San Miguel’s president and chief operating officer talks about his own management style and the San Miguel way
What comes to mind as one of San Miguel’s main accomplishments in the last year?
Overall I think it was a bumper year for San Miguel. Our businesses did very well. We had some difficulty in a few corners of the Group where performance could be better. We’ve faced down the issues of oil prices and the excise tax, which is going to have some effect on our beer and liquor business moving forward, but on the whole, it’s been a good year. We own the largest oil company in the Philippines and are now the country’s biggest producer of electricity alongside being the brewer of nine out of ten beers sold in the Philippines.
In March, we finalized our acquisition of ExxonMobil’s downstream business in Malaysia and are now proudly operating under the Petron brand—and perhaps even shaking up the petrol retailing business a little.
Here at home, San Miguel bought into Asia’s first airline, Philippine Airlines. Half a year on, we are now the Asian airline to watch, having bought 64 planes from Airbus.
By the time we are done, we will have one of the most modern fleets in the region. We’ve made improvements to everything from the menu to online bookings and ground service. We’ve begun flying to Toronto, and new destinations in the Middle East, Asia and Australia.
Do you find yourself less focused on the traditional core businesses than on the new businesses?
Only because these businesses are much more established and I’ve worked with the management teams of these different companies for close to 15 years now. They know what I expect of them, and they know how I like things to be run. And to be very honest, they don’t need me there, hovering over them. They are very capable; the best in the business.
For the new businesses, we’ve created new work teams, brought in a lot of people from the outside, all of whom are still learning how to work within the San Miguel system and do things the San Miguel way. The new businesses are also in industries that are relatively new to us and generally more dynamic, in that there are a lot more moving parts and external forces at work, so I’m having to take the time to learn the businesses from the inside out. I think you’ll find that over time, I tend to turn over the reins to our managers. Two years ago, I’d sit down at least twice a week with the Petron team. Now I’m spending less time with them and more time with PAL, simply because it’s our newest investment and there’s a lot of work that needs to be done.
What do you mean when you say the “San Miguel way”?
In many of our businesses we have parameters on where and how to compete and how to win to maximize things that are important to us, things like long-term value and steady growth that we can sustain and build on.
San Miguel is a great company and it’s driven by strong values that I don’t mind saying were here even before we took over in 1998. Things like the importance of good execution, operating with a great degree of integrity, investing in people and communities.
These days, I think our company is more and more appreciated for what we do and what we contribute to the economy. So I think that’s another value we havegoing for us: doing the right things for the long-term and for the greater good.
What sort of values do you think you’ve brought to this company?
I don’t know if you would call it a value, but I think I’ve brought to this huge company a sense of what it is to be entrepreneurial. I ran my own businesses long before I joined San Miguel. None of them were quite as big, but I think the reason why they were successful was because we brought an element of entrepreneurship to them. There was a certain comfort with taking risks, going for the big idea and being really invested in what we were doing.
In a company as large as San Miguel, it’s sometimes difficult to get that level of commitment. Everyone’s always a bit detached. The level of ownership isn’t always there. It’s also that much harder to work up an appetite for risks because it is publicly held. I understand this. But I also like to dream big, and I think that’s paid off for San Miguel. I think, if anything, I’ve encouraged our people to take off their blinkers and challenge their own view of themselves and what we can do.
I’m also very results-oriented. I believe in accountability. So I think that’s worked its way down the line and changed the way we do things around here.
To a certain extent I think I’ve also brought a fresh new set of eyes to each business. Sometimes all that’s needed is a fresh take on things, the viewpoint from the outside. For instance in Philippine Airlines, it was relatively easy to decide that we needed to buy more planes. To keep the old ones was too expensive and not doing the PAL brand any favors. So we’ve invested in smaller wide-bodied planes that are more fuel-efficient. That way, we cut down on maintenance costs and don’t have to fly half-empty planes between routes.
Our flights to Brisbane or Perth will make a short stop to refuel in Darwin, but because we’re using a smaller plane, we can bring down costs and pass on those savings to the consumer. When you think like an entrepreneur, you see all the little things that in the end can make a difference. The brand ambassadors that will greet you on the ground and help fill in your forms. The use of online booking systems and kiosks that will make it easy for people to buy tickets.Small things that boost your brand and your value as a company.
San Miguel seems to be taking a more active role in development issues. Why is this?
We’ve always said we want to be a partner in our country’s growth. Not just a partner, but an engine in helping create this growth. This is the ambition we hold for ourselves.
Government doesn’t have enough money to invest, and the entire idea of public-private partnerships has really taken off and become a key program of the Aquino presidency. We’re seeing PPPs in electric utilities, water utilities, airports, ports, and, toll ways—industries which we want to be involved in one way or the other. It makes sense for the private sector to take on some of the development risk in these types of projects so that you can actually bring it forward for the benefit of the majority.
And from a business standpoint—infrastructure, power—these are good businesses that promise very, very good returns.
So it makes sense from a business standpoint as well?
Yes, of course. We can’t forget that we have a responsibility to our shareowners to give them a good return on their investment. But at the same time, the private sector, larger businesses in particular, has a bigger role to play.
The longer I’ve sat in this position of leadership as thehead of SMC, I’m finding out that the challenges ofdevelopment, of alleviating poverty or making lives better, are more and more appealing to me. I think when you’re just starting out, you tend to think very narrowly. It’s all about self-interest. Later in life, and with lots more experience behind you, you begin to understand that if you invest in people and bigger causes, they invest in you and help your business grow even more successful.
Every day, we have millions of Filipinos who use our brands or services, so there’s a huge opportunity to touch many people on so many different levels. It’s that whole thought that we can actually make majorprogress in society that has found its way into our current business philosophy. The success we now enjoy reflects the duties and the responsibilities we owe.
I really believe that it’s San Miguel’s responsibility as one of the country’s leading companies to think more broadly and creatively about supporting infrastructure projects which are, in turn, going to spur demand for the products and services our other businesses supply. So all in all, these are mutually beneficial growth opportunities that present themselves to us.