Nazareno: Let your grandkids show you the way

ONE of the things that helps me run the companies I work for is the fact that I am a doting grandfather to five very precocious kids – one girl and four boys.

This started out as a guilt trip. You see, when I was younger, I spent all my time working. I was ambitious and wanted to build my career. I paid a steep price: I didn’t see as much of my own kids as I should have. I’m lucky my wife made up for my shortcomings. So now, I am trying to make up somehow and I do that by lavishing attention on my grandkids.

Being an active grandfather has been a lot of fun for me. Along the way, I also discovered that playing around with my grandkids was giving valuable insights into the complex and difficult challenges that many businesses face today.

The fellow I learn the most from is my 12-year old grandson Gabriel. Gabby, as we like to call him, is a die-hard citizen of the Internet world. He regularly browses the Web to pick up all sorts of information, to social network and to play online games. He also buys a lot of stuff online. Actually, Gabby tells me what he wants and then I buy it for him.

Gabby is very much into digital games. Recently, for example, he used the credit line that I provide him, to buy a Razer Black Widow, which is a top-of-the-line mechanical gaming keyboard, and, a Razer Megaladon, a 7.1 Channel Surround Sound Gaming Headset.

He also ordered an ergonomic gaming mouse, plus recording software and a 24-bit rate, 192 khz microphone to do voice-over recordings during gaming playback. He uses this equipment to play games and edit videos that he uploads to his YouTube channel. (You can check out his YouTube channel called “juvenilespawn.”)

What amazes me is that Gabby did all of this largely by himself. He knows the specs of all this equipment like an engineer. He’s done his research online and checked it out with friends. And he has explained to me, rather authoritatively, why he prefers these models rather than others.

I realize that Gabby is not the typical 12-year-old in the Philippines. But neither is he all that exceptional. Like my other grandchildren, Gabby is a digital native. They are digital natives because they have all grown up in a world where mobile phones, tablets, the Internet and other digital technologies are very much a part of life. The rest of us are digital migrants – we grew up in an analog world and had to learn the language of the digital world later in life. The generation of my grandkids is very different. To them, the Internet and social networking provide the fabric of their lives and they use these technologies in ways that utterly surprise older folk.

All this isn’t just kid stuff. This is very serious business. We recently had a strategy session in First Pacific Group of Companies and several of the expert speakers we had in that conference warned us very emphatically that we need to prepare for the day when in five to ten years’ time the digital natives grow up and take over the world. How will you deal with customers like Gabby, who are highly-informed and empowered?

Customers who can research your product, find out what other people online say about you and also get feedback from friends who, like him, are also prowling the Web for all sorts of information?

Already, the proliferation of digital technologies and services are turning entire industries inside out, making traditional businesses obsolete and replacing them with digital, Internet-based services. Take the case of retail. For example, music stores have all of a sudden become passé. Why?

Because people are buying music online. Did you know that Smart is not only the country’s largest mobile phone company – it is also one of the largest online retailer of full-track music?

I recently read a Bloomberg article on the travails facing the US retailer chain Best Buy. Just five, six years ago, Best Buy stocks reached record highs on the back of its strong business selling electronic goods and equipment. Today, Best Buy is struggling to find new directions because its stores are being used as showrooms for goods that people look over and then buy elsewhere, often online, at lower prices.

The Internet is also changing the media business. More and more, young people are getting their news not from newspapers or radio or TV but from online news services, or from Facebook, Twitter and YouTube. What will happen to the media business when bigger chunks of advertising follow young people and go online too?

The telecoms business has been affected too. The largest carrier of international calls today is not a telecom company. It’s Skype, an online service provider now owned by Microsoft that does not have a network and rides on the infrastructure of others via the Worldwide Web.

Many businesses are scrambling to cope with the disruptive changes that the digital economy is bringing. That includes us at PLDT.

We’ve done basically three things. First, we’ve focused on people – our own people and our customers. Second, we’re spending over P67 billion to modernize our networks, making more powerful, pervasive, resilient and intelligent. Third, we are innovating to create a broader range of products and services within a larger ecosystem, including services that support things like prepaid electricity and mobile health.

Let me just tackle the people component, which is important and often overlooked. I’m talking first of all about our people in the PLDT Group – the way they are organized, oriented and incentivized, and, second, about our customers. We’ve just completed a major reorganization and created business units along the lines of the major market segments that we need to focus on. We now have business units handling the individual or consumer segment, the home segment, enterprises large and small, and finally the overseas market, specifically the roughly 10 million Filipinos living abroad.

It’s still too early to tell whether this redesign will deliver the results we’re looking for. But strategically, our objective is to change our people’s mindsets.

Traditionally, our people have been focused on developing and selling specific services – postpaid cellular, DSL on fixed lines, mobile broadband and the like.

Today, we want our people to concentrate on our customers – understanding their needs and wants and then figuring out how to best address those needs and wants using our services and capabilities, including those needs that they may not even be aware of yet.

In the digital world, the one closest to the customer is king.

This is much, much easier said than done. It requires a major, major shift of our people’s mindsets. But it has to be done. We need to really understand our customers of today, and, increasingly, our customers of the very near future. This brings me back to Gabby and his fellow digital natives.

I am willing to bet that most adults, particularly people of my generation, have not been able to get their minds around the big changes that digital natives will bring to so many businesses. By the way, they will also transform our politics in unexpected ways.

Make no mistake. Their tribe will grow in numbers. Prices of smartphones, tablets and other digital devices will fall in the next few years.

Broadband Internet will be much available and affordable and will become, like cell phones, at many people’s finger tips. Haven’t you seen two-year-old kids play around with iPads with ease, with no help from their parents? Can you imagine what they can do when they grow up?

To understand the changes that are coming soon, I give my friends and colleagues this piece of grandfatherly advice: Take some time out from the daily grind and talk with your kids and grandchildren. Listen to what they say and observe what they do. You’ll probably enjoy it. And possibly find the insight to save your business, or, build a new one.

The author is the president and CEO of Philippine Long Distance Telephone Company and Smart Communications, Inc. He was named Telecom CEO of the Year during the 15th Telecom Asia Awards last April for “being at the helm of one of Asia’s most successful operators.” He was voted Corporate Executive of the Year in the Philippines for three straight years from 2004 to 2006 by Asiamoney Magazine.

Mr. Nazareno is a Cebuano and he graduated in 1970 from the University of San Carlos with a Bachelor of Science degree in Mechanical Engineering. He obtained a Master in Business Management degree at the Asian Institute of Management in 1973. He also took the INSEAD Executive Program at the European Institute of Business Administration in Fontainebleau, France in 1983.