Female urination device, headlamp, foldable silicone bowls and cups… The list of things that I never thought would end up in my Amazon shopping cart goes on.
For someone who has never been camping or trekking, I still wonder what drew me to sign up for a 10-day long backcountry expedition in Patagonia, Chile. I generally consider myself a risk-averse person, where most decisions I make are based on careful assessments of logistics, details and plan Bs. But this time it was different; Had I actually given much thought about the details of this trip (10 days with no shower, the physical burden of carrying a 50 lbs bag, being without a phone the whole time, dealing with the aftermath of your period, etc) I don’t think I would’ve had the courage to sign up. However, I’ve learned to become more comfortable with taking risks and playing with the unknown since I came to CBS. So instead of focusing on the details, I simply thought of a famous quote, “Life begins at the end of your comfort zone.” As someone who has always lived within a certain boundary of comfort, I figured this was a great opportunity to push myself out of my comfort zone and find out which version of me will show up at the end.
The current version of me takes a slew of vitamins each morning, is heavily dependent on freshly brewed coffee, applies multiple layers of skincare, and puts on a dental retainer at night. Geez, I never realized how high-maintenance I was until I started packing for this trip and decided none of these were worth the extra weight I need to carry on my back. Deciding which items are essential enough to make the cut is an interesting process of recognizing how much time and effort we allocate each day on trivial matters. I wonder if everyone else on this trip had similar thoughts while packing.
It is the day before the big expedition, and as I write this post in my nicely heated hotel room I’m still not sure what to expect for the next 10 days. Whether I’ll come out at the end as a disordered mess, a changed person with new life perspectives, or somewhere in between, I really have no clue. But one thing I know for sure is that it will be nothing close to my expectations, for better or worse.
Now that we’ve returned to the joys of modern plumbing and
food that hasn’t had to be rehydrated, there’s been time to reflect on our
expedition in Patagonia.
Some students refer to the trip as “Patagucci,” the
implication being that an opportunity to earn 3 academic credits while hiking
in the Chilean wilderness must be a business school boondoggle. I’m fairly sure
the mental image conjured by most people is of a bunch of students decked head-to-toe
in Patagonia mountaineering apparel, sitting around a campfire with
marshmallows, singing camp songs. The reality
was very different. As arduous as the journey was, each of us came back grateful
for the experience. What’s more, we walked (or in some cases, hobbled) away
with some important takeaways on leadership and team dynamics.
uncertainty- don’t avoid it. There were so many moments when we
faced risky and unpredictable situations. We had to make decisions with very
little information. We’d start out on a promising route and have to change our
strategy partway through because the way we’d chosen was impassable. In some sense,
this was the way in which the trip was most analogous to the business world-
leaders face constant uncertainty in daily operations. Sometimes the greatest
measure of the leader is not how well they plan, but how well they adapt to
vs. the narrative. In every situation, there are the
objective facts and the story we tell ourselves about those facts. E.g., We’ve
been hiking for 6 hours. My pack is roughly half of my body weight. My feet are
blistering in my sodden boots. These are all indisputable things that are happening-
we have no control over the facts. The question becomes: will we choose to look
for the best in a situation, or the worst? Some of the most effective leaders
in history are those who are able change the course of events just by shaping
the narrative around them.
you make a decision, own it. On my day as designated leader, I
had a lot of doubt regarding whether I was making the best decisions for the
group, or if there was a better option. I felt personally responsible for the
well-being of my team, and wanted to make the day as smooth and easy as
possible for them. That was not to be! I had to do the best I could with the
information I had, and then stand by that choice and not second-guess it. No
one wants to follow a leader who is constantly apologizing for their decisions,
or wishing they had done something differently. Leaders should learn from their
mistakes, but should also be able to distinguish between mistakes and
circumstances beyond their control.
team is crucial. We had a lot of really tough days
during this expedition. Each of us was tested in different ways. No matter how
bad things got, I always knew I could rely on the people in my group. I was so
grateful to be part of a team that worked every day to be positive, supportive,
and helpful to one another. There were days when it was so hard to stay
optimistic, or even be pleasant, and hardly anyone complained, even despite great
hardship. Our success was due to everyone’s positivity, selflessness, and work
ethic. I realized how crucial it will be throughout my career to have a good
team to fall back on when times are hard.
As challenging as the trip was, I miss
it. There was a beautiful simplicity in having to do nothing more than get from
Point A to Point B in a day. There was a sense of pride and resilience. There
was a daily feeling of gratitude. It was the hardest thing I’ve ever done, and
also one of the most rewarding.
Looking out my window at a grey, snowy Morningside Heights, it seems hard to believe that just a few days ago I was still in bright, sunny Santiago. Our trip was exhausting, amazing and surprising all at the same time. Though our packed days of programming would wear out even the most seasoned business traveler, we were all so fortunate to have had the opportunity to explore this country and meet with a few of the businesses that have made it a success. We learned about the specific developments in the Chilean economy, we learned about the general challenges faced by markets shifting from an industrial to knowledge-based economy, and we got to know our peers better. Since you have heard a great deal from me about my thoughts on the program as well as our meetings during the week, I’d like to use my last blog post as a chance to share the thoughts of my classmates from the program. Their perspectives, questions and commentary added so much to my experience in Chile!
“The fact that we were able to look behind the scenes and communicate with the highest levels of management of interesting companies was very valuable. I think Chazen organized everything very well, and most compliments goes to Carmen Concha [program teaching assistant] who has been able to pull off this huge effort without a hitch. It was surely one of my CBS highlights.”
– Chayenne Wiskerke, CBS Class of 2013
The group enjoying the private tour at Amayna Winery on the last day of our trip
“I thought the trip was a huge success. It was quite a learning experience to hear from executives in some of Chile’s largest businesses about their growth strategies in Latin America’s most stable economy. I was also impressed by how much I learned from my classmates. Sixteen different countries were represented on the trip, and it was great to compare notes about the different cultures. Carmen, our TA, Professor Preston, and Katrina from Chazen all did an amazing job at putting this trip together.”
– Adam Breitman, CBS Class of 2013
“The trip was a fabulous opportunity to learn about the Chilean economy as well as successful business models in South America. The speakers were very inspiring and the factory visits were particularly interesting. Also, it was great to meet so many new classmates.”
– Anne Kronschnabl, CBS Class of 2014
“Chile stands out as an economy and a country destined to be a leader in Latin America and possibly on the global stage. The sheer determination of its immigrant-infused population has really made a huge difference in the country and the region. Similarities can be easily drawn between Chile and the US during its growth post-World War II. Chilean government is a great player in this regard, providing the appropriate working environment and facilitating the impressive level of growth and prosperity. I am certain that, as Chile transforms more of its working class from poverty to middle class, new challenges await. It will be interesting to see how Chile grows over the next 30 years.”
– Varghese Mathew, CBS Class of 2013
Though I mentioned it time and again in this blog, Chile has impressed me in so many ways. This country has been through many difficult times and only recently re-joined the democratic world as it continues on its path toward development. Over those past two decades- relatively little time when talking about the development of a country- Chile has become one of the leaders in the world in terms of economic growth and has truly created a development model worth of emulation by any country seeking to boost economic growth and the living standards of their citizens. The eagerness of everyone we met with to help us learn more about this amazing market was key to making this a very memorable and informative trip for all of us.
Since arriving here in Santiago, it has been emphasized time and again that Chile relies strongly on its open, export-driven economy. While the open economy strategy has worked very well here over the past decade, there are complications on the horizon. Los vecinos- or the neighbors- of Chile include Peru and Argentina as well as regional partners such as Colombia. While Peru and Chile have a very strong working relationship that I will discuss later, Argentina is facing a number of its own challenges that are beginning to impact the way other countries in the region perceive it. And the Colombian market is heating up quickly, making entry expensive.
As Chile’s second largest and formerly most significant trade partner, Argentina’s trade regulations create complications for a country where exports are key. While Chile is all about efficiency, Argentina has a number of protectionist policies in place as well as a very powerful unionized labor force. In 2008, the Argentine state repossessed assets from a joint venture with Spanish energy company Repsol, sounding alarm bells for the international investment community. Among the biggest critics of these problematic policies has been formerly close ally, Chile. When asked to comment on recent movements toward a further closed economy in Argentina, Gonzalo Arenas, president of the Chilean parliament’s Economy Committee said, “The protectionist policies not only generate disappointment but also attack free markets and free international trade principles. We should begin thinking in reciprocity measures.”
We heard a more tempered but still very concerned attitude toward Argentina and future investments there almost every time we spoke with a company representative. Particularly interesting was our conversation with Falabella, Chile’s largest retailer. It should also be noted that the company has diversified into a number of sectors including home improvement stores, private label credit cards and retail banking services. Our speaker mentioned a number of interesting facts on growth of Falabella’s sales in Chile, Peru and even Colombia but took a long pause when glancing to the near side of the map at Argentina. “It’s difficult to manage our product mix in our department stores there because there are many restrictions on the types of goods we can bring into the country. And banking services there are a substantial challenge. At present, we do not have plans to grow in Argentina simply because we view the risk as excessive relative to the potential growth in profitability.” While prospects for continuing investment in Argentina are not strong, there are others in the region that Chile seems very interested in.
Peru has been mentioned by almost all of the companies we met with- whether Banco Santander, retailers Falabella, food producer Carozzi, even the Western world’s biggest copper producer Codelco– as a strong candidate for future growth. Chileans also seem to view Peru as a trailing indicator of their own progress. Chile seems eager to integrate its economy further with that of Peru. For example, as we learned at a meeting with Superintendencia de Pensiones (Pension Oversight Board), Chile has passed legislation allowing Peruvian workers to move their pension withholdings back into a Peruvian pension plan if they choose not to stay in Chile. Time and again we heard that Peru is still between five and ten years behind Chile but that it is showing strong signs of moving in the right direction.
And then there’s the more distant but dynamic Colombia. One of Chile’s largest food product producers, Carozzi, expressed a strong desire to move into the market but pointed out a number of challenges. “We have to make an investment in Colombia or we won’t remain regional market leader. But we need to make it worth our while. That means strong brands with strong multiples and high volume. We don’t see that company available for acquisition in the Colombian market right now at a price we consider exceptable. Most candidates have valuation of upwards of 20 times EBITDA.” said Gonzalo Carozzi, partial owner and CBS ’10 alumnus.
Though we have been extremely busy attending mining presentations, speaking with tech startups, touring factories and even tasting wine, we did find time to fit in some fun. Below are photos from a number of events and sightseeing activities we’ve done over the past few days:
Now that I have been in Santiago for about two days, I feel I have absorbed enough to make some observations about the culture and business climate. Our meetings with executives from banks, forestry companies, airlines and even chocolate stores have been extremely helpful in generating a better understanding of what doing business in Chile is like. If you don’t have time to read the rest of this blog post, let me sum it up for you in one word:
It feels almost as if all the executives we meet with have coordinated their messaging to ensure that we are repeatedly reminded of this defining trait of the Chilean economy. Coming from a very large market – the US- where there are various population centers, geographies and climates it’s hard to understand the constraints under which Chile has managed to do a stellar job of growing its economy.
As I mentioned in my previous post, Chile’s population is right around 17 million people. And according Juan Pablo Castro, Head of Research at Banco Santander Chile (the second largest commercial bank in Chile), the average income per capita has grown over the past 40 years from roughly $9,000 in the 1970’s to upwards of $17,000 today. While this growth is remarkable, it still only amounts to about $248 billion in total income. This is a very small market compared to a country like Brazil or Colombia. What this all boils down to is Chile’s need to be an exporter of both goods and services. Because the domestic market reaches saturation very quickly, the country is one of the most open economies in the world today and has free trade agreements with over 90 countries. Though not directly related to the Chilean economy, a particularly interesting point brought up during our discussion was the challenge this local subsidiary of the large Spanish firm Groupo Santander, SA, has faced from ratings agencies eager to reduce its rating because of ties to its parent. The case of Banco Santander highlights the critical role of corporate governance and creating appropriate separation between parent and subsidiary, especially when one is disproportionately affected by a market downturn while the other is reporting strong growth.
Chile’s laser focus on only producing goods in which it has a competitive advantage is very impressive. For example, the country used to assemble cars and trucks domestically. However, it was eventually decided that this was not a best use of Chile’s labor force and resources, and today the country imports virtually all of its vehicles. On the other hand, the Chilean climate gives this country a unique advantage in the lumber and paper pulp market. As we learned during our visit to Arauco, where we met with CFO Gianfranco Truffello, certain types of trees grow significantly faster in Chile than in North America. This gives the company a tremendous advantage and allows it to get higher yield out of its land holdings in order to produce the paper pulp. The mining industry, which I look forward to learning more about later in the week, is another good example of how this small country is a net exporter of raw materials to the world but imports almost all of its finished goods.
In the services area, Chile faces similar growth ceilings. One of Chile’s best known companies, LAN, is a perfect example of the need to expand outside of the country’s borders. The airline recently merged with Brazilian giant TAM to become LATAM Airlines. The challenges of integrating with a Brazilian firm- with substantial language and cultural barriers- is one of the most interesting parts of the new company and learning about how LAN prepared for and continues to manage the integration process was a highlight of our discussion. LATAM Airlines now servers a substantial part of the South and Central American market, allowing what was a small Chilean airline founded in 1929 to become the leading airline in Latin America. Today the combined company serves over 60 million passengers a year and recorded a combined revenue of nearly 3 times that of its closest regional competitor.
Though we have yet to dive in to the large-scale retail experience here in Chile, we literally got a taste of what the entrepreneurial climate is like for aspiring retails today when the founder and CEO of La Fete Chocolate, Jorge Mckay, came and spoke to us about his business as well as the challenges of starting and growing a small venture in Chile. What was most impressive about our discussion, aside from the delicious chocolate we all received (yum!), was Mckay’s passion for optimizing the customer experience.
The expertly decorated and laid out stores looked like they could have been on a chic corner in Soho and the focus on providing an optimal selection of products for customers, even at the risk of complicating the production process, was what really impressed our group. He concluded his presentation with a few words that really stuck with me: “First build a dream, then you can build a business.
Though we have not had much free time, our guide managed to squeeze in a trip to the Mercado Central as well as the Plaza de Armas, the main square downtown.
We also attended an outdoor movie last night, which was a lot of fun and made for a great opportunity to experience Santiago as a consumer. The event allowed us to see how companies market themselves in Chile since the outdoor space was surrounded by promotional booths for wines, food and other goods.
Thus far Chile has been everything I expected and more. This country has a surprisingly sophisticated and developed feel. Everyone has been very welcoming and seems to really want to show us how much this country has to offer. Tonight we are off to a reception with CBS alumni (being abroad is no excuse to stop networking after all) so there will be more updates to come.
Peru, Colombia, Argentina, Uruguay, Brazil, Ecuador. All places I have visited and or worked in at one point or another over the past several years. Speaking Spanish and having a long term interest in doing further work in this region, I was a little surprised when I thought about the gap in my regional knowledge as I have yet to visit Chile. But that is going to change tomorrow.
When I heard about the Chazen Global Immersion Program in Chile focusing on family businesses and the unique challenges they face in Latin American markets, I wasn’t sure that this was the class for me. Unlike some of my peers in the class, I don’t have any stake in a family business and don’t plan to start one in the near future. However, upon further contemplation I realized that this was a valuable experience for me regardless of my (lack of) involvement in a family business. I attribute this in large part to two factors:
1) According to a report by the Family Firm Institute, it is estimated that roughly 75% of all firms in Chile are family owned and controlled. While one might initially think that this is just a very large number of very small businesses, in fact, about 65% of the medium-to-large enterprises in Chile are family owned.
2) Chile’s GDP growth- though somewhat volatile over the past ten years- has held steady at 5% to 6% throughout the past three years and even as the fortunes of its neighbors rise and fall, Chile has retained a sound economy and government about 20 years.
Just these two pieces of information were enough to convince me that this will be a very valuable program! But that was five months ago, so lets fast forward to now.
Though I didn’t know much about Chile prior to this course, my peers and I have all been making an effort to understand more about the country and its progress over the past several years. One of the most surprising things I discovered during our pre-trip lectures was that Chile is one of only about 20 countries in the world that, according to the World Economic Forum’s Global Competitiveness report, is successfully moving from an efficiency-driven to an innovation-driven economy. Such a move will put this small country of about 17 million people alongside Western Europe and North America in terms of development. The report also ranks Chile as number 33 in terms of global competitiveness (out of 141 countries), placing it ahead of all its South American peers. An economy with a majority of family owned businesses that is on a steady growth path and outpacing its cohorts is a country every businessperson should know more about.
In a recent interview with CNN, the country’s president Sebastián Piñera highlighted the “Four pillars of success for Chile: Education, science and technology, innovation and entrepreneurship, and more employment.” He went on to state, “Our vision is to transform Chile into a developed country and to eliminate poverty by the end of this decade. We hope that we will be the first in our region to achieve that… by being an economically open and integrated country.” My classmates and I can’t wait to see firsthand how Chile’s efforts are progressing and how family businesses are having an impact.
Hannah Stern ‘13
(Follow my travels on twitter.com/Iamblond007) [blogging from sunny Rio de Janiero…for now]