A good manager must make himself “dispensable,” ensure sustainability and suitable succession apart from building value, creating jobs and making money for shareholders.
Thus said tycoon John Gokongwei Jr.—founder of JG Summit Holdings Inc., the conglomerate behind a number of corporate jewels such as Asia-Pacific industrial powerhouse Universal Robina Corp., budget carrier Cebu Pacific and property developer Robinsons Land—who received yesterday the prestigious “Management Man of the Year” award from the Management Association of the Philippines.
The 91-year-old tycoon, who attended the awarding ceremony with family members and key executives from the JG Summit group, had a pre-recorded acceptance speech that was shown during the awarding ceremonies at the Shangri-La at the Fort.
Gokongwei thanked MAP for the recognition, which he said “funnily” came 10 years after he had retired and relinquished management of the company he founded to his brother James and his only son Lance. “I have to say though that the timing is impeccable. The mark of a good manager, as they say, is to make oneself dispensable, and I believe that 10 years hence, the business has prospered under their capable leadership, coupled by a bench of professional management,” he said.
“Just a few years ago, the conventional wisdom was that family-run businesses could not be as well-managed as non-family run businesses. But the research has shifted, and our experience as a group shows that a hybrid of family-led publicly listed business works,” Gokongwei said.
Gokongwei noted that JG Summit debuted on the stock exchange in 1993—among the first Philippine conglomerates to do so—to better raise money from the capital markets as well as international credit markets to fulfill its aspiration of becoming a pan-Asean (Association of Southeast Asian Nation) conglomerate.
“More so, unless placed under the spotlight of the public eye, a family-managed company would not be under pressure to perform. We would become soft and flabby,” he said.
On building value, Gokongwei said JG Summit had never been afraid to enter competitive markets but always thought of innovative products to introduce.
“For example, both C2 and Great Taste White shook up the consumer beverage and coffee markets when they were introduced. Sun Cellular and Cebu Pacific also shook up the telecom and airline businesses by providing choices to many Filipinos, thus improving their lives,” he said.
On job creation, Gokongwei reported that the group was now employing around 60,000 Filipinos. He added that Gokongwei Brothers Foundation, which focuses on education-to-employment, was also making sure that the group could help talented but less-fortunate kids receive a fair shake in life.
On creating value for shareholders, Gokongwei put up Universal Robina with P3.5 million in 1956. “This was from money I had saved from selling used clothing, old newspapers and other knick knacks, plus some money from good friends to whom I am still grateful,” he said.
In 1993, JG Summit was listed with a market capitalization of P6.3 billion. Today, the group’s two holdings companies, JG Summit and Robinsons Retail Holdings are valued at P665 billion. Remaining family-managed, Gokongwei said, would imbue the business with the stability, strong culture and long-term vision necessary to see its investments bear fruit.
“This balance has allowed us to invest in capital-intensive businesses that bridged the first phase of our growth to our current one. It allowed us to provide local consumers with choices. For example, Cebu Pacific Air, which has made air travel affordable to ordinary Filipinos. It has allowed us to contribute to our country’s manufacturing base, a step necessary to a nation’s progress, through JG Petrochemicals,” Gokongwei said. “It has allowed us to plant the Philippine flag in Thailand, Indonesia, Malaysia, Singapore, China, Cambodia and Laos, where Universal Robina is now a major player, and in Oceania, where we have acquired leading snack food companies in Australia and New Zealand. It has allowed us to hold substantial holdings in blue-chip companies like Meralco, PLDT and UIC in Singapore.”
Gokongwei said the balance between being a family-led but professionally run organization had allowed the group to shepherd key businesses, “despite big risks and losses at the start, to reach their potential, without the short-term pressure of quarterly earnings calls.”