The messy business of succession
September 1, 2003 | 12:00am
SINGAPORE – Who will be the eventual successors among the many talented children and kin of business titans Lucio C. Tan of Philippine Airlines/Allied Bank/Fortune Tobacco; Ambassador Eduardo "Danding" Cojuangco Jr. of San Miguel Corporation; Henry Sy of the SM Group/Banco de Oro; the Aboitiz clan of Cebu and Union Bank; the Antonio Floirendo agri-business empire of Mindanao; George S.K. Ty of Metrobank Group/Toyota; Ambassador Bienvenido Tantoco of Rustan Group; the Lorenzo clan of Del Monte Philippines/Lapanday; Socorro Ramos of National Book Store chain; Andrew and Mercedes Gotianun of Filinvest Group; Ambassador Alfonso Yuchengco of RCBC Group; the Gozon/Jimenez/Duavit clans now controlling GMA Network and others?
Even the phenomenal mass following and economic/political clout of the El Shaddai are built around the charisma of real estate tycoon Mike Velarde. What about Brother Mike’s successor? What about the challenge of institutionalizing this El Shaddai phenomenon to duplicate the stature of the Manalo clan’s Iglesia ni Cristo?
The problem of succession in big Filipino business groups is similar to the dilemma of succession in the Philippine political plane. Will President Gloria Macapagal Arroyo finally announce her long-anticipated plan to run next year or will she surprise the nation by opting to choose a successor? How about the opposition, will the various contending forces be able to come up with a common presidential bet next year?
An example of well-planned succession is progressive Singapore, which recently saw its Prime Minister Goh Chok Tong deliver a National Day speech spelling out details of the plan for his brilliant Deputy Prime Minister Lee Hsien Loong to take over in 2005. Goh was merely following the sterling and unselfish example earlier set by the enlightened dictator Lee Kuan Yew, who voluntarily gave up authoritarian power to him and retired himself from office like a dignified corporate executive.
China’s late paramount leader Deng Xiaoping was also astute in choosing successors. Not only President Jiang Zemin, but also the now newly installed President Hu Jintao are said to have been Deng’s personal choices, too. A Taiwanese tycoon told Philippine STAR that ex-President Lee Teng Hui had failed in his choice of President Chen Shui-Bian, whom he complains has not done well as a leader in reviving the economy or enhancing economic ties with Mainland China.
Nowadays, the newspaper headlines and the buzz in Singapore is the problematic public image of the Cambridge-educated Brig. General Lee Hsien Loong – whether he is indeed unapproachable and too tough as the next leader in 2005.
Meanwhile, in our economically backward and fragile republic, 84 million Filipinos have to live with the perplexing political uncertainties of GMA’s Sphinx-like silence regarding her 2004 plans.
In Malaysia, Prime Minister Mahathir, accused by the Western media of corruption, served his nation well by providing a stable and effective leadership. Mahathir passed the final test of true leadership when he announced that he would retire late this year and relinquish power to his chosen successor, despite the outburst of tears and profuse expressions of gloom by his people.
Among the numerous Filipino tourists in Singapore during the recent Ninoy Aquino long weekend (who must have seen the media fuss about Lee Hsien Loong’s looming ascendance in 2005) included several scions of the country’s top business clans such as the late, rags-to-riches sugar baron Antonio Chan’s eldest son singer-songwriter Jose Mari Chan; Lucio Tan’s son Michael G. Tan of Asia Brewery/Tanduay; the eldest child and son-in-law of self-made industrial pioneer John Gokongwei Jr. (Robina Gokongwei-Pe and Atty. Perry Pe, who attended a board meeting of a major publicly-listed Singapore conglomerate); and the late real estate tycoon Tan Yu’s fourth daughter Elena Tanyu Coyiuto who came to Singapore to acquire the Philippine master franchise of Japan’s Sakamoto mathematics education system and the franchise of Singapore’s famed Kinderland preschool for her new PACES educational group.
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GMA as a responsible and mature leader of the nation must help clear the clouds of uncertainty by fearlessly declaring her political plans now. Even if critics will crucify her for electioneering or reneging on her earlier pledge not to run, this is much better than fostering uncertainties. If she decides not to run in 2004, she must not fear she will be sidelined as a political lameduck, because true leadership requires supreme personal sacrifices. Making an orderly and graceful exit is a test many otherwise brilliant leaders in history had failed miserably at.
Business people, investors and even international creditors abhor uncertainty. The Asian Development Bank (ADB) recently assessed the true state of our republic, declaring, "Uncertainty has been a persistent partner of the Philippines in recent years and seems likely to continue to influence economic performance and investor perceptions. Uncertainties exist with contenders for the Presidency in the 2004 elections and the policies that will be pursued by the new administration."
Perhaps GMA and other business leaders can learn from the astute JG Summit Holdings founder John Gokongwei Jr., who had already clearly spelled out his line of succession: First in line is his youngest brother, the highly-educated chairman James Go, to be followed eventually by his son Lance Y. Gokongwei.
GMA and other business leaders should learn from the courage, common sense and foresight of Gokongwei to give up day-to-day management to his chosen successors, with the hale and hearty founder only retaining the title of chairman emeritus and presiding over weekly Friday meetings of the executive committee.
His undertakings on succession have done away with any future ambiguities or uncertainties for JG Summit, now the country’s most diversified industrial conglomerate and expanding throughout China and ASEAN.
Observers told Philippine Star that despite his adopting numerous modern Western management ideas to institutionalize his business group’s success, the patriarch Gokongwei is still adhering to the ancient Chinese tradition on primogeniture – or the passing of authority to the eldest male heir, which is similar to practice in Europe’s oldest royal families.
The RFM Group is one sterling example of well-planned succession. Founder Salvador Araneta passed on managerial control to his son-in-law Jose Concepcion Jr., who eventually passed on authority to his own eldest son, Jose "Joey" Concepcion III. Each generation is different, with Joey Concepcion now recreating the RFM Group into a leaner, smaller yet more efficient food/agri-business group.
In the Hispanic Zobel-Ayala clan, it seems apparent that Ambassador Jaime Zobel de Ayala’s eldest son, Jaime Augusto Zobel de Ayala is the successor, although younger brother Fernando Zobel de Ayala continues to play a key role in the telecom/banking/real estate conglomerate.
Joselito Dee Campos Jr., the eldest son of pharmaceuticals king Jose Yao Campos and grandson of lumber tycoon Dee Hong Lue, seems to be the successor in United Laboratories (Unilab).
In the 19th century, Dee Hong Lue’s granduncle and my great-great-grandfather, rags-to-riches lumber pioneer Dy Han Kia had misplaced confidence in a nephew as his successor, who almost ruined the clan’s wealth with the shocking loss of landholdings in Manila’s present-day Ongpin, T. Alonzo, Zacateros and Gandara Streets in one night of gambling during the Spanish colonial era. It was fortunate the entrepreneurial Dy clan was able to rebuild the lumber and other businesses immediately.
John Gokongwei Jr. recounted to Philippine STAR that his own rags-to-riches great-grandfather Pedro Lee Gotiaoco was a talented empire-builder in Cebu, but the founder also failed in training his successor in the next generation, and so the family fortune was gone by Gokongwei’s time came. Was the searing memory of this loss the motivation for John Gokongwei Jr. in his obsession to build a world-class transnational business conglomerate that will last?
Can the world’s finest self-made tycoons devise a foolproof mechanism or system with which to ensure the long-term viability of their business successes beyond their lifetimes? What needs to be done to lay the groundwork for smooth succession in any business enterprise? Will publicly listing family enterprises and recruiting more professional managers ensure survival and long-term prosperity for the family businesses?
There are no 100 percent guarantees on future success, but still, entrepreneurs and even political leaders like GMA should plan for the long-term, should take the ultimate risk of naming his or her successors now. Not planning for the future of business stewardship, ignoring the imperatives of preparing one’s exit from power is similar to the irresponsible act of not buying life insurance for estate protection or safeguarding the future of loved ones.
The true test of great leadership is not only the nurturing of vast enterprises, the marshalling of people and resources to attain grand dreams, but also dispassionately and clearly institutionalizing his or her organization by well-planned succession.
Thanks for your many messages. You can send any comments to wilson_lee_flores@newyork.com or wilson_lee_flores@hotmail.com or wilson_lee_flores@yahoo.com or P.O. Box 14277, Ortigas Center, Pasig City.
Even the phenomenal mass following and economic/political clout of the El Shaddai are built around the charisma of real estate tycoon Mike Velarde. What about Brother Mike’s successor? What about the challenge of institutionalizing this El Shaddai phenomenon to duplicate the stature of the Manalo clan’s Iglesia ni Cristo?
The problem of succession in big Filipino business groups is similar to the dilemma of succession in the Philippine political plane. Will President Gloria Macapagal Arroyo finally announce her long-anticipated plan to run next year or will she surprise the nation by opting to choose a successor? How about the opposition, will the various contending forces be able to come up with a common presidential bet next year?
China’s late paramount leader Deng Xiaoping was also astute in choosing successors. Not only President Jiang Zemin, but also the now newly installed President Hu Jintao are said to have been Deng’s personal choices, too. A Taiwanese tycoon told Philippine STAR that ex-President Lee Teng Hui had failed in his choice of President Chen Shui-Bian, whom he complains has not done well as a leader in reviving the economy or enhancing economic ties with Mainland China.
Nowadays, the newspaper headlines and the buzz in Singapore is the problematic public image of the Cambridge-educated Brig. General Lee Hsien Loong – whether he is indeed unapproachable and too tough as the next leader in 2005.
Meanwhile, in our economically backward and fragile republic, 84 million Filipinos have to live with the perplexing political uncertainties of GMA’s Sphinx-like silence regarding her 2004 plans.
In Malaysia, Prime Minister Mahathir, accused by the Western media of corruption, served his nation well by providing a stable and effective leadership. Mahathir passed the final test of true leadership when he announced that he would retire late this year and relinquish power to his chosen successor, despite the outburst of tears and profuse expressions of gloom by his people.
Among the numerous Filipino tourists in Singapore during the recent Ninoy Aquino long weekend (who must have seen the media fuss about Lee Hsien Loong’s looming ascendance in 2005) included several scions of the country’s top business clans such as the late, rags-to-riches sugar baron Antonio Chan’s eldest son singer-songwriter Jose Mari Chan; Lucio Tan’s son Michael G. Tan of Asia Brewery/Tanduay; the eldest child and son-in-law of self-made industrial pioneer John Gokongwei Jr. (Robina Gokongwei-Pe and Atty. Perry Pe, who attended a board meeting of a major publicly-listed Singapore conglomerate); and the late real estate tycoon Tan Yu’s fourth daughter Elena Tanyu Coyiuto who came to Singapore to acquire the Philippine master franchise of Japan’s Sakamoto mathematics education system and the franchise of Singapore’s famed Kinderland preschool for her new PACES educational group.
Business people, investors and even international creditors abhor uncertainty. The Asian Development Bank (ADB) recently assessed the true state of our republic, declaring, "Uncertainty has been a persistent partner of the Philippines in recent years and seems likely to continue to influence economic performance and investor perceptions. Uncertainties exist with contenders for the Presidency in the 2004 elections and the policies that will be pursued by the new administration."
Perhaps GMA and other business leaders can learn from the astute JG Summit Holdings founder John Gokongwei Jr., who had already clearly spelled out his line of succession: First in line is his youngest brother, the highly-educated chairman James Go, to be followed eventually by his son Lance Y. Gokongwei.
GMA and other business leaders should learn from the courage, common sense and foresight of Gokongwei to give up day-to-day management to his chosen successors, with the hale and hearty founder only retaining the title of chairman emeritus and presiding over weekly Friday meetings of the executive committee.
His undertakings on succession have done away with any future ambiguities or uncertainties for JG Summit, now the country’s most diversified industrial conglomerate and expanding throughout China and ASEAN.
Observers told Philippine Star that despite his adopting numerous modern Western management ideas to institutionalize his business group’s success, the patriarch Gokongwei is still adhering to the ancient Chinese tradition on primogeniture – or the passing of authority to the eldest male heir, which is similar to practice in Europe’s oldest royal families.
In the Hispanic Zobel-Ayala clan, it seems apparent that Ambassador Jaime Zobel de Ayala’s eldest son, Jaime Augusto Zobel de Ayala is the successor, although younger brother Fernando Zobel de Ayala continues to play a key role in the telecom/banking/real estate conglomerate.
Joselito Dee Campos Jr., the eldest son of pharmaceuticals king Jose Yao Campos and grandson of lumber tycoon Dee Hong Lue, seems to be the successor in United Laboratories (Unilab).
In the 19th century, Dee Hong Lue’s granduncle and my great-great-grandfather, rags-to-riches lumber pioneer Dy Han Kia had misplaced confidence in a nephew as his successor, who almost ruined the clan’s wealth with the shocking loss of landholdings in Manila’s present-day Ongpin, T. Alonzo, Zacateros and Gandara Streets in one night of gambling during the Spanish colonial era. It was fortunate the entrepreneurial Dy clan was able to rebuild the lumber and other businesses immediately.
John Gokongwei Jr. recounted to Philippine STAR that his own rags-to-riches great-grandfather Pedro Lee Gotiaoco was a talented empire-builder in Cebu, but the founder also failed in training his successor in the next generation, and so the family fortune was gone by Gokongwei’s time came. Was the searing memory of this loss the motivation for John Gokongwei Jr. in his obsession to build a world-class transnational business conglomerate that will last?
Can the world’s finest self-made tycoons devise a foolproof mechanism or system with which to ensure the long-term viability of their business successes beyond their lifetimes? What needs to be done to lay the groundwork for smooth succession in any business enterprise? Will publicly listing family enterprises and recruiting more professional managers ensure survival and long-term prosperity for the family businesses?
There are no 100 percent guarantees on future success, but still, entrepreneurs and even political leaders like GMA should plan for the long-term, should take the ultimate risk of naming his or her successors now. Not planning for the future of business stewardship, ignoring the imperatives of preparing one’s exit from power is similar to the irresponsible act of not buying life insurance for estate protection or safeguarding the future of loved ones.
The true test of great leadership is not only the nurturing of vast enterprises, the marshalling of people and resources to attain grand dreams, but also dispassionately and clearly institutionalizing his or her organization by well-planned succession.
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