Challenging giants

Michael Alan Hamlin

Posted on December 20, 2006

In the end, it’s not the circumstances that dictate success or failure

Businessman, government advisor, and entrepreneurship evangelist Joey Concepcion III believes the Philippines – and Philippine entrepreneurs – should develop a “giant challenging” mindset. Concepcion first made a name for himself, differentiating his personal brand from that of his famous father, industrialist and civil society activist Jose Concepcion II in the process, by taking on global giants in 1987 as just-appointed president and CEO of the RFM Group.

Concepcion pushed successfully for the acquisition of Cosmos, a small local bottler catering to lower-income segments as the cheaper alternative to Coke and Pepsi, for P500 million. At first, Concepcion’s strategy appears to have been to appeal to patriotic fervor and market the brand to the middle and upper classes as well as its traditional base as an all-Filipino product. Slick television commercials for Sarsi, a root beer brand, delighted the market and dramatically increased awareness and recall of Cosmos, and Concepcion.

As impressive as the advertising campaign was, however, Concepcion quickly recognized that he couldn’t go head-to-head with the two global brands on supermarket shelves. They had too much muscle for supermarket executives to display Cosmos’ Sarsi and Pop Cola brands as prominently. So instead, Concepcion leveraged and enhanced Cosmos’ traditional strength – the sari-sari distribution network.

The smaller, more nimble Cosmos worked closely with these small proprietors. While they carried Coke and Pepsi products as well, Cosmos developed stronger personal relationships, and provided incentives – including a new pricing strategy – that put Sarsi and Pop Cola at visibility parity. Fourteen years after acquiring the brand, Cosmos was generating P7 billion in revenues, or 35% of RFM Group income. A year later, Concepcion sold the division for P15 billion, a thirty-fold increase over its purchase price.

In remarks recently to technology-based small- and medium-scale enterprise (SME) owners and managers, Concepcion attributed his success to strategy, but also to a can-do mindset. Strategically, he advised his audience not to try to copy larger competitors, as he learned, but to define “the right business model.” In doing so, he added, “differentiation (from competitors) is a critical factor.”

But to entrepreneurs and SME owners and managers who complain about the inevitable hurdles all businesspeople must address – securing financial resources, attracting and keeping people, and competing against established players – Concepcion advised, “stop complaining and take control of your own destiny,” observing that “there are many success stories that have arisen from poverty” in the Philippines.

As I looked over the Forbes “Philippines’ 40 Richest” list published in the December 25, 2006, it was clear to me that this is, in fact, the case. Although you may not necessarily approve of the manner in which each of the Philippines’ richest took control of their own destinies, there is no disputing the reality that they beat the odds in many ways because they were determined to do so.

At the top of the list is of course Henry Sy, who also appears on the magazine’s cover. Sy’s early struggle as a poor, 13-year-old immigrant from China is inspiring to even the most jaundiced observer. Among others on the list who worked themselves up by “challenging the giants” are Sy rival and industrialist John Gokongwei, hamburger and fried chicken king Tony Tan Caktiong, and the beauty accessory entrepreneurs Rolando and Rosalina Hortaleza.

Concepcion would like to see similar stories in sunrise industries, especially technology where he acknowledges, “there are few success stories compared to other industries,” but adds that this means there must be great opportunity. As an advisor to government and chairman and president of the Philippine Center for Entrepreneurship, Concepcion developed GO Negosyo, a program and website designed to equip aspiring entrepreneurs with many of the skills and much of the knowledge they require to succeed. A similar program, TechnoNegosyo, focuses on the tech sector.

Growing wildly successful entrepreneurs in the technology sector, Concepcion says, requires that the Philippines create a Silicon Valley environment. Doing that requires increasing PC penetration by making it easier for people to access technology, and training and education to assure that access is meaningful. That’s nothing new. But it also requires, Concepcion believes, that entrepreneurs, “believe in the country. Believe in yourself.” And challenge the giants.

Others have shown this simple formula works. In fact, the Philippines has been so good to mall magnate Sy that according to Forbes, “he has resisted moving into new markets” for 60 years, despite the obvious opportunity. While it will always be true that different conditions might make things easier in the Philippines for entrepreneurs, success ultimately depends on the entrepreneur, not circumstances.

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