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Success is sweeter after overcoming a crisis PDF Print E-mail
Written by Wilson Lee Flores   
Monday, 07 July 2008
If your actions inspire others to dream more, learn more, do more and become more, you are a leader. — US President John Quincy Adams

One hundred and twenty young Filipino-Chinese entrepreneurs from the Anvil Business Club recently invited PLDT and Smart Communications president and CEO Napoleon "Polly" L. Nazareno to talk at a private dinner. Honorary chairman George Siy gave the introduction and vice president Stefan Tong, the club's first Malaysian member and president of Keppel Philippines, moderated the lively open forum.

The low-profile Nazareno shared two success stories. First was his inspiring personal saga as the son of a humble family rising to the heights of corporate leadership, and second was the innovative business strategies of the PLDT conglomerate which, under chairman Manuel "Manny" V. Pangilinan and Nazareno, has an astounding net profit of P36 billion pesos per year. Nazareno cited the visionary MVP as "an exacting chairman who works up to midnight and sleeps at 2 a.m."

He said PLDT has a "flat organization of only five levels, where people have no titles and no two-page job descriptions" and he's the only person with a corporate title "because it's required by law."

He said PLDT employees are creative, dynamic and "not regimented." The employees are given targets and paid well with up to 22nd to 24th-month bonuses. He said PLDT hopes to continue enabling people via ecommerce, mobile banking and others. PLDT is also looking at entertainment, content creation, plus an aggressive campaign to support small and medium enterprises (SMEs).

The PLDT Group is the Philippines' most valuable firm with market capitalization of P439 billion, 30,000 employees and the biggest telecom giant with 32.6 million wireless subscribers. PLDT also has huge call center operations with 14,000 employees, now its fastest-growing business.

More significantly, Nazareno pointed out that the PLDT Group has helped create entrepreneurial opportunities for about one million people who now sell their Smart load or eLoad, not only as sari-sari-store owners, but even as enterprising students, employees, professionals and entrepreneurs.

Doors Of Opportunity Are Opening

The soft-spoken and good-humored Nazareno revealed that he was a scholar in elementary and high school at a top private school in Cebu City "not because I was a particularly outstanding student, but because I had an exceptionally persuasive mother. She approached the rector and told him that she wanted all her four sons to be schooled by the Jesuits, but could not afford it. So she asked the rector to grant her children scholarships. As it turned out, the rector said yes, and we were all accepted."

Nazareno said that in school, unlike his brother Gus who "is a very bright guy and was a naturally gifted student," he had to work really hard to maintain his grades and not embarrass his mother, Linda Monandarte Logarta-Nazareno.

The first lesson he shared with Anvil members was, "Doors can be opened for you. But that won't matter very much in the end unless you deliver and perform."

After his college studies at San Carlos University in 1971, Nazareno worked for two years selling farm equipment and supplies for Sarmiento Securities all over northern Mindanao. He then studied at the Asian Institute of Management (AIM) in Makati, where he learned to cope with pressure because students there were deliberately overloaded with reading assignments and case studies "that it is simply impossible for you to finish everything." He learned a new lesson here: "The discipline of prioritizing and focusing on what I thought was really important."

Communicating Directly With People

The next part of his corporate career saw Nazareno become plant manager of the cigarette lighters division of Phimco Industries in Manila, which made Feudor lighters. The firm did well, but floundered when a competitor came up with a better technology and sold their products at a lower price. When his firm suffered losses and had to lay off employees, Nazareno was given the dreadful task of firing people.

Instead of avoiding the terrible task and despite his then not being yet fluent in Tagalog, Nazareno decided he had to personally tell the bad news to his rank and file. He prepared his Tagalog presentation with help from colleagues, practiced it and told the retrenched employees the bad news. Everything went smoothly. He said they would be first to be rehired if the firm recovered.

"I learned the need to communicate directly with people," he said. "You have to face them not only in good times, but more so in bad times."

The biggest challenge to Polly Nazareno as a corporate leader came in 1998, when he became president of Pilpino Telephone Corp. or Piltel, which he described as "virtually a zombie then —one of the walking dead. It had US$850 million in debt. It had no cash. Its cellular business had been decimated by cloning and stiff competition from Smart. Its network was not GSM and therefore could not compete in a market where text messaging was driving growth. And finally, it had 2,500 employees."

Nazareno said that letting Piltel sink would have been bad not only for parent firm PLDT (which First Pacific had then just acquired control of), it also would hurt the whole Philippine banking system. They then made the painful decision to save Piltel.

In his first meeting with creditors where he declared a moratorium, he "told them that I was sorry but I could not pay up. Three people stood up and walked out. It was a slap in our face. But we persisted."

In the next two years of loan restructuring and reforming the firm, the stress took its toll on his health. His eyesight started to fail and his eye doctor advised him to change his job. Nazareno didn't give up.

After two years, Piltel signed a master restructuring agreement with creditors and this became the first successful major restructuring agreement in the Philippines that was done on a consensual basis and did not have to go through the courts.

Today, Piltel is debt-free, its Talk 'N Text brand is the third biggest GSM cellular service in the Philippines and it is a very profitable company contributing to the phenomenal success of PLDT.

"This experience taught me the need for perseverance once a well-thought-out decision has been made, despite the great odds."

Nazareno concluded: "I learned my most valuable lessons not from situations where we were doing great and everything was bright and cheery. Success is sweeter when you learn the bitter lessons of failure or when you overcome situations of great danger and difficulty."

BULL MARKET, BULL SHEET column By Wilson Lee Flores
Monday, July 7, 2008
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