The Asian Manager, October 1993 Issue by Sherbet Manalili

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As Vol.VlNo.5

Publbhel FelipeB. Atfonso

6 Business TumsGreen

Edltorjn4hlot MichaelA.Hamtin

Bylbarra C.Gutlerrez Managing Editor

Managlng Edltor lbarraC. Gutierrez A3ll3tant M.naglng Edltor Kin Gatbonton Art Dlr€ctot AtexanderEowie A3loclato Edltot3 SalomeFlores-Aldaba FedericoS. Esguerra AtetaA. Tabatba BelindaSingson

Businessis fast djscoveringthat it is both possibleand deslrableto protect the environment.

14 TQMandEnvlronmental Prctection 8y DavidR.Chittick Director, WorldEnvironment Centerand EnvronmentandSaletyEngtneennE Vce Prestdent. AT&T

Contrlbutlng Edhors Eangladesh: MitonBikashpaut,MM '88. Hong Kong:StephenTanEWinpOn. MBM 76. India:JuzarKnorakrwatal MBN475. Indonesia:Leonardo Tanubrata, MBM '78; Christina F. Ferreros,AMMP 82. Korea:HonASoo Lee,M[4'79. Malaysia: TanSri O=at6 tr. TalhaHj. Mohd.Hashim,MN476. Pakistan: lshtiaqAhmadeureshi,BMp '77. Philippines: JesliLapus,MBtvl'73. can CheongEng.tvlBM 82. _Srngapore: rarwan:HsiehLai Fa,T[4p,82. Thailand: SomnukJetjiravat, BN4p81. Edltodal Board GabinoA. Mendoza HoracioM. Borromeo,Jr. SonnyB. Coloma

A$oclato Pub 3h6r& Adver rlns Dlrector- PhlllpDlno! DeliaC. Gutierrez A$roclato Publbhor & Cl.ruta on Dlr€ctor Monette lturraldeLim Dl.octor toa Opersflong Pinkyl. callegos

18 AsiaJoinsthe Franchising Bandwagon

29TheAsianManager: Shaping theFuturc

ByKlncatbonton Assistantttlanaging Editor

ByWashington SyCp Chairman, SGVGroup

23 TotalQualityUpClose

ByEtsuInaba,professor andErmanric L Chua. [,48tV93

sc A WholeNewWodd 8y Feipe B. Atfonso President. A|\,4

Coverphoto OGaryKaemmd/Th6tmageBank(HK) ht rn€tion.t Fepr€erlatiE

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H^ong-Kong:pamsta choy, pacitic asia M€dia, 13A, 361-363 L@khan Road, Wanchai,Hono Kon. T€t. 834 6128 Far. (85-2)834 59S0. Slng.aFroi l€ddy Tar pAM MedE Sotu,ces fte , r834 Easrcoasr Boed. TayBu- c,- s".ii;s i.;i*, s,ngapo'e 15.2 Tet.348 4{q5 Ia, t65t a4OBt6u Indie irb-ConuDnt Media SouthAsia (p)Lrd.,Apanms lA,Abhi-AnitAwas. XanlrpalhJamat,Karhmandu, N6pal.T6l.221 576, Tet6r 2606 MEOREPNp Fax 197?-1|,227 336. yI gr-yl Fr6r M6da s6ar($ co,po,slon Jg1ol CPO Bo"919. Seou'.Koree t€t 738359./35c2. teter FMSCOFP h 29137 Fa. to2t 73a 7S7O Japan: Hidso Nakayama, Nakayama M6dia t.rerna_ I'o.alh. FonteAoyans /05.2-22 .taM,nehr{oyaha, M.naro {r,Totyo t07 JaDar ret ,03}3.7q.6t3. F;{(03, 347S-6r$ Unn.d_Xhedorn: Br6n Taptrr Ass@iates,J2 Frsh6.y aoad EoxF@. Hen6t Femodead. He4s Hpr rNO, U.K.Isl (0442)215 635 Fax l1442l246 034

OCTOBER 1993 . THEASTAN MANAGER

3 Fromthe Edltor 63 Fenceslttel 64 ThlnkAbod tt 65 EntrcprcneuF' Comer 66 MoneyMatters 67 Kahen

53 Technowatch 61 People0n the Move 62 Booi Revlew 68 TravelNotes

33 Telecommudicatlorc In the phlllpptnes 45 8asic,/FCB coprrg- _9olb/ -.A'anMdaes @n:genenr

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Having more...

EatingYour Cake uBecoming a legitimatetarget asa rcsultof one's suooess maybethe ultimaleexpression of value.tt

anil^-lr:.The Sewr Cultxrcsol Capitalism,authorsCharles Hampden-Turner andAlfonsTrompenaarssugqest that, "tGowledte is not fr-ven up in exchangefor money in the sameway as a creamcate. 1(ou can't eat your cakeand have it ' but you crn s€ll yoru knowledge and keeD it. As Romeo said. to "Ille rrore I give you the |uliet, more I have."' Micosoffs Bill Catesis very likely the planet's most suicessful- and fortunate - vendor of ideas and knowledge. His product's sho*comings-in physical dirnension and aesthetic appeal caused it to be called "software." It is rcasonableto suggestthat he made a critical contribution to altering the conc€pt of value: Micro6oft is paid vast sums of money forinformation stor€don floppy disks.tud he hasbeenso phenommallv succesfirl sellinc his prcduct a'nd keep^g it tod that the United Stat€s governmmt, frimds and foesar€ tryins very hard to change the nrlirs oi the value game, Of couse, becoming a legitimate target as a t€sult of onds successmay be the ultimatreex'Dressionof value. TheAsian Mamgo's mission is, '"Ib influence management thought and practice in Asia." And it tries to do this bv presenting ideasand informatio:n to our r€ade$ which we shongly believe are worth a great aiat. We believe this because they al€ generally the ideas of the toD t-hinken, strategistsand manajers principaly in Asia but also North America and EuroDe, Assistant manacine editor Kin Gatbonton redrti on ttre value Asian entrelpreneurs and some Asian miltinationals

OCrOBER 1993. THEASIANMAMGBI

- attadr to knowledge of sys tetrts and procedues provided by franchisors, and what accounb for the succ€ssof someof Asia's toD franchisees. fapanese corporations are gmerallyaccreditedwiththefrst practical,largescale aDDlication erfthe princiFles of roiai q""lity management, emPowertnent, arld,Knizzn:the process of continuous improvement. Etsu Inaba rcports on the observations of 24 Master in Business Marngementgraduatesfrrmsix countries in]apan to exanine its most dynamic mterpris€s. Environmental concern in Asia is an idea that is provins to be more thansimpty ihe'flaior of the month." Manasins editor lbarra C. Gutierreiprisents a special report on the invironmental practices of Asian and multinational corporations, and finds that maior - and costlv - measures are being intd duced to enhance the environment bv Asian corDorations with littie financial incentive or media cledit. David Chittick, AT&Ts vice pteeident for mvionment and safety mgineerin& merges the concemsoflnaba and Gutierr€z in his r€port, 'TQM in Envtuon-

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kto$,beie hplness selb,the more It wlll have."

mmtal Protection": a valuable concept for corporations conc€med with global competitiveness and sustainable development in increasingly competitive markets. HitNy competitive markets in an em offree trade provide the backdrop for FeliF A.fonso's exanination of 'A Whole New World," a world seen from the persFctive of managersin global otmnizations on level olaving fiilds. these new giobll organizations seek corpetitive advantage thouth c0nstant innovatiorL unwavering commitmmt to customer service and uncompromised quality. "IA/howill nunage these corporations and their rcsou(€s, develop their culh.u$, and plan their srowth?" Washincton SyCip isls in, 'tre asian fi{anager: Shaping the Futur€." It is managers who will succeed in their tasks by mistake, good fortuneand plan in a mudrmort complex,dynamic-and ufforgivint-envLonmentthanever mvisionedoro<periencedbythe pioneerswhobr6ughtaboulthis era. If Alfonso, SyCip, HampdenTurner and tirnipenaars are right, then "only goducts that use and sell knowledge can pay back their society the costs of educating citizens" in incr€asingly prosperous economies, And this implies two things: 1) Asian enterprise must be constandy conc€med with developing and manufacturing sophisticated products; and, 2) The age of simple manufacturers and assemblen in Asia will come to a rapid and inevitabl€ qo6e. AndttEtrcalywiUbeawhole new world, one in whidr the mor€ knowledge businesssells, the more it will have. I

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COVERSTORY

Businessfor the Environment, lnc., a nonstock,non-pofit organizationput up lastyear tosprcad theenvircnmmtal gcpeland speed up the "gr€ening" of local business(seerelated story). PBE, Ied by some of the bg names in Philippine business,has aLeady made srgnfic;it progressin inculcating 6nvironmental consciousness,particrdarly among large corporations, Favila said. 'Thev still look at environmmtalism as a nai:r ixpense item that conhibutes nothing to lhe bottom line." For Kimberly{lark, howeve4,caring for the mvironment by conholling pollution has tre(ome a revmuegen€rating vmfuIe as well. The waste, mosly made-up of fibers, collecd by the company's two clarifieE when H to a dewatering machine turns introthickened sludge with a 707omoistuIe contentthat canlikewise be rccyded. Kimberly<lark ieelf uses recyded pap€r in its Froducts, except for tho6e which rcquire virgin pulp such as agerctte paper and its topof-theline tissue paper brands.Recyding is,in fact,another key thmst of the compan/s envilonmmtal program. '1{e used rcyded paper,the kind known in the bade as 'office wasre whitd which induder computer printouts, in many of oui products," Baylon said. "This way we minimi"a wastes while..gmerating savings for the comPany.

woodpulp and, accordine to Balbino K. Uenunao, vice pesidmt"for operahons, -no "R*ydi.g is by means limifea O the shopfloor, l,rGarc doing iteven in our offices. In fact, we have signed up with the pap€r exchange pmiect of the Makati Busrness Club.' The company is also tsimming its use of packaging nraterials. New packagedesigns being developed exempl.ifya '1es is better" pNlosophy. According to Jose Alfuo Magbanua, pu.kugr,g developm€nt manager, the company is looking at rcfill pac*s w:hich consuri,e abyotesspab<aeinsdlterials.Savingsof110meeic t<insoffrty?trylene per year wele alsogmerated by reducing the

fuel and demical stioragetanks, prwiously undergound, were all elevatredbo I'Ievelrt possibleleakages. 'The elevatedtanks have secondarycontainmmt featuEr and leak detectors," said Rodrigo Y Fumtes, safetyand mvironmmtal affairs manager. Thesehigh technology s€nsolsare quite e)(I)e1|sive. In l9Z consultantsftom the Pennsylvania-basedEnvironmmtal ResourceManagemmtlnc. arrived in the Philippinesto assisain customizing a facility-specific incident manual for J&JPhilippines that sFlls out to theminutest detail the measiures thecomoanv should take in casesof fires, earthquikei, floods and other conceivablesituatioris. Johnson& Johnsonis also involved ur other, lessdramatic, envlurmental Dre bectionproic'cb. 'We have an ongiring k€e-planting program at out company site," Fuent€ssaid. "Aside ftom this, we also give free mahogany and narra seedlings to our employeesfrorplanting offsite."

A CoDontcPdodty

The 36year-old Phinma (Philippine Inveshneni Management Consuitins Inc.)Group ofCompaniesis anotherbusine6smtity that has made envircnmental rcsponsibiliw a corporaie mioriw. A sDecial-Enviroruirmtcifi ce,u"ao" irtt-tiin" vice Pr€ident was qeated by Gcar J. Hila<iq Phinrna plesid€nt ana CEO, in Roduclng Emdmnmortal lmpact 1992,shortly alter he was named 'ManJohnson& Johnson(Philippines), Inc. agemmt Man of the Year." This oftce, is anothercompany that firndy believesin now headed by lauro D. Guwar4 vice minimizing waste.The winn€r of the 1992 p€sidmt for envfuonm€nt,overseesthe Asian Managemmt Award for Operaimplemmtation of an environmentalprotions Management, the company is the gram in eadr of Ptrinma's over 3GmemPhilippine subsidiary of a mirttiiratlonal ber companies. corporation that is commitH to €nvironThe PhinmaGroup is involved in conmental protection worldwide. stsuction materials riranutacture, pupe. f,artbf ;ohnson C ;ohnson's corporate and packaging products, oil exploration, credo states:'1Ve ar€ r€sponsible to the agribusinessand trading. However, its communities in whidr we live and work enviruunent pogram has initialty foand to the world commrmity as well... We cused on the manufacture of cenent, must maintain in good oder the Plopelty Phinma's chief business.I{rinma operwe are privileged to use, prctecting the abessixofthePhilip,pines 18cemmtcixnenvionment and natural r€sour€es." paniesand accormtsfor nearly haUof the In the pursuit of this commitment, counbys production capaciry Johnson&Johnsonseeks,amongotherthings, weight of cur€nt c0ntaine6. Philippine c€rn€lt factoric are old and to pEvmt ot at leastr€duce"all environmmaddition to lesspackaging,John-son& small compared to their counterparts in the _ .In "stsiving tal impacts" of its global operations, Johnson also wanb mole environment- r€st of thg Association of SoutheastAsian for erivironmenti nzuttir.titv and rr*.rrr." friendly packages."l4b have askedour sug nations (ASEAN) . PerlEpo in r€coqnitionof efficiency consistent with ttie principtes of pli€rs to stop using inks with heavy metals," this fao the Philippine fovernmit alows sustainabledeveloDment." Hemando said. 'Toxic substancessuch as 5@milligrarns of drut p€r cubic meter of air Worldwide, Johnson & Johnson is mercu4r, lead, cadmium, and hexavalmt from csnent plants built before 1978and 30 ta€etting trorcduce office wasteby 50%over chromium are formd in most inks, but they rg./cu. m. f& planb built later.In comparithe five-year period ftom 1991tiol99tSand to can be rcplacedwith non-hazardousorganic son, the more technologically advanced cereducethe usi of packaghg maberialsby 10?o rnaterials." mmtplantsinjapan,IndonesiaandThailand Hween 1992and 197. emit less thar half the lwel Philippine govJohnson& JohnsonPhilippines is senous Envlrcnmental Cfub Rospome ernment standardsallow. aboutachiwing and surpassirigthee targes. Aside ftom contsollins warte, Tohnson& In line with its €nvironmental cgmmitIn 1985,a p"lp t *""iV maitrine was ln- Johnsonis also commitd to ttre prevmtion ment, Phinma decided to go beyond complistalled in the factory to reclairn usable of mvircnmental crises.Forinstanc€,in 1990, ance with gote.n-eni stairdards and

"Manyenvironmental measures comefromsimple andinexpensive ideas."

OCTOBER1993 . THEASIANMANqGER

COVERSTORY

adopted 100 ms. /cu m. as an intemal standard, matciring ihat of the advanced cement planb ' "Asin the rcsion. a leader in the Phi.lipPinecement mdustrv,Phinma hasdecidedto take thelead in initiating environmental management," '1de have come to recognize Hilado said. respectfor the environmmt asnot only necessary but vital." 'l,eadershiD, as Phinma found out, cor. d be a strain on-thebudget. Initial experuesfor the Dollution conhol prcgam for its cement olarits have alrcadv ieadd US$to mi[ion ior equipment and itstalation. The cost is expecied to so up further with additional eldctrostaticp.eciiitators ordered ftnm Europe whidr are due for delivery by year<nd ir t heduled ioi;id- 1994. c6-^istior,itrs However, Fhinma believes the cost, "Thercis thoughheavy, is money well sPent. s€ctor to the corporate a strong clamor for addresienvironmental probbms," Ramon del Rosario Sr., Phinmi chairman, said. "Shareholders expect industrie6 to reduce the envitpnmen6l imPact of their process€s."

Gost{fiactlveElMrcnmontalbm

Envionmmtal solutions neednot always be expensive.Hilado recalledhow Phinma's United PulD and PaperCo. lnc. dosed down thepulp mill that suiplied raw materialsto its p"p"r fta"t u".a,r* 11was pollutinga nearby river. "It was uneconomicalto insta[ the necessarv pollution-conbol sYstem for such a "-.li oiatrt ^d v"t *e di; not wish !o continue desmying the river," he said. The paper plant ibelf hascontinued oPerating. d fah, 0nitea nUp and Paperrecehtly announceda$36million expansionand modernization program. For raw material, it has shifted to was6 paper.The emPloyment lost at the pulp mill hasbeencompensatedby an inqease rn the paPer Phnrs worKlotre to handle the bigger volume of raw materials. Many other measues come from simple - and inexoensive - ideas. For irulance, cemmt planG minimize energytrseby keep ing the moish[e content of sluiry at a certain level.On the other hand, water consumPtion is reduced by using recycled cooling water from rotary kilns, Although much is still in the early stages, the Phinmi experiencehas also shdwn ihat environmentaiism makes good business sense.Given new emphasis urder its hiShpriority program aresuchotherwisecommon iaioru is tfri irnmeaiatepatching up of holes in pipelines and containers;actionsthat have in reducedspoilage optimum useof res-ul-ted materialsand savingson equiPmentrePaiF. Meanwhile, the electrastaticPrcciPitators that will cut the emission of c€ment dust by Phinma's -for Dlants u/il also make the dust rcreuse. IJr this way, the $16 coverable milLion costbecomesan inveshnent.

Although environmentalisn is sti[ in its infancv in the Philippines, it alrcadv has a champion, an orsaii;tion led by some of the biA guns of Piilippine busin*s. Philippine Business for the Environment, Iii. is a non+tock non-profit organization incorporated in January 1992to assistlocal comDaniesin dealinq with environmental issiresand conce"is. Specincallv,PBEwillbe involvedin mvironnrental enhatrcementproiects,training, education and awarenessl,developmmt of regutatory policv and intermediation bet$r'eencomirrunities, buslnessand government. PBE is commitd to the princiPle of sustainabledevelopment whete economic tnp$th is bafancei:l with mvin:nmental foponsibility," Grac€F. Favila, the organizationjs o(ecutive dir€ctot said. We believe she added, that the Pr€sent sadstateofthe envlDnm€nt is due lar8ely to undiriplined consumption -ess of the world's this hend is Ie natural r€sourles. Ut versed, the ability of futule tenerations to sustain themselves is seriouslY threatened."More important, we beiieve that busines organizations have the corpotiate rcsponsibility to cpntsibute to rcversins this hend," shesaid. et iresent, pnf hast7 chartermembers' These-arethe Alcantara Group of Companie, Caltex Philippines, Inc., Coca{ol,a For.ndation, Inc., Dow Chemical Pacific Ltd., Far East Bank and li.ust Co., Ftst Philippine Holdinas Corp., Johnson & Johnitin (Philippin-es) Inc:, Jaka Grcup, Louis Berger Intemational, Philippine Conrmercial Irternational Bank Petegrine Capital Phil., Inc., PhiliPPine Refining Cohpanv lnc.,Philippine SugarMillers As"o.i"fu on, ptti"-" Ci.jupof C6mpanies,San Miguel Corporation, Sitech Resources GrduD.Inc. ;d scv Grcup of companies. "l&e initially concmbitea on the big corporationsbecausewe needtheir suPPod to keep our activities goin&" Favila ex-

Cadngbr the Forcst

Caring for the forcst is the main Ouust of the environmental program of the Paper lndustries Corcorahon of the Philippines The country's biggest manufacturer-of paper products,PICOPmanagesand maintains the iarget forest concesion in the Philippines consistingof about 128!00 hectaresof natual rcgmemting for€stand thelargestman-made forest plantation of about 54,000heciaresin the ASEAN region. Locatedin northeastem Mindanao, the-mainisland south of the Philfour iDDines, this forest concession spans municipalities. and 13 irbvinces ' itsaFaof Tomaintainecoloeical-balancein

plained. ' Fourteenchartermembershaveconcibuted P100,000eachto hmd PBE.Thee have contributed their s€!'viaes. "VVearenowbeghningbathacttheatEF tiqr of nrore businessgroup6," Favila said. 'Tor instance,we havevery high hope for a s€riesof mvircrunental s€mfura$ we ar€ packaging for bankls and und€rwriEs." ' fn-ese- seminars aim to inform local bankers and insuers about intemational ts€nds in interratins environmeltal conc€rns into fin;cial iunagement describe inveshnent oprrtunities in the environment field, and open poesiblenew areasof cooperationbetv"eenthefinancialsectorand the government in promoting compliance with environmental standards. In addition to holding serninar, PBE also Dromotesthe adoption of local compani& of the '?hilippine BushessCharter ior SustainableDeveiopmmt;" conducts a paper exchange progim -Bankers 'Srrs-io"""in cooperauon Club, i"iih tr. vaiti Association of the Philippines, PhiliPPine Businessfor Social Ptogr€ss and Makatibased non-government organiations; overseesan indushial wasteexchangePrcgram; and partrcipatesin the Pruj(t to rchabilitate Manila's PasigRiver. "W'estill havea long way to Sobeforcwe canconvincesmallandmedium€izedcomDani€sto cale for the mvkonmmt, but we r.vi[ all win them over evenhrally," Favila said."The market will forcethem tobemor€ " concernedwith the envircnment on is counting PBE'Sexecutivedtector "Our vet another, muallv powerful, ally. i,Uar*, tft" f"ir..,te!"itoution, will iead the movement towards envlonrnental consciousness,"shedeclarcd. PBEcanbe contactedat its offic€Eon the Found floor Padilla Building EmeraldAvenue, Ortisas Complex, Pasis, Meto Manila, or thr6'ughtekfrhone nuliber 631-3138 or fax nurnber 631-524. operatioru, PICOP has implemmted a Total Ecology Control nogratti. fns -tegratea DlpgramcoversresourEeregmeration,sound iotdt manaeement,-u*i;um utilization of re6orucesand Dollution control. Under redource regeneration,_the Prcqram has two components:natural for€stand ilantation forcst rnanagement.The filst iniolves the oreservatioi, maintmance and "old gouth" forests assisted-reginerationof as well is the application of proper silvicuttual practices in wood-harvesting. The second is a system that Prcvides uniform-quality wood for cost-effective processiogana utilization. It hansforrns de1993 THEASIANMANAGER. OCTOBER

COVERSTORY

nuded and poorlv stocked forest areasinto uoductive indusirial hee plantations where iast-gto*ing treespeoesaregrown like regular agicultual cops. Meanwhile. to ensue that ib for€st resourc€sare maximized, PICOP applies the "whole tree conc€Pf in wood harvesting buying and utilization. Under this concept, the laryest diameter nortion of a tee is used as veneerblocks for beeling into plw,rood and as sawtimber for ihe "aimi.D. l'he next biggestportion is used aspulpwood for the manufactu-reof pulp and pa'per]The smallest portion of the-trunk as inell asthe branchestirat would otherwise 8o to wasteareus€dasfuel for PlCOPsboilers to power' "senerateDroc€sssheamand Sinceis etablishment,'PlCoP has invested a total of P167million for pollution conhol. Of this figure, some P60million has gone to the irutallation of various pollutioncontrol devicesand instruments in the company's paper manulacturing facilities. ' The'bilk of the remainine Pl07 mitlion wassDentfor two proieqs conipleted -millionin 1991. chlorthe first orcie* ivai an ft10 alkali plant, i state-olthe-art chemical plant withrion-pollutine featuesthat improv& the qualitv oi PtCOFs paper producis and in&:ax! its capacity io prod-ucewhite paper gades. The secondpmiect, a P27million air Fotation clarifier, recovirs pulp and clarified waste water which are then returned to the paper production systemand reus€d.

fui the PhlllpPlne A SecondChance Eaglo The for€st is also the concem of Far East Bank Foundation lnc., the foundation of Far East Bank and Trust Co., one of the biggest universalbanksin the Philippines. Inthiscase however,the foundation is focusingon a particular portion of the forest - a 300 square meter site in the Malasos distsict of Divao City in Mindanao - for-thepurposeof taking careof somevery specialcreatures- Philip pine eagle that will be br€d in caPtivity. ' The"Philippine eagle (Pithecophaga ietreryl), also known as the monkey-eating eagle,is an mdangered specie.Only 6l are known to exist today, 18of them in caPtivity rmder the careof the Philippine EagleFoundation Inc., a non+tock, non-profit group which is seekingto popagate them. The othersarer€portedtobe in the rapidly dwindling for€stsof Mindanao, Samarand kyte. tlabitat lo6sis the Drimarv causeof thelow eagle population. IUi€al loating and stashand-burn farming diminish the eagles'rainfor€st habitat at the rate of 180,000hectaresa vear. ' Some60 years ago, rnore than half of the PhiliDpines 30million-hectare land area was covei6d with forests.The forcst-to-manrauo then stood at a healthy 1.13hectaresPer Filipino. ln 190, the DePartrnent of Environ-

PEEPwas formally launched lasLJune Ma*et r€sponsehas always been of gFat "SM Assembl/ complete with inter€st tio the Philippine Refining Com- with a "Ati-Atihan" danc€rs(y6ungboirsand girls pany,Lnc.,a leadingmanuJach[€r ofbeauty "native" costumesand black body lndiealth careonifuucb. Little did it realize wearing that one day it'will be keenly intuested in makeu6, who dance in the stseetsMardihow one public market would r€sPondto Grasstyle).ftognm proponmts, led by the ntlq frordeaning up the envionm€nt. heads of the participatins institutions, What has become a rnaFr, lonS-term marched aroun'd and ihrouih the mark*, basicldea campaiqning for cleanliness.-The commitment for the companv startedfiom said. interes! of wasio irum-up wish: i'RC, a member Jambalos a simple corporate And drum-up inter€st it did. In fact, the tinilevd familv wanted to clean the |.f'taodePaa, aiwid.that cutsthrough the anotherlargecompany,a businesscomPetifirm's 24 hectareDlantsite on its wav to the tot thinking that the activity was a Prclude toanalloutmarketins PasigRiver. blitz bY PRC, held its However, despite own "dean-uD drive" serious effortstodean "Ullhat a weeklateri"Now has become I up the esfelo,it reniained dirty and heavily polluted. A teamoflocalconcommltmentbl the .had4te"tlft'"eLh: work began PRC sultants composed of OOmpany Stafte0 ff0m staredby distibuting the United Nations expertson pollution was commissioned by the thePafonrarketonefor Wbh." company to study the w*and anothetfor dry cas€.The experts imwasb ior edt of the mediately found the 3,00 rmrket stall ownproblem: the busy Paco Public Market This was followed locatedupstream,was by weekly meetings- which continue up resporuible for 607oof the pollution. membels of the Paco h second study was ionducted. This kr the orEsent- with "V!'e meet with some Market CooDerative. time the obiective was to come up with solutions to the problen pr€senH by the ien members at a tine, dirussing the lmPacomarket. Thris was boin tfEP, tle-Paco portanceof deanlin€ssand ways for keep ing themarket clean."Jarnbalosiid, adding Envircnrnental Enhancemmt i'rogram. 'This was basicallya prcFrt to motivate that attendancein these meetines has bethe vendoE in the Paco Public Market to come one of the requkements-mernbers keep their surroundings dean and esPe should meet before they can borrow fnrn ciallv to rcfrain ftom drcwing their wastes the coooerative. PRC will soon beein more formal sesinto'the este/o,"said Bernado N.Iambalos '1Ve will Itr, PRC's extemal and industrial rel,atioru sions with the markA vendors. motivational and higNy asbe showing even manager/total quality.coordinator instructional films ftom the DENR" signedtospearheadthecompan/sinvolveAlthoush still in its early stag6, PEEPis ment with the program. Although the Eogram alsoinvolves the already b6ginning to be;r fruit. Waste Paco Marlet Cdopsrative, the sidewalk ttrmwn into-tlrc rivula have been reduced vendors associatioo Manila's city govern- by more than half. However, PRC,though mmt the Meho Manila Authority and De- hipw, ''i{e is still far from being satisfied. won't stop urtil wi seefish swimpartment of Environment and Natural ming in the EstsrodePaco,"Jambalossaid. itesources.it is basicallvPRC'sshow. "since 'We-hoaitllat thiswiil takeseveralyearsand "Iffe dont mind," Jimbalos said, we have the resourcesand the commit- tl|at we still havea lot ofwork b do,hrt inthe meanttne,wdrc surehaving a lot of firn" ment."

torg:term ;Hr.n'rl,r?*:t' rnaio4

conorate #.ntfi""ffitr; aslmple

ment and Natural Resoucesplaced the total forcst land at only 6.7million hectares.Measured againstthe country's 6Grnillion population, this meant a forest-to-man ratio of a precarious0.1 hectareper Filipino. lf the deoletion of the cornbr/s forestcovercontinues it the presentrate, there will be no forest left

bv- the vear 2010. The PEFIhas taken upon itself the task of saving the Phjlippine eagle from e\tinchon Ten y"earsof scientific researchand experimeniation resulted in the birth of Pa8-asain lanuary 192. Bomof captiveeaglesDola and Juniorthrough artifi cial ins€mination'Pt8{sa, IHE ASIANMANAGER. OCTOBER1993

C O V E RS T O R Y

ACUVUE

which mearu "hope" in Filipino, was the first Philippine eagleto be bred in captivitiz The hatchingof a secondeagle,named Pq\kakai'a,the Filipino term for "unity," in ftob€r last year, proved that the br€eding technology developedby PEFIcould be rep licated. However, according to Octavio V L . s p i r i t u ,f t t s F o u n d a t i o n p r e s i d e n t , Pagkltkllisa'sbirth r€pres€ntsmore than iust the successof a technology. " Pagkakaisa takeson a sl'rnbolic missionto unite the people in combating ecological destruction " he said. FEB Foundation has signed a memoranclum or agreementwrth ftht a owng lt to adopt Ptrgkakoi$I.The signing also marked

DISPOSABLE CONTACTLENSES

s o c o n v e ni e n t , vou wearthem i n d t h r o w t h e m away. sAUtto0t ml

OE -ofthcbigrEt Fobld of rlSulrr conbcrhr.. ! proEd build.'!. rhid tDe.ar oY.t tiEc Dinpod[lc loa iin m potcb build-'p.B.d!€ yoo dror .'ry 6c rtobLn-. od ttd ova *itli I tt'l ar pdr of .drdl

"Business organizations havethe coryorate lesponsibility to stopthe undisciplined colsumption of thewodd'snatural lesoulces."

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SAU!rolllt

Arr yd optm€nlt d optttilololitl fd vou FffiB TRIAL PAIR' OF r'orl nos 6 AciMJ&.l'd youc{ tcr yo'lr ACIMrB Di.drbL Cdttd l-a!.t d 6! NE:WCVT-FflCB Rl0B ( Up b 25* ofi'rguhr Fi'c. ) d .I pdicipdin! opticd ed ophtbholo3y clini.a 'Ctsulrrrio

'*Wi;re m the launching of the foundation's "Fly-high " program. Pagkakaisa Under this program, the foundation put up a 300"squar€-meter isolation rearing facility, costing around P400,000, at the PEFIsite in DavaoCitv In this facility, eagles that will be hatched after Pagkakaisais prepared for release. PFFTstudieshaveshown thdt captiveeagles, due to their exposr.te to humans who feed and rear them, get the impression that they themselves are humars or that their human caretakersare also eagles.Dfficulty arir during the breeding seasonwhen the eagles refuse to pair with each other The situation becomesmore diffiolt when the eaglesbegin looking at eachother as prey Topreventthis,captive-bredeagles,which will come after Pagkakalv,will be reared in isolation to enable them to adapt better to wildlife conditions. From birtl! theseeagles will haveno contactwith hurnansexcepifor caretakercwho will put on eagle costumes. This will ensue that the eagleswilt identify with their own species. More important, this will ensurcthat they will beableto survive and tMvein thewild so that, once more, the Philippine eagle will be king of the nation's skies. I OCIOBER1993 . THEASIANMANAGER

fc. crcludcd.

ACUVU E DISPOSABITCOMACT ITNS€S

goh+lor'"lollznrcr

Lenses. Free Trial Pah Disposabh Contacl ofACUYUE If youroptometristor ophthalmologist decides thatACUVUEis right for you,thiscertificate entitlesyou to a freenial pairof ACUVUE.

Limit on€ccrtificltr per Perron. Examinationand odler CurrentACUVlrE wcrrers !r! Drofessionalservicefeesarc not eligiblc fot lhis ofler. irot includedin dris offer. only rt paniciparingOpticslstd OphlhtlmoloSyClinics. Rede€mable Availablein MetroMardla,Cebu.Davao.td Bacolod.

tXPrRtS ONll/18/93 ACI SOON. lHrSCEnflFrCAlt

QOVER S T O R Y

TQM and Enikonmental quality methods apply to envlronmentallsm, too.

nnbined with quality methodology, economic

Businessand industry responded defenvvely formany vearssnd.hanldv,manv~.Othwtem~,manv &lied only when tkey had to.They saw the en-& t but if propaly managd, they'xe also the mental~tasiustanotherunwelcoma)8tofdoine CUIP. business and sometimes a very cost P ~ s a y ~ a n d u s u a l l y p i n t t o o u r f i n i t e To make matters worse, W s a shunz tendency in the remruoesthatnurstputa limit togrowthand progress But LE to yiew rektionshipsbetween gov&ent dindue whaYs~teisalsoinfinitewhenviewedfmmanother ~inadvwarialterms.Congreshadpassed,theResidmt v e . A l i n e a n e ~ l o n g i s f i n i t e f m mwd to has signed, and theLE Envinnunental Rotgtion Agency end youcandivideandaubdivideitforwaandthatts hadenfomdenvironmentallawawithreiatively~mput what bushe%and tedrnology have done in efka. And fmm industry, espedany m the vital farnative stages.But time and tune again, for a better part of thm centuries, industry has complied. they'vepmlucedmoreandmoreforllessandless.T~lBythedawnofthe199Qs,USindusttywasspending$20 ogy multipliea mmmea asmuch as and, often,even more billion a year to install and operate pollution equipment thanitdedetesk accndingtotheUS~tofCoaunerreandthat ~here'~mtedrnol0gythatcdpturesthatideab~thandoesn't count thecast ofmanagement, R&D, relegation or i n f a m a t i n r ~ . F o t e x a m p l e , w e ' ~ b e e n d o u b l i n g diversion of labor. The effort has bmught undeniablehthe number of components we can p l t on an integrated efi6.~totheUSUSofh~talQualdrruit chio everv 18months a so.for decsdes. The decade ily, theUS cut averagelevels ofmost averageairpollutions ~tha~,we&~doing~tevay12mon~. in W fmm 1975 to 1991.In 1975,36% of ow rivers and I n o t h e r a ~ a s o f t e d r n o l c g i e s , t h e ~ a r e ainmm failed to meet envinnrmental standards. By 1991 ~tocomeby,buttheyantmuetoarur.Shll,busme4e we've reduced that to 2096. Aml meanwhile, the US emnomy gewby50%overfh?+tsamepaiod. leadem won't make in anv area, indudine the envinmment,rmless dq"plan ahead' and r;olk&tiThisisane~mpleofgettingmnefor1less.Fortheseand cakThat'sthekevtothewenineofaa)l~~~~.tkm.and otherreaaons,theplblicfa~~~environmentalregulaticm moreshonglythanever. Environmental pnX&h may have ken a matter for zealotsmthepastbutmwiYsinthe ' ' Dnbom#nblMwamnt polls &u! most employes, mckhokiers and Nstomw Business people axuund the world are beginnhrg to favoringitInfact,opinionpoIlshavefound~l~~tnners~ho ~ a thev v think about how a commnv's d u c t or senice

the late 19608 it wmt fokdand continued to advance ttvoughlaws,manda~andregulation9onalllwelsof 14

hying to -e'the &vi;oNnent. ' So, for busings,all of a sudden, ping p e n isn't just a

COVERSTORY

the desipn stage rather than fix them at the run-out Fpe. lasaysthat ultimately_youhave to desim with reead to your goduc{s impact on"birth, in liie in de;th aid tluough its reincarnationin someother Ploduct! Thid, oualitv is an ongoing processof imorovem6nt. tls a racewitlout a itnish line. A iommitment to environmental quality meansqoing beyond governnent standards as theyir*itoday or anticiPating what they canand perhapsshould be.It meanscontinuous imorcvernmt, but the r€sults could be nrofound; a clearer and safer mvironment, igeater customer satisfaction, prouder emfloyees, better deigned Products and more rational and lesscosdvbusinessoperahons. Businesoftenassumesqualityiostsmole. ln fao it co6tsless.Evensmall improvements can qeate larse savings.For example,AT&T elimiruted uirecessai wide spacesfnrm the bills we send to our lirge long distancecustomels.As a rcsult, we c1rtthe averagebill by about four pagesand reducedour paper and rnailing co6t by $4 milion a year A simple change, yet a [a!Eer€sult, obviously.

Quality methods also suPPortmorc lonSterm rational approache to managing the mvironmental bwiness. Ifs not iust a duty to comply with tlrc labestgov€rnmmt standatd for iir emissions or what not, but rath€'t'it becpmesa Putsuit that can Put you in ftont of the regulatoryclrve. This isnot a small mafter in an indusEy such as ours where the $?ical product Me cyde is ftom 18 to 24 months. The government rcgulatory cvde mav taketwice that long.ln otlrcrwords ti. oddd are that vou tv l ;ias the marketolace if vou don't anticipate the impacl of Lguhtidns befote th"y hupp*, So q""lity methods are the key to staying comPetitive. Thereare also p,racticalways to avoid the expensesof non-cpmpliance such as fines, t"j"t f""", li"bilitl"" ani rcmedial cosb. They helDvou avoid or minimize the costof waste disfosal, pollution abatement and taxes on toxic and-other hazardous rnaterials. Ard they help us avoid the escalating cost of rrEterials that rnay become morc exPensive or harder to obtain becauseof envilonmental r€shictions.

Ihe AT&TExpotlence l-et me illustrate what I have been saying by tellhg you about specfic environmental Eoblems at AT&T. ollr company is striving io manage its entte business,induding its mvironmmtal programs, according to the Drinciplesof total quality management.we'rc i,nlistiire empbv& ut every livel, ftom the chait-ir to ihe*o.kers on'the factory floor and to owsupplie$. Our environmmtal protrams extendaround the world. And it is our ;tcv to adherc to those world<lass standirds wherever we do business.In Practice, this meansthatwe strive to meet either the locat standads or AT&T standards,whichever is higher. CFCs-or chlorofluorccarbons are good casestudie on how our quality methods are workinq at AT&T. CFC emissionsharm the enviroiment because thev deplete the sFatosphericozone laver. ln 1'90, we deciddd to set an ambitious soal to reduce our CFC solvent emissions Fnrm manufactruing by 5O7ofor 1991, and' 10% by the year 194. That was thEe years

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. OCTOBER 1993 THEASIANMANAGER

P 3 R

COVERSTORY

aheadoJthetimetablesuggestedat theglobal beaty signed in 1987known as the Montreal ProbocQl. We co,ild not eliminate CFCSby simple methods. Our factories make hunilredi of thousandsof products and they use CFCSin an array of different processes.3o our people formed quality teamsand eachlocation u&d quaIity methods to identify the gapsbetween me goal and orrent practices. Theseteamsthen worked with engrneels at AI&T's Bell laboratories to devise soluhons. Wedid not deline a simple and single allpurposeanswer,but we did find a number oI specific answers. For example, at one plant our people developed five different process changesthat reducedCFCsolventem$srons

IJN Environmental Prcgram (UNEp) tast year and that daiabaseG now accessible to more than 90%of the world,s telephones. I could multiply these examDlesfrom AT&T and add mariy more ftom other companiesbut this would be tedious. The potential is clearly enormow. UN studies eshmate that industrial countrie could recyclemore than50aooftheir paper,plasticandmetals.It hasbeenestimatedihat;dvanced technole giescould slashhazardousindwtrial wasres by 75rro.The Industrial Energy Agency says thatindustrialcountriescoutJ-cut"enerly de. mand by 20.2o by theyear2000if thev would install energy-efficient airconditionirs, fur_ naces,rcfi:igeratolsand other equipment.

reaucragrand you stille that progress o* experienceat AT&"T supports ., Ir that argument. Many oryanizationsat AT&T only set goals. We have not prescribedsolu_ tioru. The enthusiasm of thi engineersand workers on the spot hasmade th6 real differ_ enceat AT&T around the world. Thev are the ones who have devised hundred;, if not thousands, of improvementsthathavemade AT&T succeedin its environmentaleoals again and again. And of course,a comianv canand should beencouraged to sharesucil solutions as widely as possible. A relatedlessonis that goverrunentshould carefully assessthe benels of an envrronmentalregulationagainstits cost.Fore\dm_ ple,how muchis thaitiny investmentofciedn Envlronmertal Regulation air or clean water worth to the health and w%Ea. Frcm thelevelofindividual businesses,let safety of human beings: Our technology is One of AT&T'slargestusesforCrcc was us take a look at the total prccess of our pustungLrson In this respectbecauseof our to washaway the flakesfrom elecbonicwir- envirDnmentalregulations. I think it is obvi_ advancedabilitytodetectimallerandsmaller ing boardsthat havebeensoldered.Our ensi- ousthat quality m;thods at the businesslevel inqements of materials.We can now detect neers developedsafe altemahvessuchls are not the total solution to envircnmental not only partsper billiory butpartsper trillion solvents derived from harmless extracts of problems.Govemments and citizensarealso accumtely.And that last incrementcould be orangcpeelsand a material that is corunonly maior players in this situation and in this enormously exF)ensive to remove frcm our found in melons. Thesesolvents prcvented respectI would like to sharea few lessonswe waste sneam. disposal problems becausethey ire totally have leamed in the US. Still another related issueis the matter of biodesadable. . First,I would suggestsimplicityand con_ public trust. We need to move from need to In somecases,our engineersdevisedsuch srstenry aqossiurisd ictions.In theUS,lederal know to right to know We need to move to precisenew methodsas applyins low solid statesand even local govemments have en- need and right to understand. We need to flakes that they elirninated ihe n"eedfor the actedmorethan 80,o0O-regulations since19g1. encouragea broaderpublic underctandingof dean-up stepaltogether.That eliminated the That is more than 35 new regutations per the natur€ of risk. needto purchasesolvents.It alsoreducedone working day. Justat the federallivel, thereare But given thehuge amount of information manuJacturing stepwhich inevitablyadded over 10,000pagespublished per year to enact being filed, trying 1o understand it is like hothequalityofthe products.This isa classic new regulahonsand update old ones.Manv trying to takea drink frpm a firehose.So we exampieof designingfor the environment: of theseare simply refo*ing requiremenri, needto go beyond eventhat.Wehaveto build designa toxicout of the wastestredm. many.dupticateeachother with only slight public tmstand goodwill in thegovemmenr Through these efforts, we succeerledin vanahons,many arc in connig with each and the private sector.And thit demands reaching our goal for 1gl. We rcduced our otner,dnd many are vague to the point that cooperationrather than confiontation. enissions of CFCsolventsnot by 5070but by wEnes becomeconcreterequirements. And I think sharedundersbndingof technoloty 76%.A^d by the end of the y6ar tD2, ie 9adto say,many of them aresimply created and terminology will male it iasier fur eovreducedthem even further b 8aqo.Weexpect for politicaleffect. enment and businessto work toeetherall over to meetour -goalofzero way aheadof the i994 Theideal would bea comprehensivesetof theworld. Wearcbeginning tose;tlut in theUS schedute. new standards. But I am ;ftaid I am ,usr andEwopewherctheenvironmentalprotection Ourcordlesstelephoneplantin Singapoie dreaming about that. We do have a set of agmcieshavebegunimplementingtotalquatity was our hrst factoryto eliminateCrc emis_ lmportant intemational in the marugernentm ttsorrerations. Ftandards sionsentirel)aNow,20 of our factoriesopemte quality realm, however. Theseare standards In somecases,we're facing huge com_ without emifting any CFC solvent wiratso- developedby the Intemational Orqanizanon pler challenges. But ldm vei/ opirmishc ever, for Standardizationand they areialled the about the ability ol business,gou'"rnm"nt Wehave investedmore than $254rnillion ISO9000standards.ISOis now collaboranng and societyto balance environ-mentalproin R&D to develop and improve theseprcc- with its sisterorganization, 'from the Intematiorul techon and economicgrowth. There,sno esses.But with CFC prices escalating Electrotechnical Commission EC), to de- questionin my mind that we can use our eight centsa pound in 1986to more thin g7a velop a set of intemational standardsand scienceand technologyto desiqn producis pound today, we still saved the companv environmentalstandards aswell. Theeffort is and servicesthat do not harrn-but rather millions of dollars. generatinga lotofenthusiasm in industry and harmonize with the environment. We are . Eliminating CFCs forces on us a global it may leadto mairr breakthroughs. proving that to ourselves day after day The challengeand no company could do it ;lone. Another lessonis that govemment should key is to unleash the boundless creativitv of Thafs why the US Environmental protection setgoalsand broad rcquirements rather than human beingsto inspire them and to tlad Agency encouraged us to ioin with other define technical soluiions. l In "o-" "ur"", them to work together as a team and to that companies,some of whom are fiercelv com- rcgulators have actually attempted to man- end, the methodsof total quality manage_ petitive, to form the lndustry Cooperalivefor date how we manufaciureproducts which ment,areshowing us the wiy i Ozone layer Protection.Th'eworid c<xrpera- would d iscourageinnovations and inihanve. l tion for the ozone layer's protection dims to Ineverycompany,ifs thepeople tThrsarhclewase\.erpted fr^m rhetermoread[, in the facto_ developand sharetechnicalaltemativesto ries, in the office, in the laboratorieswho Mr Chrrticl dehveredd;nng rhe (oryxrirre EnrrronI rol'oe\ and l'logrdm\' runterenc,pon<or€dby ' CFCs around the world and we aresucceed- understand their processesbest. Insist that mcn_la lhe Phrlpprne Bu{n€^\ ror the Environme;l In(. eart\ ing. We have donated a large databaseto the they merely take onders from a central bu- this year.) OCTOBER1993.THEAstANMANAGER

Asia Joins the Ranchising Bandwon -m-

maa W l n e for trled Md tested flmdws. Fastfood

FEATURE

McDonald's is scrambling to catch up with jollibee Foods Corpom-tion.Jollibeehasa 57% share of the locat hamburger m a r k e t - b y c on t r a s t , McDonald's has o Y EIo and is the largest fast food rcstaunnt chain in the PhiliPPines with close to US$38million in salesaswell asa secue Placein the nation's Top 50 CorPorations - the first and onlY fastfood chain to win that distinction. JollibeeoPerates117stor€s, 26 of which are comPanyowned. The rcmaining 91 arc franchiseswhich oPeratedunder an agreement which Plq vides for the Payment ot an initial ftanchisefee and rcYalty feesequal to a fixed Percentage of apaiticularstore'sgroassales. h aaditiorL the chainholds five other ftanchises in Indonesia Plza Hui hs a big iollowlng In Hong lbng' and Brunei, with Plaru to oPen both in the Philippines and storcs 16 other where (SIFA)estimatesthat in Singapore the end of the Year. before abroad fTanmaster are franchises of maiority the went Public in June the comPany Since the 3 5% of chises frinchising accountsfor plarLsto openadditional franchiseshave cg3, 1 GNP island-statds put on hold Jollibee'sfocus, Already a whole range of homegrown beentimporarily Lillian Reventar,is to officer, savs licensine esiabmorc the to give starthg are companies stores' company-owned m&e d6velop Iishe? foreign companiesa run for their "Vv'e'veiuspended for applications frairchise world-famous Philippines, money. ln iire

Among all the obvious franchising industsiesI ranqinq frcm s€rviceoriented businessesto auiomotive Products,the-food indusw hascashtills ringing uP and down practicallv every maior Asian ciry ludging bv robrrit salei figures, franchisors and franchiseoperatoF arc on a mll Iryhv then do€sfood govide suchathactive op'portunities for framhisors? Part of the aniiver lies in changing demographics' A ouick look at fastfood these days easily telli vou iust who is buying CertainJy,a vourieerAsian population (in contrastto the "$ev ;n;let'' in west EuroPe)and towinq iccelera-tedurbanization have helped the burseoning food industry. Asianstoday ale rictier and'irave more leisue than they did two decadesago. Another fa&or is simply the unr€lentin8 demand for what mary corsider a basic need. The fastfood forrnat Prcvides customers essential nourishment (although docto6, paFnts and the health{onscious mav disiute this) at affordable prices in convmient and attractive settings. ln 191, FitiPinos sPentdose to US$18.5 billion on food alone, rePr€sentlngmorc than haff oftotal householdexpens€sfor the

mough that a qtable and u*r' Proof 'lucrative markets exists. For 6xhemely manv fobd franchises, the potential for erc;th is therc too, beckoning in the middisence. Statisticsshow that the annual food intale of the averageAsian is considerably lower than his American or westem courterDart. For hstance, while the FiliPino corisume 14 kilos of chickenor beefa year, his twin aqoss the Pacfic consumesa least 36 kilos. And while a Filipino will &ink clo6e to 16 liters of softdrinks a yeat An AmericanwilleasilypourT5UteFdownthe hatch.Given a gorviirg penchantfor things American, fast"foodfranchisorsarc hoPing that the avenge Asian will be uP to the challangeof nanowing the East-WestconsumPnon 8aP.

Whrt lt cosb tnttls PhlllpPln€3 Pl.5 million 6tBsnwich (Pizza) Chow King (Chines€) t3.$4.5 million glakey'sYuz^ I7.F8 million Pl2 million lollibee Pl,t-15 milion McDonald s Gig€

Fovided by ihe cmpaniB

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the time being becausealthough franchis€es incr€as€salesand help broadenourconsumer base,rnanagemmtfeelsthat thecompanyhas sufficient resoutes to expand oPeEruonson its own," Reventarsays. Oneexampleofa *estem franchisewhich has done spectaculadywell in Asia is Pizza Hut HongKong, ownedby theJardineGroup and a Ma"rketinieManagementwinner of the Asian Manaee;ent "who Awads Unlike most enown the odd storc herc or trepreneurs thereand whose entire life savingsare sometimes sunk into one storc (in Jollibee'scase,a franchise!€quircsfrom US$37O00G$500,000' Rival McDbnald's requires US$300,000$500,000), JardinePacifiais into franchishing in a bi8 way. Having identiJied rcstaurants and fo5d seidce as J Fawth businessearly on, lardine hasacquired the rnasterfranchise "steakfor'Pizza Hut in Taiwan, Sizzler, a s€afood-salad' chain in Aushalia, and Taco Be[in Hawaii. At Present,the comPanynow overseesmorc than 260rcstaurantsand fastfood outlets in the Asia-Pacificrcgion' From Hong Kong,JardinePacfic conhols Ptzza HEutfranchises in Canada, Hawaii, Guam,Taiwan,MacauandAushalia. With its 50 Pizza Hut ftanchis€s in Hawaii Jardine Pacificeasily domirutes the local Pizza malket. In Mata)5ia Kentuclsy Fried Chicken is probably fhe country's most successful h"t chisot The local franchise is owned by KFC Holdings Bhd., a publidy-tisted comDanv on the kuala Lumpur Stock Exchange whiih. at last count, runi a chain of over I 10 KFC rcstauants thoughout Peninsular and EastMalavsia. KFC AoHines' salesare $39 million and retum on sabs 6 a staggenng9.4%".By contrast, McDonald's, its clos€stcomPetitor,can onlv daim 17oretum on sales in -anv *ays, KFC Malalsia is vastlY -.rr. r,rcces"f,.tlthan its franchisor in the UnitedStates. Judgingby thecomPanysnumerous irurovations in both Prcducts and marketing efforts, the Krc Mahysia exPerienceis a iiasoicexampleof technology transfer in reverse. Not one to submerge lts innovativeness,the comPary rec€ntly inho"second geneEtion rcstauduced socalled rants." scaleddown verslons of fast-food outle'ts especiallv designed for locations in semi-urbanareai wlttr s-mallerPoPulations'lt alsointrciluced mobile r€staurantslnown as 'Meals on Wheels."The concePtits currenuy taking hold in other countries where KFC holds franchises.

tu AlmostEvery919 Somsthlr€ '"Ihe

eood thins about franchisin&" sa1,€ one houiewife whio owns a Smokey's Saustaat a sase World hailer stationed "is that it Pehol works for titin near her homq, everybody. Franchising is an oPtion for someoneI'ikemewho hasa little extra money 19S3 THEASIANMANAGER' OCTOBER

FEATURE

to spend, good bwiness senseand a bit of time on her hands. But it is also a viable venturc for huge conglomerates who are looking to diversify their business holdmgs. For many, like this housewife, the Faditiona.ladvantagesof franchising - a proven system, extensive researchand training (a McDonald's franchise applicant an1'where in the world is required to attend a l&day to four-week training sessionat the company's Hamburger University in lllinois), and an establishedidenfiry arc enoughto convince entrepreneuF that ftanchising is a solid conceDt. And for the most part, it is. It's been known to fail however - as most thinqs when the franchiseeor the franchisor enter an atrcement with their eyes closed. For instance, a growing number of hanclusees these davs are former comDanv exeotives who, tired of the rigors ofcorporate life, have chosen to go it on their own. Often, says Miguel Zosa,the man largely responsiblefor bringing the Califomia-based Pollo Loco and Round Table Pvza franchises to the

Jolllboe's aFonal of p|oducts includo3 fa3t iood favotft€s that aro dls ncUy Flllplno.

Philippines, theseexecutivesar€ convinced Not so. "They don't realize," he says, "the that their considerablebusinessexperience amount of work that goes into opening a automaticallvmakesthemgoodfranctus€es. franchise.Thev don'i r€alizethat in the beginning at hadt, they have to be everything - janitot patty-maker, accountant." "Unlike working in a company where Be Knowledgeable. .lt shodd go with- l.jnd of enueprcneut one who is willing to there are always other people to fall back on, ouf sayingthat thepotential f ranchiseemust curb his own businessirutincts and accepr a franchise's success,"saysZosa, "is alnost thorougNy evaluate and investigate the the professional guidance - ever''thdLg always equal to the franchisee'sefforts and various companies under consideration. from operationsto marketins techniquesdetermination. Although you are given a Someofthe tlings to payo(ha carcfulatten- that frinchison offers have"to offurl' nny blueprint on how to mn a business,you're tion to? Apart from scrutinizing the fran- individual considerinq taking out a franultimately on your own." chiseagreement,('Read carefirlly and take chise, saw one owner"of a sirall Dunkin' nothing for granted," says Smokey's Sau- Donuto;tbtinaManilasuburb, "should do A Cavoatbr the EntrEprcnoudal sageWorld Frandrisee.)Evaluatethe com- apelsonalauditorinvmtoryonhispersonal Reventar of Jollibee says, "Some panys promis€sto you asthe franchiseevs. strengthsand weaknesses."This leadsto the franchis€esthink that by opening one of our aclual historical Derformance.Consider the conrllary: restaurantsthey areleaving behind a world in demograpfucsoithe particularmarketarea. Be sure you have adequate workint which they were constantly dictated upon. Potential franchisees who approach capital. Inadequate workhg capital is a What they don't realize is that they aren't Jollibeds licensing officer, Lillian Rwemar, corunon reason for business failure. A entirely escaping this sort of Me. Because often own choice rcal estate.ADart ftom source book for franchise opportunities what you't essentiallypaying for when you intervie$/ing prcspects,Reventar-'sFb ts to says it Hteq, '\Iever underestimate the buy a franchiseis a prouensystem, one that determine and evaluate whether the ure period needed before yoq achieve breakdoesn't allow for too much deviation." To qet will athact substantialcustomer traffic even. Always be realistic about the poaround the problem of feeling restricted,one Be awar,eof your own sten$hs and tential need for additional funds." JoseP managementmagazinesuggeststhat all mgwealmesces.Mkezosasays,"Anyaspiring Pardo, president of Philippine Seven ged, highly-individualistic t)?es who enioy franchisee should examine his own PropertiesCorporation, a company which conquering new ground, make a bee-linefor strensthsand weakn€&s€6. Doeshehavethe awards franchisesfor Wendy's hamburger service oriented franchisesor lesser-known drive-to make the franchise work? Is he restaurants and 7-Eleven convenience franchisesntherthan maturefastfood chains, wiuing to work within the system,without stores, consideE accessto caDital one of wherc therc is lessroom to manzuver. trying to srodify or improve the franchise? the most important qualities-required of Nevertheless, at the top of many a Franchisin&Zosasays,"rcquir€sa differcnt prospective franchise holders. franchjsor'swish-list for the idealprospective franchisee is 'tntreprenzurial spirit". The CompadveSuccess RatsFnnchbedBuslnesse E, lndepqrdent Budn€so3 McDonald's prospe.:tusfor franchisees,for example,liss this qualification aheadofother Frana$bod&Bln€ss6 ln&poflrg|tBusht6se such qualities as "a strong busines backglound" and "people-handling skills."

After1st )€arof business Aftersth y€arin business After10th !€ar in business

* Bond, Robert E., the Soutu€Bod<of ffi1ise

OCTOBER 1993. lHE ASIANMAMGER

97% 92!A 90/6

6X 23Vr 78P/o

Op@rtunities,Ctcfl)ones-jrwln,flllinois. 1989).

It TakesTwo A franchisorcanalsomakeseriow miscalcl' ations. For instance,Taco Bell made the mistake of €ntering the Philippines in 1983 when the national economywas besetwith a

FEATURE

deepeningr€cession.The chain'sowners and fran'':hise&also misiudged local tastes.Havine become more cosmopoLitanin bermsof orisine onlv in the last deaade,Fijipinos then werent quite rcadv to indulge wf,olesale in tacos, bdrritos ani tamatesl rn singaPorc, Iranchise that have failed for similar reasons indude Wendy's, Baskin-Robbinsand Blue "I attribute Rooster.Savsian Thuan Seng their hitle'to a combination offactors: inadequatehvesfinent and managerial commitm'enton Orepan of *re franchiseesaswell as the tack of udllingness of the franchisor to adiustto localmark€t tasteor cdtulal rcquiF ments." It is also important to keep in rnind, says Reventar, that when franchising does succeed,it is a shar€dsuccess.Franchisorssome' times believe their franchisees succeed becauseof what the franchisor has done that the franchise'ssuccessis a lesult of yea6 research, routinized oPerating Pacedures ard manasementservicesonly thsvcanoffer. "fall On the6ther hand,the franihiseemay

F V Y

has into the hap ofbelieving that his franchis€ " succeeded'inspite of tf,e franchisor. (Entre"lgs wewur, Ar,nl i9931*ys one franchisee, 'so that franchisor easvto iorg* that it was the brougiht you into the business in the first place.I used to resenthaving to issuercyalty iheque becauseI thoueht, well, i(s ny hard wori and energy thaf;gone inbo thi; business.When I fiel this way, I try to rcmind mvs€lf whv I sot into franchising in the first ptice. wfrictr,-of course, is for ihe relative securiw it offels. Mv franchise is succesfirl becaus6of the franifiisor's existing quality conhol systerns,training Programsand riSorous market researchasweu asother suPPot s€rvic€ssudr asadvertisin&" "we heat franchiseesasour SavsReventar, clienti and provide them everything we feel they need,from dweloPing systemsand corporatestaffto prcviding them forms that may be useful in meetins production targes. We work everything oir *ith them to-the last detail and most importantlv, we seethe franchisein termsofa partnership.And at the end

TUCNEWCOMPAQLTELITE OPEN. COMPUTERS. PERSONAL (APPRECIATE HOW MUCH WE PUT INTO THEM') STANOARDMOOCLS

STANDAROFCATURES

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ofthe dav it is essentiallythat.Our franchisees arehelpiiig usexpandand we aregiving them thechance-tosu&eedwith timited capitaland know-how." Althoueh therc is plenty -both' of room for confranchison and flict in frinchisins, franchiseesagree that franchising will continue to bea vital economicforcenot iust in the United States,but in Asia, where newly-plosperousentr€preneursare finding franchisirg a viable and exhemely attractive concePt.

RcgUlatlon In the Philippines, wherc laws Soveming technolosv transfer arrangements are now less res"tiictivethan ev:erbefore, new franchisorsare[kelv to ioin the ranks of the 20 existinefranchisesEgistered with the Bureau of Paten'stndenurk and'lechnologyTnrufur (BPTTI).l,eo G. Dominguez,a Filipino lawyo with the law firm Quisumbin& Tones & Evangelisiaandanauthorityon thel€alasPects of franchisrng,saystlut under the new laws, foreignfranchisonwillhal€ grcaterincenhveto setup shopin the Philippines. ''ijnder the new amendmentsgoveming t e c h n o l o s v t r a n s f e r a r r a n g e m e nt s , franchisoriire zuaranteed royaiEes of 57o. Previouslv the dvment of royities could not excd, l-27o oi a'franchise's qross sales lndustry norms els€wherc in lhe region are much higher." Another plus, savsDominguez is govemment's deciiion to 6xtend the maximum a.llowable term of technology transfer arranqementsto l0 yeaE, from the Pr€vious five v"earsas weU as its efforts to esrablish clear6rguidetines. At pres€nt,ticensing and distribuioragreemens, often resulting in royalty disputes, becaus€royalty Paymentsare oniv pirmitted under ftanchising agree' meirs. Singapore,which now has a 30 different foreim"fr;nchiseesin the food industry alone, hasn-ospecificfranchiselegislation.Says,SIFA presidmt Tan Thuan S€n& "All ftanchising ictivity is regutateaUytheSingaporeCompanies Act. And becauseSingaporcbelieve in a fteemarket,we haveno restrictionson foreign ownership or palments of franchise fees, which maies uimbre athactive to franchiso$ awav from Thailand and Indonesia who shv -sovemments pn3mote policies Ie whose " strictingYpreignowners'hipin theretail trade

A ilew Matudty

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The new rctail mvircnrrent will be far more complex, competitive and uncertain. For manv iranchisini offersa formula that is tried and tested.For ientrepreneur rcflecting theuncertainand ftagmmted characterof the futuJe enterpris€ laidscaPe, the franchisinS format that can best assure an enterPris€'s survival. Once an uPstart industry, ftanchising is on its way to attaining a hardI won matu-riry THEASIANMANAGER. OCTOBER1993

FEATURE

rose

AIM studenb EFt a fiFthand look at whyJapanls aheadofthe rcst of the rcglon. BYErsUI AB&hoiBson r{oEifl n c B. Cflu^, MBM'93

I magine 25 wide-eyed non-laDanese speakingstudentso-ainmea-ao'ngwith I U"gg"ff - into Ia IT _sevenscreammg -taxis,sqeechingthroughthedenseToky; baffic. Th usbegana l3day introduanon to the esoteric,make believe world of Japanese management; suddenly, that world'was a uvrd realitv. Thisf eld researchprogramsupplemmted .. rneJapaneseManagementliractic€scours€_ management practices, interviews with or JAMP - a course offered at the A$an Japaneseexecutivesat differentmanagement Institute of-Management,designed boteach levelsand surviva.lina distinctlynewi,rltunl rne pnnclp|es of Japanesemanagementand setting. illustrate their application in JafarnesecomThe trip, howeve4 did mote than iwt ex_ parues. posethe studentsto Iapanesecompaniesand It u/asfirst offer€d in May 190, whm 25 rnanagement operations. It also helped carMBM graduates flew to Tokyo for an eight- rcct the image of Southea*Asians among the day expedition. They visited 6ve comparue: Japanesethemselves. Unfortunately, many Fuii Xercx, Fuiitsu,Yasaki,ToyotaMotbr, and Japanesestill think of Matsushita Etectronics. Thi students ob- prcviders "ilqjal', SoutheastAs'ians as of or cheap labor Rarely servedhow businessis done in thesecompa_ do Japaneseexecutivesmeet young profes_ nies and interviewed the managers tiut sional managerssuch as AjM-rrad"uites. tn handled their ooerations fact, many of the people we miet expressed The 1991JAIr,lpwastwo davs loneer than surprise to find the AIM visitors so pdrsprcu_ the fust tripand new compani* were"visitea. ous and observant. Among them: Kawasaki-Steel,Nissan Me tols, IGyaba Industry, Toyo Rika (a Toyota supplier), SanyoSecuritiej and K-Line. As in the prcvious yea4 moot of the tsip wasspent visiting plants and talking to rnan_ ateF. In addition, the group madea-side-trip to Kyoto where we were lucky to witnessth'e "Sanja Festival" one of the m6st popular fus_ tivals in laoanThe 192 JAMp graduates decided to fc cus ol lhe theme, ,"Ibtal euality ManaF_ mmt in 'nsnds."Japan:Its Curent Status;nd Futile

"EaGh year,participants of AIM'sJAMPdas acquirenewinsiglrtswhich the Japarcse freqrnnfly granted." takebl

The designinduded exposureto Japanese

OCTOBER 1993. THEASIANMAMGER

1993Fbq Re3sarch Rogtam

. - | wenty-four AIM gnduates leftforJapan in May_fo-rtheh l3day neH resear*r tri!. e total of_l] cornpanii representlng a wide range ot Japanesebusinessoperations were visited: IGwasaki SteelCorf.bration (Chiba Work); Nippondmso Co. itd. (Ario and TakatanaPhnb); ToyotaMotor Comorauon ClbyotaAutomobileMuseurn,Toyoti Kaikaa and Tsutsumi Plant) Matsushita Eleckic Co. Matsushita lbchnical Cente4,Flall ofFlstow. a-ndTV Plant);(Ibkyo StockExchanee);Bani of Tokyo;and, JohnsonCo. Ltd. toii planO. _ Becauseof the importance of cultur€ m Japanes€rrvuugement,thegroup alsovisited theanoent citi/ ofKyoto. Ofinvaluable help in understanding Japanese culture was ihe gmup s ihteraction with studmts ftom Keio BusinessSchooland participants of the curImt Intemational Association of Tmffic and SafetyScienc€s(IATTS) Fomm. A.s past yeals_, theparticipantsacquircd T new iruights which theJapan-eefteqrimtly take for granted. Those m&t relerranito th! tnmediate intercsts of the g,oup had to do with ToralQuality Managemmf CfeVl.

TQMInJapan:Ins€htsandExDedoncos

Prior to the trip, the ffoup had acquired coruiderable knowledge of ihe undeilying

FEATURE

philosophy,practicesand techniquesof TQM. itmone the& wercthe KarbnrorjusFin-Tune, 55,\4sual Control Measuresand Techniques, StatisticalQuality Contrcl, Lifetime EmPloyfi|€rrl, Kaizm or Continuous IrnProvement and Quality CiKIes. AT AlM, the students frequentlvdisoss€dhow thesepracticeshad probuced remarkable resulls in Japanese 6usiness.But none of these discussions equalledexpooureto the actual imPlementation of TQM in JapanesecomPames. 1. Totd Quality Management is a Philosophy. Philosophy irnplies a way of life manifest in the attitude and b€havior of the people subscribingto it. ' h lapan, there are several ways people tive the TQM philosoPhyFor erample, in rnanv of the pldnts that we visited - from the Chibaworks of KawasakiSteelto subconhactors like Tokyo Seat- slogansexhorting emDloveesto follow the company's mottos are oos'tedon walls. Often, thersemottos are bro-ken down to thelevel of eachdepartment.For 'tsack example, Matsushita ElectriCs motto to Ba;ics" is meant to revitalize the company according to the original vision set by its founder konosule Matswhita. The motto is then modified to fit the nahrreof eachdePartment. Matsushita ElectriCs accourting de partment for instance, has adoPted as its mofto "Improve Accounting's Contribution to Muction." Insome cases,evenindividual employees have their own slogansthat rcflect therr rcsponsibilityin the implementahonof TQM. ti Honda,all employeesftom thelineworker manager wear IDs uD to the qeneral "with a slogan This slogan reemblazoned minds the ID holder of the Soalthat he hasset for hirnselfasanemployee.More imPortantly, it r€mindshim ofthe r€sDonsibilitiesthat such entails. a goal Sometimes,a comPany also modfies its vision to match the needsof the times This usuallyhappenswhen comPdnye\ecrilives hold periodicshategjcPlanningr,sions. In Fuii Xerox'scase,managementrealized that theoverwhelrninge\Pansionof theinformation age would radiorlly changethe way inlorrnation is managed.Thtu, they shifted "The Copier the company identity from '"fhe DocumentComPanY" t6 Company'' aion! *ith tttis "hift was the necessityto alter emblovee work routine to meet the 'The DocumentComchallengeoi being, pany."H"nce, Fuji Xero'. likewise imPle'The New Work menteda program called, of their ConstantlyremindingemPloyees soals and responsibilitiesboth asind ividuals ind asmembersof a team hasbeencritical in allowingemployeesto imbibe the comPanv'' ph'llordphv Consciouslyor subcont i i o r . i s t y ,e - f t o y e e s e v e r i t u a l l y f i n d themselvesliving uP to this philosophy, thereby contributing to the comPany's

sidiariesand arefi€quently taught new skills. Vy'hatis interestingaboutMetime emPloyment is that it demonshates the symbiotic relationshipthat e\ists between Japanese companiesand their employees.Lifetime employrnentis not an aut6mitic rlght that emiloyees enpy. Rathet it is something that is neiotiable between managementand worker$ In conhast,ASEANemployers@uently fight hard to ensurethat govemment doesnot erant to labor new benefits becaus€these Senefitseventr.rallybecomeemPloyeeriShts that can no longer be takm away. Views on lifetime emPloyment vary Some though, even among the Japanese. view it asa strongcomPonentol tneJaPanes€ culture, others do not, In the financial sector, for instance,somecompanieshir€ execuhves frcmother firmsinstead of hiring ftomwithin their own ranks asin the caseof SanyoSecurities. The ntionalization for this is that lifetime employment is sometimes seen as limitine for the company in terms of the benefit! that canbe deriv& tbough technologv transfer. lf no transfer occurs betrareen cdirpanies,each6rm will haveto sPendmuch mor€ on R&D to develop rcdundant technologies. N=eithereducatediunior staff and executives ar€ in favor of lifetime employment. Becaus€thev are prepared to tackle gr€ater responsibilities,thLe iunior membeEbelieve thev deserve more oppofiunities to demonstrjte their potential. Fiw of them ale willing to wait anaverageofsixyearsfora Prcmotio& which they would have to do under the senioriw-bas6d promotion scheme.Thus, they arefbrcedto seekbetteroPPortunitiesin other companies. The Japaneseconceptof tifetime employturels failed to seethis advantage,so evenhr- ment soeshand-in-hand with another major manaBement: componentof Jdpanese PeoPle ally, they lo6t their comPetitiveness. At ChibaWork. the Kawasakiexecutives emDowerment. Each member of the comaremindfirl oftheAmerican exPerience.They panv is encouragedto participatein the decihave earmarkedthe equivalent of more than iion'--akine pt;ess. Everyone is invited to $2billion in investment in the rationalization con*ibute t6 enhancingpr6duciiviry In conand improvement of the Plant. The immedi- trast,empowerment is always a bone of conate financial picturc may aPPearharrowm& tention amongmanagementandstaffin other but the com;any's executivesare aware of Asian settlnqs. Outside Japan,it is difficult to convince what this investmentmeans:new technology, to decentratizeand to bring down managers gains. plants mor€ long+erm and new RimarLabty,the long-term outlook of the decision-making role to emPloyeelevel lapanee companiesdoes not only concem becauseof fearsthat this may causeorganEatechnologyand innovation.EvenemPloyees tional problems. ln other words, organiza"renewaf' concePt tional sitiratiors do not lend themselvesto are beneficiariesof this throus.h lifetime emplo]Tnent. Lifetime em- empowerment.Both conceps though, have comPanies ployrient is founda] o; the understanding becomesoautomahcin JaPanese ihai the company is responsiblefor the long- that thev ale no longerthoughtof as some term welfareof its employeeswho are,in tum, thinq th;t needsto be"cormiouslyactedupon 3. TQM encourages€mPloyees to Perresponsiblefor thecompiny's overall success. form at their best and in the most excell€nt rnanLifetime employrnent encourages aqementto be ai efiicientaspossiblein allo- manner.The effectof a long-term outlook lies that is inculcated in the cJhnq "ofand expandingthe humdn resource in the value system base the companv. when conditions re- people. Employees realize that it is to their quire dowruizing oi personnel, employees lrni:fit ttratitrevdo tleir utrnostfor thecomire assigned to other departments or sub- pany. The more the comPany rcaPssuccess,

grcwth. 2 Th€ TQM philosophy seesand seeksa long-t€ml outlook, One of the often cited comPanies reasorufor thesucces ofJaPanese is their long-term outlook, something not found in most Western comPanies.In fact, Matsushita set the rccord for long-term outlook backin the 1930swith his legendary25G vear companv plan. Compare it with ',lmerica in the 1980swhen the direction of Americancorporationsshiftedtowardsshoftterm goals becauseof the emPhasison increashg shareholdervalue. This emphasison short-term, immediate returns was one of the primary reasonswhy theAmericansteelindusEywent into decline. America would have maintained its edge over Japan in the 1950sand 196Oshad it invested in new plants and new R&D The JapanesesteelmanufacturerbuiltnewPlants arid produced new technology throughout the6etwo decades.They continued to create and innovate. This evenh.rallyled to a deseasein Droductioncosts.Westemmanufac-

"Viervsonlifetime valy.Some emdoyment seeit asa strcng of Japanese component culture,otheF donot."

THEASIANMANAGER. OCTOBER1993

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FEATURE

the greaterthe benefitsthey enjoy.For its part, the company booststhis success-orientedattihrde through continuous education progams, quality circles,employee suggestion 'ptogran$ and Kaizen. ioyota, for example,follows a three-fold education system which is centerd on onthejob training using formal and informal educationinordertoimproveemployeecompetence.It alsoboasts99%implementation of employees'suggestions.Other companies such as Nippondenso and Honda have a similar list of development activities. The support that companiesgive to quality circles is evident in the way Production lines are laid out. Each quality circle has its own station, and the memhrs of the circles are given a free hand in decorating it- p1oviding for a more personalized,comfortable and a distinctidentiiy. appearance --To help employeesdo their jobs bettel, companiesalso spend heavily on R&D. The FlexibleManufacturing Systembeingapplied by Toyota and Honda to their suPPliersis a product of the researchof these two maior comPanies. For example,Honda had robotic equipment installed in the plants of its main sup plier, Tokyo Seat. This equiPment was designedto do most of the more dangerous and repetitive work such as fabricating automotive parts, welding and joining Parts together.Through the support Provided bi Honda, Tokyo Seatis now ableto consistenly provide the companywith high-quality parts and equipment. Certainly,this value systemthat demands excellencefrom emPloyeesis alsoreflectedin theculture and pride of thepeople.This isbest exemplified.in the Japanese'seffort to beautify their environment by keeping a wellmanicured garden. For the Japanese,a well-trimmed gardenis a spiritual undertaking. 4. The philosophy of TQM emPhasizes the value of eachindividual asa memberof society. As members of society,emPloyees channeltheir contributions to socialdevelop ment through the company they work for. They give theirbest becausethey believethat what they do for the comPany has a corresponding effecton the societythey live in. For their part, JaPanesecomPanieshave beenmaking effortsto ensurethat their processesareasenvironmentally friendly astheir knowledge and resourcespermit. They have alsotaken the stePof transferring technology to other countriesby way of foundations and associations,[ke IATTS and the Association for the Promotion of Intemational Cooperation (APIC). Even institutions like the Bank of Tokyo assist in the technology transfer Process. Through their branchesoverseas,they keep in touch with eventsin develoPingcountries. They also provide funds and advice to assist

in the implementation of development projectsand technology transfer. 5. TQM seeksto foster in m.rn a senseof pride and value, initiative and self-motivation, growth and fulfillment. The net result of thisphilosophyistofosterthegrowthof the BysubscribingtoTQM, employeeasaperson. man giveshis bestto everything that he does. As a result,hebecomesproud of thecompany that he works for, of the plants where he works and of the product that he produces. In the Nippondenso plants we visited, the pride that company exeotives feel for the plant that they supervisewas obvious. This demonstratesthe high degreeof loyally and dedication the company hasinculcated in its employees.It also shows that the TQM philosophy is working well for the company. The pride that employeesfeelfor the company they work for canalsobeobservedin the way the people of the community Patronize its products.In TovotaCity, for instance,over 95% of the cars sold in the communities around the plants areToyotas.At Suzuki, the

"Employees realize thatit is to theirbenefit thattheydotheir utmostbr the company."

samecan also be said of Honda Motors. The whole point of fostering growth and pride in individual employeesgoesback to the company as an integral comPonent of society,and being a member of it entailscontributing to its growth and weHare.Konosuke Matsushitasaidthattheprofitof acompanyis society'sway of retuming the SoodProducts that the company hasbeenProviding it at the lowest possibleprice. 6.TQM seeksto accomplish its goals in a setting where man lives in hamrony and abides bv the laws of nature. The informa'80s made tion explosionof the 1970sand Greenconcernsan important strategicissue. Hence, in many of the comPaniesthat we visited, much R&D has been cented on recycling.AIso,wesawthatmany comPanies now haveprograms with Zero Wasteastheir goal. tash recePtacleshave been clearly marked for different types of wastes - cans, bottles,paper and non-biodegradablemate rials. Kawasaki and NEC are two active advocatesof recycling.Bothreryclemore than90% of the waste water used in their industrial

processes.Kawasaki, for example, is quite broud 'nqo ofthe fact that they are ableto recycle of the industrial wiste water usea in steel-making. Waste water used in cooling molten steel automatically passesthrough sink holes and is stored in catch basiru for recycling. In the caseof NEC, its new headquarters hasbeendesignedwithcomputersthatweigh the planfs impact on the envhonment. A windtunnelisbuiltonthe llthand 12thfloors of the plant which allows air to flow through the building. This lessenswind velocity and turbulence which skycrapersSeneratein an urban environment. Also, the design of the building allows NEC flefbility in expanding or changing the layouts of its officesquickly. An officecanbe built modularly or expanded depending on the requircments of the company. The NEC Supertower likewise collects iainwater which it recycles for use in the building. Concem for the environment is probably best seenin the way NEC developed its Environmental Audit System. In responseto environmental problems that began to de velopinJapaninthemid-60s,NECappointed a director responsiblefor handling environmental concems in1969; and a year latef, it establishedthe Environmental Control Dvision. The program continud to be modified and improved in succeedingyears until the in 1973.Tirday,each Systemwasimplemented NEC employee canies a card that esPouses the principles of NECs environmental Program. More emphasis on environmental concems can be seenin how the Oiso plant of JohnsonCo. treatsits wastewater.Soonafter the plant was built, the local council became very concernedwith the water the plant re' leasesinto the environmentbecausethe river and water systemsarealsousedfor irrigation purposes.But thelevel of which substancesin the water was shown to be much lower (around 40 to 60%less)than the level that the local council originally set for the comPany. Other community services have also been providedbythecompanytothearea;and/this senseof servicehas endearedit much to the people. Thus, when Johnson Co. recently innounced its plan to move the plant from Oiso.thecommunitv and localcouncilexerted efforts to convinceihe comPanyto stay. 7. Adherence to the TQM philosoPhY increasesthevalue of man's contributions to society and improves the welfare of his fellowmen. Becauseof the Total Quality Managementphilosophy, theJapanesehave contributed substantially to improving our wav of life.It hassetclearprioritiesto provide productsthat areas abundantand usefulas the water that we get from the faucet. Japanesecompanies sPend heavily on R&D to improve the quality of their products and their production systemsthroughlhizen. 1993 THEASIANMANAGERo OCTOBER

FEATURE

Small improvements enable comPanies to developprodud innovationsat a fasterrate than the West. In essence,Total Quality Managementin Japanis a philosoPhy that seesand seeksa long-termoutlook that encouragesmen and wo;1en to perform at their best in order to instilla senseofprideandvalue,initiativeand self-motivation, growth and fulfillment.

Futulelssues Severalissueswill certainly confront Japanasthe2lstCentury dawns. One issueis the environment. We have seen how many companiesexert substantial efforts towards making their production systems generate Zero Waste. Many of them are succeeding becauseof management'svery real concem for the environment. Howeve4,it is also important that the PeoPle are Personally involved inthe process.Hence,implementation of the TQM philosophy should emPhasize the environment's imPortancein the company's " dailv routine activities. Another issue confronting Japanwill be how it intends to coPe with the ongoing

worldwide recession. ]apanesecorporations long as key competitive advantagesare obhave alreadybuilt plants in lessdeveloped tained through differentiation of customer countries in order to take advantage of the services. The training of personnel in preparation lower costsof production in thesecountries for the future canoften be performedwith the grow help them time to and at the same economicallv.Thev have also automated company's internal resources and departmuch of the-production Processso that they menis. Howevet glven the trend toward incan produce higher va-lue-addedproducts. creasingglobalization,the fastpaceof change In other words, fapanesecomPaniesare occuringintheenvironment,andthedemand holding the line on costs, although invest- of the younger generation to have monerements in capital equiPmentcontinues.Nev- sponsibilitiesand fastercareerdevelopment, "Are internal training may not be adequateto meet ertheless,the question still remains: the challengesof thesevast changes.Manage' momentheseefforts enough to generatethe tum requiredto bring aboutstrongeconomic mentshouldalsoconsiderthepossibilitythat the technologyand skills they seekto devâ&#x201A;Źlop growth worldwide?" Theneedto lowercostsis causingcomPa- and discover internally are already available nies to begin rationalizing comPonentsused from external sources. Using external institutions may proyi{e inproduction.Asaresult,productsproduced by different companiesare becoming more managementa freshview and outlook which similar becausethey arebeing made of Prac- canbe a useful aswell as more cost-effedive ticallv the same parts. Thus, competition than internal development.In other words, and it is c'entered the role of institutions like the Keio Business amo;g companies'tightens, moreoncustomerserviceratherthanproduct School and the Asian Institute of ManageThiswill eventuallyleadtoa shift ment aspartners inPromotingand improvdifferences. in emphasisto the servicesector where high ing businessmanagementskills needsto be I value products can easily be generated- so unlderstoodby management.

. OCTOBER 1993 MANAGER THEASIAN

FEATURE

TheAsianNlanaser: //^ff

Thenewgeneratlonof Aslansare expectedto keepmakingthings better... BYWasHtt{cror{ Syctp CH^|RMAI, S{iVCRoup CHAIRMA , ASI,AI{I SflIUIE OF MAI{AGEMEI{T

here is probably no better place to discussthe subjet-f'Theesian'Uut agerShapingtheFuture" thanin Malaysia,a. country whos€progess I haveadrnired over the past 30 yeals. Malaysia has put its house in order. And with the very rcpid grcwth achievedunder an extremely capable and dynamic prime minster, we Asians are proud that the voice of a very successfnlAsian leader is increasrngly heard,and listened to rcgionally and mtenutrlonallv - Many from the United Statesand Euppe hardly knew where Malaysia was until your leaders proved that your country is abie to prosperwithin thecontextofyourown values and with your own development plans.Just as you have prospered froin foreign investments, you arc now assisting neighboring countrieslikeChina, the ptritippinesltrdoni sia and Metnam - assistinb'themnot by adviceand lectures,but byjob qeating invesiments. PeterDrucker recentlysaid, "Onty Asians can integratea rapidlv d'evelopineAsia into the world economy,but who r,,'il lEaa?" Here agaig we are seeingthat the ideas of Prime Minister Mahathir arc shongly ' influencing other Asian economicleaders. Asf look backover thelastquarter c€ntury - and then backto the preseni- I seea new cycle of development commencing. It is a cycle very similar to that which launchedmy rcludant generation on its mission todevelop Asian enterDrise. We tried to foster understanding, indusb-ialdevelopmentand prosperity.AJa resuJt, your neighborhood is gtotril raiher ttran regional.The successof your enterpriseswill be

OCTOBER 1993. THEASIANI4AMGER

determined by the quality United States.In a rccent rcand pace of innovation port, he said - with undiswithin colporations; and guised pnde - about his your Fosperity will be decompany,'We'rc specialists pendentupon factorswhich in our field. We're not afraid we did not have to worry of competition.Wecansellin about! America, the most difficult And maybe, that is the and competitive market, so challenge upon which hiswe can sell ant where." tory-25yealshencE, when last February in Manila one of you will be standing Tunku Aimad Yahaya, the here- will iudge this ne* Wa3hington Syolp r,|P iust-rctircd group rnanaging generation.Becauseyou are director of Sime Darbv said expectedto keep making things better.But if that he was not stue Asian Manaeers could you haveIookedaround much recentlv thafls competein a fiee trade environment.\er, you gefting petty hard to do. ale well trained,capableand aggressive.And "The Asian Maruger - Shaping the Fu- Asian Manage6 are determined to succeed ture" is much more than a challenge;it is a and will makeenormow sacrificesin order to destiny.The futule will be what you make of achievelong+erm obietives - especiallyin it either-by mistakeor bi desig; Unhappily, We6temmarkets. failure despite plans for successfiitdeieio; So I think it is healthy to fear the James ment is not wholly uncornmon. Kohs of Asia. But I think it may be even And fortunately,succes by mistake is not healthier to fear theJamesKohs of ihe United unheard of; neither is accidental success. States,Euope and South America who plan Sometimes,we actually achieveour qoalsas to compete in our markets. planned. 2. Fiercecompetition. The fierce cornpeTo do my small part in contributing to the tition arising from the fr€etrade environment debateon what thefuhrrecanbe,I will iiscuss will exert pressule on Asian enterprises to thr€e paramete$ for developmmt as I see "rcenginee/' tlEir orsanizationdl sb-ucruJe. them. Br.isiness Weefr recently-notedthat oqganizing "aniund resuls, riot tasG - These are the enterprise environment, the corporation busmesspracticesof Asian corporations;and such as sales or production" can produce 'quantum leaps performance, of course,the Asian Manager. in and not I Oqo or mEogans;' I|e EnterpfueEnvllonent There will be continuous pressure to 1. FreeTiade. JamesKoh, a businesman 9qu€ezemargins out of crowded, constantly with plants in Malaysia, is the rEnaging di- chanting industries and markets. The derector of Koda Woodcraft, a US$l,Lmillion mands of differentiation and product appeal company which exports its products to the will be intense;and, firsFto-tire-markermav

FEATURE

become the primary determinant of success. 3, Serice Orientation. Or it could beservice.Asked to comment on the successof KYocera Corporation - the maker of ceramicpackagesfor semicon"...one of ductoG and JaPans most consistently profitable companies"- its first US "lt salesrnansaid, wasnot rcally " technology,it was service quality, delivery Service aftersalesmarketing and suP port- will provide the long-term distinction &tween market leadersand market players And in theareaof servic€,Asian Managers excel.Europe used to have the best hotelsnow theseire in Asia - and the better hotels in Euope and the USA are probably owned by Asians!

ers,customers,eveneFtwhile rivals - linked by information technologyto shareskills, costs and accessto one another'smarkes." And I suggestedtiat whether you call it vir:hral corporation or shate' gic alliance- this is the way business is usually done in Asia, and has been for many, many years. 1, Networks. No one is more skilled in Putting togethergroupsof businessmen from diverse backgtounds with the same common obiectivei as Malavsia's Robert Kuok. He hai establishedcloserelationships with mdny of the most successfirlbusiness groups in EastAsia. The Japanesetrading comPaniesPutting together local consortiums all over Asia for specificprojectsmay not haveheardof vltua I but thevwillbehappyto Lnow coroorations, thai theyhaveagainied t|e Wesiin management urnovaoon. 2. S9€claltsatlon.SPecialization- a cata-

"Thefrrturewill bewhatyut makeof it, eithel bymistakeor by design."

TheAslancoDo]adon

Earlier this year,I discussedthe conceptof "A temPorary netthe virtual corPoration: work of independent companies- suPPIi-

lvst as well as a bwroduct of the virhral iorporation - witl be another featureof succesiful enterprises.Enterprisehasleamedthat it it does best when it thcks to businesses knows well. According to Felipe B. Alfonso, AIM'S Dresident,so entrenchedhasthis idea becom6that Sun Systems,for instance,does notevenship itsown pnrduct5-it hashir€d a professionilshippingfirm to do this,after ot un-happye\penences. vears ' 3. Constafi lmpiovement. Knizm - or constantimprovement- is likely to remaina fixture of the virtual "Asiancorporation. Enhancedproductivitv and value-addedwill be the primary objectives. The implications of failure to match Productivity gains by the competitionwas recentlv d-erionscaiedwhen the chairmanof BMw said that Toyota could not produce at sucha low costa carasgood asthe Lexus!And "were stunned to MercedesBenzexecutives, discoverthat their production costswere 35% higher than Japan's." The successof Japanesecars most clearly demonstratesthe imptcations of failure by their competitors to engrain the tradition of

.IHE . OCTOBER 1993 ASIANMANAGER

FEATURE

constantimprovement.

rccendyreported, they q,eateda rcmore con_ tol VCR programmer and a US$l@million Ihe A3lanManager business.Henry Yuensaysof the busines he . Sofar, I have tried to prcvide someof my conceptualizedand founded, ,,Our business thoughts on the busin&s envirorunenr rn will remaininnovation-thedevelopmentof which you will seekto practiceyour skills and new products that drive the consuiner elecput your talents to wbrk. Ne'xt, I talked of honics markets forward. certainfeahu€sofAsian corporationsand the 2. Chanplo||3. Claig Hickman, author of populaity of Asian businesspractices. Mind ondMawger - Sotllol a L,qder,sugglE Finallt I would like to aiscirssttueeouaiuutrnnovahvecompaniesinstitutionalize the ties of the Asian Manager tlEt I have - in dwelopment of leaders who champion new laimess- observedin theleadersofexcellent ideas. "Ioe corporationsall over the world, of small companies will come up . l- Poopb odcntad and Innovathp. Mkio with applications for tire information hisliKitano, Toyota'stop productivity guru says, way and make hundleds of millions oI d;l_ 'The key boprodu-ctivity is sim'pficittzM'en lars," according to Miqosoffs Bi.llGates.But conuol machines;not the other *ay around. I believethat the level of irmovation we seern We have said - often quite piousiy - that small comp-aniescan atso be seen in lalge people ar€ ow primary asset.But it hasbeen enlightenedoreanizations. the resurgenceof apprcciation for ideas that For instanci, Kitano is also an acknowlhastruly convincedus of the worth of people edgedrenegade.Andalthough weoft m think in an orsanization," ol Japanesecorporatioru as relativelv mone lithic, Kitano shows us that champi6ns play ftfoascomefiompoople. critical rcles in the successof evm very lirgi When two Hong Kong-bom scimtists had Japdnes€corporahons. houble programming tf,en VCR, ,4siaa,,eek Fil Allonso had it right when he said that

there is only one thing more painftrl than having to deal with ,thampions,, in an or_ ganization who constantly rock the boac not having any. So I believe'that the successful Asian Manager will be a personwho hasthe shengthof charactertoacknowledsetheneed for champions and provide al en"vironment in which thev flourish. g. tradld. ana tne asian Manager musr b people to greatness. ,the real i*?*.. €aqer, asoneobserverrelates,,AIasno need to lead- heis contentbopoint the wav,, your task, thm, is to cata.lyzetlamwork jd innovation and dedication to new ideasand their development.And insodoing you wi.ll shape a future for Asia of which yo-u'canbe oroui. "I don't know thekey tosuccess,.,oneman hf said, "But the key'to fuilue is tryint to pleaseeverybody.",ust asyou prioritize yow oDtecrves,you.must prioritize your support Decausesprcadrng corporate r€sowces too thrn -- Fying to please everyMy _ will prcbably not contribute to the shapins of the " future you have in mind for Asia.' So suppot those who produce: The Champions. t

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ThePhilippines: Closer Together Through Telecommunications By CynthiaH. Evidente

ith the advent of the telephones per 100 population. fhe philip- from the mainstreamof Philippinepolitical 21stcenturylessthan pineshasyetto hit the 2:100mark. andeconomicactivitiesemanating fromMetro a decade away and Countingparty-lineconnections,official Manila, with globaltrendsin statisticsreleasedby the NationalTelecomFora nationwhose63 millionpopulaceis telecommunications municationsCommission (NTC)pointtoa 1.4 dispersedthroughout7,i 00 islands,tne govtechnology shifting telephone densityindex(TDt)indicating the ernmenthasnooption but to ensurethatvital from analogto 100% networkd igitalization, numberoflinesper 'l0Opopulationasofyear- telecommunications linkagesaresetin place thePhilippines, with its2O-year infrastructureend 1992. to bridgethe geoSraphicgap. backlog,ishardpressed to rethinkit.erecomThedisparityin the telephonedistribution After all, a more equitabledispersalof municationsdevelopmentstrategies thathave tellsa vivid storyofcountrysidedevelopment economic goods and servicesdown to the "natural favored monopolies." neglectby both governmentand privatesec- grassroots levelthingshingesoncorrespondClobalattention isnowfocused on thefast tor jnvestmentprograms. ingdistribution of available communications growingAsia-Pacific region.The economrc Theconcentrationoftelephonesin Metro facilitiesto the rural areas. miraclesworked out bv Singapore,Taiwan, Manilastands at 10.4TDI.RegionVll,thesite When PresidentRamosends his term in Koreaand Hong Kong are aftractingheavy o t t h e C A L A B A R Z O N( C a v i t e - L a g u n a -1998, oneoftheyardsticks for measurjng the infusionsof both local and foreign invest- Batangas-Rizal-Quezon) industrialgroMh socio-economicachievements of his adminments. area,js a poor secondwith a 1.25 TDI istrationmay well be the tangibleinfrastrucWhetheror not the Philippines succeeds The rest of the cou4try particularlythe tureachievements i n thetelecommunications in aftractingitsown shareof seriousinvesrors Visayasand Mindanao, has less than one sectot dependslargelyon crediblesignalssentby telephone per 100population. Thisvirtually It hasbeennotedby governmenttelecomgovernmentplannersabout an open-door isolates themillionsof Filipinos in theseareas munications andeconomicplanners thatthe policy conducive to real competition,depoor telecommunications scenariohasbeen regulation and liberalization. costingthe Philippineeconomyextensively in termsof lostinvestmentopportunities, more AwesomeProblems expensivegoodsand services(forexportand Theproblems confronting theadministradomesticconsumption), and wastedproducdigitalizzlisl, tion of President FidelV Ramosin the teltive capacity. ecommuni( dtionsse(toraredwesome. At a timewhentheworldisalready talking Government Targets of 10090 diSitalization andintegrated 5er!ice\ DefinitetargetshavebeensetbytheRamos digitalnetwork(ISDN),some700,000Filipigovernment.National probler,nshampering nos are still waiting to be hookedup to the economic groMh and proposedsolutions mostbasicofallcommunication instruments: havebeenlaiddown in the 1993-1998 Methe telephone. dium-TermPhilippineDevelopmentplan Neighboring Asiancountles like Srnga(MTPDP) andthe "Philippines 2000." pore,KoreaandJapan nowspeakof having40 ln essence, the MTPDPseeksto stimulate

"At a timewhen

theworld is into

Filipinosare still using themostbasic of all communication instruments- the telephone."

. THEASIANMANAGER OCTOBER1993

SPECIAL SUPPLEI,4ENT

Satellitecommlnications is of particular very few Filipinocompaniesthat offersatservicesto providea importanceto an archipelagolike the ellitecommunication link.One ot them communications .ugcritical With some7,100 island Philippines. Cor Communications lnternational is the satlerrdins, mountainous gedforestsand technologyoffers porationor ICC Telecomswhich provides ellite communications the opportunity to leapfrogover existing satellitecommunicationsthrough provislowdownterrestial-basedsionalauthoritygrantedby the Sovernment difficultiesthat in December1990. microwave networks. centraland reICC Telecoms.eaches The vital roleof wirelesscommunicadur- mote locationswith its 1O-metermaster tionswasdramaticallydemonstrated ofnaturalcalamities hub earthstationfrom Antipolo,to ensure ingandaftertheseries '1990 and 1991 and backhaul.line-o{-sightconnectionsfrom that hit the countryin infra- the hub to hostsites. microwave the existing disrupted Asidefromobvioustechnologistructure. c a l a d v a n t a g e so v e r c o n v e n t i o n a l Novel Approach U nlikeotherauthorizedVSAToperators communicationstechnologies,satellite supportsthe shared' or VSAT) whose infrastructure (VerySmallApertureTerminals took a difprovidescost-effectivesolutionsand for- carrierapproach,lcc Telecoms of its in the roll-out strategy ferent opening tifiesthe country'sunstablecommunicaper carchannel single by offering services tions infrastructure. andmultiplechanne!percarrie' Most industriesrely on constant,on- rier(SCPC) dediline connectivityat mediumto hiShdata (MCPC)facilitiesfor easilydeployed, Telecoms' ICC links. channel cated, clear rates.VSAT5have gained popularity beand causetheir cost is predictable.By com- SCPClinks are protocolindependent portion ol the voice prevent on congestion are lines leased parison, the cost of eventually move This calculated link. the reand are added locations as ircreased that mote sitesbecome more distant.ln addi- led to the useof multiplexequipment high bandto splitthe stations remote allow tion, VSATnetworkshave fewer pointsof failure, are deployed in two to three days width and deriveMCPC. '120 instalICCTelecomshasmorethan and are simplyconfiguredand managed. The advent of VSAT technology has lationsandover70 satellitestationsnationare enabled communicationsplannersand wide. Closeto half of its installations agencies banks and used by Sovernment managersin the countryto step up and sectoris dnothermdior communicat;ons The manuiacluring fasttracktheirrespective carrlers/ expansionprograms.However,there are user.Othe. telecommunications "pumpovera 20-yearpe Longterm investments economicSrowththrough sustained "self-help" to 8ov riodendingtheyear2010,according efforts. priming" and planners, must By the end of the planperiod,percapita ernmenttelecommunications billion. least reach at (CNP) $28 the Philipof grossnationalproduct pinesshouldhavereachedUS$1,000from thecurrent$730.AverageannualC N Pgrowth t'Poor rateshouldbe anywherefrom 69o-87"while the povenyincidenceshouldhavebeenre telecommrurica[ons ducedto 30o/o. energyand telecomhasbeencosting This yeal pressing Philip problemsconf rontinBthe munications the Philippine pines have forced the governmen to to rate CNP downscalethe targeted Srowth economy 47o. 2.57.froman ambitious to lm exlensivelyin Meanwhile,capitalrequirements iaprovelhe countrvs lelecommuni(dtionc termsof lost cilitiesremainstaggering. B a 5 podn t h p I q ql - | q g 8M T P D Ba m r n r ' investment mum of $2.5 billionin privatesector-driven opponunities." will haveto be plunkedintothe investments 1998 4.0 TDI by localindustry iustto attaina g

SPECIALSUPPLEIVIENT

suchas radio pagingcompanies,broadcarliersrecastentitiesand international quiringdomesticlinks,havelikewiseused for theirerpansionrequireICCTelecoms of terrestialmentsduetothe inadequacy basedbackbonefacilities.Thegovernment alsousedsatellitetechnologyto coverthe recentnationalelections,with five key links. citiescoveredbyvideoconferencing ICC Telecomsutilizes three-fourths transponderspacesegmentfor domestic serve capacityto telecommunicationswith voice digital toll-quality data, high-speed with and videoconferencing applications rangingfrom1.2 kbps speeds transmission to morethan 2 Mb5.

FuturePlans The company'siuture plans include operatinga digital cellular mobile telephonenetworkand internationalSaieway facility,both of which havepending applicationswith the NationalTelecommunicationsCommission(NTC). ICC Telecoms'main thrust is Public service,to providedependableand reliservicenotonly abletelecommunications f o r b u s i n e s sc o m m un i c a t i o n s w h i c h stimulatethe economy,but alsofor Filipino residentsin remote,far-flungareas. ICC Telecomsaimsto installfacilitiesin remote areasto servethe growing needs of business,commerceand the Sovernment,and to supportcountrysidedevelopment.

Of the total amount, close to 50ol" or 5 billionisneededto raisethecountry's 16.1 $ a TDI of 10 which the TDI to 10. lronically, to rcachis wav beis ctrugelinS Phrlippines globalstandards. let alone hindAsia-Pacific, in the PhilipBasedon a paperpresented tela U5-based Molyneaux, pinesby Joanne e c o m m u n i c a t i o nesx p e r t ,p e o p l e i n t h e regionwho enioyat leasta TDI Asia-Pacific of I0 accountsfor a mere 157" of the entire regionalpopulation. (40 Theseincludethepeopleof Sin8apore (45 (42 Kong TDI); Hong TDI),New Zealand (48TDI). TDI)andAustralia On the other hand,85% or 2.5 billion nationsof peopleresidingin the developing two theregionhavetomakedowithlessthan populatron. per 100 telephones Suchis the statein countrieslike BanglaVietnamandthe desh,China,India,Pakistan, Philippines. 1993 MANAGER. OCTOBER THEASIAN

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8 1 6 2 u 5 t f A X ( t j 3 2 ) 8 6 1 - 5 5821 8 9 7 2 0 c e b u O f t r c9?5 3 4 2 : 9 3 5 6 5

ThroughTelecommunications CloserTogether ThePhilippines:

at least$450billionor Forthesecountries, area'stotal anthe underdeveloped 56% of nual CNP will haveto be investedin local linesjustto achievea 10 DTI telephone Despitewhat mayseemto be insurmountupwithitsAsian itscatching against ableodds in the thereisa new{oundinterest neighbors, to developthe country'shuge Philippines needs. infrastructure

. Direct dialing, a featurethat can be tstablishedin November'l928,the Philip pine Long DistanceTelephoneCompany activatedinto electronicor digital phones (PLDT)is the largestand most diversified DDD enablesa customerto make internainthecountry tional and domesticlong distancecalls telecommunicationscompany today. For over 60 years.PLDT has been without passingthroughthe operator.This investingbillionsof pesosin settingup an cuts down long distancephone bills by as inteFislandnetworkthat hascableand sat- much as407o. . country direct sâ&#x201A;Źrvices.By dialingan ellite linksto the restof the world. With an expandedfranchise,PLDTcan accesscode,callers8etthroughinstantlyto Competition Encouraging operatorin seleclcountrie5 tel- the telephone now make full use of state-of-the-art Today,thereis a rejuvenationof hopethat way to make internaThis is a trouble-free not to offer technology ecommunications the Ramosgovernmentis sincerein its inmayalsocharge collect. Callers calls and tional but data iust voice communications pursue in and policy competition to tended CountryDirect Callsto a telephonecredit servicesaswell. imagetransmission inof the telecommunications liberalization Justasvariedarethewaysthatcustomers card.The service,now covering23 coundustry. as vehiclefor telecommuni- can call long distancetoday.Digital tech- tries,will soonbe availablein moredestinaMonopolies nology,coupledwith specialarrangements trons. havenotworkedoutfor cationsdevelopment . Philippinesdirea. when abroad,this PLDT'scorrespondenttelephoneadwith the country. givescallersdirect accessto PLDT service make long distancecalling ministrations, weresent Earlyin histerm,stronSsignals when placingcallsto the Philipoperators and economical, more convenient Ramosto boththe domesticand by President Direct pines. can makePhilippines Callers the also bear facilities Public teleohone in a shift signifying communities international Canada, Singapore, the USA, payphones from and calls Multi-coin touch. modern in favor of market the telecommunications Fincardphonesare now in placein MetroMa- Bahrain,ltaly,Japan,the Netherlands, realcompetition. Hawaii, l-hailand. public Taiwan. Uh, Cuam, land, field,still 94olo nila, Meanwhile,more and more The telecommunications Maldysia Kored, Sweden, Philippine calling officesare vital servicesin PLDT's Spain,lndonesia, connolledbythedominantcarrier, Cermany. Denmark and provincial (PLDT), areas. fianchise has Co. Long DistanceTelephone "108"(inter. Telecharge, which allowstravelersin ln additiontothetraditiona! open to prospectivequalified beendeclar-ed "109" credit card servicefor (national) to use this the US operator-asnationaland of liberplayersin linewith theglobalthrusts (US)and international domestic charging ofnew a varietv PLDT o{fers sistedservices, and of ownership, democratization alization, for can useTelecharge callers calls.5oon, call long ways to more convenient and deregulation. pesosin in be billed calls, and Direct USA from the Philippines. to and distance issued Malacaiang Run in accordingly, the Philippines. Theseinclude: two executiveorders(EOs)desiSnedto cure developthe lopsidedtelecommunications ment in the country. en- PrivateSectorResponse Eitherone optsto be a niche-player EO No.59 mandatingcompulsoryinterto IibMeanwhile,privatesectorfesponse in liShtot the conneclronamongall publiclele(ommuni- gagedin valueaddedservices policies has been telecommunications implied by eralized (PTCs) wasissuedlastFebruary huge investmentrequirements cationscarriers from Day One jud8inglrom policies,or elsego for higher overwhelming government for IDCFandCMTS theinfluxofapplications asa majorindustryplayer. The policy seeksto provide a long-term stakes the NTC. join now inundating theband- services ln effect,anyonewantingto raisedby otherPTCs solutionto complaints playerslike traditional Almost overnight, for telecommunications public wagonof applicants to theexisting deniedaccess allegedly lobal Communications, C PtDl Philippine investment of minimum (PSTN) have a must of PLDt services switchedtelephonenetwork Telecommunicaand Eastern Inc.(Philcom) Ramosbacked P 1 7b i l l i o n . In Julythisyear,President ( E T P If)o u n d t h e m s e l v e s I n c . P h i l s . t i o n s policy, EO with anotherofficial No. 59 up EO intotheprofitable by newentrants thfeatened thesocial.esponNo. 109,whichdelineates gateway business. international operators. sibilityof telecommunications to the IDCFbusi newcomers Prospective formulasetby EONo. Undera prescribed nicatlons Telecommu Digital ness include in the lucrative private engaged firms 109, ( D i g i t e l ) , F i l i p i nowned 1 0 0 9 . a l n c . Phils. facility(IDCF)or I digitalBateway internationa ColonBwei: lo( al larpan loh'l lcd b! enterpflse (CMTS) opsystem cellularmobiletelephone ClobeTelecom,an AyalaEroup-Singapore erationsshall be requiredto providelocal (STl)tie-upfirm; the TelecomInternational and in unserved services exchange telephone Communications International Lopez-owned areas,includingMetroManila, underserved a jointventure under lslacom Corp. llCC);and withinthreeyearsfromtheSrantof authority Asiacom and the US between arrangement by the NTC. (one Bells). the US of West s t f o n g p o s s i b l e o f emergence The the radio pagingmarket,once Likewise, mayresultas polarizationswithin theindustry Co (Piltel), by PilipinoTelephone dominated of the huge capitaloutlay a consequence lcll-\o'es) firm ano br .ub:rdrarl a PLDT impliedby thesepolicypronouncements

"Thereis a rejuvenation ofhopethat theRamos govemmentwill liberalizethe telecommunications industry."

SUPPLEMENT SPECIAL

1993 THEASIANMANAGER. OCTOBER

ecommunications Co. Inc. (Extelcom), has beendeclaredopen to new operators. As a result of the huge capital outlay requiredunderEONo.109,anemergingtrend in the Philippineindustryis the mergingand consolidation of resources amonglocalfirms. However, lasting allianceshave yet to emergefrom ongoingdiscussions amonglocal telecommunications firms. On theotherhand,therearereportsabout interestedKorean,Americanand European investors scoutingaroundfor localpartnersin the Philippines. lndeed,the prevailingclimateis one of Sreatexpectattons. As PresidentRamosworks through the secondyearof hissix-yearterm,thetelecommunicationsentersa most critical stageof development. At thispoint,governmentdecisions on licensescan make or break the country'simdgeasa havenfor foreigninvestors followingthe calls alreadymadeby the nationalleadership for foreigncapita,. Thecountry'slongtrektowardsachieving the much-covetednewly industrialized country (NlC) statushas begun, However, hopesforsustained economicgrowthmustbe anchoredon the country'sability to address the existingSapsin the communications sector. Startingon the rightnotewith EO Nos.59 and109,theRamosgovernment mustfollow throughwith a strongpoliticalwillto staveoff theresistanceof old traditionalplayersagainst the new players. li government liberalizationpoliciesare implemented,effectivelythe Philippinetelecommunications industry will enterthe21st centurywith a bullishmarketfavorableto the influxof foreignand local investments. Alliancesand joint venturearrangements betweenlocalandforeignouditswillthnve as Filipinoentrepreneurs seekthe rightformula ensurea more competitivestancewithin the growingtelecommunications market. Whetheror not the Philippinesattainsthe covetedstatusNIC by the turn ofthe century willdependon thesuccess of boththegovernmentand the privatesectorin implementing variousinfrastructure programs. lf they succeedin buildingthe infrastructureurgentlyneededby thecountry,thenthey will succeedin bringingthe people closer togetherthroughtelecommunications.

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Cynthia H. Evidente,who rcw wotks in one of the najor Philiryine bleconnunications companies, was a tetecommunicationsrepode. hon 1989-1993.She was named "Telecommunications Repode.fo. 1992" by the Econon ic JournaI bts Association of the phi Iippi nes(EJAp) tot het extensive covetaEeof the l.rcal teleonnunLa-

. THEASIANMANAGER OCTOBER1993

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udging by billingsalone,Basic/Foore creatrv.-freld Spec itcal v the agencl has I r r,b lr c I rP", I b, tle e s t a br s h e da r e p u t a l i o a n st h ca r e a t onr n d -' f ,i. ' champrr,n o l s r r c r a! l r e e v a I t a ( l \ e r ts t n g tt', 4 ,e. , . h . j . e R , r n k eodn l ! i o ! r t h I n 1 9 8 9B a sc c a D r p a r g rIi ns l a c t I n p r e s e n I n eL tw i t ht h e l C t l z o o n r e ( l t ( j I h edr!fs t r \ s N o l p o s i to n markei ng managcnrcnta$'ai(l the board r n 1 9 9 2r l r e r r t sb t l L l n grso s eb \ 6 8 . ' ,f ,r o m o f l u d g e sc i l e d l l a s r cF C Bk r r r t s ( o r l s i s l I h e v e a ra g ol e v e l o P 9 8 7g m r l l r o nt a b o u r ent and sLrca-.ssfLrl espousalol tndrvtdual U S S 3 6m I o f \ f r t h b i l l t r g s a l r e a d va t a n d s o c a v a l u e 5r n r 1 sa d c a m p a t g nlst r r P 6 J 64 n | l r o n i 5 2 32 m l l o n t a s o f e n d some ofthe Phrl pprnes brggestantl m(rst lul\ t hrsVearBasL(,iFCB is $'lde \ expected h i g h p r o f r l ec o m p a n l e s l . e x c e e dl h e P l t j I o n 1 S 1 64 m l l r o n ) The board headed b\ former Senak)r ' r'ri l.nt ,r I bF F 1- f . , t a r - . 1 . 1 . - Vicente'l-Paternosarda keenunderstafdi n q o i c o n s u m e rn e e c l sa f ( l b e h a v t o h l r f e a d a g e n a !l o r e a c ht h t s m t l e s t o n e r as B u t d a , s L r t ei t 5 r m p r e s s L Vf e inanca allowed tsasrcFCBto tTans,lte lhese Into .raherements BasL(: FCB thr' I)hll ppiIe $ , o r d sa n d i m e q e st h a t r n s p l r et h e c ( ) n n r n n e r i r l t h e l 9 9 2 A s l , r ni \ 4 a n a g e m e n l s u m - atr( ) l e e a n ( 1l h e n l ( r a c l r\\,".rrdl(jr \lnrkettIg \lnnagement given B a s r cs l r e n d \a c t r ' s, m h ; s m : d e r i v c b ! t h e A s a n l n s l r l u t eo t \ l a n . r s c m c n t s conscrtrusness the nornt ai L()aaad!r-rtrs batterkn(.$nlor ls p ()ncr.Ttnq \{(rrktn thc ers the boaftl s,rd \10re rnp(rrhnl \

. 45 SPECIAL SUPPLENIENT

r o o t s i n E D S A . Easic/TCB's the companyhascompelledthe industry to rethinkitsroleasanarbiteroftastesand Mercadosays,"After adslor values. the 1986revolution,a ilaenolia'$ resurgenceof Filipino Flavor oftho valueswasneededto A Global Network t[onlhlco wasestablished in 1977byfive spur the country to BasidFCB Cruam aro creativediredors. In 1984,itaffiliateditself development."Haramon0 lhs withFoote,Cone& Belding/North Amenca. nessingthepowerand mosl persuasiveness the first major ad agencyin the United ofthe brand's medium, BasidFCB's popular. States to be publicly owned. With this move,the agencybecamepartofa global DBP and the PLDT communicationsnetworkthat boastsof Good News ads enovef 180officesin 46countriesandworldcouragedwould-be widebillingsin excess of 56 billion. entrepreneursto learn Thisnetworkincludessuchtop-ranked from the successof agenciesas Publicis-FCB/Europe. rcB/ thosewhohadalready Latin America,FCB/Asia and FcB/Pacific. m a d e t h e i r m ar k . ln 1992, a memberof the FcBfamilywas Without the hard sell No.I inthe US,anotherwasNo.2in Europe, o r c h a r a c t e r i s t i c which and a third wasNo.4 in the Asia-Pacific mawkishness region. s o m e t i m e sc r e e p s Knownin the Philrppineadvertising into suchcampaigns, industryfor its advocacy of socialdevelopthe ads'messagewas ment-related issues,BasidFCBf irstgained simple: Be proud of prominencein I 986througha seriesofads the Filipino. for the Development Bank of the PhilipOther Basic/FCB pines.Considereda noveltyin its day,the ads dating from this period also carrieda DBPads trumpetedsuchintangibles as integrity,disciplineandhardwork-seven distinctlynationalistic tone.Thefamous yearsbeforeMadisonAvenuerecognized Sarsiand Popcola adsprovidedits viewthe tremendousappealof causemarketers slogansfor the times. Sarsi'stagline ing or the promotionof "goodnessrather wasAn4ats4 lr4 (AbovetheRest),and Pop ' than goods. Cola's,Bili,silrsaPino,(TheyBelievein the Sincethen,causemarketing or "value F i l i p i n o ) .T h e m u c h a w a r d e dP L D T NatingLahat(ATriumphforAll of a d v e r t i s i n ga ' s B a s i d F C Bc h a i r m a n Tagumpatt likestocall it,hasgained Us)campaign askedFilipinosto rallytoAntonioMercado getherto transcendhardship. widecurrencyamongcompetingad agenThe post-Edsaperiod, say BasidFCB cieseagertoreplicatethesuccessofBasid managers,called for advertisingwith a FCBs socially-relevant ads. providedthe conscience. Amongthe agencys bestknownworks andfewagencies same forcefulconstructionof images, are the PhilippineLong DistanceTelephonecompany'scood NewsandForeign soundsand words in their ads as Basic/ Investmentads, and Rizal Commercial FCB. Bankingcorporation's 'Think Like a Dragon'campaign aswellas Product Ad6 Fromthemodestlygood i t s e n v i r o n m e n t asl e r i e s {like Anlonio ilo.cado. which focusedon pollutioneveryad agency,Basic/FcB Chriman hashaditsshareof less-than controland reforestation. LVen tJastc/t-Lu s sltce-olsuccessfuladvertisements) to the dazzling,BasidFcB's life ads for such clients as battingaveragefof ads that lol libeepromotestraditional hitthemarkisenviable. It's"l values.who can forget the "Lola simple but poignant Can Feel lt" campaignfor " Palmolive madea staroutof lcrandmother) campaign whosesubtle lessonforyoung the pretty but veritablyunknown, Alice Dixson and Filipinosis respectforelders? madetheshrugoftheshouldersand a toss of the head, Bcyond Had sell theyear'smostapedgesture. By all accounts,BasidFCB's Marketresearchshowsthat valuescampaignfinds its 46 . SPâ&#x201A;ŹCIAL SUPPLEMENT

It,xrER wri\TH I t.lt o[ ,^,r,

l r , l N o w 0 rN n r r are effectiveat ads createdby Basic:/FcB the cashregister The Angat solbacampaigngenerateda 45%increase in Sarsissalesvolumeonce considereda low-endsoftdrink("lt's the kind of softdrinkI would be embarrassed to drink amongfriends, said one person surveyedby Basic/FcB), Sarsiexperienced a sharp sales increaseafter the ad's re"By lease.Saysone Basic/FCBmanaget depicting Sarsi as the softdrinkfor the individualistic and avantgarde,we managedto erasethe brands negativeimage." Palmolive similarly, s shareofthelocal soap marketgrew from ll.2% to l7.l% directlyafter the releaseof its upbeat 'SpeciaI ads.with LeaSalongapitching C a r e f o r A s i a n H a i r " c a m p a i g nf o r Palmoliveshampooin a highlysuccessful l99l ad, the product went on to share becomea marketleaderwith25.2% in 19921 Positiveresponseto the Magnoiia FIavorof the Month(FOM)seriesof ads A fewmonths camealmostimmediately. afterthe adsare aired,the FOMposted a 20%saiesincreaseover rhe l99l figures. As the agencys clrentbasegrewrapidly in the early1990s, it becamealmost a reflexamongthe marketingexpertsto ads as a standard think of Basic/FCB 1993 THEASIANMANAGER. OCTOBER

PLDTis OnEOI Basic/FCB's biggesl Glionts.

o componentof any smartorganization's salesarsenal. Valuc Added Adverdslng ApartfromcreativeinnovationsBasic/FCB hasalsointroducedseveralnotablemedia signifithathavecontributed innovations 'Our purcantlyto consumerawareness. posein creatingexcellentadvertising, says Mercado,"is not only to generate profit,buttouseadvertisingasan advocate aswellasthe mesfordistillingeducation sageof progress." The PLDTCood Newsseries,a Proied Mercadois personallyproudestof, providedthe vieweran interestingtwo-and-aof halfminuterundownon thechallenges entrepreneurship. BasidFCBalsointroducedthe concept of educationalcampaignsthroughcollateraladvertisingin moreprosaicTVspots. s "HairlineNews'and Palmolive shampoo "Skin Talk, taughtconPalmoliveSoap's sumersthe basicsof good groomingand hygiene.YetanotherinnovationwereBa"valueplugs." Tender sidFCBsso-called -Shared for Responsibility carepromoted persuaded its whilePalmolive Parenting, 'Bethe BestYouCanBe. customersto inothercountries, a standard Althqugh airing was introducedby cross-channel BasidFCBin the Philippines.Saysthe 'TheSarsi accountmanagerfor Cosmos, and PopColacampaignsachieveda high reachand impactlevelpreciselybecause on all five weairedtheadssimultaneously have channels."Sincethen,otheragencies cue,andcross-chanfollowedBasidFCB's to any nelairingis nowthoughtessential successfulproductlaunch. "Wetake At BasidFCB,saysMercado, goals asour own. Cenerating our client's businessgrowth,attainingmarketleader,18 . SPECIALSUPPTEMENT

ship,and gainingprestigefor our clients areour sharedgoals.In short,our clients arean extensionof BasiclFCBand because of this, we are true partnersworkingtogetherto achievetheseobjectives."

(accountmanagement, creattve,medla, production, amongothers).Moduleson consumerresearch,direct marketing, presentation brandmanagement skillsand of arealsotaughtthrougha combination discussions and workshops. lecture-type ln addition,studentsare providedwith sufficienthands-onexperienceon the practicaI aspects advertising ofthevarious disciplines. As in anycollegiate course,Adschool studentsare requiredto passa rigorous revalida or orcl examination,usuallya defenseof a marketinâ&#x201A;Źor advertisingprogramfor oneof BasidFCB's clients. "Agencywork is creativeas well as a management function,so we exposeour that it emstudentsto all the disciplines to themthatthiskind emphasizing braces, of workcallsfor an openmind,creatjvity, to bepartof abilityandwillingness energy, human a team"saysChayNoel,BasidFCB resourcedevelopmentsupervisorwho theAdschool. helpsadminister The FCBAdschoolhasbeenattracting new graduateswilh excellentacademic recordsas well as young professionals wantingto shift to an ad agencycareer Eachyeat morethan 300of the Philippines best and brightestyoungtalents applyfor the l5-20slotsin the school.of hiredby these,about80%areeventually withthe restfindingotheriobs Basic/FCB, in the industry.

MTV Generadon goaI is oneof thefactorsof lf thissingular Basic/FCBs successthe companysemployeescompriseperhapsyet another.^ maiority of the agencys282 employees havebeenwith the companyfor overfive is yearsTheaverage employee BasidFCB 25yearsold,a memberofthe MTVgeneration. Thismayexplainthe agencysbiasfor youthful ads.Amongthevari' high-energy, Sharpâ&#x201A;Źnlng Creadvlty ln Foxholes ous brandswhich havebeengivena more Palmolive But evenafteran Adschoolstudentis reyouthfulimagebyBasic/FcBare cruitedby Basic/FcB,his educationconsoapand shampoowhichpriorto Basid t i n u e s .T h i s t i m e , h o w e v e rt,r a i n i n g FcB werethought of as family product'foxbut in a wholesome, butratherboring. happensnot in a classroom traditional, Dixson hole.' SincetheadventofthepopularAlice whohandles the Febrero, SaysMaripaz and Lea Salonga'sHiud,l,ads, Palmolive "workingin a foxholeis a PLDTaccount: has come away with a new young, fun effort.Whileeachof us are collaborative imagewhich has won for its productsa re" givenourowndesignated widefollowingamongyoung pitch we each sponsibilities, Filipinowomen. 0rdofiez. in whenit comesto developYoungpeopledo not only Heminio Prosidonl ing ideasfor adsand other buy the productsBasic/FCB promotions.No one ts enadvertises, theyalsocompete tirely an art directoror fiwith eachother for a chance nancemanwhenitcomesto to work at Basic/FCB.The workingin the foxhole competition- which gets ofa suFoxholesconsists pretty jntense- occursat pervisot manager, account Advertising the Basic/FCB art director, mediamanager, School. creativedi rector,production The BasidFcBAdschool manager,specialprojects openedits doors in lanuary memberfrom manageranda 1988.lt offers a six-month financegroup. BasidFCB's programon all phasesof Whilethe accountsupervimodernadagencyoperations

. OCTOBER 1993 lHE ISIANMANAGER

BnHruo THrs Loco IsOun 0rTun Worun's

Mosr SuccrssFur RssnmcH CoMpANTE

It takes innor'ative thinking, untoldoatience andtotal dedication to create genuinely useful medicines. Yet.atJansrn.\ € havea reFitation forachieving it Wth astounding regularity. Thecompany wasfcundedin 1953byDr.PaulJanssen, a manof outstanding vision. Since thenour research teamsha\,€synthesized 70,000original chemical entiries. These har'eledto the introduction of over70 medicines whicharenow

avaihblein

Onaverage that'sa new medicine everysixmonths. A remarkable success ratein this comDlex andcritical field. Co\€ring manyareas of - including hurnanmedicine allergy, anaesthesia and analgesh aswellasganrGenterology, immunology, mycoloS/,parasitology and - theJanssen ps)/chiatry research programme contributes to the progress of medical science by consistently turningsound research intofunctional reality.

l7f| Floor,SrraraI00 Edg., EmeraldA\€., ortigas Comdex, | 600 Pang,MetroManila P.O.8or 1482MCPO 254 l,lakati.Meto Manila,PhiliDpir|e

TunHnc RrsrmcH hroRmun

sotislhe defactoheadof the foxhole,other membersinsiststhatthe foxholeis man"Foxholes," saysBaageddemocratically. Hermtntou uroonez stc/fLtrPrestoerlt "workin synergy, breaking downrankand functionalboundariesThroughthe foxofturfand hole wedo awaywithproblems redtape.' Thesystem alsoworksro lheddvantage the lorholeferrelof the agenrybecause "workingin foxholes out non-performers requiresqualityworkfrom allitsmembers' workisnt up ordoffezsays li someone's to pat the restof the groupmakeshim awareof this lf in theend,he stilldoesn't producewhats requiredof him, he noralthoughfunto mallyIeaves. Thefoxhole, of workin, is alsoin a senseunforgiving non-performers' au t tti t u d e Thisshape-up-or-ship-o on their toes and enkeepsemployees retainsonlythebest suresthatBasidFCB andmostproductive employeesThefoxhole systemworks,becausein a sense eachfoxholeearnsits own way.And all forlheir areresponsible foxholemembers

groups profitabil- Fo oles ity Unfetteredby brealdown layers lankand unnecessary o f m an a g em e n t lunctlonal foxholeshave the boundados. freedomto fail as wellasthefreedom to succeed Bec a u s eo f t h i s . m e m b e r so f t h e foxhole work harder and s m a r t etrh a nt h e y wouldif theywereon theirownor partoF a largergroup.As a reward,total agency profits above contributionsto stockholdersare distributedamong Basic/ and staff FCBmanagement An importantmemberof the Basic/ FCBfoxholeis the clienthimself.Unlike theirclients otheragencieswho relegate (eitherdeliberately to the or unknowingly) fringesof the creativeprocess,Basic/FCB everystepoftheway. clientsareconsulted themtn Sdy(Mercado.Wetryandtnvolve everywaywe can.Fromformulatingstrat-

and creatingcam" egies,conceptualizing paigns,to developingmedia plans the clienttakeson an activerole in developrnga campargnAs a result feedbackis from immediateandideasaregenerated " agenciesand clientalike W h i l e t h e f o x h o l e sa r e g e n e r a l l y s thoughtof asthe reasonfor BasidFCB rivaladvertisingfirms singularsuccess, h a v eb e e ns l o wt o r e p l ra( t et h e mi n t h e i r "As own agencies. far as I know, says 'we ordofrez, arethe only oneswho have takenhold of the conceptand made it

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1993 THEASIANMANAGER. OCTOBER

part of our organizationalstructure But this i s b e c a u s et h e a e e n c y h a s a l w a y s b e e n The foxholesdidn't sud collegially-motivated. denly emergeovernight.As I see it, they are a continuationof our own way of doing things which has always been group-centeredand Thefoxholesarea resultol a consensus-based long-gestationpâ&#x201A;Źriod that requiredthe culti' vation of a certainmindset- one that woulo appreciateindividualcreativityand harnessit " within a team A Condnuing Prccess Committed as they are to learningas a conideas tinuingprocessBasic/FCBpeoplediscuss nor only wrtl' t\e r . I ent. but with varron. expertsas well includ ing those whose expert i s e l i e s b e y o n dt h e f i e l d o f a d v e r t i s i n g t trxk U n d e r a p r o g r a m c a l l e d L d l { , 4 fU (Broadeningthe N,4ind ).agencystaffersspend w e e k e n d sa t M o u n r M a k l i n g i n t h e p r o \ I n c e of Laguna (a popular retreat about an hour's d v e f r o m \ , 1 e r r oM a n r l a )l t l e n i n g r o < p e c l a l i s t si n a c u p u n ( l u r e o r r g a l r u s i r medico-legaw l ork, martial arts, actuarial scienceand even volcanology ''At f i r s tb l u s h ,a l l t h e s em a ys e e mt o h a v e nothing to do with creating ads Mercado " b u t w e t h i n kt h e yd o o u r p r o d u c t s a r e says ideas The bigger our idea bank the bette. So we look for fresh ideas and insights even " o u t s i d et h e w o r l d o f a d v e r t i s j n g Basic/FCBhas found a wealth of new a n d h i g h l y e f f e c t i v e- i d e a s a n d i n s i g h t s f r o m t h e J a p a n e sS e i n c e A u g u slt9 9 2 . a g e n c y m e m b e r sh a v e b e e n g o l n g t o c l a s st o l e a r n kaizehtlte Japanesecustomer-centredwork a n d m a n a g e m e n el t h j c t h a t i s l a r g e l yc r e d i t e d f o r p o s t - w a rl a p a ns d i z z y i n ge c o n o m r c growth T h e o n e - y e a rp r o g r a m .c a l l e dt h e B a s i c / in total FCBCEOSchool.is an intensivecourse qualitymanagement(TOM)andborrowsheavrly from the lapanesesystem The Basic/FCBtoxhole. in fact is an adaptlon of the lapanese workteam A number of AIM professors.lncLuding ,.,obrro A Mendoza "ld Rel e D.,ningo teachat the CEO School At the. school BasiC/FCBmanagers say Domingo a lapaneseexpert.definesthe agency client relationshipin very basicterms Basic/ FCBis in the servicebusiness Servrcecomes from the root word serve So you re servants ' And the client is the boss T h i s i s a v i e w B a s i d F C Bs u b s c r i b e st o w h o l e h e a r t e d lAy n d t h i s p e r h a p si s t h e s i n g J a r n o \ l r p o r l d n l r e d - . r "l1o r t h e a g e r , 1 phenomenal success Becauseat Basic/FCB, I t h e c l i e n ti s s i m p l ya n d d e f i n i t e l yk i n g

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FEATURE

will alsomeajrthat strategicalliancesbetween comDaniesseographically distant and technotohcattv iomipaiiule withln speclfic,complemientaiv areasof expertisewill becomea i<eycomponentofcomPetitivenessanda critical factor in market develoPmmt. 'Tuiitsu now accounts for For instance, about 25% of Sun's (Sun S)stems)JaParEs€ sales of US$700million a year, while Sun annuallv buvs an estimated US$200million worth oi corirponens ftom Fuiitsu "The two comDaniesale now deeplv intertranned,providini a textbook caseaf-how a leading iJS company - without Washington's hilp- - canweaie itself into the fabric of IaDan.' ' The riskinhercntin develoPingnew technology - particularly in hiSh.lycomPetitive industries - will encourageor8anizationsto stick to specific comPetencieswhere they know theycanexcelandmaximizerctums on r€soures'devoted to Product develoPment. And this will build and nurtue the interde pendencyof partne$ within thesealliances.

Whatever his rcasons,when IBM has finished consolidating its r€sources,lickinS its wounds, and mouming its neardemis€, expectiLsaccomplishedCEOto provide a vision meantto harnessthe ootential of an outstanding pioneer firm to &tatyze syneryy within and without. Pas6ion. We talked about slmergy as a characteristicof dynamic orSanizations.But how do we qeate it within ar organization? '€nhepreneurs mulbply the odds of success if otheis at their comfrnie share their pas-

04Pnizatlon TheInnovatlve

Successfirlorganizatiomin this new world will be irupvative organizations.To be innG vative, they must a[pteclate and embrace leamins. The'first of five characteristicsof imovative orsanizationsis,therefore,vision. Visioru becaui achiwing a vision entails the conquet of new development ftontiers.And this acquirc the tools ,in.rlto *r"t ote-i;dons ani expertlserelu*a of mark& c-onquerors Mgion. A rrecentreDort on the woes of Japanesesoftware deveioPer observedthat, "Iipan's protracted economicdowntum has "L.iru"a *t" software firms' Achilles heel: farlure to changewith the times." Although dose to the customeris important, so staying -oreanization's idea of how it wi.ll re is fhe sDondtolhecllstomer's needs.Wecallthis the corporate vision - defining how the compariv will fit into ib industry, wherc it will iocris its strensths,and the areasin which it will endeavor.i to excel. But if vision is so fundamental to a firm's success,whv did IBM's new CEO l,ouis V. Gersher, Ir. ;ppear to rid icule criticism of his perceived "fiiiure" !€cently to articulate a new vision for his beleaguercdfirm? "...the Wizard of Oz was a vision" he rc"the lastthing IBM spondedto his critics.And needsrisht now is a vision. What IBM needs right now is a seriesof very tough-minded, market-driven, higNy efkive shategiesin eachof its busines6es." Only G€rstner can tell us for ceftain, but perhapsit is that an oBanization must know what it is beforeit canunderstand what it can be.Orperhaps that it must rctum to the rcality of sh& hairi work - under brutally de mandingconditiors- befor€its PeoPlelearn what tft€ywant to be.

"Topman4ement[shottldbe] a liberatorof Ideas,ntherthan of ptopdetary a guardian advant4e." cornpetitlve

sionand commitment to thebusiness.Howto get it? lt's empowerment..."accordingto one !€cent r€port. Ohfa; Olabson is the 3&year-old President of Sony Electrcnic Publishing and"Aa widelv-published author He notes that, good p€rson is not going to want someoneto iratch over h.isshoildei on a dailv basis." Getting your peopleto riseto thi challenge of manaeine vour entr€preneurial hotHs au-thoritv along with will rmrire-iantins respotrsllbilit/ una iaving th6 strength or characterto Fust your key Peopleto Perform. And to leavethem alone. UndeFtanding. In describingwhy he rcsiened ftom IBM'S executive committee as w;[ as its board, former coCEO of TimeWamer J. Richard Munro lemarked that the committee was out of touch with the companyandtheindustry:'Notoneofushasarc in our home or office." It is not uffeasonable to exPecttoP manaqementto stay in touch with the comPany, th'etechnotogy,and the industry. Indeed,fo6tering the trust and confidence r€quted to empower people and o{Sanizationswill re-

quir€ an intimate understanding not only of the company's technology, but where that technolosv can lead the organization developmintatly.To understana that, toP managiment mwt get as excited about that technolqgy as its idea Senerators. This is where top managementbecomes an inspiration rather than gaiekeeper;a tibentor of ideas, rather than a guardian of proprietary - and historic - comPetitive advantage. Cele6ration. Burma-born New York propertv developerTommy ke, when asked '^1oul'now i" "irrtui" tti" "*.e*t, rcsrjonds, this before?Be whv^nobodv has ever doire cauie nobody ever had the guts to try it." Kim Woo Choong Daewoo's enigrnatic 'Tor me, the chairman, sa1s, PossibleoPPortunities and chancesprovided bya dangelous situation are more imPortant than the crisis itself." Developing that sort of mhePre_neurial spirit within organizations means that the wo*hiness of risk-taking must be acknowledged and celebrated. Gutsy-ness is often directtv proportional to s€ority Ac@untabiliw assiriesi reasonablexrsiective of how hird and unpleasant urie*pi<tea unaings and unconbolled dive canbe. The appreciation of innovation and its acknowledgementas a sitical successfactor hasfostered-amaissance of the idea.Encourasins"Ui.U' Deopleto test ideasand to act on them tfil ttl"it confidence and caPacity of vour orqanizationto recogniz€and capitalize 6n opp5rtunities whelevir they ale found. f-eiderstrip. Paul Her*y n Manngerrcnt of Oryanizttbiut khooior norta h tgg2 that, "The-succesfirl organization has one maior atiribute that setsit aPart from unsuccessfrrl organizations:dynarnic and effectiveleadership." And "...real leaders must distinguish between the essentia.land the irrelwant. They must be artiolate, but they must also know when to be silent'' Gideon Ralaelwrites. It is these characteristicsthat focus the enereiesof people and organizationson corporaie prioiities, and minimize the energy ind resiutes devoted to marginal and often uselesspursuits,And it is thes€characteristics that nuitur€ the develoPment of PeoPle,in order that they miSht somedaycarry on for you. ' Of coursemarngement must occasionally berutNessaswell. But Prideand Poductivity remain produce of the example,the example setat the top. So if you want managerswho demonshatecharacter,so must You.

Conclusion

And therewe have it, a whole new world; a world seenftom a differ€nt Point of view. That point of view is a ftee and oPenmarketptace, a highly competitive economy, and I innovationiriven tecirnologY. 1993 THEASIANMANAGER. OCTOBER

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PEOPTE oo/,e?th,e obert Barebyls extremely oDtimistic about China's tourism and havel potential. As the new managing directorof Kernpirukv Hotel and Citer, Barsby BeitingLu-fthansia sals he hasevery reasonbe optimistic. "Thesearc exciting tirnes and China'sbullish ecpnomvpl} videsgr€atd|alenges ior the local hotel industry." With over 20 yeals of exPeriencein the hotel industry, Ba6by considen hims€lf lucky to have worked with a wide variety of people. Despite the diversity of cultures, beliefs and complexities amongpeople Banby claimsthat the same management skills "Vvhat is work across cultues. " basicaly important saysBarsby, "is good managementard build-

RobeltEaFby

Beijing Lufthansa Center Complexcelebrateits first anniveFary this fuober, Ba$by is counting on the same management-staff collaborative sDirit to make the hotel famous ihe world over. "Our eoal is clearand defined to make the hotel and complex the b€st in B€iiin& offering our clstomeD the world{lass service Kempirski has always been known for." I t's good to be back I where I belong," said I Arsenio BartolomeIII I upon his assumption of the gesidency of the Philippine National Bank (PNB). l4ith the excEDtionofa brief stint ascha man of the BasesConveEion De' velopment Authority (BCDA), Bart6bme s careerhis been exclusively in banking. Over the years,he hasserved in significant positions in the Multinational Bancorporation, Citibank, Bancom,theCalifomiabased Wetls Fargo Bank, and RCBC. Bartolomeseesliftlediffercnce in being asked to manage the Philippines' biggestbank and in managing smaller commercial @nxs. 'The differenc€lies not in the nahueof the problemsand issues that crop up;but in their nagrutude," exDlainsPNB's CEO. During his term, Bartolome would like to seethe emergence of an even stronger and biSger PNB. The bank, he says,should cater not only to large corPorations but also to small FiliPino enheprcneus who r€qule f irvmll

ing a teamwith clearobte$ives." Barsby enioys his work, although this often meansPutting in long hours and "suffering the o c c a s i o n a l w o r k - r e l at e d hauma." In 190, a bomb ex- AF€nio Bartolomolll ploded in the hotel in which Banby was managing causing coruiderable physical damage and derailing plans for a mairr conferencewhich was to be attended by over 52 headsof state. "the colFortunately,saysBarsby, laborative efforts of the staff and managementmadeit pogsiblefor us to r€sumeoDerationswithin a few week and the conference tumed out to be a huge succ€ss." As the KemDinski Hotel and

1993. THEASIANMAI'nGER OCTOBER

cial assistance.Bartolome is also in the PIQcessof imPlementinSa number of development Programs to oltivate the bank s irain assa - lts people. Guided by the principle that a rnanagershould be a panton of professionalism and integrity, Bartolomemakesit a rule to Prac"I tice what he preaches. will employee of this ask any never bank to do somethinq which I myselJcannot do or am not witling to do," he vows. -Apart from his considerable 2&vear experience in banking, Bartolomeias anotherintaneible assetin his favor- goodr€hEons with his p€ersand colleague. Bartolome is extremely active in the businessand banking circuit and hasbeenelectedto boardsof various prof essionalassociations such as-the Rotary Club of Manita, FINE)(, and DeveloPment Banke$ Association of the Philippnes. llllam S. Tlffany ls Caltex Philippines' president and chief executive officer. Prior to his apPointment in Manila, Trffany's 2Gyear career in Caltex brcught him to Singapote, Malaysia,Tluiland Tanzaniaand Kenya. TrffanvconsidelsKqwa his lrrcGt mern6nbtepcting. Uis hmity, he sals,p€rtiolarly mlryed living dn a rnountainddge 6,m0H above sea level with-over 70 differcnt speciesof btds flocking to nests right in their backyard. dailv TrffanvoverseasCaltex's operations.As its CEO, he determinesthe company'soverall policy directions and work towardsdeveloping Caltex s competitive edge by providing customers the best quality products and efficient servicepoosible.Trffanyplacesgreatimportance on the value of functuality and hard-

oet is in getting to thetop at such a younS a8e? BilLs answer is simple. Apaft ftom turdwork he considersthe level of maturity fundam e n t a l i n wllllamS.nffany molding a manager'sskills and capabilities. But maturity accordint to this CEO is not something you de "lt is a tunction velop ovemight. of time and a processof leaming and gainhgwisdomftomthecirorrnstancesa Pe$on exPenences in life," he says. Tiffany recallsthat his experiencts in the Vietnamwar opened his evesto the rcalitiesof Me and netpid himmaturequickly.Asan officer at 22, he was in chargeof an artillery battalion of 200 men and $20 iniltion worth of fie Dower.The military men under iris command,mosiof them werc old enoush to be Bill's fathel, would coire to him and ask for his advice. Their problems were often times personalsuchasbroken marriages, or broken rcla'-Of course I wasn't tionships. married thenbutlhad tocomeuP with advice. Being in this position,mademegrowuPv ery fast," savs ' T:lffanv DesDite his hectic schedule, Trffanymanagesto spendquality time with his farnily. So far, the family's attempts at dinner togaher have b&n fairly successfirJ.Photography and music are the CEOS main inter€sts.On the 'lifiany dabblesin Painting side, and is also fond of reading nonbusinessbooks: history mysteries,novelsand humor. Honesty and personal intqlrity ar€ the vftues that Suide Tirffany'slife. "Everyone makes mistaies and no one is perfect." Bill elaborates.But not when they go beyond the realm of honesty and integrity, That is where "That is Tlffany draws the line. by," must live I the Dhilo6oDhv 'l

*yi cutt"<! cto.

Mlchael A. Hamlln

hero... Unlikely

Masterofthe Universe Software d Robeftsis a small+own F country docror in G€ofgra E - in tlle United States.He f ts is, "a hulking bear of a "he loved man" and because tinkering with electronic hadware.,. Pined the Air Forf,€ to leam morc about electronicsand ended up stationed at KirUand Field outside Albuquerque," whidr is alsoin the United States in a placecalled New Mexico. Not much has ever come out of New Mexico - other than the atornicbomb - that much of the world would recognize as a hourhold term. But cpnsiderthesequestions: .Who fiFt built and rctailed calculator kits in the United States? .Who desiSnedand rctailed the fust peFonal comPuter? .who save Mcrocoft its filst maPr hEak the chanceto write BASIC? If you said: .TexasInstruments 'APPle comPuter .IBM vou aIe wrong. If you said Ed hoberrs,you ar6rignt. EdRobere did atl thesethines - filst in his garage,and then in the former TTha Enchanted Sandwich Shop." Unfortunately, The Enchanted Sandwich ShoPdid not r€alizea metamorphosisinto the The Enchanted Cbmputer Faclorv so the invmtor of the Per-his sonal computer pursued life-long ambition to became a doctor and Mcrosoffs Bill Gates dnsed his dream of ceating the greatest softwar€ comPany on eadh. Both successfully achieved thesegoals-Gatesaccumul,ated severil billion dollars in the processaswell - and you will not be surprised to leam that therc is a

'tsv 1991,Mqogoftwa6 making morc than US$200million a 'vdr iust ftom salesof MSDOS." Ci'itics and admilels, rcpo* authors JamesWallace and Jim Erickso& agtee that Gates is a nurnber of things. First he is brilliant. "3y the time you werc with Bill for fifteen minutes,'Jack Sams- who fiIst headedIBMs PC development pK)qram says, 'you'no bnler thought about how old he wasor what he looked like. He had the most brilliant mind that I have ever denlt witll9econd, he is a merciless workaholic, and his prograrnmels were expectedto keeP uP. "tsiU woutd say that someof his besttimesweresiftingin his office at 2:m a.m.,' said one Mioosoft 'Bi[ felt better then !nanaqer... tltanaiyothertime,knowingthat his colnoanv was working."' "tsi.[ ffrita. n6 is imlnatud admitted lots of ttnes he needed to qrow up, but he didn't know -a cU"a S6QDOS. noi. fnrilrty, he needed a big h."t"coa"a The "86" indicated the proc€ssor brother rnore tlun he needed a "'aMicrosoft manager the system was desilned for. pr€sident "9O06" stood for "Quick and i:xptained to the authors. ' -Gate6 qeativitY-gmerating Drw ODeratinsSvsterl" *atdb coriDriter made the off-the-wall behavior drove the less-than-whoi:ping sum of teclurology that drove the comU$$25,000off the deal, and later pany, but dificulty introducing sold DoS to Microsoft for basic managemmt technologY was apparenlly US950,0mhrgely almost entirely had becauseGates due to Gates'tanhired the Fatherof hums, r€luctance DOS away but to delegate and plomised to proimpauence. vide Seattle upFoufth, he is dated versions of rnadly competithe operating systive. "€ill kamed tem. Seaftle conearly on that ki[sidered the ing the competiupdat€s socritical tion is dle narrEof to its futute that it the game,'said a refusedan offerby Misosoft execuIBM to buy DOS tive who was for US$250,ffi0.

country doctor in Georyia who somehow ftels that life has not been fair, "I was naive," Roberts says of his relationship with Gates. LIard Drh.z Bill C-fltesand the Making of thz Micto*lt Enpire ls fiIst a chonicle of how corPorations and carcershave fallen in the wake of Gates' relentless marEhto his status as master of thesoftwareuniverse.Itissecond achnrnideof thepredictablera8e, brillianceandenergyofGatesand the tenacity with which he Pursuedhis vision-and the comPetitiorL YetGates'best-knownsucc€ss - develoDmentof DOS, or disk operatinFsystem, for DM - he t"i"d to sieei to a companv - called Dgital Research.Wlren Dgital Research couldn't meet IBM'S deadlines, Microsoft arranged with Tlm Pafterso& vic€ pr€sident of SeatdeComputer - and the Fatherof DOS - to licensea Droeram Pafterson hirnself had

"Gates'

crcatlvltr

genelatlng; off-thewall drcve behavlor thetechnologr that dtwe the company."

with the company in the earlY 1930s.There iust aren't as manY people later to take you on."' ' iates is reported to have vowed to Dut i nurnber of his competitors out of business, 'tlariuning his fist into the Palm of this other hand," to Punctuate his seriousness. Fifth, he is a total ned. Gates was appalled wh€n l.otus buried Micmsoft's first sPtead sheet. Excel was developed to r€cover thefirm's momenium inapplicationdevelopme.nt.ButdesPitethe importance of the program's Dublic announcement rn New "was YorbwhenGatesarrivedhe neither sluved a mess.He had nor showered,and he had obviously not had much sleeP.His hair was mafted and oilv and he wasbadlyinneedof deddorant." Th€!€ is at leastone mor€ tsait Gates displavs: His remad<able caoaciw for iucceeding desPite fniuerit, notable and couuv ialturis. Microsoft's iirst spt€adsheet,windows 1.0,DOS 4:0and06/2 werc dl di$nal hilur€6.YetExcelnearly sankIotus, and Windows hasfinallybecorne the standad graphical rc inFrfac€,despitethestill very obvious shorkominss of DOS. In fact, Micosoft sejJsonenillion coPie of Windows every month Hotd DrirE, predictably and heavily reliant on unidentified Microsoft emplovees - both nresentard foimei - and indi\ridruls -troee exPeriencewith Cabwasof theEdRobeds'Seru€, is stil a fucinatin& but wqdy account of a too-good-to-be-tsue, story I mind-nurnbirg srtccess IlndDrhre: Bill &tes and the lelakjngof thc Mict@ft Enpbe, lames walace and lim Elickson N€w YorL HarPerBusiness, 1993).OriginaltyPublirh€dbylohawiley & Sons,Inc. in 1992

19qI THEASIANMAMGEF. OqTOBER

AntonloR. SanEon

Tongue incheek...

Lessons from Pontius Pilate "Until youhear

themshout'ouciff him'- donotgive anybodythe axe."

anagement practitioners are forever lookhg for new guruswhowillprcvide startling insights tishts into the tired tir€d topic of management.They have already mined such hisiorical leaders and analysts of leaders as Machiavelli, Sun Tzu, Attila theHur,AbnlumLincoln... and now, the bueaucrats' new managemmt herc, Pontius Pilate. The Rornan proconsul - renor,r.nedfor his distastefor makint decisions and taking responsibility for them - has i few words of wisdom to shar€ with his counterparts2,000years into ihe futue. Dstilled from yet another book on manage. ment theory ale some excerpts trom Quotaibns ftom ne PprinsulPontiusPilntewiffuhe ancient words paraphrased for the rnodem reader: Excarpt On€.As a leadet you will often be faced with difficult decisions. Sit tight. You don't have hodo anythhg riqht awav -This Form a study Forip. -il give you time to leview your options and rclieve the public pressurieon the burnins issues df the dav. nest of alt. wlen the study gr6up submits its r€commendations,you canblame it fior anymistakesin implementation. And if the results are favorable, you can quickly clairn credit for these. Excerpt Trvo.When made to choose between two difficult options, consult the people. This can be done through a public -people forum where the can choose uirla noce 6r throueh opinion polls. Always take tle most popular course;or at worst, the least unpopular. People are stil the beiniide even if thev donit have the facts vou have. Excafi Thr€o. Ii is al*ays best to personalize issues.If tire

THEAShNMAMGEB. OCrOBER 1999

people want to rid themselvesof a political problem, give them a common criminal and ask what they want done with him. Even a thiefand murderercanbeeivm amnesty if the people *aniit. ln exchangefor somebody elsebe. ing givell the sevenlast words. Exccrpt Four. There will be times when certain decisionsno matter how popuLar and sup-. ported by opinioir polls canbririg on nightmarcs for your wife. What can you do with Galileeans?They rcally inspirc these tvDes of mentai ais'turbances, What's done is done, unlessanothercommittee canbe formed to investigatethe rccomrnendations of the first. On, say, where the buial should be.Ard when. b(csrpt FlYo. At times, extrememeasu.rcsneedtobe taken. In such cases,make sure there is an outcry ftom a bloodthi$tv crowd. Until you hear therir shout 'Crucify him" - do not give anybody the axe,even if he is involved with nefarious activities. Just to play safe,alwavs inform the people that the mitter is. not within vour iurisdiction as ther€ is ieparition -r€ally of powers, but if they insist you will govide the wood and ru s.

"Andlf $ey saythat a leadelshouldlead, youcflt rcmlndthem

thataleaderbonly a senantdthe peode."

Exc€rpt Slx. Wear a toga. U localcustomdo€snot perrriittris, roll up your sleeves.This attitude will enable you to wash your hands frequendv and oub., iicly without wettingirny pirt of yourdothes for your many pubuc aPPearances. Exccrpt Sovan. How will people r€member you? Not as a personwho doe6not tnake decisions, but one who leaves important decisions for the people to make. Never mind if that i6 a way of avoiding any blame in thefuture. Itisalsodetrrocacyat worK. And if thev sav that a leader should lead and niakehard dedsions,you can rcmind them that a leaderis only the servant of the people. A leader should rcflect the wishes of the people at all times. So that they only blame themselvesand n6t vori froranv disasters - like futue dercgitory r€marks on the race. Remiird them that thev did sav when they askedfor tireir voicei tobe heard that theblood will be on their heads. E (cortt Eitt, hobleE|s must not be solved too quickly. Thev must beallowed to iester,'pileui and intensifv to the Doht-wheri the people aie ancrv and fed up.

rnG wiy, ttreyari foaayto6.ie

you the p,owersyou want or at least to take the blame for any drastic actions that may need to be taken. Excatpt llna. Do not fall into the trap of rcacting quickly. Be. ing decisive is not a virtue. It only meansthat the actions vou hG win be athibuted to j'ou alone.Along with anyblane and rccriminations. Exc.Dt lon. Delay. Delay. Delay. Problems usually Eolve themselve for vou. Or thev forget about them'and adiust.'And buygenerators. I

J6sus G. Galbgo8, Jr.

results... Long-term

Healthvs. Strategic FinanbialHealth "Theinclusionof a missionstatement andlong-terrngoals in a company's strategyformulation process helped assuretheir shatesic survivalasan industryleader."

n several shategic ptanning I workshops I conducted re I cently, what emelged as the I I most athactive asDectof the workshop process irom top managemengspointof viewwas the formulation of the mission statement. These companies, already with relatively lucrative bottor ines, were genelally op enting on a year-to-year basis. Although they went through yeady "shategic planning" sessions, goals wer€ never set beyond a year's time, nor did they consider the use of mission statements in their strategrzing Dr0cess. After going through the various stagesof the workshop, however, thev rcalized that the potential foi much stronger pv"thand prcfi tabilitywas well within their rcach. Mote imDortantly, they saw that the inclusion of a mission statement and long-tem goals in their shategy formulation processhelped assule their shategicsurvival asan industry leader. A better term fo! stratecic survival is strategic health. Tlre best example of strategic health thatcomestomymindisJohnson & Johnson.Following a firm adherenceto the comDany'sCredo - a mission staterileni that underscored the company's responsibilities to its customeF, to its employees,to the communities in which it operated, and finally to its stockholders - J & J has managed successfully its 166separatelychartercdcompanies with an emphasis on the long term. "empowJ&J was practicing erment" as early as the 1930s through its decentralization culturc. This is yet another indicator of strategic health, sinceJ & "L* go" management style fs

looks to long-term r€sults,rather tharimmediatefinancialrctums, Aside from the celebrated Tylenol case, the best proof of this long+erm emphasis can be s€enin I & J's overhead burden. Sinceprcviding autonomy to all companies can lead to a lot of duplication in back office functio;rs, the overhead at J & J is 41 percent of sale, Its much more centraiized rivals, Merck & Co. and Bristol-Myers Squibb Co., have overhead to salesratios of 30 percent ard 28 per€ent, re spectivelv FIad short-term le turns beei given priority, theJ&J ratio would surelv have approrjmated the industry average Citicorp,iheorgianizationthat has produced a significant number ofASEAN bank CEOS, is an examDle of the follies of primgrily pursuing short-term or financial health obiectives. During its 1980soperations, it commifted lending misiates to thee market segments: developing countries, highlyleveragedcorporahons and real estateoperatoFandmortgages. . To the credit of the excellendyrun Citibanks in the Asian rcgion, howevet the causesof the problems were all attributed to the Darentoffice. when CiticorD backeda ho6tile take-over bid by Ronald PercLnan for Gillette Co. (a valu€d client), the motivation was

"Thepunultof sttateglclr.alth rcsulbultimatelyIn f,narcidhealth."

clearly the huge feesinvolved in HLT'S. To comDound matte6, policv decisioirs were rnade ivtrth institutea a bonus plan that r€wardedvolumebothinits real estateand HLT units. In Institutionol Ircestor magazine, a former senior ct€dit officer of Citicorp was quoted as sayin& "Don't worry about qedit problemsthat mitht erupt yearsfrom now; move thoeeassetsand collect those bonuses now" The "the masazine also noted that ranl and file thought earnings were the bank's only measue for success."One of the imPortant factors that sDurred this drive for revenue *as the pre6srue on CEO John Reedto meet walter wriston's oft endeclar€d goal of 15 percent annual earnings growth. Reed succeeded Wriston as CE0. TheBankprobablyhasawelldefined, sound mission state ment. But it apparcntly violated the shared values portion of its mission statement sometime in the 1980s. What is the leson here? As the Pete$ ard Waterman excellent companies are b€ing knocked off one by one, companies that go for shategic health continue to prcspeu and J & J exemplifiesthis-with its Credo that puts the ostomer above all elseind its decentralized or empowered companies.Thereinlies the secr€tof why J & J continues to beacknowledged asone ofthe best-managed companies in America. Emphasison strategichealth ensues not only the survival of the company; but more importantly, brings about an enviable leadership pooition in the industry. The fact that the pursuit of strategichealth r€sults ultimately in financial health is the best bonus of all. I

octotsER1993. lHE PSIANIIIAMGEF

RobortV.Chandran

DivineDiscontent. ..

Riskandthe Entrepreneur "Tbrun a highgrowtttcompany is like livine pennanentlyon a rollercoaster."

hercisatidein thcaft'airc of a high-groMh company is like men,Wich, takcnat the [vrng permanen y on a flnd, lwds on to t'ortune, rollercoaster. People who run

Omitted,all thewVagesin their life is boundin shalliwi. and 0l mtsene5. - Shakespearc Risk and reward are like rain and thunder, one normally accompanies the other. Inextricably connecd to thedrcamerand thedrcam merchantis theability to understand risks, the least known concept in the manage. ment lexrcon. "Risk" is the word used to describetheunknown rcsultsthe businessfacesasit goesforward. Your mind refus€s to focus on the downside of the deal as you arc the best dream merrhant. However, the qualities of dreaming in an enntpr€nzur cirn be used on a reverse basis: to visualize the pidalls. Tobeawarc is to be Dr€D;red. The irexi phase of managing risks is "blitzkries leaction." To identify all the po;sible alternatives and folo; each of them "simultaneouslv" is verv critical. It is irnporiant to d6 all of themsimultaneouslybecausethe mortality rate is very hish and the time availableis verv"short. Living with risk ho*ever is an unnatural existenceand people get tired of putting out fires. Every one dreams of raising enouth capitalso the company can withstand the normal downturns of the business. I gauge the success of a company by its "Survival Coefficient." This gauges the relative increasein the workins capital of the corporation sincE its inception. It is very dif{icult to liveon your wits on a long-term basis.This is why mosf small companiesopt to itay small and avoid the risk of grcwth. To run

OCTOtsER 1993. THEASTAN MANAGER

these companiei are action permanent iunkies and worshippers in thi ternple of "Dvine Dscontent." How does the risk-tat<ing capabilities of the entrepreneui and the corporahon changeas time passes?Successbrings a metamorphosis in the entrepreneur.As he aqes, the endles pursuit of bis;er and better frontiers loses i6 valueFor me when this dav comes, I will quit and sell myinterest and purcuemy otherdr€amofbeing a teacherand lieht a few candles of interest ii the younger Senerahon. The propensity to take risks is directly proportional to age and to how much you stand to lose. As wealth acomulates, people becbme more consewative. Instead of making wealth, they becomemore interested in protecting what they already nave. Entrepreneurialcorporations mirlor the "risk phase"the leader of the institufi6n is in but also add a few more layersbecauseof sheer size. If a corDoration remains private, it his better chances.-When the ecuitv

"livingwfthdsk is anunnatural way ofexbtence;people getflrcdof prtting outfltes."

account gets bigger than $10 million, risk aversion setsin. By the time the caDital reaches$20 million, the corioration losesall senseof adven'ture.A sue sign of this is the arrival of tf,e corporate legal department and the multiplication of the planning staff. As the corporation grows, the enheprcneur los€sthe abilitv to haveiis inputs incluaea nine various decision-making process.It becomesso bad that you don't recognize your own gTPTy; Oppo.t -itiesga tired or KnocKmgon your doors. The computer has brought great solutions to this prcblem, E-mail has brought the leaders closer to the workers and l,otus notes have brought corporate discussionsto levelsneverheard of in the past. In the-future,neural network technology will allow the thought pnccessesof entrepre. neurs to be downloaded and applied to differcnt thomyquestions of business, and this knowledge basecanbe accessed by all employees. HaNard Professor Marty Marshall always told a class composed of owners of companies, "If I have a say in youro€anizations,Iwillnot give you offices.Thereis nothing you can do inside. By now, if the company can not mn without you, vou have failed misemblv bo and spend vour time witi your custbmers, suppl.iers and banlers. You arc the only one who can do deals faster." By putting the risk-taking part of the corporation in touch with action where decisionmaking is vital, you ale guaranteed progress.In short, embrace risks as the life blood of success or else b€ cursed to live a life of failue! I

vlctor S. Llmllngan

Riskybutrewarding...

BankManagement Games nBank

management gamesallow participantsto see the impactof their decisionsandthen takeconective actions,tt

astJuly,we conducted the I finance module of the I first BranchManagement I Program of the MBf L Group of Malaysia. The MBf GrouD - which includes MBf Finaice, the largest finance company in Malaysia - hasexpanded so rapidly that iis top executives decided to establish the MBf Academy to handle their in-house training needs. Headed by Dr. Ian Chia as executive director and Lim Chin Hock as general manage{, the academy chose a branch nanagement program as its fust seminar project. We wer€ invited to design and teach the financial module by these two former colleagues at the Asian Institute of Management, but were guided by their specifications that such a module should include a bank management gam€. We were not enthusiastic about the r€quest.Wewer€ then involved in-the design of the first Advanced Bank Management Program (ABMP) at AIM and we remembered including in that pmgram the Stanford Bank Management Game. Our exDerience with Euch stimutation exerciseswas really quite more of ambivalmce rather than certainty. Bank lvlanagementgamesdo have merits though. They stimulate the participants to inte$ate the analytical techniques thev learn, convert such integraied analyses into ef{ective deci5ions,seethe imDactof thes€ decisions and take corrective actions. Thus, we decided to get the best bank management game currently available in the United States (note, not in Asia). For this, we tumed to Professor Fermin La Rosawho is theAIM

expert on bank management games. He recommended and even ordered dir€ctlv the best ard thelatestbankm;agement garne - Retail Banlbuilder With the bank mana8ement gamechose&wethenwent over the Drevious ABMP materials to analyze how the bank management game could complement rather than comDetewith other finarce sessions-, We came to the conclusion thatthe management game and the finance sessions should be run separately and distinctly although some subjectsr^/ill not be covered extensively espe, cially, those that overlaP. We decided to make the Re tail Bankbuilder the core around which to design the finance module. The topics for discussion were based ;n what we anticipated would be the need bf the bank teams during that phase of the game. Short cases were also introduced to cover topics not included in the game, Beforc the start of the game, we lectured on the Limlingan Financial Model to show how 'they could analyze the past per-

"Thegarreb a morcrcdbdc slmulatlon fui practltlonen rvhomakea sodes of Incrcmental declsbnsnther thar one makeodreak declslon."

forrnance of the bank they would be nanaging. We also did a financiial analysis on MBf Finance to show how the company achieved its pr€eminent 'Dosition in the finance industrv. During the lull, we used three ghort cases on account management, credit analysis and financial packaging. When these finance caseswene completed, the participants playint as bank managers in Retail Bankbuilder felt overwhelmed by the numerow decisionEthat continually had to be made. Worse, such decisions rcsulted in conflicting decisions (i.e., lending mtes wer€ raised while deposit generation campaiSns were beinq launched, wNch generatedixcessively exPensive funds).Thus,weintmduced the case,"First Security Finance Berhad", a case on corporate strategy written by Professor George thn - to show them that decisions could be made more readily and more consistently lr'ith a bant strategy. Towards the end ofthe management game, several of the banks got into trouble. In anticipation, we earlier pr€par€d an Indonesian caseon crisis man"Utama acement entitled, Jalan G-roun."With this caseasmodel, we and the entirc classanalyzed the rcasons for the poor Performance of some teams. Not only did the claEsdo the analysis, they even recommended a course of action to tum the bank around. Thisteam followed to the letter the r€commendation and their score rose from a dismal two to a maximum ten in the next pq' riod - much to the relief of the Drofessor.And that about sums up our revised view of bank risky but rnanaeement qames: "

rr*afitrg.

199S. THEASIANiitAl,lAGER OCTOtsER

R6n€T. Donlngo

Leading byexample...

TheTotalQualtty CEO "TheCEOis such an importantpercon thathe is indeedthe

keytoTotalQualiry success or failure."

he vast maioritv of companies thai have inuq. duced Total Quality Management (TQM) have failed because they have incorecdy assumedthatquality startswith the workers and rankand-file emolovees. Being ladvised and armed with little knowledge of TQM, themanagementinauguratesthe progran with a few speeches.It thm attempts to changethe employees' behaviour,attitude and cr tweby diEciing them to form quality conhol (QC) cilrles, now f ashionably called "self-managing teams." The net effect is superficial participation and results; the TQ movement is aborted in a couple of years or lingers on for a decadeand dies a slow death. l,et us examine this worldwide frustration with TQM programs by tracing the movement backto its origiru-Japan, where it is known asTotalQualiw Control or TQC. When the Jaianese started dominating world markets with quality products in the '70sl the West eager to find an explanationfor this threatto their industri€s and economies,studied Japanesemanagementpracticesand swiftly conduded that the reasonfor their successw6r! the QC ctcles. Composed of empowered €rnployeesgivingsuggestionson how to improve the quality of their work, the clf,les werc the most conspicuous, spectacular and uniquely Japanesephenomenon observedbv the WesF ern analysts. Emfloyees of westem compalues -but wer€ never empowercd, were ordered and controlled by management - so this differ€nc€ must account for the Japanesesucc€ss, they thought. And thus, the finding that

@IOBEF19C}. THEASTAN MANAGER

quality startsfrom the bottomfrom theemplovees-war codi fied and pdbGhed in western books thai becamethe fist Total guidebooks - or Quality "rnisguide" books in English. Asian countries,too lazv to studv Iapan first hand, and too dependentonwestemanalvstsand inalyses to explain any ti ^"agement phenomenon, used these Westem publications, seminars ard consultants to launch their TQprograms. Therestis history Ir'Vhatthe westerneF saw in the '70s was the secondphaseof TQC - the bottom-up-stage in which empowered employee voluntarily give suggestions to managenent for approval and irnplementation. What they did not seewas the fitst Dhase- the topdown stage- iir which top managementrnodelled the way to quality tbough theirpersonal behaviour and leadership,tough managenent decisions and enlightened policies. This phase occurred in the '50s and t60s whm W. Edwards Derning - ironically an American quality guru who was discredited in his own country preached and rolded the JapaneseCEOSin his seminarsthat " 80% of quality problems come

"MootfallurcsIn TQMcanbetaced

to ftc cEo.nfiofalb to actvelylead$e movement orwotse, activelyopposes the

pqgtram.'

from management, and. 2QVo from workers." During those formative decades,the CEOs were personally transformin& r€designing and honing their oryanizations into lean and mean quality companies in line with Derning's 14 principles and his PDCA (plan. io, ch'ek, action) cvcle. Niwadays, in the '90s,someenterprising Western authors have labelled and advocated this corporate hansformation - or tior>, down stage of TQM "re"engineering", as if it were a new phenomenon or nunate. ment practice. Where do we go from here? Companies deciding to adopt TQM cannot copy th1 Japaneb companiesthatareall now in the second or bottom-up stage of TQM. We should start with the fLstor boFdownstage,ard what the have done in the '50sJapanese and the'60s.Weshould start TQM with managemen! in partiolar, top management - especialy the CEO - or whoever is in chargeof mnning the company, be he called GIrd pr,esident. or E\tP Most failures h TQM implementation can be traced to the CEO, who fails to activelv lead the movernent or worse,personally and actively opposes ttre pqgram, especialy if it was initiated by middle managemmt. T.heCEOs failue to participate proFrly in the TQM movement which leads to its untimely demis€ comesin many fom|s: t- Ind|fforanac - tvDified by ministerial pr€sencein quality activities, and making unactionable and unemotional speeche on quality. During the TQM training serninar for his entire management staft he giv€s the opening remarks and then disappars. Hecomes back

Jo3le Alh'Yalag three days later to Eive the 0nthemap... closins remarksfor 30 minutes to wrip-up what hashapp€ned durine th'e seminar, and asks everySody to sta Practicing oualiw. '2.|lnorance - ty?ified by the CEO who thinks that by s€tting asidea budget for the quality program, aPPointinga totai quality managerand committee ind dllegating all quality tasks to his staff, quality will haPPen. ention Canada as a MisinJormed by equally misindestination and in formed literature and consultmost probability, ants, he thinks that his personal Toronto and Vaninvolvement is unnecessary He would rather play golf. As the couver come to mind. It is not surprising therefore savins,"A little knowledgeis a dinee"rousthind' goes,th; CEO to s€eraisedeyebrowswhen told witlilittle know-ledeeof TQM is that instead of Toronto or Vanthe most dangerous person in couvet I once settled in Edmonthe company. Being the most ton, Alberta, in Northwest oowerful, he could make the Canada.To this day, I still smile host and biggest mistakes due in amusement when recalling a bewildered remark, to inadequate or wrong infor- friend's "wherc on Earth is Edmonton manon. where the bi8Sestattraction is 3. Fesr-q?fiedbytheCEO who can talk about qualitY and a shoppingmall?" rriti uut tme to state, Edsaytheri8ht phrases,but would is nestled on monton change comPany not darc Poucies that restrict quality for fear prairieland where life could be ofbacklashfrom political grouPg Dretw much sedate for waninside the companv,or lossof his derlust souls. The city's only own Dower aid ilout. To this claim to fame was homegrown CEO quality is OK aslong asno hockey star player WaYne one changes the status quo or Gretzky of the Edmonton Oilers who eventually uprooted rocks the boat. himself toioin theL.A. Kings.It by typified 4. Alooftro€s becameinevitable thatmy dailY the CEO who monitors quality rituals revolve around the in his exonlv through r€ports ecutivesuite.Goinedown to the confinesof a shopping mall lofactory mixing wi:th the rank- cated iust a block awaY from and-file and verifyhg the rcPorts home.But,perhaPs,at that time I failed to emphasize that the are beneath his diSnity. shoppingmall referredtoholds s.Lack of Leode]3hlp tvpified bv the CEO who lacks the Cuiriness record, then and cir'arisma,and is uninsPiring to now, as the world's largest emplovees who do not s€e a shoppingmall. West"EdmontonMal[, set moiel'in him. This CEO - the "I havemadeit" o/' I havedone aside its size, is unlike anY mv time" tvpe- hasPracticallY shoDDinshaunt. lt is a mYriad rehred on ihe iob. Tocap his tb of iirired"ibleamusementi that vears of service, he initiates compel countless tourists to tQM as his last hurrah, think- considera stopoverin Edmonins that it requiresliftle effort ton. So diversi are its visitors ati enetgy. but TQM, being that thestaffhave learnedhow such a radical change, requires to say welcomeinlanguagesas an almost evangelist q?e of diverse as Arabic and Zulu. The vastnessof the placecan leader,preachingandPracticing and its sheer be overwhelminq quality up to his last breath or quite for unsettling opulence the comPany. with hour The CEO is such as imPor- Tirird Worli visitors.Althoueh that he is indeed the its parking lot accommodaiis tant person -to Total Quality success... 20,000cars, roaming about in key search of a vacant lot is not I or?ailure.

Edmonton Detour

unusual. Apart from the over 800retail ou-tlets.the mall boasts of a subsurface cruise with a collection of over 500speciesof marine life; an ice skating Palace;pebble beach golf course; aviarv; an amusement Park combinine features of both Disneylarid and Las Vegas' Circus Circus; a sports club; theaters;hotel; casino, all under one roof. As a shopping convenience feature,motorized scootersare available for rent while coinoperated foot massagersare strategically located for those who "shop tilt they drop." The epicurean .delights profened bv the themed centers ire quite deiectableeven for discriminating Palates. For somebody who still has to see New Orl6ans, the mall's Bourbon Sh€etSaloonEovidesmorethan an inliline of Dixieland, where creoles,ciiun and endlessmeal possibilitiestempt gourmetsand the curious alike. amusement feaTWounique -mall should not be hrres of the missed,sDeciallyby first-timers. tne uiniWdei nle located at the Amusement Park is a must for the adventuresome. Regarded by delegatesof the

"WegtEdmonton Mallis unllkeany hauil - lt b shopplng a mydd of incledltle

amusements."

Amedcan CoasterEnthusiasts "the single best Convention as in the known coaster steelroller universe," the 14-storeyindoor roller coaster roars through twists and tums and barels through kiple loops...truly an intense de oI a lifetime. The second - and my favo te-counterbalancesthe nuisanceof winter in Canada. Known as Wolld WcterPark,hv e acresof rolling wavesand over 20 waterslides comPrise this great year-round, man-made beachfacility. Electronically-controlled simulated oceanwaves cascade as swimmels frolic amid a dome-covered troPical reso . While beach habitues deplore the absenceof sand along the shoreline- which would have made a difference- the salinefree water, however, is more than welcome to those who prefer fresh water Pools. And ivith the increasing incidence of sun-induced skin disorders, few will really care about the apparent lack of solar heat required for a genuine tan. Perhaps,it is the successof World W;terpark that insPired Iapanto DutuPitsown verslon beach in the nf'u ^"ir--"i" Seagaiacomplex. West Edmon'ton Mall ind the Seaqaia Complex exemplify breiakthroughs in highiehnologY to simulate nature and stimulate pleasure.Notwithstandint the irifles and fritls afforded bY man-made pleasure -returneddomes I to mY eventually Asian homeland. In Canada, the language barrier is surmountable, ethnic discrimination tolerable and household chores bearable. But for the weary foreigner who cannot contain her emotion, there is no I place like home.

. OCTOBER 1993 THEASIANMANAGER

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