Club hosts winner of business award
Molly Madden | Wednesday, October 15, 2008
Jaime Augusto Zobel de Ayala, winner of the 2007 Harvard Business School Alumni Achievement Award, said it is possible to help out poor communities while at the same time making a profit in a lecture hosted by the Entrepreneurship Society Tuesday.
Ayala spoke to students about how he has developed business solutions that engage impoverished areas while still moving forward with economic growth.
Ayala is the CEO of the Ayala Corporation and received the award for providing water for poor areas in his home country, the Philippines.
At the start of this project in 1999, only 26 percent of people in the Philippines received water 24 hours a day, Ayala said. In 2007, after Ayala and his corporation had completely redesigned the project, the number rose to 99 people. At the same time, the company made a profit, he said.
“Originally in 1999, we invested $67 million into the project. The company now makes $50 million per year off this venture,” Ayala said.
He said this new way of doing business is exciting and it also does a lot of good for those in need.
Ayala said business ventures that create a social development agenda will help to alleviate poverty in some of the poorest areas of the world, but the process will not be without its hardships.
“Businesses will face both operational and cultural challenges,” Ayala said. “They have to take their social development agenda and integrate it with a business strategy.”
In order to do this, Ayala said businesses must know about the culture and the people they are trying to do business with and remember that, in some cases, they are working with people living below the poverty line.
“Businesses that are setting out on these ventures need to expand their market but also reach people who have less money to spend,” Ayala said. “They need to think of whole new ways to bring costs down.”
“You want to touch communities at the lowest level of income and make them your customers,”Ayala said. “In order to do that, you have to make it beneficial to them.”
The biggest challenge that companies will face is changing the way that they do business and adapting their methods so that they will fit with the community and people that they are trying to reach, Ayala said.
“The companies that enter into this have to work with these low-income communities in different ways than they normally would,” Ayala said. “These are markets that are growing around the world and we have to deal with them in whole new ways.”
He said this new way of doing business is doing a lot of good for less fortunate people all over the world and is also profitable when the companies approach the enterprise in the right way.
“There are great opportunities to get good returns by expanding into these poorer areas,”Ayala said.”If you tackle these areas correctly, you will make a huge profit.”
Ayala said companies must consider people as well as money when they make decisions about their business ventures.
“Business is not just dealing with numbers and marketing; it also deals with people,” Ayala said.”We can have capitalism that fulfills social development and addresses the needs of people around the world.”