Business lessons from Mar Roxas
How do we become better leaders, entrepreneurs and professionals? Former Wall Street investment banker and Wharton-educated Senator Manuel “Mar” Araneta Roxas III recently had a candid exchange of ideas at a four-hour dinner forum with 180 young Filipino-Chinese entrepreneurs from the Anvil Business Club in Ortigas Center, Pasig City. He said: “We are all business people, we all talk turkey here.” He challenged them to help our society to overcome the numerous balakid or “obstacles” to Philippine progress.
He lamented the fact that despite the high economic growth seen in our statistics, one-third of the people often miss their meals every day, and a major proportion of public school kids do not finish high school and college. He lamented the tragic “disconnect” between high growth in gross national product (GNP), stock market prices and lower bank interest rates, with what he describes as “the real economy.” He describes the shrinking of people’s purchasing power as the “sachet economy,” where a lot of consumer products are now mostly sold in small packets. Instead of the wide rich-poor gap now, he said: “The Philippines needs a big middle-class as the strong foundation of our economy.”
He lamented that Philippine manufacturing industries are “in the doldrums,” that the high value of the peso is problematic to our exporters, whom he believes “we should support.” He called for decisive action against smuggling and help for our manufacturers.
He half-jokingly said, “I used to work as a venture capitalist for 10 years, but I had somehow gotten mad-cow disease and entered politics.” He added that he eventually learned that “you can actually do a lot of good through politics.”
On his Wall Street experience, he said, “I was part of the team on Wall Street that funded Discovery Channel, whose founder, John Hendricks, is a good entrepreneur who never gave up. I also admire Jollibee founder Tony Tan Caktiong, whose firm I helped to take public. Among other business leaders that I admire is my late maternal grandfather, Amading Araneta.”
His maternal grandfather, J. Amado Araneta, in 1952 bought 35 hectares of land in Cubao, Quezon City. This prime real estate is now the multi-billion-peso Araneta Center, with Gateway Mall and Araneta Coliseum among its main attractions.
Here are some of the numerous ideas expressed by Senator Mar Roxas, who has just been elected the new leader of the Liberal Party, which his late paternal grandfather, President Manuel Roxas, once led after World War II. Aside from many other insights on business, politics and history, Roxas admonished the young Filipino-Chinese entrepreneurs of Anvil to remember three principles, which I believe will also be useful for people from all walks of life, including our political leaders:
• Never give up the long term. Roxas criticized the penchant of our society for cutting corners, the mentality of “puwede na yan” (“That’s passable”), the attitude of “bahala na” (“let’s leave it up to fate”) and the “bukas na lang” excuse (from the Spanish colonizers’ “mañana” or “there’s always tomorrow” bad habit).
He said giving up the long term negatively affects not only the entire Philippine economy in terms of uncompetitiveness and inefficiency, it will also have tremendous negative effects on entrepreneurs’ dealings with customers and their businesses’ viability. One example of the debacle of giving up the long-term is the NAIA Terminal 3 imbroglio. “They got impatient, they cut corners, mabilisan (they rushed things) and now, a decade later, we still don’t have a new airport, we’re stuck,” he said.
“The ZTE deal is going to be the same thing — cutting corners, no bidding, the officials did not follow the normal procurement process — I guarantee you if this deal ever pushed through, it would just become another NAIA 3. The problem is not China per se, the problem is our government officials’ using China as an excuse to bypass the bidding requirements. The National Broadband Network project awarded to ZTE didn’t go to a public bidding and that was the problem.”
He warned entrepreneurs and government leaders to be wary of overlooking the long term, because the end results will always be the same — eventually all of us lose, we will be left with a tattered reputation, and nobody will want to invest or do business with us anymore.
• Don’t be incrementalist. He advised the Anvil entrepreneurs, “If you have the capital to open 10 outlets of your business, don’t immediately rush off to open 50 and take five years to do it. Finish the 10 outlets first, do them well, and then from the cash flow of these 10 ongoing outlets, you can open the next 10 outlets, and so on.”
He warned that there are political leaders afflicted “with the disease of incrementalism, who try to please everybody but end up nowhere.” He pointed out that regarding the Philippine government’s total national budget of P1.1 trillion this year and P1.3 trillion next year, it is tragic that our leaders have a tendency to spend on too many different priorities, causing government to “spread our limited resources so thinly — a little bit here, a little bit there, and in the end, lahat nakatiwangwang kasi konti-konti (everything is left hanging because of this penchant for incremental spending).“
He advised that it is the best and most efficient way to first solve two problems today and then “use that as leverage to solve two more problems tomorrow, then four the next day, and then eight problems the next day.”
He pointed out that many of our politicians rarely build 10-kilometer roads in their provinces or towns, because they tend to build instead 100-meter cement roads in each barangay or rural village, with lousy patches of dirt everywhere, making an overall mess of our infrastructure system. Therefore, citizens end up driving all over the rural countryside by navigating occasional cemented roads that alternate with patches of dirt roads.
He advised, “You finish one project first, open one store first, then derive the cash flow and create value, then go on to the next project afterwards.”
• Marking to market. Roxas used this finance or banking term to advise young Anvil entrepreneurs not to lie to themselves and others about the true conditions of their businesses. He used the Tagalog phrase “Magpakatotoo tayo” (“Let’s be truthful”).
No matter what entrepreneurs tell others, even if we have to window-dress, he advised entrepreneurs “to know the true value of your balance sheet,” adding “because we make decisions and take actions based on this. In the end, if there are huge gaps, we won’t be able to follow through, and we won’t be able to deliver on the promises we made to our customers, business partners, and whoever it is we deal with.” He warned that not holding ourselves accountable and not upholding good governance will result in “us hurting ourselves.”
He added that to ensure a better, more progressive and socially equitable future for the Philippine economy, “there should be transformative change.”
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