Filipino family firms must localize, globalize

Filipino family firms must localize, globalize — Harvard prof


Family corporations in the Philippines must both globalize and localize—that is, they need to develop their export potential and adopt global best practices—in order to build resilient corporations, a Harvard professor said Tuesday.

Dr. Ranjay Gulati, a professor of Business Administration at Harvard Business School, spoke at the Asian Institute of Management (AIM) on keeping family corporations strong and thriving even in times of uncertainty.

And times of uncertainty can actually be good for some firms, he said, as they provide rare opportunities for “break-away companies who play offense rather than defense.”

Gulati has first-hand experience of how businesses are conducted in the Philippines after doing consultancy work with a top local bank and a top natural gas power generation firm. He described Filipino family companies as emerging-market-based with the rise of the middle class, and advised them to be more customer-centered rather than being too identified with their product.

Gulati also likened managing a business to parenting, and the way a company deals with its employees—by being a neglectful, permissive, authoritarian or authoritative “parent”—can affect its success.

Authoritative management gives employees high levels of both direction and warmth/support. However, said Gulati, some cultures may prefer the authoritarian way, which involves a high level of direction and a low level of warmth/support.

Gulati said workers should be regulated, but also encouraged to be more entrepreneurial. He counseled bosses that they “can never over-communicate” what is expected from each employee. In rewarding high achievers, he said, managers must keep in mind that different people value different things, so employees may want to be rewarded with a raise, a promotion, more responsibility or less responsibility.

Also noting that “we all think we’re better than what we actually are,” Gulati said bosses must also “spend time with those who are not promoted” and motivate them to do better. “Treat a man as he is and he will remain so; treat a man as he ought to be and he will become what he can and should be,” he said.

Gulati also advised companies to make visible commitments and monitor their progress so that they won't get hampered or side-tracked by what he called “hidden commitments.” As an example he related that while Kodak announced that it would go digital as early as the 1980s, it continued to focus on making film, which brought it little success.

The AIM partners with individual professors rather than with schools to allow the institute more freedom and scope in its lectures. It said it is now looking into inviting more Southeast Asian faculty for future lectures. — BM, GMA News