Lopez Group chairman Manuel M. LopezLopez Group chairman Manuel M. Lopez (MML) said Lopez Group companies must continue to focus on delivering customer value despite the substantial drop in share prices in the stock market.

Speaking to top executives and senior officers at the midyear performance review on July 27, MML said: “The stock market will be the stock market. It is for secondary trading of shares. The important thing is we keep doing our job to enhance the value of our companies, to create wealth in a sustainable manner, and to proactively manage the risks that affect our businesses. I know that if we do our work well, the investing public will eventually realize how they have grossly misjudged our performance. But until then, we just have to stay focused on our strategic plans and execute with passion and whenever possible, with perfection.”

The stock market in July revisited lows from 2016. In the same period, ABS-CBN Corporation and Lopez Holdings Corporation share prices fell to levels last seen in 2009 and 2010, respectively.

While expressing concern over the effect of the peso’s depreciation on the Group’s consolidated debt, MML, nonetheless, said the recurring earnings of First Gen Corporation and Energy Development Corporation (EDC) are more stable this year. Meralco signed a power supply agreement for the purchase of the output of the San Gabriel natural gasfired power plant and EDC has recovered from plant outages caused separately by an earthquake and a typhoon in 2017.

"Better recurring earnings from the power group will improve our expected income all the way to the ultimate parent, which is Lopez Inc. Because Lopez Holdings is now debtfree, any dividends we receive, less operating expenses, can flow freely to the public and other shareholders,” MML said.

He also mentioned several projects Rockwell Land Corporation is working on en route to what is expected to be another record-setting performance.

“There’s the Aruga Hotel here at (Rockwell) Center, that will be ready next year. There’s the beachfront development in Mactan, Cebu, which will ground-break next month or so. The Vantage in Kapitolyo, Pasig is on schedule. There is still this commercial joint venture called Santolan Town Plaza, at the White Cross property in San Juan, which is now full steam. And we just delivered RBC Sheridan to hopefully, very satisfied tenants, and more than 90% of the units there have now been taken.”

Finally, MML commended ABS-CBN Corporation for “doing admirably well despite all the constraints and negativity that is being hurled its way.” Its prime time show “FPJ’s Ang Probinsyano” is entering its third year delighting audiences. He said ABS-CBN’s singular focus on its customers, primarily its viewers and the subscribers of SKYcable and SKYbroadband, have benefited the company. This focus has kept ABS-CBN in touch and connected with its customers and has allowed it to deliver on its commitment to bring them the best of Philippine news and entertainment.

Creating ‘antifragile’ organizations

In the same meeting, First Philippine Holdings Corporation chairman and chief executive Federico R. Lopez (FRL) told executives about keeping tabs on areas where the Lopez Group may be fragile and how to create organizations and people that are “antifragile.”

FRL shared insights from the book “Antifragile: Things that Gain from Disorder” by Nassim Taleb. Fragile suggests anything that is delicate, easily damaged or destroyed, and “by inference does not like harm, volatility, randomness, uncertainty, disorder, errors or stressors.” In searching for an exact antonym, Taleb coined the term antifragile to describe things that get better from chaos, disorder, uncertainty, stressors or harm.

FRL said it would be better to build antifragile organizations instead of resilient ones, which means being able to bounce back to their original state, or robust ones, which means being able to resist damage up to a point.

He said this in the context of having to do business in a “severely broken” world. FRL cited the increasing frequency of extreme weather events—flooding, heat waves, droughts, Category 4 and 5 storms and wildfires among them—as observed and recorded by scientists from such institutions as the Massachusetts Institute of Technology, the National Oceanic and Atmospheric Administration, and the National Aeronautics and Space Administration.

“No doubt the planet is faced with many mega challenges. Lots of them focused around the nexus of how we use and what we do with energy, water, food and waste. All these will need drastic solutions on the way we live and produce the products and services that sustain us day to day—from power, water, real estate, and the robustness of our infrastructure. These have enormous implications for all our businesses and require all of us thinking through what it will take for us to survive and thrive in a warmer, scarcer and more open world. Succeeding in this respect can open up enormous opportunities for us,” FRL said.

At the same time, FRL said many companies in the Lopez Group still need to define their distinctive capabilities, similar to how Amazon was able to build five key capabilities to succeed as a “super aggregator of customers and sellers.”

“In many ways our various companies have done well over the years, but gone are the days of high double-digit returns. Many of our businesses are swimming in red competitive oceans or highly disruptible ones. In most of them I notice we’ve not yet spelled out the distinct capabilities we need, to have a ‘Way to Play’ that demolishes competition and creates new market space using those strengths. This is something we need to keep working on if we want to continue creating blue oceans to play in,” said FRL. (Story/Photos by: Carla Paras-Sison)

FPH chairman Federico R. Lopez