Who are successors to our tycoons?

Truly great talents with capabilities and strategy are extremely rare and the extra margin on inventiveness, courage and prudence is even rarer and must be rewarded. — Li Ka Shing

I have always been driven to buck the system, to innovate, to take things beyond where they’ve been. — Sam Walton

The day rags-to-riches industrialist and Philippine Airlines boss Lucio C. Tan surprised the public with his move to merge his flagship business Fortune Tobacco with arch-rival Philip Morris International, this writer was interviewed by Europe’s leading economic newspaper Financial Times for our assessment. This writer believes that this is a very smart strategic move of Lucio Tan, because it would ensure long-term stability and viability for his business empire.

This move also ensures that succession in Lucio Tan’s cigarette business will pass on to world-class management professionals from Philip Morris International, without need for any relative to take charge and no need for kin to contest leadership prerogatives. I believe this move is, in a way, a brilliant exit strategy for him whereby the enterprise will still be partly family-owned but no longer family-run.

Lucio Tan’s once most-trusted sibling Mariano Tanenglian is now at bitter loggerheads with the taipan, challenging him in courts and even through the mass media, causing outside observers to speculate about the long-term future of the empire before this merger deal.

Among Lucio Tan’s many kids, Michael “Mike” Tan is diligently helping out in Asia Brewery, Inc. Another son, Lucio “Bong” Tan, Jr., is helping out with Fortune Tobacco and is well known for his love of sports like basketball and golf. Another younger son, Timmy Tan, is helping out with one of the family’s food ventures and running his own La Isla magazine for the family’s airline. A daughter, Vivien Tan, is the most high profile in media, has dabbled in business school and has recently taken the unusual path of going into electoral politics as a congressional candidate in Quezon City.

Another aspect of this merger deal is that the new giant firm shall in effect monopolize one of Asia’s most lucrative, relatively unregulated and least taxed cigarette markets. The total Philippine cigarette market is P78.9 billion, and the merger of the two largest firms will have undisputed control of over 90 percent of this still-growing market. The new enterprise shall enjoy more profitable operations due to less contentious competition, possibly less advertising revenues against each other, plus many other savings and operational efficiency advantages.

Years ago, while I was his guest in Guam, I asked Lucio Tan how he had planned out his future succession. He jokingly replied to me: “I will just sell everything and live a few years longer.”

Among the many business leaders and top business families in the Philippines, who shall be successors in the long-term future?

• Henry Sy, Sr. of SM Group, Banco de Oro (BDO) and China Bank is one of the earliest to institutionalize possible succession scenarios by publicly-listing his numerous businesses and training his children to take over day-to-day operations. Eldest child Teresita or Tessie is seen as the leader of the next generation, and she has ably led the rise of the Philippines’ biggest banking conglomerate with BDO. Other children helping him oversee the business empire include second child Elizabeth, helping with resort developments; eldest son Henry Jr. who is busy with their fast-growing SM realty projects and also active with the Christ Commission Fellowship (CCF) church ministry; second son Hans, taking charge of the malls and China Bank (which is superbly managed by the uncle-and-nephew team of chairman Gilbert Dee and president Peter S. Dee); and other sons Herbert and Harley.

• John Gokongwei, Jr. of JG Summit Holdings is one of the wisest taipans in all of Asia when it comes to strategic planning about succession and in training of his heirs. His younger brother the brilliant James Go is now boss of his business empire, a graduate of Massachusetts Institute of Technology (MIT) and whose Harvard-educated son Bryan Go has gratified Gokongwei as the nephew who volunteered to be posted in China’s booming financial center of Shanghai. The heir apparent of Gokongwei in running his publicly-listed enterprises is his son Lance Y. Gokongwei, a highly-educated and disciplined leader,  who told me he recently ran 21 kilometers in two hours at “Tuna King” Ricardo Po, Sr.’s successful Century Tuna Superbod Run at The Fort on Feb. 21. Another runner in that star-studded and biggest run of its kind was Fernando Zobel de Ayala of the Ayala Group.

• The Zobel Ayala clan has already passed on the baton of leadership from Ambassador Jaime Zobel de Ayala to his two Harvard-trained sons Jaime Augusto Zobel de Ayala and Fernando. Their family empire has gone through their own ups and declines in the past, but is now seen as a stable and well-managed conglomerate. Recently, Jaime Augusto told this writer that more important than who shall win the presidential elections in May “is that hopefully we shall have smooth elections.”

• Senator Manny Villar of Vista Land is a “rags-to-riches” billionaire who is now running for president of the Philippines. Although he is still young, he already has three well-educated kids who can succeed him and his wife and business partner Congresswoman Cynthia Auilar-Villar in running their businesses. Since second son Mark Villar seems more inclined to succeed his parents’ political tradition and now running for the congressional seat of Las Piñas unopposed, it seems the business successors in the Villar conglomerate will be eldest son and Wharton-educated Paolo Villar, also their only daughter Ateneo-educated Camille Villar.    

• The Aboitiz clan is one of the Philippines’ leading families not only in business success, but in successfully reinventing their conglomerate with new enterprises, new ideas and nonstop infusion of new-generation Aboitiz heirs taking charge as responsible successors. Despite their wealth, the family leaders and members are low-profile and humble, including the new leader 53-year-old Erramon Aboitiz who last year took over as boss of the empire after the December 2008 retirement of the successful past chief executive officer Jon Ramon Aboitiz. Unknown to most people, the Aboitiz family enterprise almost went bankrupt in 1929, but family members resiliently built up the businesses and maintained traditional family values without controversy or chaos. Although the business empire is big in transport, banking, real estate, shipbuilding, food and other industries, Erramon Aboitiz told this writer that 70 percent of the group’s total revenues now come from their flourishing power plants business. Their success not only shows the importance of having good, well-trained, humble and responsible successors, it is also crucial to seize new opportunities and to adjust to changing times in order to ensure long-term success.

* * *

Thanks for your letters, all will be answered. E-mail willsoonflourish@gmail.com or at my Facebook account.