Jaime Augusto Zobel on sports, business, Harvard and being Filipino

Every year the Harvard Business School selects a number of outstanding alumni to receive its highest honor, the Alumni Achievement Award. In 2008 the award went to a Filipino businessman, Jaime Augusto Zobel de Ayala, chair and CEO of the Ayala Corporation, one of the oldest conglomerates in the Philippines.

“It was an unexpected thrill,” says Zobel, 50. “The profiles of the previous awardees were very different from mine. I think the recognition came from the work our companies have been doing in tailoring our business models to the needs of communities at the bottom of the economic pyramid. Also, being a Filipino has always opened doors for me in unusual ways.”

Ironically, Zobel, who is of Spanish and German descent and was educated in England and the United States, is not easily identified as a Filipino. At the immigration counters in Manila’s airport, he is routinely asked to queue up with the holders of foreign passports.

“I’m always amused at how surprised people are when I say I’m Filipino,” he laughs. “I get a lot of double-takes. But most countries have become multi-ethnic and multi-cultural. Americans are not expected to look Anglo-Saxon.”

Zobel is credited with steering the 175-year-old group of companies founded by his forebears towards telecommunications, information technology and the modernization of infrastructure, public utilities, offshoring and outsourcing. In the last century, Ayala has been a local leader in real estate and banking.

Recently Zobel announced significant adjustments to the Ayala Group’s strategies, business models, products, and operations. For a business to make a difference in society, he told the media, it has to go beyond measuring its success with traditional metrics like financial statements and balance sheets.

The Ayala Group released its first sustainability report last week. It is the first Filipino conglomerate to use Global Reporting Initiative (GRI) guidelines that cover not just economic performance but indirect economic impact, energy consumption, waste and emissions, water usage, product responsibility and other indicators.

 “The sustainability report defines in a more concrete way a lot of things (his brother, Ayala president and COO) Fernando and I have felt for a long time now about the world of business and society, the broader responsibility beyond giving the stockholders an adequate return and paying taxes,” Zobel explains.

“We’re all trained as managers to put an emphasis on growth, and yet we’re dealing with a world in which resources are increasingly scarce and more and more tension is being created. So we’re saying, why does the equation always have to be around that? Why can’t there be other equations where you’re creating a kind of win-win situation? Put focus on areas and efficiencies in the way you do business that are important to the communities and to society as a whole.

“The Ayala Group has traditionally dealt with the top-end customer segment,” he adds. “If we’re going to make a difference to society we should be providing products and services at lower and lower price points, but with the same dedication to quality. Globe Telecom was the first company to touch that different level. It’s led us to the joint venture between Globe and BPI (BPI Globe Banko, a savings bank) in microfinance, to see how we can create a banking entity for the un-banked. BPI only has 3.5 million customers, why should we not be able to provide credit to communities that traditionally have not been able to turn to a financial institution?”

Jaime Augusto Zobel in the flesh seems both older and younger than his age. His hair went silver when he was in    his thirties, and when he discusses business his manner is formal. He is given to quoting statistics and research and, despite the profusion of personal gadgets on his desk (two Macs, a Kindle, BlackBerry, an iPod containing five seasons of The Wire, etc.), writes notes to himself on yellow legal pad. He is exceedingly polite, identifies himself at the end of every text message, and texts his subordinates to ask if he might call them. When the topic shifts to his non-professional interests, his tone changes into that of a kid in his twenties.

“Clint Eastwood is making a movie about the 1995 South African rugby team,” he announces. “This one could place rugby on the map.”

A devotee of the sport, he flew to France for the last World Cup, only to be greeted by the news that his beloved New Zealand All Blacks had lost in the semis. “I was in a zombie state for a day,” he recalls. “But the All Blacks will have their day, and next year could be it. They just demolished the Aussies in four out of four games.”

Zobel discovered rugby at the British boarding schools he attended when his father, Jaime Sr., was the Philippine ambassador to the Court of Saint James. In his teens he played county-level rugby in Sussex and dislocated his kneecap five times.

“I’ll be frank with you, the first time my kneecap popped out was not on a rugby pitch,” he laughs. “It was on a grass court, while playing tennis. My foot went one way, my body went another…”

Contact sports were out of the question by the time he got to college, so he joined the Harvard rowing team. “I did lightweight crew for three-quarters of a season, but the pressure of training was so intense that I quit. That’s one of my big regrets. Recently I told my son, ‘If you’re ever at the point of giving something up, give me a call.’” (His son is now on the Harvard rugby team.) Otherwise Harvard was a very pleasant experience: he met many of his personal idols, including the writer Gabriel Garcia Marquez, and he earned his degree in economics with honors in 1981.

He had toyed with the idea of working at Sotheby’s, the art auction house, but his father convinced him to give the Ayala Corporation a try. For half a year he toured the group’s offices, did staff work, and was eventually assigned to the food manufacturing operation, Purefoods (which has been sold). “I spent a lot of time at the tuna cannery in General Santos City. I bought fish from the local fishermen. It was great.”

After a couple of years he returned to Harvard for his MBA, met and married his beautiful Colombian wife, Lizzie, and settled into the family business. “It’s no longer really a family corporation,” he stresses. “Ayala is a publicly traded, professionally managed company.”

Initially there was intense pressure on Zobel to prove himself at Ayala. “Part of it was self-imposed,” he says. “I was quite young, and I was working with highly educated, very experienced professionals, some of whom went on to become government ministers. It was important for me to be seen as an equal.” He took over as president in 1995, and chair in 2006.

During the question-and-answer session that followed the Harvard awards presentation, the recipients were asked the same question that appeared in their college application forms: “What have you achieved in your life?” Zobel’s reply: “I think I’ve achieved a modicum of balance in my life.”

“It wasn’t like that for me at the beginning,” he says. In the last two decades he’s figured out how to manage his time and energy to meet the demands of family (he and Lizzie have four children; the two eldest are attending Harvard), his advocacies (nature conservation, education and literacy), his hobbies (books, movies, motorcycles), and his professional life. This balance is made possible by his working relationship with his younger brother (by one year), Fernando. “We’re really co-managers,” Jaime Augusto emphasizes.

“My life is a bit less intense now,” he says. “I have the liberty to set my own schedules.” The brothers Zobel are usually in the office by 7:30 or 8 a.m., and out by 6:30 p.m. “I oversee banking, telecommunications, electronics, and developmental projects. I observe the challenges and opportunities in those sectors. When there are gaps in my schedule, I ask for presentations. I’m naturally curious, and I just want to hear what the younger ones are thinking.”

Striking a balance includes taking time off for long journeys on motorcycles. The Zobels and their bike-loving cousins and friends have ridden across the Philippines, large swaths of Australia and New Zealand, Wales, Baja in California, South Africa, and Morocco.

“The wind on your face, rain and crushed insects on your helmet, even the aching bones — these are the things that make us feel furiously alive,” he writes. “There’s a wanderlust gene hardwired into our systems, waiting to be activated.”

Wanderlust appears to be a distinctly Filipino trait: consider the millions of Filipinos living and working abroad, especially in the Middle East. “The world economy has changed — there has been a globalization in the manufacturing and distribution of products and services,” Zobel says, switching back to business mode. “Labor is just following this trend. We’re filling a tremendous service gap brought about by the demographic shift and the drive for productivity and competitiveness in the developed world. Given the shortage of job opportunities in certain sectors of our economy, the export of labor has also helped solve a potential unemployment problem.

“However, the export of labor also represents a loss of our own human resource capacity, which is needed to drive growth in certain sectors.

“At the end of the day, the option to stay or leave the country is a personal choice. Our challenge as a country is to make sure that that remains a real choice rather than a decision brought about by necessity.”

Recent global events call for a new sense of responsibility, he continues.

“With the global recession a lot of failings have taken place in the capitalist system,” Zobel points out. “These failings have made people more sensitive to the role of institutions in the catastrophes that have taken place. Those tensions have existed in our type of market in the past, which may be why we’re more sensitive to them than developed nations now facing the same thing.

“The worldwide economic recovery still has some way to go. It’s great to see so many countries work in a concerted way, governments putting huge amounts of capital into the system, but not everybody’s out of the woods yet. We’ve actually come out of it relatively okay in the Philippines. A lot of the danger really came from the banking sector globally. They have a risk profile that we don’t have in our market: we’re far less sophisticated in the kind of products and services we offer. We’re not exposed to these esoteric instruments, derivatives and the rest.”

When the conversation inches towards politics, he politely weaves away from the minefield. “Elections are always important because they mark leadership changes,” he says of the 2010 presidential elections. “One is always hopeful that the next leaders are open to new ideas and more progressive ways of doing things.”

Going back to that college application essay, what has he learned in nearly three decades in business?

“From a personal standpoint, I’ve come to realize that businesses are now regarded as having an implicit social contract with society,” Jaime Augusto Zobel de Ayala says. “The private sector needs to take into account the social impact of its business activities and, more importantly, the manner by which they conduct their business affairs. This is the only way to nurture and build trust among customers, business partners, regulators, financial investors, shareholders and other communities. This is important in the value-creation process and in the growth of any enterprise.”

Send the man an acceptance letter.