Embrace change as an opportunity to improve and make life better for all. This was the gist of JG Summit President and CEO Lance Y. Gokongwei’s presentation at the Makati Business Club’s Leading in Extraordinary Times 2021 Series.
Exclusive to MBC members, the series of monthly virtual events features the country’s leading business executives discussing how companies can not only survive but thrive in these difficult times. For Gokongwei’s session on September 23, 2021, he spoke about the Gokongwei Group’s transformative journey, its COVID-19 recovery plan, and how it is continuing to build and strengthen its various businesses for long-term growth and sustainability.
JG Summit President and CEO Lance Y. Gokongwei focused on the topic, “Where to Play and How to Win in a Post Pandemic World,” for his online keynote presentation. IMAGE Screenshot from Lance Gokongwei's MBC presentation
In his view, the Gokongwei Group was able to bear the brunt of the pandemic’s impact because of several initiatives within the organization that had been taking place long before the health crisis emerged. “Since assuming my role as president and Chief Operating Officer in 2000, and eventually as CEO in 2018, my priority has been to put in place an organizational and governance structure that would allow me to focus on setting the overall corporate strategy, allocating capital, and maximizing synergies of the business units within our ecosystem,” said Gokongwei.
To achieve these goals, the Gokongwei Group began its transformation journey. Gokongwei recounts, “We revisited our Purpose, Values and our 5-year Ambition. We embarked on a long-term strategic planning process using the Objectives, Goals, Strategies and Measures (OGSM) model to develop and document our 5-year business strategy. We crafted our portfolio strategies on where to play and how to win, through our strategic enablers, which we identified as Leadership and People Development, Customer-centricity, Digital Transformation, and Sustainability.”
To address the session’s main theme, “Where to Play and How to Win in a Post Pandemic World,” Gokongwei first delved into the group’s 5-point recovery plan, which covers the following:
To deliver on the first point, the Gokongwei Group implemented various measures to protect employees’ well-being. These included the provision of transport and lodging services during the strict lockdowns, permitting work from home arrangements, and setting up the group’s telemedicine service and COVID Protect vaccination program.
Doing these allowed the fulfillment of the second item on the five-point list. Thanks to these measures, as well as the heroism and dedication of the group’s employees, as acknowledged by Gokongwei, many of the group’s business units were able to operate during the various lockdown periods. Among them were the group’s retail units, such as supermarkets, convenience stores, and pharmacies. Cebu Pacific, despite the challenges that plague the airline industry, continued its Bayanihan flights to repatriate stranded OFWs and tourists, while its cargo operations transported essential goods, including medicine and PPEs for healthcare frontliners. Gokongwei added, “At least 60% of our Robinsons Bank branches were operational at the start of the pandemic. The number of open branches continued to increase as quarantine restrictions eased. Likewise, our food and petrochemical plants, which are part of the essential industries category, continued their manufacturing operations, to ensure a steady supply of products for their customers.”
The third part of the plan calls for the strengthening of the Group’s financial position, ensuring that it has enough liquidity to weather what remains of this crisis. Much of the fundraising focus was understandably on Cebu Pacific, as aviation was among the sectors hit the hardest by the pandemic. So far, it has raised one billion dollars in fresh capital. Gokongwei also mentioned cash-raising activities of other companies in the group, including URC, which is divesting from its operations in Australia and New Zealand to focus in other areas where it will have a competitive advantage; and Robinsons Land, which has raised P23.5 billion through its real estate investment trust company, RCR.
The Gokongwei Group achieves the fourth point, helping local communities, through various ways. Cebu Pacific’s humanitarian efforts during the crisis include the previously mentioned Bayanihan flights, as well as the transport of life-saving vaccines. “To date, it has already carried over 16.5 million vaccine doses from China to Manila, and the distribution of almost 11 million jabs to domestic locations across the country,” said Gokongwei.
Robinsons Malls, for its part, has teamed up with different LGUs to provide safe, comfortable and accessible vaccination sites, while JG Summit’s major shareholder, the Gokongwei Brothers Foundation or GBF, created a P150 million fund to support various COVID-related initiatives through its Juan Communities program and its participation in Project Ugnayan.
The fifth part of the plan is where the questions of where to play and how to win really get answered. In brief, this will entail continuing the group’s digital transformation journey and then strengthening its core businesses and adjacencies.
While the Gokongwei Group began its digital journey before the pandemic, it has had to step up the process to stay ahead of the curve. “Our strategic thrusts especially digitalization and customer centricity have become more important especially in light of rapidly changing consumer behavior and an evolving business environment,” explains Gokongwei.
Leading the charge is the Digital Transformation Office. Set up in 2018, it “has been helping our conglomerate create great end-to-end user journeys and innovative products for our customers, employees, and business partners.”
The embrace of digital allowed business units like Robinsons Retail to launch consumer-oriented apps in just a few weeks after the first lockdown. These have enabled Robinsons Retail’s e-commerce sales to grow by four times compared to the same period in 2020.
According to Gokongwei, digital technology is also being used to strengthen the group’s “ecosystem plays.” Through Data Analytics Ventures, Inc., the repository of the group’s extensive consumer data, new customer insights are unlocked, leading to new product offers and business models that enhance customer experience and provide growth for the Gokongwei Group’s business units.
In addition, combining DAVI’s consumer data and Robinsons Retail’s network of thousands of offline stores will help enable its new joint venture GOtyme, a digital bank intended to cater to the millions of unbanked Filipinos. According to Gokongwei, GOtyme, a partnership with Tyme Bank, one of the world's leading digital bank players, will help democratize financial services. This is in support of the Bangko Sentral ng Pilipinas’ goal to bring 70% of Filipino adults into the banked population and have 50% of payments done online by 2023.
While the Group has made impressive gains in the digital space, Gokongwei maintains that the digital transformation journey is still in its infancy. During the Q&A session held after his MBC talk, Gokongwei candidly said, “It's very early days in this digital journey. If we're looking at K-to-12, we're probably at K or [level] one, so this is an ongoing journey. But what gives us confidence is that this is really of primary importance to our leadership team, to our board, that digital transformation is on top of our agenda.”
Realizing that growth will not come through digitalization alone, Gokongwei revealed that it will continue to strengthen its core businesses and create new adjacencies. Recent moves in this area include URC’s acquisition of Central Azucarera de la Carlota and Roxol Bioenergy, Robinsons Retail’s acquisition of Rose Pharmacy, the leading drug store chain in the Visayas and Mindanao, and JG Summit Petrochemicals’ 60-billion peso expansion program, as well as its recent entry into the fuel sector.
Gokongwei noted that the group’s companies have made it through the worst part of the crisis because they have adapted well to the circumstances, and will continue to adapt in the years ahead. Paraphrasing Darwin’s Theory of Evolution, Gokongwei said, “It is not the strongest of the species nor the most intelligent that survives; it is the one most adaptable to change. During the early period of the pandemic there was great confusion, and there was no playbook to guide us through. And yet, here we are now – getting better and wiser by the day, I hope and believe – because we have embraced change as an opportunity to improve and make life better for all.”
Gokongwei elucidated on this further in the post-session Q&A, conducted by Riza Mantaring, an MBC trustee and independent director of URC. In response to a question about the business risks the group takes, Gokongwei said, “That's one of the founding values of JG Summit. In the effort of providing better choices, you have to take an entrepreneurial stance, so that's oftentimes being first. We've made some major investments before that appeared risky, like going in as the third player in telco, or building a low-cost carrier, or building a petrochemical plant, or going overseas as a food company. I think that's really part of the entrepreneurial spirit which we'd like to retain at JG Summit.”