Q&A with Pong Ejercito on Customer Development

Q1: You are an industrial engineer and you started as a methods officer in the finance function in 1977 for Unilever (then PRC). How did this influence your thinking process in your long career in Customer Development?

A: Industrial engineering, in my view, is the application of science in business.  The professional advance of Customer Development (previously called Sales) from traditional beginnings has made it beneficial for practitioners more honed in logical and quantitative business disciplines such as industrial engineering.

One of the mantras in industrial engineering that I like is: “there is always a better way”. This idea has motivated me to address any problem with a better solution than I started with.

Industrial engineering equips one in both total system and detailed process approaches.  These points of view enable one to move from looking at the big picture to delving into detailed processes to improve results.

One learns in industrial engineering that the organization performs best when the organizational goal and the individual goal coincide. This was motherhood for me until I saw the potential motivational impact when it happens. So it is really worthwhile finding out how to make individuals put a stake in the organization.

Being a methods officer and projects manager in my initial work took me around the business and enabled me early on to see and understand the different processes of the Company and how they are inter-linked in generating business results.  This gave me the perspective that in order to deliver higher sales one cannot go it alone. In Customer Development, one has to be well supported by the demand side (marketing), the supply side (supply chain), and the enablers such as HR, Finance and IT..

As a part of the finance function then, I was steeped in the mindset of expense control and risk management to optimize profit – very important indeed even if one was responsible for the generation of revenue or in pursuit of market shares.

Q2 You became the sales director and also board member of Unilever Philippines in 1999. You worked with many trade customers and developed preferred supplier status with many of them. What does it take to be strategic partner of trade?

A: When I was in Unilever Philippines, we valued the vital role of our customers in enabling us to gain effective access to shoppers and consumers. The strategy in dealing with each key retailer and channel was part of the total company strategy.  How we allocated scarce resources – human and financial – had to consider both the short-term and long-term value of the relationship in the success of brands and the business as a whole.

We had to understand and respect the vision, mission and character of each retailer we dealt with. In this way, we could chart a roadmap based on partnership with each one.

We were fortunate to have had a slew of brands that had a strong footprint in the stores. This meant we could engage with retailers in a number of categories where our brands were important.

We trained and developed our key account managers to be competent in representing the Company and managing the interface with customers. The relationship was not to be transactional but strategic, therefore win-win and long-term.

We also built inside the local business or tapped, regionally or globally,  expertise in a host of mutually-relevant issues such as shopper marketing, category management, use of information technology, supply chain, etc. that can benefit our business with key retailers. Indeed all the capabilities inside the Company could be harnessed in the service of our customers if needed.

The guiding formula to achieve strategic partnership was a proper balance of Brands, Science and Relationship.  The approach of building trust and relationship is still and will always be important to any human interaction. All things being equal, who would like to deal with the less reliable, less pleasant and selfish (not win-win) supplier? However, this is no longer enough.  The supplier must bring valuable knowledge, insights and expertise that will lend credibility to his proposals and enable a beneficial exchange of viewpoints. Finally, the interaction should truly add value to the supplier’s brands and retailer’s category in the store, which must in turn be significant in the retailer’s business.

Q3.  Your team has won many customer collaboration awards. What are the critical success factors of collaborating with key retailers since manufacturers and retailers often times have conflicting goals?

A: In principle, manufacturers and retailers need each other. While there may be conflicting goals, they have an important common goal of maximizing sales in the store, which is a strong reason to collaborate.

Each retailer seeks to build his competitive, sustainable strength in the market through unique qualities, capabilities and target shoppers. The manufacturer should recognize and take into account such differentiated qualities of the retailer in creating and implementing a strategy for growing with the retailer. Different strokes for different folks, not one size fits all.

The retailer will appreciate manufacturer’s initiatives that not just gain for the manufacturer’s brand but also for the total category and total store.

Successful collaboration requires mutual trust that each party will behave in a certain way. Both must adopt a win-win approach and a long-term view, and this philosophy has to be demonstrated continually over time.

In my experience, support by the highest level (CEO) and across the different functions in the manufacturer’s organization for the customer strategy, initiatives and the relationship will be extremely valuable. The quality of the customer team and their compatibility with the retailer will be vital. The ability to execute basic processes, such as order-delivery, promotions, etc, and initiatives  and deliver commitments will be an essential pre-requisite to deepening the collaboration. Being able to share useful updates and insights on relevant industry and category developments would be helpful as well.

To continuously improve in the manner of collaboration, one must listen closely and openly from the retailer either through direct feedback or through some form of survey or other on the perceived priorities for improvement.

Q4 When California Manufacturing was bought by Unilever, you had to integrate a food sales force into a beauty and personal care company. What is the most challenging part of an integration? If you were to do it all over again, what would you have changed?

A: Bear in mind that these were two organizations with a lot of talent and success, and with strong teams and cultures. CMC had dominant 80-90% market shares in a number of categories such as bouillon, spreads, soups, sinigang mix.  As a sales force, CMC had a track record in building strong brands through impactful retail merchandising and presence.  Unilever Home and Personal Care was a much bigger business and had also demonstrated much success in highly competitive categories in home care and personal care in both modern trade and general trade.

The challenge therefore was how to motivate the individuals and teams to “leave”  the old organizations, to ”join and embrace” the new one and to adopt one common vision in the shortest possible time.

This change would bring benefits to the business that were easy to understand – more scope in dealing with customers, greater cost effectiveness, sharing of best practices, more opportunities for career growth, etc.

However, the individuals would have to be reassured that they and their colleagues would be treated fairly, with respect and given the same opportunities like everyone else. It was about influencing both the hearts and minds of everyone.

Trust was of paramount importance. Effective communication and delivery on what was communicated was key.

We communicated the benefits of the change to the organization and to the people.

We communicated the anatomy of the change and where we were, so we could all see the change process and what was needed to succeed, in an objective way.

We communicated the logic of the new structure and what we would achieve together, our common shared vision.

As a leader, I tried to know each individual from the CMC side, and their needs and aspirations.

We listened openly to everyone through frequent periodic dialogues to address concerns as quickly as possible.

We created a transition monitoring team composed of members from the two sides to tie any unanticipated loose ends especially administrative ones.

We organized a teambuilding outside the offices which encouraged introductions and interactions to create and then smoothen relationships that did not exist before.

In the end, despite the risk and difficulty, everyone responded positively and it became a very successful integration. It made the business ready for growth in sales and efficiency within a short period.

Q5. You were expatriated by Unilever to China in 1993-96 as National Sales Operations Controller and again in 2008-11 as Managing Director of Unilever Korea. How does one ensure success as an expat?   I understand you instituted major changes while in Korea.

A: I do not claim to be an authority on expatriation as I have had only two assignments in a cumulative span of nearly 7 years. However, based on my personal experience of being an expat and dealing with expats, I can say that it requires everything one needs to succeed in his home country—and more.

Additional demands include being able to accurately understand the market, the operations and the people—within a different culture, using a different language, over a reasonably short period of time. Even if the language used in business may be the same as one’s own, there are still fine distinctions to be made, particularly in countries where the social norm is not to completely verbalize what one is thinking.

Closely related is the issue of cultural understanding—how locals behave and why; how locals expect the expat to behave and why. The expat cannot take for granted the various do’s and don’ts peculiar to the host country as they play a strong role in relationships and effective communication.

An expat must be able to project a sincere, positive perception and appreciation for his host country and its people. This naturally paves the way for much smoother relations with the locals.

Likewise crucial is effective communication with his superior(s). The expat should be able to secure from them a clear mission and objective, as well as continuing feedback, encouragement and support.

Particularly for an expat whose superiors are not based in the same country,there is the added challenge that comes from complex reporting lines and infrequent contact with superiors.

Finally, having a personal support system cannot be under-estimated. This includes the family and the immediate household, as well as informal contacts established within the host country. They provide a constant source of balance and inspiration that enable an expat to manage the inherent challenges encountered in a foreign assignment.

Apart from being expected to achieve excellent business results, a successful expat must leave behind a legacy of great leadership by example.He provides for seamless transition by training a competent group of leaders ready to assume the cudgels of responsibility. He puts to effect transparent governance practices, as well as a culture conducive to high-level performance.

Q6. Some of the Mansmith Young Market Masters Award (YMMA) winners from Unilever pointed to you as instrumental in their development not just as a marketer but as a person. What is your people philosophy?

A: I consider the success of my people as my personal success.

I believe in setting high standards in recruiting for my function. Training and development only work with good raw material. When I led the Customer Development team in Unilever Philippines, I thought that the performance of our team was pivotal to the success of the business.  And because the function lay at the important, often challenging, interface between the external and internal points of the Company the function was where, I thought, leaders and talents of the Company could potentially come from.

I believe that leaders should spend much time to know the members of his team, even those lower in the organization and those who have just joined.  The leaders should know their strengths and weaknesses, their potential and performance, so that they would know where they could contribute and develop and what they need to learn and improve.

The Company had a strong process for developing the performance and potential of individuals.  I believe in  widening the opportunities for individuals in other assignments, including in other countries as well as in other functions.  Such outside opportunities not only serve as a reward but also accelerate the maturation of individuals, give them confidence to deal with new situations, and enable them to bring back new ideas.

I believe in encouraging high-potential individuals with career plans, and in coaching them to deliver higher performance. I believe in enabling people to be the best they can be.

I believe in communicating a vision for the team that will empower and motivate everyone to a common goal.

I believe in the recognition of superior individual and team business performance and innovations by their peers, leaders and other members of the organization.

I believe in creating a learning organization where people take responsibility for their own as well as their group’s learning. This will enable the continued pass-on of basic and higher skills, innovation, and deepening of expertise.  It takes a village to raise leaders.

To make people sustainably successful, I believe in creating an organizational culture that has the proper balance of strong results orientation, infectious teamwork and high motivation toward individual development.  Creating such a balance of powerful elements is a result of sustained focus by a group of people over a period of time.

Q7. You are now a consultant for the supermarket operations of SM Retail. How do you think the retail landscape in the Philippines will change in the next decade?

A: I have a positive view of the future.  Many economists foresee that the Philippines will continue to grow handsomely as all the lead countries of ASEAN have done a few years back.

Demand will continue to grow as the country continues to benefit from buoyant OFW remittances, BPO growth, more international and local tourists, more infrastructure investments, growth in the workforce and rise in household income. With the income distribution as it stands, much of any increases in disposable income will quickly find their way into demand in the retail market.

The growth in demand will trigger more investments in modern stores.

Such growth will not only be in Manila but also in other cities and in provincial towns which are also rapidly urbanizing. Dispersal of modern stores will correspondingly happen. More and more, consumers will find it more convenient and desirable to source even their fresh requirements from modern stores.

A parallel development to more modern stores will be consolidation as leading chains continue to expand  by building new stores or buying existing stores from local operators, in order to widen their footprint in the market.  The leading chains will become more efficient with the learning curve from operating more stores and the economies of scale.

Formats will evolve in different areas depending on the specific needs for planned/destination and convenience/top-up shopping missions. The more densely populated residential and office spaces are and the more difficult it is to navigate through traffic, the greater the need will be for convenience shopping.  Big spaces for planned/destination shopping are becoming scarce in Manila and will also be so in other key cities in the coming years.

Sari-sari stores will continue to occupy an important role especially in the rural and low-income areas.

Leading retailers will strive to be abreast of foreign standards of store designs and concepts as shoppers become increasingly appreciative of the aesthetic aspect of stores.

Foreign retailers will invest if they find that a) profitability reaches their threshold level and vis-à-vis other countries to invest in, and b) ease of doing business is acceptable. Experience of current foreign retail investors will provide a litmus test.

With ASEAN economic integration, there will be more scope on the side of local retailers to source their merchandise. The increasing appetite of consumers for aspirational higher-end products with the much higher exposure of consumers to foreign goods through travel, gifting (OFW) and  non-traditional, social media will only fuel this search for other sourcing options.

Technology such as online shopping and then pick-up or delivery will be deployed more and more to create competitive advantage in giving more convenience to the already harassed workforce.  It will add more complexity and cost to retailers so they will initially proceed with a degree of caution. Technology will have to be explored to generate greater efficiency in the supply chain especially with an expanded network of retail stores.

The retail industry will continue to be competitive not just in number of stores but in ability to attract shoppers with each store, to build their loyalty, and to deliver efficiency/profitability. These competitive arenas signal the need to further professionalize the industry.

Business succession and governance will be important elements to sustainable success for some of the leading retail chains.

Q8. You are the immediate past president of the UP Upsilon Sigma Phi Alumni Association. How does being a frat member help you in your career?

A: I was fortunate to have joined a fraternity from which one could look up to and be inspired by many role models in different fields. In general, these role models developed their talents, skills and attitudes and acquired knowledge to enable them to become good leaders and individuals in the service of their organization, their community or the country.  The motto was: “we gather light to scatter.”

Being a frat member which requires having to adjust to individuals of diverse backgrounds, personalities and professions helped me develop my social skills. As a frat member, I had the benefit when I needed of seeking the counsel of many well-meaning individuals who could willingly give practical advice based on their experiences.

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