In a speech delivered at the first MAP NextGen Conference 2020, JG Summit Holdings, Inc. President and CEO Lance Y. Gokongwei shared his thoughts on Next-Generation (NextGen) leadership, focusing on stewarding the JG Summit conglomerate to greater heights during these turbulent and uncertain times.
Organized by the Management Association of the Philippines — an organization which counts more than a thousand of the nation’s top corporate executives, government leaders, and management educators within its ranks — the one-day online conference brought together the nation’s NextGen leaders to share their personal experiences in handling today’s most critical issues, as well as to learn from their peers’ best practices.
In the conference’s first plenary session, Gokongwei was invited to provide insight on “NextGen Leadership in a Conglomerate,” an apt opportunity to present his vision for JG Summit after taking the reins as its second-generation leader. In the wide-ranging speech, Gokongwei addressed topics such as the conglomerate’s core values, the lasting legacy of Mr. John Gokongwei, Jr., the company’s response to the Covid-19 pandemic, enabling its workforce, creating a positive impact on society, and the growing role Sustainability plays in the Gokongwei Group’s operations.
The NextGen Conference was the first time Gokongwei addressed a public audience after the passing of the conglomerate’s founder in November 2019. In his speech, Gokongwei paid homage to his father, who built the company from scratch in 1956 and led it to become one of the country’s largest conglomerates. “Getting to where we are now from our humble beginnings is a testament to our founder Mr. John Gokongwei, Jr.’s vision, entrepreneurial spirit, courage, grit and resilience. I am humbled to be given this distinct opportunity to continue – and build on – the great legacy that he has left behind,” said Gokongwei. Today, JG Summit is involved in food and beverage manufacturing, aviation, real estate and property development, banking and finance, petrochemicals, information and technology, infrastructure, and logistics; it also has core investments in utilities such as power and telecommunications, and affiliate businesses in retail and media.
Building on Mr. John’s legacy was a central theme of the speech, underscoring the importance the conglomerate places on its core value of Stewardship. “My father instilled in us the mindset that ‘the family is here to support the business; the business is not here to support the family.’ This puts into proper perspective our Family’s role and responsibility as NextGen leaders in ensuring that the business prospers and endures for generations to come.”
Highlighting the commitment to creating value for shareholders and not just the Family, Gokongwei stressed that majority of the conglomerate’s earnings are invested back into the company. “By reinvesting our profits, we are able to further grow the business,” shared Gokongwei.
Good stewardship also meant having the business managed professionally, hiring the best-qualified talents to help run the various aspects of the business. “We need to work alongside the best management team and a committed and competent employee force who will help guarantee that the business not only survives but flourishes over a long period of time,” explains Gokongwei. By doing so, he believes that the family can escape the fate of most other family-run businesses. Research reveals that only a small percentage — 3% according to Businessweek.com — of family businesses prosper beyond the fourth generation.
Driving JG Summit forward into the future are its Purpose, Values, and Ambition --- the company’s “North Star that guides and inspires us both in normal and extraordinary times such as we are experiencing now,” said Gokongwei.
In the conglomerate’s Purpose, which is the “unrelenting commitment to provide our customers with better choices, creating shared success with our stakeholders,” Gokongwei says that customer-centricity will be key, enabling the company to “proactively provide them with better choices that will make their lives better.”
In the pursuit of this Purpose, the Ambition is also set, which is to solidify JG Summit’s position among the country’s largest conglomerates by 2024. However lofty these goals, Gokongwei told the conference’s audience that the conglomerate will always act with Integrity, one of the three core values alongside the Entrepreneurial mindset and Stewardship. “We will deliver [our Ambition] through a strong entrepreneurial mindset, acting with agility, courage and grit. We will promote stewardship by always having a long-term strategic view of the business. We will act with integrity by being respectful and humble in our actions all the time. These values will be the hallmarks of our behaviors, as we foster a shared culture in our organization.”
Bringing the speech to a close, Gokongwei offered an effective mnemonic that could help other NextGen leaders steward their own business during these extraordinary times. “Like Captain Ri, dapat “SMART” tayo!” he said, alluding to the Smart commercial featuring the popular Korean actor Hyun Bin.
According to Gokongwei, being SMART entails the following:
- Our business has to be Sustainable for it to be able to outlast this pandemic and beyond;
- We need to be Motivated beyond making profits and instead foster inclusive growth that will benefit our stakeholders – our employees, business communities, business partners – and society, as a whole;
- We need to be Agile so that we can respond with speed that is so necessary in today’s volatile environment;
- We need to be Resilient and recover quickly from obstacles and setbacks; and finally
- We need to be Transformative by creating innovative products and services that will transform the lives of our customers and make it better.
The entirety of Lance Y. Gokongwei’s MAP NextGen Conference 2020 speech can be viewed below.
Mr. Francisco Ed Lim, president of the Management Association of the Philippines; NextGen Conference Committee Chairman Mr. Donald Patrick Lim; Secretary Karlo Nograles; fellow speakers and NextGen leaders; ladies and gentlemen, good morning. Thank you for having me here today to share with you my journey as a second generation leader of JG Summit.
When I assumed the position of president and chief executive officer of JG Summit in May 2018, it was very clear to me that my role is that of a steward, a caretaker, of the business that has been entrusted to me. With the role came the responsibility of ensuring that JG Summit continues to thrive not just during my watch but over a long period of time.
One of my major challenges as a next generation leader is to steer the conglomerate to its next level of growth amidst today’s highly disruptive world. I have learned from my 33 years of working for the business that our keen ability to recognize change, confront competition and overcome adversity has ushered in countless opportunities for the business to grow and prosper over the years. Starting as a single-product company in 1956, we have significantly expanded and strengthened our portfolio to provide our customers a wide array of products and services, many of which are now household names.
Today, JG Summit’s businesses span various industries ranging from food and beverage, aviation, real estate and property development, banking and finance, petrochemicals, information and technology, infrastructure, and logistics. We also have investments in utilities such as power and telecommunications, and affiliate businesses in retail and media.
While our businesses, like most, have been affected by this historic pandemic, our diversified portfolio helped mitigate its ill effects on our overall business performance.
Getting to where we are now from our humble beginnings is a testament to our founder Mr. John Gokongwei, Jr.’s vision, entrepreneurial spirit, courage, grit and resilience. I am humbled to be given this distinct opportunity to continue – and build on – the great legacy that he has left behind.
The stewardship of this business is a responsibility – a privilege, actually – that I take very seriously. To ensure the continued success and longevity of JG Summit as a nextgen leader, I am guided by my three-pronged philosophy:
- First, we have to put the interest of the business ahead of the Family;
- Second, we need to build a strong corporate culture anchored on our organization’s Purpose, Values and Ambition; and
- Third, our business must have a social purpose so that in turn we may gain our social license to operate.
PUTTING THE INTEREST OF THE BUSINESS ABOVE ALL
Recent research shows that only 3% of family businesses last beyond its fourth generation. But Mr. John had a vision for the company 100 years into the future. He wanted the business to last and survive well beyond its third generation unlike most family businesses.
My father instilled in us the mindset that “the family is here to support the business; the business is not here to support the family.” This puts into proper perspective our Family’s role and responsibility as nextgen leaders in ensuring that the business prospers and endures for generations to come.
As long-term shareholders and stewards of the business, our Family has always prioritized investing in JG Summit’s growth over dividends to the Family. Majority of our earnings are plowed back into the business, with typically no more than 10% going to the Family as dividends. By reinvesting our profits, we are able to further grow the business.
The Family also believes that the business has to be managed professionally. We view ourselves as professionals. We work as hard, or some say even harder, as everyone. Just like everyone else, we have to keep on learning, work at further developing our competencies and skills, and get the job done.
Managing the business professionally also means getting the best qualified talents to help the Family’s nextgen leaders run the business. We need to work alongside the best management team and a committed and competent employee force who will help guarantee that the business not only survives but flourishes over a long period of time.
One other way of ensuring that the business is managed well was the move to list JG Summit and our major subsidiaries on the stock exchange. Being listed puts our management under public scrutiny and provides checks and balances. We also need to work doubly hard as we are accountable to our external shareholders who have entrusted their hard earned savings to us.
To further ensure the continuity of the business, Mr. John and his brothers Henry, Johnson and James donated a significant portion of their shares to form the initial corpus of the Gokongwei Brothers Foundation in 1992. On the occasion of Mr. John’s 80th birthday in August 2006, he announced that he was donating half of all his shares in JG Summit to support various charities through the Gokongwei Brothers Foundation. The donation, which made GBF the single largest shareholder of the conglomerate, ensures that JG Summit will always have a committed shareholder to support its continued growth. It also means that the company has to perform well so that it can continue to support GBF’s mission.
FOSTERING A SHARED CULTURE IN THE ORGANIZATION
Last year, as part of our enterprise transformation journey, we revisited our Purpose, Values and Ambition.
Central to our Purpose are our customers, who are at the front and center of everything we do. Our strong customer focus allows us to understand our customers’ needs, enabling us to proactively provide them with better choices that will make their lives better. And as we achieve this, we can only truly succeed if we are able to share our success with our various stakeholders – our employees, suppliers, communities, and shareholders.
With our Purpose in mind, we set our Ambition which is to solidify JG Summit’s position among the largest conglomerates in the Philippines by 2024. We will deliver this through a strong entrepreneurial mindset, acting with agility, courage and grit. We will promote stewardship by always having a long-term strategic view of the business. We will act with integrity by being respectful and humble in our actions all the time. These values will be the hallmarks of our behaviors, as we foster a shared culture in our organization.
Our Purpose, Values and Ambition form our North Star that guides and inspires us both in normal and extraordinary times such as we are experiencing now.
MAKING A POSITIVE IMPACT ON SOCIETY
Of significant importance to me is being able to build a solid reputation for the company as a socially responsible corporate citizen. As our company grows bigger and more successful, our responsibility to have a positive impact on society becomes even more pronounced.
I want our employees to be proud that they belong to a company with a social purpose, one that acts in a manner that benefits society. Being socially responsible includes taking good care of the natural resources that are essential to the operation of our businesses, being a good neighbor to the communities where we operate, and in conducting our business with integrity. By making a positive contribution to society, we earn our social license to operate, which is a license based on trust.
The Gokongwei Brothers Foundation, through its various initiatives to promote education and, recently, through its disaster relief and COVID-related assistance, is one of the platforms by which we are able to give back to society. Mr. John and his brothers believed that quality education is necessary to compete in this world. GBF has dedicated itself to contributing to the country’s progress by helping educate the future workforce, particularly in the fields of science and engineering.
For the past 28 years, GBF has awarded scholarships to deserving youth, supported professional development of teachers, built quality learning facilities, provided support for reputable academic institutions, advocated for STEM education, and created synergies geared toward uplifting the lives of Filipinos.
LEADING THE BUSINESS TO ITS NEXT LEVEL OF GROWTH
I have just shared with you my three-pronged philosophy on how to ensure the long-term sustainability of JG Summit as a NextGen leader. I will forever be grateful to my father for leaving behind this great business for me to lead. But how do I bring this business to its next level of growth?
We have to be dynamic as the world is changing faster than we can imagine. Every day, we have to strive to be better, to be more customer-centric in order to not just keep in step with change but to drive change as well. As we continue to transform, we are also in pursuit of other growth areas.
Our Digital Transformation journey, with our huge ecosystem as playground, is a platform to fuel our growth. We will leverage on ecosystem synergies to benefit our business units and make them more customer-centric.
In 2018, we established Data Analytics Ventures, Inc. or DAVI. As the repository of our extensive consumer data within our ecosystem, DAVI will harness and unlock new customer insights leading to new product offers and business models that are designed to provide growth for our business units.
Another growth area for us is the logistics and warehousing industry. We recently started the operations of our joint venture company called DHL Summit Solutions, Inc. or DSSI. We have ventured into this business not just to serve our customers' needs but also to once again unlock and harness the benefits of our ecosystem.
The joint venture will utilize DHL's state-of-the-art technology and solutions to initially provide domestic transport operations and services that include serving the requirements of Universal Robina Corporation starting last July and Robinsons Retail eventually.
This joint venture is another manifestation of our company’s dynamism and growth mindset as we continue to look for ways to fully harness synergies within our huge ecosystem.
EMPOWERING OUR INTERNAL ORGANIZATION
In the midst of fierce competition and rapid technological advances, it is essential to have an empowered and competent employee force especially for a customer-centric and innovation-driven organization like ours.
I believe that by empowering our employees with the authority, resources, opportunity, and motivation necessary to accomplish their work, we will be able to fully harness their strengths and enable them to maximize their contribution to the attainment of our company’s goals.
A few years back, we embarked on our enterprise transformation journey to evolve our governance structure and strengthen organizational alignment, collaboration and execution among JG Summit and its strategic business units. We have successfully appointed CEOs for each of our strategic business units who are empowered to lead and be accountable for their respective businesses. The move entailed pushing down decision-making at their level for speed and efficiency.
We have also institutionalized a strategic planning process to enable our strategic business units and corporate center units to be accountable for their 5-year roadmaps in support of our Ambition. Our objectives and goals are tied up to our performance management and rewards system with a clear set of KPIs to ensure that we are aligned, responsible and accountable for the work that is assigned to us.
In terms of resources, our investments in technology have greatly benefitted our organization especially during the pandemic. For instance, we have been able to provide our employees with an effective platform to communicate and collaborate with each other. We are also able to vigorously conduct various e-learning programs to further hone our functional, leadership and personal skills and competencies.
We realize that to make customer-centricity a way of life, we have to create a work environment where our employees can thrive and find fulfillment. As they say, “customer-centricity starts at home.” Thus, it is important for us to have happy and motivated employees so they can, in turn, create an unbroken value chain of satisfied internal customers that ultimately leads to our external customers.
With this in mind, we formed a dedicated Employee Experience cross-functional team last year whose ultimate goal is to ensure that employees have a positive employee experience throughout the employee life cycle. Using the Agile Method, the EX team has made breakthroughs in transforming the lives of our employees through improvements in various employee touch-points.
Similarly, our Digital Transformation Office or DTO, which was formed two years ago, is helping empower our business units to take bold steps and seize opportunities to further strengthen customer-centricity through digital transformation.
DTO helps our business units create better customer journeys and innovative products by coaching them to become digitally fluent, agile, and data-driven. From these empowering partnerships, several key projects were either accelerated or borne during the pandemic such as Robinsons Bank’s mobile app, Robinsons Supermarket’s and South Star Drug’s e-commerce platforms, and Robinsons Land Corporation’s Homeowners Portal.
STEWARDING THE CONGLOMERATE AS A NEXTGEN LEADER
Stewarding JG Summit as a nextgen leader during these extraordinary times is a most challenging task, but an experience that is definitely well worth it.
We have learned so much as we soldiered on uncharted territory during the past 8 months. But even as we continue to navigate the intricacies of today’s treacherous terrain, our sights are trained on a much farther horizon. We need to be well prepared and emerge even stronger to succeed in the post-pandemic world order.
Let me end on a light note and please excuse me for this shameless plug. As we continue to ride out this storm as NextGen leaders, like Captain Ri dapat “SMART” tayo!
- Our business has to be Sustainable for it to be able to outlast this pandemic and beyond;
- We need to be Motivated beyond making profits and instead foster inclusive growth that will benefit our stakeholders – our employees, business communities, business partners – and society, as a whole;
- We need to be Agile so that we can respond with speed that is so necessary in today’s volatile environment;
- We need to be Resilient and recover quickly from obstacles and setbacks; and finally
- We need to be Transformative by creating innovative products and services that will transform the lives of our customers and make it better.
Thank you very much for obliging me to share with you my story as a NextGen steward of JG Summit.
