Category Archives: Management

The Lean Startup Conference 2018 – Las Vegas

We came to the startup movement through Steve Blank: he really has it canned, this how to build a business from nothing. It is almost like it is too easy, except he does tell you, whatever else you do, starting a business to scale will probably be the hardest endeavour you can ever do, and by the way, coming from a dysfunctional family helps if you are going to be a founder. In fact in a panel discussion at the 2018 Lean Startup Conference in Las Vegas, Eric Ries the author of the bestseller The Lean Startup expressed his wish that if he could do it all over again, he would have not made it sound too easy, which has become an entry point of criticism for the book in recent years, especially now that corporate America is trying to implement and learn from Ries and his team.

Eric Ries’ The Lean Startup book and company we can say are the crystallization of Steve Blank’s initial ideas as taught in his classroom and initial blog essays, combining it with the engineering methods and management systems of Toyota, thus transforming the concepts and anecdotes to a combination of Steve Blank and Toyota into a digestible language that has graduated into the world to consultants and annual conferences.

First off, in spite of the criticism the Lean Startup concepts and simplifications have received in recent years, our company is a testament that the ideas of Steve Blank, and the iterations of his ideas in the works of people like Eric Ries do work. We of course are no brand name in the startup movements that have sprouted all over the world in the last decade, especially those that have emerged from Silicon Valley. But we have grown from our beginnings of just starting as a scrappy two-people team, to a health care trading company contributing to health care solutions in the Philippines. Nearing our one-decade birthday anniversary in the market, to pull back and understand startups, to be reminded of our roots, to also take a break for the intensity of work for eight years: we decided to join the Lean Startup Conference in Las Vegas.

Largely, the venue of having it on the Zappos Campus is very interesting, because startup movements are always seen to be innovations in technology, and Zappos is a testament that innovations can come from business models, service orientation, to management styles. Zappos is the largest company to practice holocracy, which we find to be too utopian but nevertheless seems to be working for this Amazon subsidiary.

The conference did not disappoint: the plenary sessions were mostly of very high quality, and the breakout sessions we thought were revealing of the limits of the Lean Startup concepts when extended to philanthropy or big business. GE previously was touted to be the company that was using the Lean Startup methodologies, and the difference of just two years in the covers of Bloomberg below should be enough to summarize what had happened in 24 months since celebrating the transformation of GE to some kind of a Lean-agile-digital company.

March 21, 2016 Bloomberg cover versus February 18, 2018 cover

The big incentive for us to travel was also Reid Hoffman being part of the culminating plenary session, and he had approached business ideas previously with his background in philosophy, and his success in business and philanthropy made him a much sought-after speaker.

So with what Steve Blank’s ideas have contributed to our start and growth (we got to meet him and even had him autograph a book in 2016), thus the interest in Lean as a concept, Reid Hoffman attending to join a discussion on blitz scaling, and going to Las Vegas to visit Zappos: we were on our way.

Reid Hoffman is too big, and too present in youtube, to be interesting because what he said in the conference is basically out there already. And since he is a certified billionaire, he is likely very calculated in public discussions. This was all confirmed in seeing and listening to Hoffman on the last day of the conference. But in conferences like this, it is not the big name one is likely familiar with that makes attendance worth the effort. The discovery of new names not in our radar is really what makes these conferences worth the trip.

What we said about Reid Hoffman we can say the same about Tony Hsieh, what he had to say had been said by him many times, and easily can be found on the web, in articles and videos.

Hands down, Holly Liu was the best speaker for us, plus an education on the world of online games. She was articulate, staggering in achievement, and generous with her ideas. In fact, listening to her explained to us the weak breakout sessions or even one of the weaker plenary sessions. She basically says that there are abilities and ingredients to innovate and disrupt that are unique to startups. Some of the reasons are: nobody cares about your startup, nobody knows or likes your startup. This frees you up to be sharp, to be adventurous, and to dare to be different and exciting to rise above the rest. She did not exactly say large companies are hopeless in the areas of innovation and disruption, but that somehow the outlook will be different, or the ingredients just cannot be duplicated, and by implication, likely will need a whole different set of ingredients. In breakout sessions of the people in government who are currently tasked to bring in the spirit of the Lean Startup movement into these mammoth organizations, one does hear some of the speakers say they were hired because they did a startup and failed, so one qualification was they have tried out the startup world. There is much that has been said of being unafraid to fail in Silicon Valley, but the ability and the experience of those who have succeeded, like Holly Liu, are the reasons the gravitas to talk about innovation and persistence amidst the sea of failures is so convincing and more importantly, realistic.

Holly Liu in the conference

The other great speakers were Matt Johnson of the Frontier Project and Stephen Robert Morse of Observatory, on the importance of a compelling story, even biological and psychological reactions to it were discussed, with a powerful preview of a possible Netflix project by Morse on Colin Kaepernick. Liz Jackson of The Disabled List (she was even more compelling here than in New York last year with her 99U talk on design as she argued not for design this time, but for how business is doing it all wrong in approaching this segment of the market). Joel Spolsky of Stack Overflow did not only have a great story of making it in the world of online business, but more importantly he talked about countering a web business that monetizes what should be an online space that allows programmers to have a free and open discussion to help each other. In short, not everything should be monetized in the web, even if it is possible to monetize it: and Silicon Valley is under the microscope these days precisely because of this issue (Facebook is monetizing you).

The discussion titled Lean Startup Where You Least Expect It was well moderated by Hisham Ibrahim, and the founders Malcolm Handley of Strong Atomics, Jaya Rao of Molekule, Greg Piefer of Shine, and Claudia Recchi of EdSights were all articulate, and have been going through the hoops of running a startup. These are founders who are beginning or have attracted funding, but are still grappling with issues of how to scale. You could see and hear their passion and struggle to get not only proof of concept, but beyond, the struggle to scale in the area of nuclear fusion to software to help universities track students at risk of dropping out. This is in contrast to the Real-World Lessons in Scaling Innovation Inside Large Enterprises with Keith Berry of Moody Analytics, John Buhl of Liguori Innovation, Julie Foy of Proctor and Gamble, Jean Vernor of Munich Reinsurance America, and Lisha Davis of Vanguard. The most memorable anecdote here was how Procter and Gamble innovated with what is a leading sub-category product in the diaper category: the environmentally friendly disposable diaper, which is certainly important, but also maybe says a lot about the limits of what is possible in giants like Procter and Gamble, which certainly is known globally to aggressively recruit some of the best talent available out there, but is also being questioned in media outlets for how competition from smaller companies may be beating it in the area of innovation and in delighting customers.

Forms were given to those who wanted some time with Eric Ries, founder of the Lean Startup Conference. It was told to us that those who will get some time with him will be announced, but no announcement ever came, so some of us wondered if this did push through. Our question written in the form was: How do we bring this to the Philippines? It was a shot at having the Lean Startup team really connected to Philippine giant companies (with paid fees of course, and we would have helped in the legwork to get them connected), and to the small but real startup scene in the Philippines. Telecom conglomerate PLDT for example had Guy Kawasaki previously, and we think other conglomerates are also trying to understand the startup DNA. Metro Pacific and Ayala Corporation both have startup funding ventures looking for the next Alibaba. It will not be as exciting as say trying out the methodology and the Lean Startup team in say Procter and Gamble, or even GE for that matter: but with the efforts in non-profit, I think to launch this in a Third World country, in Asia, will add to the coffers and glamour and usefulness of the Lean Startup ideas, extend concepts, ignite new movements. But the Lean Startup team will need to be willing to see this market as worthy of its time (China and its cities like Shenzhen should be disqualified from the Third World category), as it tries to extend its influence way beyond the Startup world of say San Francisco, New York, and Berlin. The future of this movement and the Lean Startup team of Eric Ries can be found outside the centers of startups and innovation.

A full disclosure: we got to attend simply out of the kindness of the Lean Startup Conference rules, that allow participants who find the fees too prohibitive to go at a much reduced rate in exchange for a blog review of the conference. The conference is worth the trip and the time for anyone who wants to know how people are using, innovating, extending the Lean Startup concepts. Eric Ries did proudly say at the beginning that this conference had none of the PR-machine-polished talks, and except for two of the biggest names that had the feel of a PR polisher having done work already long ago, Ries was largely correct, and this made the weaker parts of the breakout conferences all the more obvious, but at the same time it was what made the strong plenary sessions so fresh and compelling.

This Is Water by David Foster Wallace

We had a leadership meeting yesterday and we had a discussion of the graduation speech of the late young genius: David Foster Wallace. If you have twenty minutes, it is worth your time to listen to the audio that is available on the internet. It starts out with a parable: Two young fish are swimming when they meet an old fish going the other way. The senior fish asked the two young fish: “Good moring boys, how is the water today?” After swimming for a while, one of the young fish turns to his companion and says: “What the hell is water?” The quote below is the key take away of that parable, which was the point of our leadership workshop.

Interview: Arturo Dela Pena, MD (Surgeon, Administrator, Educator, Academic)

DelaPena

Arturo Dela Pena, MD is the Medical Director of St. Luke’s Global City. He is a man of many hats, being an active surgeon, administrator, academic, and educator. Contrary to the serious demeanor, it always does not take long for him to crack a joke. Yet, underneath the good humor, the man is complex in a positive and interesting way: you enter his room and on his table is a Michael Cacnio sculpture of an anonymous every day man kneeling and kissing the ground to give respect to a crown of thorns. He has Ricardo Semblar’s book Maverick, which is on the radical transformation of a company in Brazil, also on his table, and this is for Dela Pena the management man. Yet under the book is The Teaching of Buddha, and only a pile of papers separate Facility Management and Safety Manual and the book Moments with God, together with the latest bulletin and journals of his medical specialty. This self-professed fan of Rod Stewart and the Beatles is deadly serious when talking about medicine and St. Luke’s Global City.

You wear many hats: educator, administrator, surgeon, academic. Which one is the more prominent one right now?

The answer of course is administration takes up most of my time, and as a consequence I have to cut down on my clinical practice, yet I cannot say it is less prominent in my life, because I give the same time to each of the patient, and without a clinical practice, I will not be in touch with the patient, which is important to my work as an administrator, and without my role as an educator in PGH, I will not be up-to-date not only with what is happening in my field, which is rapidly changing, but I will also not be up-to-date as to the kind of residents and training they are getting . The explosion of data is just incredible, and if you are teaching in front of these young people, you just have to digest the data in a way that you are unlikely to do unless you are there in front of them. All these hats are important, and I cannot say one is less over the other, as administration must constantly be informed by all these.

Yet in research, which is very important, and I am involved with the team of Dr. Adriano Laudico, I cannot say my involvement now is significant, unfortunately. But let me say Dr. Laudico and his team are doing good and significant research on the relation of female hormones to breast cancer. That is the advantage of the younger generation physicians is their training recognizes the importance of this integration of the many aspects that make a good physician. Their academic subjects even in freshman medicine are already being connected to the clinical practice. I have a daughter in 2nd year medicine, so I can see the difference.

What do you tell your daughter who is a doctor? What is the most important thing that you tell your residents that will make them good doctors?

I tell them to learn from the patient: see the patient for what is actually there. Do not just have preconceived notions of what should be or what is said in the book. This is what distinguishes a good clinician from the rest. My father is a farmer, and it is my great misfortune that I did not keep the brown bags he was sending me with his notations about his referrals. He would write in Filipino, for example, “Arturo, apologies, but this patient is asking for help. Please help and see what you can do, as she is complaining about excessive bleeding.” Later on he will ask me what was wrong with the patient, and I will say it was ectopic pregnancy. After many people have come to me through him with his brown paper bag notations, his notation would suddenly say: “This patient is having problem with excessive bleeding, please see if she needs a D & C immediately.” For some patients, later, he will have a note like; “Please see if this is appendix, and it might explode soon.” So I keep telling young doctors, keep examining patients, no matter even if you think it is a simple case of pneumonia, because the more patterns you see, the better off you are in seeing patterns, and yet you also learn that solely relying on patterns is not good, as you also learn that each patient is unique.

How did a son of a farmer become the Medical Director of St. Luke’s Global City, become a leading educator and surgeon?

You know, I recall it now and I still get goose bumps. I remember helping my father in getting copra in Talisay, Batangas, when I was a boy and I tripped: I literally found myself falling face down on horse manure. I remember the anger I had because my father could not stop laughing at me. I was so angry and crying, I said he should not laugh at me. My father said, and I still remember this very clearly, when he said: “Arturo, if you do not study hard, you will just be like me and you will have to work with manure. If you do not want to be like me, only by doing well in school can you become different from me. Or else you will be like me, and your son will be like you.” You know, that turned my life around, and I am convinced, if my father had the privilege of having studied all the way in school, he would have been a great intellectual.

Thankfully you were still able to study in FEU for medicine. How were you able to afford it?

I got to use the education benefits that my father had because he was a guerrilla during the war. My father had a town mate who was the college secretary of FEU and so we decided I should go there. The youngest sister of my father also married a lawyer, and they helped and housed me. They were my parents here in Manila.

What is exciting you in the medical profession right now?

Everything excites me. The opportunities in medicine right now are quantitatively and qualitatively very different from when I was a young surgeon. We are now in a position to improve patient care.

So this is the about the generational change in leadership?

Yes and no. Yes, Dr. Edgardo Cortez our President and CEO is a real visionary. He is really implementing brave and innovative changes in the hospital. But aside from the generational shift, there is more competition, so everybody has to shape up, at the same time there is more data available, so there are real metrics from which you could measure the performance of an organization. This is all changing medicine and hospital administration in the country, all to the betterment of the patient.

Yet it is not just the generation shift in leadership that excites me. The developments in medicine, the speed at which we are beginning to understand diseases, it is astounding. The time may really come when we can predict diseases in a person long before any manifestation is apparent.

There are those who are saying, the competition, due to the entry of conglomerates in the hospital business, are also escalating prices for the patients. What do you think?

Yes, that is true, they are escalating their prices, because they are in health care for profit. That is fine, but also, because you want them to put money in health care to improve health care. Yet we also realize, doctors’ owned hospitals, non-profits, religious-owned hospitals, public hospitals, they also provide another vision of health care, not just the bottom line and excellent service, and I am proud and happy with St. Luke’s Global in that our vision is not just profit, although I have to say, any hospital that is not profitable, except for a government hospital, is not sustainable as the expenses are big and constant. Doctors have, I would like to believe, a different take on running a hospital, compared to, for example, a finance man, or a banker. We have I think over a thousand nurses here in St. Luke’s Global, because we have to allocate a certain number for many departments and functions for three shifts, and you also have to have a backup for the holidays and leaves that are part of the package for employment in a hospital. If you are not profitable as a hospital, it will not take long for you to close down. To say we give the highest standard of care is very easy to say, but many ingredients come into play when you want that to be a reality, from doctors, to geographic location, to the culture of the country. Finance is a big part of that mix as well, we have to admit.

Speaking of location, how are we compared to for example the United States in terms of health care?

Well, it is the most expensive health care system, and we should have learned by now that expensive doesn’t necessarily equate to quality, especially in relation to health care. It is not a question of money for me, because even if you have all the money in the world, are you using it efficiently, wisely, and logically? Because of defensive medicine in the United States, where they ask you to take a battery of test just to protect themselves from lawsuits, when in actuality you do not need the test, it is not necessarily good for you, never mind the waste in your finances. You requests these test for academic reasons? Yes, if there is a reason, but academic reason is vague and has been a blanket rational to just getting the patient to go through all the diagnostic equipment available and I don’t agree with that.

Now going back to your question about going to the United States for your health care; unfortunately health care is not like building a bridge where engineering can compute for you up to the last bag of cement that will be used. The hospital you can standardize the process, the physicians let us say we can even standardize the quality, but the patient, each patient is different from another, and how that disease will develop or evolve you cannot predict with standardization. Maybe you can predict 85 percent of the patients, but how will you know your patient is the 85 percent? For example, you can operate on a patient for breast cancer, and in your research you can do comparisons based on age, economic standing, and yet not all of them will fall into the data; yet your patient is not only not a statistic, but you don’t know which part of the statistic she falls into. Of course if the statistic says the survival rate is this, it doesn’t also mean you will die of cancer. You may die of something earlier or later for a reason totally not related to cancer that you have, so I will study the data, but I will be careful in extrapolating conclusions from the data.

The simple standard should be: there should be the same standard care you get, in the best hospitals in the United States and in the best hospitals in the Philippines, except their culture is very different from our culture. For example, in many clinics or doctor offices, you cannot just show up without an appointment. For example, our hospitals are adjusted to our culture in accommodating watchers or relatives staying overnight with the patient. In many private hospitals, we have the facilities, up to a common pantry that watchers or relatives find useful.

No doubt the United States has one of the most cost ineffective systems of health care, but with the case-rate payment scheme, it is shifting to an opposite extreme in reaction to the excesses of the past, and this has an impact on the decisions of many medical doctors. The most important is what is necessary for you to get well, and I am worried doctors may begin deciding on what is only possible based on your case rate.

Steve Jobs: did his wealth and access to the cutting –edge treatments extend his life?

Maybe. But I really don’t know the specific treatment. Difficult to answer: what measurements do you use as to the reactions of his immune system to the disease or the drugs? How can you quantify this? I know it is not a simple adenocarcinoma of the pancreas, it might be some slow acting tumor, since a neuroendocrine tumor is slower. Is it secondary to the treatment that he received? We don’t know. There is a lead time bias that is important. The latest issue of Time magazine , there is a mention about ductal carcinoma in situ ( DCIS )where it used to be treated with radiation and a removal of the breast, now no treatment is being advised, because it is now seen to be only a premalignant lesion. The disease process now is better understood, and that is also what I meant earlier that the opportunities in understanding of diseases are simply different now, and as a result better treatments are also improving rapidly.

What have you realized now as an administrator you did not know as a doctor?

When you are not part of administration, sometimes you just think of your needs, so you request for the best and latest and most branded equipment, not realizing the fact that the hospital has to spread out its income to many other needs and expenses. Running operations means more than just toys for doctors. Running a hospital also means running things efficiently and as economically as possible without compromising on the patient’s health. And this again is where metrics for service, finance, treatment outcomes all come into play.

Are you saying we have the data?

We will get there. The CEO of St. Luke’s, Dr. Cortez, made a decision of acquiring a data gathering system that will put the data in our hands. We have been going around the world looking for the best system, and we are beginning to narrow it down to only a few vendors. Of course having the best and most accurate data gathering software doesn’t mean anything if it’s too complex or tedious, then we won’t get the cooperation of doctors and nurses, and the whole thing becomes useless. We already tried to do it ourselves and to develop our operating systems, but you realize, the best hospitals and system developers took 20 or 30 years to finally get it right, so you go out and try to find a well-developed system that you can purchase.

Who are the most influential doctors in your career?

Dr. Antonio Limson and Dr. Adriano Laudico, who I always call the best chairman we never had. He was a visionary, like Dr. Limson. They had the vision to develop sub specializations in our field. They sent me to Toranomon Hospital for further studies. Of course in a way I have the best of both worlds, because PGH has the research and training, but there are limitations as well; and the opposite is what we have here in St. Luke’s, which has the private sector need for optimum efficiency, speed, and cutting-edge equipment.

Maybe this is changing? PGH has a big budget for equipment purchases.

I am not sure if a big budget necessarily equates with using your budget efficiently. In the area of purchasing for example, usually government hospitals allocate funds on the basis of democracy, when the more efficient way really is to define your strategic objective as an organization, have the whole organization buy into the vision of the leadership, and the purchases will be based on that strategic objective. I am not sure if you can run PGH on the basis of getting a wide consensus as to strategic objectives. This is not about democracy. Before you can do all that, you have to know your core competence, and you must know where you want to distinguish yourself as an organization. Strategic intent is the most basic for management to decide on purchases. But no doubt PGH has a very strong faculty.

I guess the next question will have to be what distinguishes St. Luke’s from the rest?

The leadership. The President and CEO here, Dr. Cortez, is a real innovator, and his direction is towards building a culture where people can be creative in solving problems. We have invested, through his efforts, on something that changes the treatment and chances of anyone who comes to us with ovarian cancer. Adenocarcinoma of the ovary, for example, we do chemotherapy intraoperatively, heat it up to 42 degrees and we find that the survival rate increases. Many hospitals are looking to wet lab and animal labs, but we went to Israel and bought a simulation system that helps our doctors have more opportunities in training. We are into robotics now as well.

How do you deal with death as a medical doctor?

With the patients, I think it should always be with sincere empathy, and with honesty. I have experienced the loss of my only son when he was only 21 years old, and experiencing something like that changes you in very definite ways: it is never the same anymore after something like that.

It is cruel for a doctor to give people a false sense of hope. It is unethical and immoral. One of my most memorable patients was brought to me by a friend. She comes from one of the rich families in the country. When I saw her, from her workup, I knew she had advanced liver cancer. I gave her the objective clinical diagnosis. She was stunned. She asked for her chances, and I told her the truth that short of a miracle, she did not likely have a lot of time in this world anymore. She thanked me. She said she was wondering why she was not getting well and all doctors were telling her she had this or that, like diagnosing her with hepatitis: nobody wanted to tell her the truth. So, after seeing me, she made her plan to go Lourdes in France, and she asked me for the necessary medical certificates, and she made her pilgrimage, made side trips to relatives living abroad. In fact I remember she asked me what she could get me in her trip to Europe, and I jokingly said one of those famous shirts that has a crocodile as its trademark. That was July. December, on a Friday, on her birthday, she kept calling me because I was the guest of honor for her birthday party, but I was too busy. That was the last time I had talked to her. March she was brought to the hospital for hepatic coma and she died. After two weeks, her two kids came to visit me. They informed I was in her last will and testament: it said that as long as they can afford it, I would get 12 Lacoste shirts every year. I started getting them every December, because she knew December is my birth month, and in fact, I still get them but I had to request, if they insist on giving me the shirts, they do it bi-annually or quarterly, so I don’t end up with the same sets of shirts every year.

Are you religious? You have spiritual books here on your table?

I came from a Catholic family and went to questioning the existence of God and becoming rebellious and wanting immediate social change, and I believe I have come full circle. I have come to believe that when there are no answers to questions, the answers maybe with something higher than us.

What books have you enjoyed that you would like to share with our readers?

Few people can write with social science data like Malcolm Gladwell. I have read Blink, Tipping Point, What the Dog Saw, Outliers. I would encourage people to read him. The very interesting book I always remember is by Captain Michael Abrakoff. His first book is It’s Your Ship, and he relates how he turned one of the worst-ranked US navy ships to become the top ship in the navy in efficiency, cost control, gunnery score in his two years of commanding the ship. It is an amazing book, on how he got feedback from the sailors on how to avoid the rusting of the metal, and he implemented it, and because of that, it meant less time for people devoted to repainting the ship and the time was allocated for some more productive endeavours. It is a simple management book but very good. I am looking forward to this book on my table, Maverick by Ricardo Sembler. It is another leadership book.

Are you a maverick?

No, I don’t think so. I would like to believe my leadership style is to always work within the rules. I think a maverick goes outside the rules. But more than anything, I hope to be remembered as a doer, that I do things that are assigned to me. That I get things done, and not just talk about them.

What is your definition of a good leader?

A good leader must first be a good follower. A good leader must be able to motivate people to get things done and to aim for higher things.

Relentlessly building a business in the Third World

The incredible effort we put in to build our business makes us ask the question occasionally what are all the sacrifices for. The incredible energy (life), money, time expended; there is nothing else anyone of us can do but devote every waking life to building Sunfu Solutions. We are not in Silicon Valley, or New York, or Seoul. This is Manila, where four-hour traffic, red tape, and the human resources challenges are the stuff of legend. So we will list some of the reasons why we do it, when we can just walk away from it all:
1. The artist in us drives us to create something beyond and bigger than us.
2. The challenge of sharing and educating those who join us in our journey; hoping from employees they will become and transform to real partners.
3. The challenge of raising health care standards, solving health care issues, and making sure the bottom of the pyramid is considered in the equation.
4. The possibility of building something great.
5. Family: not just our (the founders’) biological family, but the biological family of those who are part of this company as partners, employees, investors. We hope we can be a lasting and innovative company that will attract the next generation to build where we have left off. We hope our values are such that the next generation will want to pass these to those coming up after them; and that a truly generational company that contributes to mankind will emerge.

It takes a lot to build the kind of company we want to become. But all these years of relentless work, we do know we are becoming that company we want to become. Let’s get back to work.

Filmbox: a bad business model

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Filmbox, which you can find in smart TVs like Samsung, will offer you a few days free trial only to reveal later on in your credit card that the few days free is actually an additional free days from what you already bought.There is no free trial. Such marketing strategy to get one’s $5 USD guarantees this company won’t amount to much in customer-service. You inquire about it, and there is no response. This is an important reminder to us that: We in Sunfu Solutions, Inc. commit to NEVER do deceptive advertising.

Ayala Corporation: the corporate giant needs a tune-up

Corporate HQ of the Ayala Group

Corporate HQ of the Ayala Group


Some members of the Sunfu Solutions team just got back from New York city to attend to meetings, and incidentally to listen to talks of innovators like Ed Catmul (PIXAR) and Sophia Amoruso (Nasty Gal); Paul Offit (co-inventor of the retrovirus vaccine) and Angie McAllister (instructional designer). Out of curiosity about an anime film (The Wind Rises by legendary Hayao Miyazki), the group went to Chelsea Clearview Cinema on West 23rd Street. It is, so far, the highest grossing film, ever, in Japan. The film, fictionalized, is about an actual engineer /designer of planes that were used by the Japanese Empire in World War II. This blog entry is not a film review, though we loved the film when we eventually saw it: but at that time in New York, after checking the internet of the cinema that it was showing that day in the said theater, we found out it had been cancelled due to the Tribecca Film Festival, and no doubt, due as well to low ticket sales. Americans, like Filipinos, are notoriously averse to watching anything that requires reading the translation of a foreign-language dialogue. Without any prodding, the movie theater manager pulled out four complimentary tickets that we can use in any of their theaters to make up for the inconvenience we encountered going out of the way to see a movie that should have been there, announced as there in their website. We left and just took a walk around the City, feeling sad, even disappointed, but not at all angry.
Two weeks later, the same guy who took us to the Chelsea Clearview Cinema checked the Ayala Malls Cinema website, and clearly it said The Grand Budapest Hotel was still showing in their theaters, with the schedules posted there for our convenience. At the long line, we could already tell from the billboard that only Spiderman was showing in all its theaters. For the second time the group was going to see a movie, in a span of just two weeks, we once again meet a failure to update the company website and an unexpected cancellation of a movie. Talk about the website or internet not being able to catch up fast enough with reality. We asked the woman in the ticket booth about the movie, and she said it was already cancelled. She didn’t even look at us when she answered. The youngest member of our group said: “Wow, free tickets.” To which our company General Manager said: “This is not New York city.” The experience also tells us a lot, we think, about capitalism USA where, in spite of its incredible problems (at the same level of the problems here in the Philippines, only differences in emphasis as to where the problems are prevalent or deadly), competition and litigation and, yes, maybe education, have made many companies much more customer and service-oriented. Imagine, the Manila theater is owned by Ayala Corporation, certainly one of the biggest companies in the Philippines, no doubt a Goliath compared to the Chelsea Clearview Cinema (currently owned by a family in the stage/theater business for four generations already). Ayala could not even have a policy of having those manning their ticketing booths apologize for the incredible inconvenience they caused us, as we had to brave traffic from our Ortigas office to Makati.
Yet, when we went down to the mall’s concierge to ask if there are any other theaters nearby, the photo below says it all (click photo): since closing time is near, 9PM, the people at the desk hurriedly left with only one still manning the place as she fixes her hair, but ready to run off as soon as possible. Look closely at the telephone on the table: I asked the woman if they always left the phone hanging when closing time was near, so that there would no longer be any incoming calls. She just gave me a big smile, no answer, and she literally walked off hurriedly out of the place. Ayala, until the rise of the SM group, had a monopoly of high end shopping in the Philippines, and now PureGold, is challenging SM in its monopoly in the supermarket chain part of the business. PureGold is described by some in business circles as squeezing suppliers dry, but many are still thankful someone is finally challenging SM. Much as ruthless competition kills, monopolies no doubt can be equally deadly. We have been critical of Ayala due to our experience with BPI (banking) and Globe (telecommunications), and we implied that on our blog post on what we think of Harvard Business School and management gurus (we however did not mention BPI by name in that blog entry), but this time, at the risk of earning the ire of a few Ayala executives, we call them out to improve their sense of service, and not just rely on their massive war chest to compete on the basis of size, glitz, and glib. It is still the best way to retain customer loyalty. Sunfu Solutions, Inc. must learn from this experience, and be reminded of this experience every day: that the user (UX) or customer experience is largely, still, what it’s all about.
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A dose of reality to improve business systems: certainly better than an MBA from the Harvard Business School

Tyra Banks with her controversial Harvard Business School wallpaper

Tyra Banks with her controversial Harvard Business School wallpaper

Yesterday, we saw an announcement in a business paper about an upcoming workshop on improving work systems, to make manufacturing and services more efficient: this is for Lean Sigma Six. If you want to be certified to be a consultant or to do lectures for this particular way of approaching quality control and efficiency analytics, they have different grades, black belt being one of the highest. Wow. What caught our attention was the mention that on the area of service efficiency, a vice president of one of the biggest banks is there to talk about how to delight and serve the customer. It caught our attention because every time we are asked to deposit money in someone’s bank  account, say a travel agency in an emergency to book plane tickets and hotels, we always dread it when the name of this bank comes up.

Their branch in Ortigas may yet qualify as one of the longest lines in Philippine banking (yes, some hyperbole, but some reality there as well) with only three, at times because of the lunch-hour break each of them deserves, only two tellers, even one when someone is sick or is needed in the vault to process the entry of cash from the armored van. Our office is in a business center of Metro Manila (Ortigas): you can imagine how chaotic it must be in other business centers like Makati, Binondo, and Cebu. The same top bank just had its president retire to high accolades; a bright, popular, certainly a nice guy who has an Ateneo de Manila University undergraduate degree and a Harvard Business School MBA tucked under his belt. Never mind the Management Man of the Year Award. This same bank has a cutting-edge leadership program for its executives, tie-ups with Harvard Business School, a resident Caucasian-American to just provoke and challenge the way things are done.

 

But in the end we realize: all that does not mean anything. “Culture,” according to Peter Drucker, “eats strategy for breakfast.” And unless there is a massive overhaul of its culture in this bank, all the Michael Porter-photocopied reading materials on strategy and competitive advantage, all the right diplomas plastered on the walls, all the right sound bites won’t save it from the bad service it offers customers. Why they cannot figure it out and us geniuses here in Sunfu Solutions can? The bank’s size alone protects it from having customers flee in droves, as its branch network is one of the most extensive in a country of islands.

 

Is it simply because, as legendary editor Tina Brown said: “It’s really, really difficult for the old behemoths to stay nimble in an era of such disruptive innovation. Elephants can’t tap dance” ? We doubt if it is that easy. To say what Brown said is to buy into the mantra that corporations are by default slow, wasteful, and unresponsive to customers. Organizing corporations is easily justified because of its ability to get massive undertakings executed, but supposedly in an efficient and timely way. You can’t get to build an oil rig or hospital building without a massive organization. Sunfu is able to detect the flaw in the Bank of Philippine Islands because it is small, nimble, always desperate for time? We think it is because senior managers are expected to routinely, even if only occasionally, as part of our company exercise to  do the work of its most junior staff. Meaning our senior management people go to the bank, pick up a customer from the airport, and join in equipment installations in far-flung provinces (Palompon in Leyte anyone?), as a management rule in making sure we face reality and not just face the balance sheet, we do not just meet long-existing and happy customers, and we do not just drink the kool-aid we offer. Every time one of us senior managers do this kind of work, or exposure, or quality/reality check, inevitably something will come up in the next company-wide meeting about how to avoid complacency, how to serve the customer better, what equipment or systems need to be upgraded, what rest period a personnel will need from the daily grind of a routine. Knowing reality and experiencing it is definitely one of the most important management tools: certainly better than a piece of paper saying you have gone through the Harvard Business School. A doctorate degree holder in business management who happened to be a president of one of the biggest universities in downtown Manila once told us she had never taught a single class in this university where she was president. She did not see it as being part of her job. It was immediately our conclusion that it explained why the university she managed was in shambles. At times like this, in spite of our love for management books and management gurus, we get our very healthy dose of skepticism that they even help us at all in improving.

Warning: Kimi Dora (the movie prequel), or the limits of marketing

Kimi

We watched Kimi Dora (The Prequel) last month, for the annual support we give to Pinoy creative work during the Manila film festival season. What prompted us to watch was our deep respect for Chris Martinez and Eugene Domingo as artists. There was also an interview with Eugene Domingo in Karen Davilla’s morning ANC show, where Domingo and Davilla described, in so many words, the movie as out-of-the-box, intelligent, and sophisticated. Well, since the Festival jurors snubbed the film for almost all categories, we just want to say it deserved the snub, as much as awards really are fleeting and may not even reflect quality (this time a snub was right on the spot: much deserved). The movie was horrible, an incredible waste of talent, and a lazy attempt at earning money from the previous success of the Kimi Dora franchise. Our great take home lesson here for Sunfu Solutions: intelligence and talent are never enough, success is sometimes the gate of entry to utter failure if you allow it, there is no substitute to hard work, and most importantly, there is a limit to marketing. A lousy product remains lousy, no matter how great the marketing. Sunfu Solutions must watch this film every year as a warning, as a paddle to whack us at the back of our heads every time we congratulate ourselves for doing well, for serving our clients with excellence, or simply on a day we stumble upon a winning lottery ticket (which never happens in real life, unfortunately).