have therefore been reshaping Aboitiz Power to ensure we capitalize on these developments by positioning our business and organization for a more challenging future.
As the Aboitiz Group pursues its growth ambitions, we will continue to be driven by our corporate values of professionalism, passion, integrity and innovation.
An integral part of our business model has always been corporate social responsibility (CSR). We feel it is imperative that we match our business expansion with investments in our communities and social infrastructure.
As we grow our businesses and increase the magnitude of our moves, we have also strengthened our practice of and commitment to corporate governance. While most corporations talk about protecting minority interests, our direction and aim is to align the interests of both the controlling shareholders, i.e., the Aboitiz family, and the minority shareholders.
Today, we are also seeing an increasing trend in a new kind of capitalism, one that is focused on a sustainable way of doing business, that uses natural resources more wisely. The Aboitiz Group is committed to achieve a sustainable business among People, the Planet and Profit, for we believe it is only in striking this 3P Balance can we bequeath a robust business that is truly sustainable, operating in a healthy planet for generations to come.
The 3P balance will guide our path toward continued success by compelling us to consider success from a broader viewpoint, and not just profitability.
Aboitiz, in step with the Philippines, looks confidently to the future where we know we will have to learn, adapt, and continuously reshape ourselves for the changing paradigms of tomorrow. We will pursue this exciting future with the Aboitiz passion for better ways. This is our mindset of never being content with the status quo and always challenging the norm. We are an organization that is driven: driven to lead, driven to excel and driven to serve.
While we are very proud of the group’s achievements, we are even prouder of all our team members, the men and women who make up the Aboitiz Group. The group is what it is today because of them. They truly are the ones that deserve the recognition you have given me.
As the group’s CEO and on behalf of each and every team member of the Aboitiz Group, we thank you for the recognition accorded to us. We are truly honored. Maraming salamat.
(The author is president and CEO of Aboitiz Equity Ventures Inc. and Aboitiz Power Corp. Feedback at [email protected]. For previous articles, please visit <map.org.ph>.)
