By Sherisa P. Nuesa
STRATEGIC maneuvers during crisis times have been truly instructive, especially to boards and leadership teams. In the heat of the recent pandemic, landmark moves included ACEN Corp.’s bold expansion in the renewable energy space (locally and abroad, supported partly and aptly by green financing), Manila Water Co., Inc.’s $500-million sustainability bonds and a strategic alliance with Trident Water Co., as well as Ayala Land, Inc.’s launch of AREIT, Inc., the country’s first real estate investment trust.
While much has been said about large publicly listed corporations, it is equally worthwhile to delve into the story of a moderately sized listed company, Far Eastern University or FEU. This 95-year-old institution demonstrated resiliency and imagination, even as the whole education space, specifically private schools, faced sweeping challenges then that struck at the very core of their business model. Moreover, these began long before the era of COVID-19.
The legislated transition to K-12 starting in 2016 triggered industry-wide, prolonged (five-year) dips in student enrollments. As bottom lines of affected private schools headed south, the law on free tuition for state colleges and universities quickly followed in 2017. These statutory stresses were compounded by the tidal wave impact of technologies and their concomitant methodologies and processes that schools in the country then were just starting to imbibe.
Thus, when the pandemic and lockdowns hit, many private colleges and universities were simply caught off guard. In September 2020, the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA) reported that of 756 schools surveyed nationwide, an overwhelming majority registered 20% to 60% declines in enrollment. A few closures happened. How FEU silently navigated through this backdrop has been an interesting learning journey, which can be dubbed as “lessons not from the classroom.”
The following ideas are not necessarily novel, but in examining prescriptions for a recovery roadmap, a few applied learnings from the past could contribute to a simple refresher course.
1. Reinvent a relevant, compelling value proposition as a constant process
A value proposition, defined by “Blueprint to a Billion” as the fundamental benefit delivered to customers, should outlast any financial crisis. Thus, companies should not freeze in a squeeze, and think as much of a rebound even as firefighting is going on. If an organization is starting to think only now about reigniting growth in this economic upswing, it is probably late. Companies should constantly think of staying ahead of the pack, especially as competitors within and outside most industry playgrounds have multiplied exponentially. Technology innovations, pandemic shocks and supply chain gaps have unleashed thousands of fresh or rehashed players, new entrepreneurs and product and service innovators, online or not. “Work-from-home” or “work-anywhere” setups have expanded geographical markets. Industries are being reshaped everywhere and more transformations are likely forthcoming.
Companies could reformulate, repackage, redistribute or even totally revamp their products and services, and those who understand their customers intimately will know the value, functional or emotional, as ascribed by the market. They should also be reading signals and readying for the next wave, the next frontier. More than ever, businesses should protect and enhance the current and potential value benefit — whether in the content or quality, the mode of delivery, the image proposition or the response time. Rethinking one’s fundamental advantage does not stop.
Embracing technology and addressing environmental threats, FEU launched at least three years before the pandemic a leading online learning management system, Canvas, and later added others, both in the academic and administrative spheres. It likewise trained its faculty and students on digital literacy, not without difficulty at first, and set up the support infrastructure as well for both online and blended learning systems.
With keen awareness that students would eventually clamor for the campus experience, the university did not halt school renovations and campus additions either. A senior high school was added in four locations, while construction at FEU Filinvest-Alabang progressed. The Roosevelt schools, acquired in 2016, were also renovated and expanded, and this 90-year-old brand added three campuses to the FEU Group of Schools (now nine school campuses nationwide, plus three joint ventures). And right during the pandemic, key investments were made in the Good Samaritan Colleges in Cabanatuan City and in a nursing school in Brunei, the first foray outside the country.
2. Reprioritize strategic risks as paramount
“A car has brakes so it can run faster.” Make risk analysis a strategic tool. There will always be opportunities even in downturns. Resist the urge to slash costs or alter the growth path simply to conserve cash, without balancing financials against the more impactful threat of eclipsing a hard-earned business advantage. A blemished brand value or one that is no longer as heavily differentiated will take time to recreate. A financial approach is a crucial leg of any strategy, but it is the business strategy, the overall business model, that drives or dictates the financial strategy, not the other way around. Even in the middle of uncertainties, a company can step on the business accelerator, provided the risk threshold boundaries are drawn. Knowing the danger zones (what is the worst that could happen?) and managing them can unlock game-changing, audacious ideas.
At the height of the health crisis, the COCOPEA survey showed that as of September 2020, about 3 million students in the country had not returned to school. The industry saw layoffs and cutbacks in investments and other expenditures. FEU similarly tightened its cost watch, but understood risks beyond operational or financial, and set its course for a strategy-based expansionary response.
3. Repower leadership through teams and teamwork
“None of us is as smart as all of us,” goes a saying by global author Ken Blanchard. The big ideas and, more importantly, their coordinated and smooth execution can best happen through effective and motivated teams. The level of confidence also rises dramatically when the key functional units are fully in sync. The one at the helm should possess an ability and feel to choose the right leaders around him or her, to form a cohesive team that can execute well. Execution is key, because a vision stays on paper unless it is carried out in the market.
FEU attributes its mix of new learning modalities (asynchronous remote lessons, fully online or hybrid applications) to each school group designing and implementing its own system approach. From this empowering policy came experimentations, an Innovation Center and a mastery-based individualized learning enhancement system (called MILES) that was developed in-house. FEU continues to reap benefits from an aligned Board and management stewardship and a reinforced faculty and workforce.
4. Revisit the organization’s understanding of governance themes
Certain governance themes are pervasive and inescapable — artificial intelligence (AI) or machine learning, DEI (diversity, equity and inclusion), climate change and social missions. Make sure that the organization-wide know-how and articulated policies for these fields go beyond what are prescribed in governance manuals.
AI, especially generative AI, and data science, can and should work for us, far more than we can imagine right now. These should be part of boardroom discussions. Gender diversity has demonstrated in certain studies that it can enhance performance in measurable ways, and many have seen it work (including highly respected male champions). Climate impacts have been staring at all of us, with the recent months seeing the hottest temperatures globally, and sea divers witnessing the sad bleaching of valuable corals, even locally. Finally, citizenship duties and social governance must find their way in the business case — improvement only for the balance sheet is not sustainable for the long haul.
Among the happy accolades for FEU, whose board has three female directors, are World Universities of Real Impact rankings (among the top 100 global innovative universities, for three years in a row); the first academic EDGE Green Building certification in the Philippines; and continuing Golden Arrow Corporate Governance awards. Its FEU Public Policy Center remains a haven for socially relevant topics. The university remained profitable all through the extended crisis years. As early as 2022 and continuing through June 2023, its system-wide enrollment, revenues and net income have already exceeded pre-pandemic levels, an unmistakable rebound.
In a wave of recurring volatility and dynamic movements, businesses should also be constantly reimagining and relearning — unlocking valuable insights, developing fresh knowledge and capabilities, and delivering lasting outcomes.
Sherisa P. Nuesa is a board director of Far Eastern University, Manila Water Co., Integrated Micro-Electronics, Inc. and AREIT. She is also a board adviser of Metro Retail Stores Group and Vicsal Development Corp. and a trustee of the Nextgen Organization of Women Corporate Directors.
Her past directorships include Ayala Land, Inc., ACEN Corp. and ALFM Mutual Funds Group. She also served as chairman and co-founder of the Justice Reform Initiative, and as director of the Institute of Corporate Directors and the Financial Executives Institute of the Philippines (Finex). She was awarded the ING-FINEX CFO of the Year for 2008.