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Driving down an unentrepreneurial road

November 9th, 2008 · 4 Comments

This is a crosspost from Filipinovoices.com, last October 31, 2008, before setting off for All Saint’s Day weekend.

In a few hours I shall be setting off and driving north towards my wife’s home province of Pangasinan, my adopted province since an unfortunate idiosyncrasy of my life is that I could trace seven generations back to Manila-dwellers beyond which I’ll have to go to China. But I digress — the two hundred kilometer journey will bring us to central Pangasinan, near Manaoag, home of a popular cathedral and Catholic pilgrimage site. Now I didn’t realize it until the first time I drove that trip, that there is a very big difference in seeing things when you ride a bus and when you drive. The primary difference is your keenness on landmarks. Because you need to know how much more lower back pain and leg strain you have to endure (it’s a four hour drive in light traffic, six hours in bad), as well as remember where you can stop to eat or pee, you notice the structures along the road, especially on McArthur Highway once you get off of the North Luzon Expressway.

One thing I immediately noticed are the various stores that line McArthur Highway. You wouldn’t really notice one store when you see it, however: you would notice it when a huge number of them are all selling the same thing, side by side. Around Bamban and Capas, both in Tarlac, it’s the stores that sell pastillas de leche and other milk-based sweets. By the time you hit Paniqui and Moncada, for around 10 kilometers it’s watermelons that line the road: there’s even a 250 meter stretch of watermelon stores. Reaching Urdaneta City in Pangasinan, a similar 300 meter stretch is lined, this time, with bottles upon bottles of bagoong. Once you reach Binalonan town, it becomes native corn, although with much fewer sellers. Leaving McArthur highway to head to Manaoag, near the church itself it’s not only religious icons and trinkets, but tupig (sticky rice and coconut meat roasted within banana leaves) is likewise peddled.

Copy this, copy that, copy cat

It’s no different from many places in the country, for that matter. Los Baños has its ubiquitous buko pie, and at one point all buko pie stores in Pansol, each one less than a hundred meters from the other were named “Colette’s”. Manila has had different “food fads” in its history; it has shifted from burgers, to shawarma, to lechon manok, to pearl shakes. But it has to be Cebu’s dried mango producers who are most guilty of gaya-gaya mentality, so much so that not only were the products the same, but even the branding was compromised.

The number of dried mango producers have skyrocketed from the 80s through the 90s due to the popularity of the delicacy as an export product, but they have some serious identity crisis. The pioneer dried mango had chosen a green package in white lettering, with a clear “window” at the lower part of the package to make the mango slices visible. Soon everyone packaged their dried mangoes in a green package in white lettering, with a window. Only one or two departed from the usual scheme (one of them went blue and green, the other changed to orange-brown).

Apparently, if the Filipino entrepreneur is efficient at anything, they are efficient in copying product offerings of seemingly-thriving businesses, down to the packaging.

A nauseating business proposition

The GEM Philippines 2006-2007 Report reveals that four out of ten Filipinos are entrepreneurs, and of those, 19% belong to the Class C segment, 54% belong to the Class D segment, and 20% belong to the Class E segment. While some people contend that these 54% are “following in the footsteps of the taipans”, it doesn’t present reveal the extent of planning, research, and marketing that these business owners apply into their business — in fact, one could assume that these businesses do not have any such activities in their enterprises.

The findings also affirm the observations I made above:

Survey results tend to affirm the common notion that the typical Filipino business person is risk-averse (segurista) and lacking in originality and innovation (gaya-gaya). Such attitude can be a hindrance to being able to exploit new opportunities and growth potentials, which is important in building dynamism in the enterprise sector. [GEM Philippines 2006-2007 Report]

The irony in this statement is that while the Filipino is, apparently, willing to go into business, they remain to be inherently risk-averse and lacking in innovation. The Report expounds:

There is a common observation (and lament) that most Filipino business owners are content with imitating other established firms rather than innovating with new and unique products and services, the so-called gaya-gaya (copycat) syndrome. This appears borne out by the finding that surveyed business owners predominantly believe that their products and services are not perceived to be unique or distinct from others. A dominant 71% of business owners indicated that they would not be seen by customers as offering something new or unfamiliar.[GEM Philippines 2006-2007 Report]

Unfortunately the effects are adverse, profit-wise. Put copycat syndrome and cutthroat competition together with a lack of marketing, and what you end up with is a bunch of palengkeras ready to kill each other off. Without the prosperity brought about by high profit margins, it seems that poor Filipino entrepreneurs will remain poor, in spite of the fact that they have chosen to put up a business.

They aren’t following the footsteps of the taipans, after all.

Taking a road less travelled

According to the Principles of Entrepreneurship publication of the US State Department, the concepts and ideas that make or break the business can be categorized into four:

  • An existing good or service for an existing market. This is a difficult approach for a start-up operation. It means winning over consumers through merchandising appeal, advertising, etc. Entry costs are high, and profit is uncertain.
  • A new good or service for a new market. This is the riskiest strategy for a new firm because both the product and the market are unknown. It requires the most research and planning. If successful, however, it has the most potential for new business and can be extremely profitable.
  • A new good or service for an existing market. (Often this is expanded to include modified goods/services.) For example, entrepreneurial greeting-card makers use edgy humor and types of messages not produced by Hallmark or American Greetings – the major greeting-card makers – to compete in an existing market.
  • An existing good or service for a new market. The new market could be a different country, region, or market niche. Entrepreneurs who provide goods/services at customers’ homes or offices, or who sell them on the Internet, are also targeting a new market – people who don’t like shopping or are too busy to do so.

Emphasis mine.

Note that while the ordinary Filipino would-be entrepreneur thinks that the safest route to go is to offer products and services that has an existing market, they do not realize that going up against existing competition makes the business less viable. Unfortunately the illusion of safety — and perhaps, the misconception that it is easier to mimic an existing operation — leads them to the cutthroat, opportunity-devoid copycat market that typifies the business environment of the unsuccessful Filipino entrepreneur.

Blast-freezing one’s way to success

That being said, local taipan wannabes must learn to focus their efforts on the more fruitful ventures of offering a new or modified good or service to an existing market, or offering an existing good or service to a new market.

There are some businesses that are becoming big this way. Lety’s Buko Pie in Los Baños is a good example of a business that was able to find ways to offer a new or modified product to an existing market, and at the same time offer an existing product to a new market.

Deluged with numerous buko (coconut) pie competition, Lety’s turned its attention to an unsolved problem with buko pies: microwaving them would turn the pies soggy. With the help of the Department of Science and Technology, Lety’s was able to find a solution: blast-freeze the pies to prevent ice globules, which form during conventional freezing, from coming up. A nice side-effect: their buko pies can be frozen up to 12 months, which allowed Lety’s to export their products abroad.

Going off-road to genuine entrepreneurship

It is clear that while the Filipino is not bereft of technical skills and capability, they have much to learn with regards to business savvy, risk-taking, and innovation. If Filipinos (beyond the usual Filipino-Chinese) are going to achieve success, much effort should be taken to be able to help them think out-of-the-box, reduce risk-aversity, and evangelize the virtue of innovation (or more specifically product-development), which in turn would lead to a much productive and high-profit business environment.

The lessons of the current state of entrepreneurship in the country should not be ignored, or worse dismissed — further education in entrepreneurship should be nurtured for the lackluster nation to be able to catch up with its more prosperous (and under the hood, more adventurous) neighbors. It’s high time the Filipino entrepreneur should learn to drive off of the unentrepreneurial, risk-averse, copycat road.

Tags: Ekonomiya · Industriya · Negosyo · Uncategorized

4 responses so far ↓

  • 1 joma // Nov 20, 2008 at 8:44 pm

    hi!
    if the solution to those who find an article boring is to delete their comment, then you may do it here.

    haha!

  • 2 Jon Limjap // Nov 21, 2008 at 8:55 am

    joma,

    I don’t mind if you find it boring. You can never, ever please everyone. ;)

  • 3 ed villanueva // Nov 24, 2008 at 3:35 pm

    You forgot to mention the lechon Manok along Mabalacat and then peddling of Alimango and aligue after that,down the way to Tarlac the tinapa peddlers and all the way down to the next town young boys and girls peddling big shrimps or cat fish,I love to travel whenever Im home for a vacation and by car all the way up to Baguio and too interested to check along the way what these people are selling not to mention my passion of checking restaurants and coffee shops along the way and indeed there are a lot of choices from fastfood to ihaw ihaw from balut to halo halo the lists are endless .What an exciting way to earn a living but I hope and pray that those young children peddling by the road are going to school and their parents make decent money to make their ends meet.

  • 4 Spidey // Feb 5, 2009 at 10:44 am

    Contrary to the other guy who read your blog, I found it informative. I can use the info to teach my kids how NOT to do business.

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