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BAB237/ JUNE 2016

GRUPO SALA
Improving Lives, Spaces, and the
Environment
“My grandfather was an entrepreneur; my father was an entrepreneur; I, too, wanted
to be one,” Humberto Rodriguez, founder and chief executive officer of Bogotá, Colombia,
based Grupo SALA (gruposala.com.co/es/),1 began as he explained the group’s origins to the
case-writer in June 2015.2 Rodriguez continued:

“My opportunity came in 1994, when the Colombian government decided

to privatize public services. The new policy was spelled out in a “little green
book” (see Exhibit 1 for a photo of the book’s cover). I carefully read the
book; made a decision to play in the new space; prepared a PowerPoint
presentation; got on a plane to Brentwood, Tennessee,3 where I made a pitch
to Gary Neill, who I had met some years earlier and had said I could call on
him if I wanted to start a venture and needed financing; and he offered to
invest $100,000 in my new venture.
I returned to Bogotá and started Grupo SALA–‘SALA’ is an abbreviation
for Soluciones Ambientales para Latinoamérica, or Environmental Solutions
for Latin America–in a 62-square-meter office and with Gary’s $100,000

1This and other Grupo SALA related websites mentioned in the case are in Spanish; depending on the
browser, an English translation should be available. The case-writer used Google’s translation
function.
2Unless mentioned otherwise, all quotes in the case are based on interviews with the case-writer
during the latter’s case-development trip to Colombia in May 2015.
3 See Exhibit 2 for a visual context placing Brentwood, Tennessee, relative to Bogotá, Colombia.
This case was prepared by Anirudh Dhebar, Professor of Marketing at Babson College. It was developed as a
basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative
situation. It is not intended to serve as an endorsement, source of primary data or illustration of effective or
ineffective management.

Copyright © 2016 Babson College and licensed for publication to Harvard Business School Publishing. All
rights reserved. No part of this publication can be reproduced, stored or transmitted in any form or by any
means without prior written permission of Babson College.

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Grupo SALA
BAB237/ JUNE 2016

investment. I was founder, chief executive, and chief mail boy. That was in
1996. Today, the group operates in three areas–solid waste, dangerous
residues, and water and sewer–and has 3,270 employees working in eighteen
companies. Drawing on three foundations–entrepreneurship, technology
innovation and regulatory management, and successful environmental
management–the group recorded COP [Colombian pesos] 256 billion in
revenue in 2014.4 We have grown at an average of 21.3% over the 2002-2014
period, and we have achieved much over our first two decades. Indeed, we
have transformed Colombian attitudes toward waste and the environment.
The question is, what next? How do we continue to grow, evolve, and
transform?”

Central to the answer to the “What next?” question were Rodriguez himself and his
approach to entrepreneurship; the evolution of Grupo SALA’s businesses and ownership; the
group’s various innovation endeavors to date; Rodriguez’s and his leadership team’s
management philosophy; the opportunities available to Grupo SALA in 2015 and beyond;
and Rodriguez’s vision for Grupo SALA’s long-term impact on Colombian lives, spaces, and
environment.

Humberto Rodriguez, the Person and

the Entrepreneur
Humberto Rodriguez grew up in Cartagena de Indias, a port city on the northern
Caribbean coast of Colombia (see Exhibit 3 for a map of Colombia; in 2015, Cartagena, with
a preserved colonial-era inner core, was the fifth-largest city in Colombia and, after
Barranquilla, the second-largest in the region). After completing high school in Colombia, he
attended college in the United States, graduating with a bachelor’s degree in fine arts and
architecture from the Rhode Island School of Design in Providence, Rhode Island. Rodriguez
then returned to Colombia for graduate school at the Universidad de los Andes in Bogotá,
the country’s capital city. After completing his MBA in 1986 at the age of twenty-three,
Rodriguez worked for five years in Bogotá with the Sanfor Group, which had brought the
plastic industry to Colombia. Rodriguez started at Sanfor as assistant to the group’s
president, then became production manager, and finally commercial manager in two of
Sanfor’s companies. “I had great bosses,” Rodriguez reminisced, “and I found Sanfor a great
school to learn to manage and to make money.”

During his stint at Sanfor, Rodriguez met Gary Neill, who had come to Colombia
because he needed a shrimp provider for the Captain D’s restaurant chain in the United
States and a company called Ancora in Barcelona, Spain. The Sanfor Group had tried to start

4 One COP was worth 0.0003 USD in September 2015. The Colombian peso had seen considerable drop in value
compared to the U.S. dollar: from 1 COP = 0.0005 USD through most of 2014 to 1 COP = 0.0004 USD during the
first half of 2015 to 1 COP = 0.0003 USD during the second half of 2015. “Billions” here refers to the U.S.
convention of 1 billion equals 1,000 million, which is different from how 1 billion is measured in Colombia–1
million.

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Grupo SALA
BAB237/ JUNE 2016

a shrimp business at the same time as Neill’s visit. Named Camarones del Caribe, it was one
of Sanfor’s two non-plastic business initiatives in Colombia. Neill and Rodriguez worked on
a deal for two years, but Rodriguez stopped the deal when he found out that a customer in
Portugal was willing to pay twice as much as Neill was prepared to pay. Rodriguez stopped
the deal, but he did not leave Neill without a supplier. Rodriguez helped Neill organize
supply from another local Colombian company, and it was then that Neill told Rodriguez,
“Whenever you think or plan to start a business of your own, please let me know. I will like
to work with you.”

In 1991, Rodriguez left Sanfor and returned to Cartagena, where, after initiating
several small enterprises, he opened the city’s first Hyundai car dealership. Five years later,
in 1996, Rodriguez decided to take advantage of Colombia’s new public-service privatization
policy and took Neill up on his offer.

Rodriguez reflected on his upbringing and how his childhood memories playing
baseball shaped his view on entrepreneurship in his first conversation with the case-writer
during an April 2015 visit to Babson College in Wellesley, Massachusetts:

“Prior to my trip to Babson, I asked myself some hard questions. One

question was, Why was I so keen on taking risks given how I had grown up
with a very strict father and gone to a De la Salle Brothers of the Christian
school where the teachers taught with a strict ruler in their hands to snap you
if you made any mistake? No errors were allowed at home or in school. And
then I remembered how I loved playing baseball from when I was six to when
I was twelve. What particularly struck me was how I could make mistakes and
get struck out and try again and again and again, trying to do my best.
Baseball helped me understand that to fail was part of the game, that to make
mistakes was all right. Maybe that’s why I still love baseball and that is why,
when presented with an opportunity, I started Grupo SALA.
I believe you need to do five things well to be an effective entrepreneur.
First, and consistent with my baseball story, you must dare to act without the
fear of failing. Second, you must have deep market knowledge–the major
players, the value propositions, the entry/exit barriers, where the market is
going, and so on. Third, you must have a credible reputation in terms of
following through and doing what you said you will do; this reputation will
give someone confidence to invest in your idea if a bank loan is not an option.
Fourth, you must develop, nurture, and maintain an extensive network of
social relationships; you never know whose help you will need sometime in
the future. And fifth, you should have an inner circle of counselors who you
trust, who will listen to what you have to say, and who will give you sound
advice–advice that may be difficult to hear.”

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Grupo SALA
BAB237/ JUNE 2016

Grupo SALA, the Enterprise

SALA GROUP offers environmental solutions with a focus on the
development of an environmental culture in the country and excellent
service to our customers. Our services include innovation and technology for
scanning and treatment of municipal and hazardous waste, to the water
and sewage services.5

Mission
Contribute to environmental sustainability through the management
and provision of sweeping public areas, collection, transportation, recovery,
monitoring, treatment and / or disposal of ordinary and special waste in the
most environmentally friendly manner, as well as by providing supply
services water and sewer; further developing activities that induce positive
environmental change community culture in the midst of a rigorous
framework of respect for the law.

Vision
In five years SALA group should be the most important environmental
management company in Colombia, being recognized as an entity
responsible with their customers, employees and the environment, and
sustainable development processes leading to the commitment to transform
the environmental culture through spaces, training and development,
environmental classrooms, publications and quality services.

Grupo SALA’s Solid Waste Business

One year after founding his enterprise in 1996 with the help of Gary Neill’s $100,000
investment, Rodriguez got his first break. Working with the Danner Group, Neill’s
environment company in California, Rodriguez won a bid on the construction of a tiny
landfill in Cucunuba in Colombia’s Cundinamarca state (see map of Colombia in Exhibit 3;
the map also shows the locations of Grupo SALA’s various operations in 2015). At that time,
Colombia’s city municipalities did not have much experience in waste management and
disposal, and Rodriguez was able to leverage that first win to bid in other towns, cities,
municipalities, and regions for new solid waste business.

In a context where bids had to be won in a political decision-making framework,

Rodriguez’s start-up, not yet named “Grupo SALA,” could demonstrate that its services
helped an urban environment look clean. Visually as well as socially, and hence politically,

5Source for this and the following two paragraphs: http://gruposala.com.co/es/el-grupo/quienes-somos/.

English translation accessed August 20, 2015.

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Grupo SALA
BAB237/ JUNE 2016

the outcome could be held up by the mayor as a trophy. The latter was a useful arrow in his
quiver as Rodriguez worked on the “regulatory management” front to enable the
geographical expansion of his business. Each bid had to be won one town or city or
municipality at a time; sometimes Rodriguez won the bid himself, sometimes with a local
partner in which Rodriguez invested, and sometimes through the acquisition of an existing
player.

Accompanying the geographical expansion was an expansion in scale–collecting

more solid waste from any one geography, Grupo SALA was reimbursed by local authorities
on the weight of such waste collected–as well as expansion in scope–from waste collection,
to urban cleanup, to urban green-space management on one dimension, and to landfill
management and energy generation from landfill waste on a second.

Grupo SALA planned to generate energy from landfill waste at its landfill in the city
of Manizales, in the northwest coffee-growing region of Colombia (see map in Exhibit 3),
but the plans were never implemented because of a drop in the value of an anticipated
European carbon-offset subsidy that would have made the economics of landfill-waste-to-
energy conversion viable. The drop in value had resulted from steep drops in the price of
crude oil.

Grupo SALA’s website for its solid waste business, gruposala.com.co/es/marcas-e-

innovacion/aseo/, characterized the business as the “integrated management of municipal
solid waste” and summarized the services as follows: 6

 Collection and transportation of waste.

 Manual and mechanical sweep to guarantee the best service.
 Disposal through environmental technology parks landfill with minimal impact
on the environment.
 Correct handling of gases, leachate treatment and advanced clean development
mechanism (CDM).
 Internal advice on waste management.
 External or underground containerization.

With 2014 revenue of COP 170 billion and an estimated 7.7% share of the overall
Colombian market, the solid-waste business accounted for 66% of Grupo SALA’s overall
revenue.7 The business operated under two brands, EMAS (emas.com.co/) and Aseo Urbano
(aseourbano.com.co/), through eight companies (EMAS Cali, EMAS Manizales, EMAS
Panamá, EMAS Pasto, EMAS Putumayo, Aseo Urbano Cartagena, Aseo Urbano Cúcuta, and
Aseo Urbano Los Patios), and in twelve locations (Chinchiná, Cali, Manizales, Occidente,
Panamá, Pasto, Putumayo, and Salamina under the EMAS brand and Aguachica, Cartagena,
Cúcuta, and Los Patios under the Aseo Urbano brand). (See map in Exhibit 3 and table in
Exhibit 4. Panamá, or Panama City, was the capital of the adjoining country of Panama).

6 Source: http://gruposala.com.co/es/marcas-e-innovacion/aseo/. English translation accessed August 20, 2015.

7Grupo SALA provided the data on revenue, market share, and share of Grupo SALA revenue estimates for the
solid waste as well as other businesses.

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Grupo SALA
BAB237/ JUNE 2016

Rodriguez commented on the complex multi-brand, multi-company structure for the

solid waste business, “The different brands and companies are partly a result of history–we
started under the Aseo Urbano brand and later, in the year 2000, acquired EMAS8–and
partly because we had to accommodate local ventures that, because of jurisdictional and
contractual reasons, had to continue to be local.”

Grupo SALA’s Dangerous Residues Business

The expansion of Grupo SALA’s business scope into dangerous residues could be
traced back to 2005, when the German government offered to help the Colombian
government with special waste regulation. The offer was for up to US$4 million in
assistance, but it came with a caveat–interested Colombian parties must contract with
German suppliers and consultants. Seeing a possible opening in the near future, Rodriguez
and his team went to Spain to see how that country managed hazardous waste, typically,
special industrial waste and biomedical waste.

The main challenges in the area of hazardous waste management were not just the
collection of the waste, but also its disposal, and in particular, its incineration. When it came
to incineration, Grupo SALA had to innovate, and the innovation took the form of home-
grown technology that was both better and cheaper than solutions Rodriguez could have
sourced from Europe and elsewhere.9

In 2007, Grupo SALA first implemented the new technology, a new incinerator with
a capacity of up to 1,000 kilograms per hour of hazardous waste incineration, in a new
“industrial park.” The park was located next to the group’s urban waste management
operations and landfill in Manizales, which had quickly become the heart of many of the
group’s innovation initiatives.

Grupo SALA’s website for the dangerous residues business

(gruposala.com.co/es/marcas-e-innovacion/respel/) characterized the business in the
following terms, “We offer advice for the integrated management of hazardous and special
wastes with modern incineration systems, security cells built with heat treatment and
technology to ensure the destruction of waste, with air emissions below the required limits of
environmental regulations in force.” The web-site summarized Grupo SALA’s dangerous
residues services as follows: 10

 Waste from oil activity.

 Treatment of hazardous industrial waste.
 Treatment of biomedical waste.

8 EMAS, or Empresa Metropolitana de Aseo, was founded in December 1994 in Manizales.

9Further details on the innovation are provided in the opening paragraph of the sub-section “Hazardous Waste
Incineration and Technology Parks.” The sub-section is part of the following section titled “Challenges—
Opportunities for Innovation and Enterprise.”
10Source: http://gruposala.com.co/es/marcas-e-innovacion/respel/. English translation accessed August 20,
2015.
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BAB237/ JUNE 2016

 Hazardous waste storage.

 Advice for the proper management of hazardous waste.

With 2014 revenue of COP 47 billion and an estimated 25% share of the overall
Colombian market, the dangerous-residues business accounted for 18% of Grupo SALA’s
overall revenue. The group operated the business under one company and brand–
Tecniamsa–and offered services in four locations: Barranquilla, Bogotá, Cali, and Manizales.
(See map in Exhibit 3 and table in Exhibit 4.) In his June 2015 interview with the case-
writer, Rodriguez indicated that he expected the dangerous-residues business to grow to
50% of the Grupo SALA’s overall business in three years’ time.

Grupo SALA’s Water and Sewer Business

“Water and sewer” constituted the third leg of Grupo SALA’s business scope. Because
Spanish water-service companies had already established themselves in Colombia’s bigger
cities, Rodriguez saw opportunities in the country’s smaller towns. His opportunity came in
the year 2002, in Sincelejo, a small farming town in Colombia’s north (see map in Exhibit
3). Digging deep, Grupo SALA found an aquifer one kilometer underground; Rodriguez and
his team turned to Brazil for relevant knowhow in the pumping and treatment of water from
such great depth.

Rodriguez spoke about what Grupo SALA had achieved in Sincelejo and hoped to
achieve in the future:

“The nearest river for Sincelejo is 56 kilometers away, and the people of
the town never had access to water other than from wells–and they never
expected this state of affairs to change. We came, we found water in a deep
well, we figured out how to pump the water out and treat it, and 25% of the
town now have a steady, 24-hour supply of treated water fit for human
consumption. Our goal over the next five years is to increase the availability
to 90% of the population.”

Water sourcing, treatment, and distribution was, of course, just one phase of a
complete end-to-end consumption cycle. There also was the matter of dealing with the water
once it was used. As of August 2015, Colombia had no regulations for the treatment of used
water. Seeing the imperative for such regulations, Rodriguez worked for two years with
Colombia’s Minister of Environment to draft new regulations. The new regulations, expected
to be effective in early 2016, would allow Grupo SALA to expand its offerings in the water
services area. For the immediate future, however, Rodriguez expected “water services” to
remain a medium-sized operation under the Grupo SALA umbrella.

Grupo SALA’s website for the water and sewer business

(gruposala.com.co/es/marcas-e-innovacion/agua/) characterized the group as “specialized
operators of water and sewage” with “experience in sustained improvement in operating and

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Grupo SALA
BAB237/ JUNE 2016

financial indicators.”11 Operating in three cities–Chinú, Sincelejo, and Sincé–under the

ADESA brand,12 Grupo SALA offered “water, sewage and complementary” services in two
areas, extracting water from deep wells, and water analysis, which included quality,
tractability, and so on. (See map in Exhibit 3 and table in Exhibit 4.) With 2014 revenue of
COP 39 billion and an estimated 1% share of the overall Colombian market, the water-and-
sewer business accounted for 15% of Grupo SALA’s overall revenue.

Grupo SALA’s New Portable Sanitary Unit Business

Operating under the SeptiClean brand (gruposala.com.co/es/septiclean/), the
Manizales-based business was the result of a merger between EMAS Manizales and
SeptiClean SAS, a player with “six years [experience] in the market of portable health for the
region of Caldas, Quindio and Risaralda.”13 SeptiClean offered services in the areas of
portable toilets, wastewater management, treatment and disposal, and maintenance of
related pipes and plumbing.

Grupo SALA’s Organizational Structure

Grupo SALA managed its businesses, companies, brands, and locations out of its
headquarters in Bogotá, with Rodriguez as president and chief executive. Exhibit 5 shows
the group’s organizational structure in June 2015.

Grupo SALA’s Ownership Structure

As Grupo SALA’s business evolved, the group also underwent a change in ownership.
Two entities acquired original investor Gary Neill’s equity as well as that of a subsequent
Spanish investor. One was Criptana, the legal entity under which Rodriguez controlled his
ownership stake, and the other was ACON Investments, a middle-market private investment
firm with a $3.6-billion portfolio of investments in the United States and Latin America.
(See Exhibit 6, which captures Grupo SALA’s structure for its eighteen operating
businesses, as of June 2015.) With these changes in ownership had come a change in
performance expectations. While Neill had required a 10% per annum growth in invoicing
and EBITDA,14 the new owners had doubled that expectation to 20%.

11 English translation accessed August 20, 2015.

12 “ADESA” is an abbreviation for “Aguas de la Sabana.”
13 Source: htpp://gruposala.com.co/es/septiclean/. English translation accessed August 20, 2015.
14 Earnings before interest, taxes, depreciation, and amortization.

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Challenges–Opportunities for Innovation and

Enterprise
Although Rodriguez had grown Grupo SALA rapidly over the course of its nearly 20-
year history, the growth had not been without challenges–challenges which Rodriguez
turned into opportunities for innovation and enterprise. As of June 2015, Grupo SALA had
implemented successful innovation in three areas—changing citizen attitudes about waste
and its disposal, containerization, and hazardous waste incineration and technology parks—
and was pursuing future innovation in two additional areas—water treatment, and
sustainability and the environment.

Citizen Attitudes and Behavior Toward Waste and Its Disposal

Rodriguez’s and his enterprise’s first challenge was to alter citizen engagement when
it came to waste and its disposal. The innovation opportunity here was in at least four areas:
(1) practices that reduced the amount of waste, (2) the possible separation of organic waste
and recyclables from all other waste, (3) the means of disposing the different categories of
waste, and (4) the disposal frequency. Of the four, the first two were relatively foreign for the
average Colombian citizen, and certainly not the starting point for Rodriguez as he started
his entrepreneurial venture in the urban waste space.

The big challenge at the time–and, nearly twenty years later, in June 2015–was to get
people and businesses to be much more mindful and engaged around responsible waste
gathering and disposal. When Rodriguez first started in the urban waste business, there
were no uniform practices for the bagging or binning of residential or commercial waste, and
people and businesses simply left their trash lying around on sidewalks and streets and
urban corners. Grupo SALA addressed this gap by issuing residences and businesses plastic
bags for collecting waste and instructing people and businesses where to leave the filled bags
for subsequent collection by Grupo SALA personnel and equipment. More than plastic bags
and trash disposal and pick-up, better waste management really needed behavioral change
on the part of people and businesses. This took many years, a lot of education, and the use of
social push-pull mechanisms.

Containerization
No sooner had people and businesses started to collect waste in plastic bags and
leave these bags for pick-up than a new challenge surfaced. The timing of the waste-bag
drop-off was not always aligned with Grupo SALA’s trash-collection routine. City
neighborhoods needed some kind of buffers to avoid unsightly accumulation of waste and
trash, which led to Grupo SALA’s second innovation, containerization.

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The rationale behind containerization was simple enough. Like others in Cartagena,
the citizens of Los Corales paid a waste-collection tariff as part of their electric bills,15 they
could choose between competing waste-collection providers,16 and they were used to taking
their trash out twice a day. However, it made economic sense for Grupo SALA to pick up
trash only every other day, and the frequency mismatch was a problem. Either Grupo SALA
had to build in a cost-effective and environmentally-responsible buffer or, by default,
residents would create a buffer of a visually- and hygienically-unappealing heap of rotting
trash.

On the face of it, the use of containers to create a buffer between the disposal of waste
and its collection would not appear to be a major innovation in the sense of, say, virtual
reality headgear or driverless cars. But innovation is a relative concept which reflects the
relevance of the degree of change involved in a particular context. For citizens of the Los
Corales neighborhood in Cartagena, Colombia, containerization was a significant innovation,
and Grupo SALA pointedly held it up as a compelling example of context-relevant
innovation.

To introduce containers, Grupo SALA had to convince Colombia’s Ministry of

Environment to change the law that forced waste-collection companies to pick up the
garbage house by house, something Rodriguez and his colleagues thought was bad for the
environment, since having a truck stop every ten meters at every house would involve more
stops and gas usage than stopping once every one hundred meters at a trash container. At
the same time, such an arrangement was more efficient for Grupo SALA. The process was
much speedier and Grupo SALA employees did not have to deal with separate bags of
different sizes and weights. In the long run, Rodriguez planned to introduce two containers–
one for recyclable waste, and one for ordinary waste.

Containerization required a systematic user-education effort to accelerate its

diffusion. To facilitate such education, Grupo SALA turned to community leaders such as
Alexis Coronado, president of the Los Corales neighborhood community. Coronado spoke
about how he encouraged the trash container adoption process (see Exhibit 7 for a photo of
Coronado standing next to an Aseo Urbano neighborhood container; Grupo SALA operates
the urban waste business in Cartagena under the Aeso Urbano brand):

“You cannot just place a container on a sidewalk and expect one and all to
comply. The starting point must be a house-by-house, neighborhood-by-
neighborhood socialization process involving the education of residents (who
generate the trash and waste), Aseo Urbano employees (who must pick up the
trash in the containers), and so-called “indigenous people” (who were used to
rummaging through trash) about the benefits and costs of containerization.
For the residents, I had to convince them of three principal benefits:

15The Colombian government had determined a tariff structure for urban waste that divided a city population
into six strata, with those in the fourth level paying a certain base tariff and those in first, second, third, fifth, and
sixth levels paying, respectively, 70% below, 40% below, 15% below, 100% above, and 240% above the base level.
The base tariff wall was adjusted, in part, depending on the location of landfills relative to the city.
16In June 2015, there were two providers in Cartagena, but the initial 8-year privatization contract had expired
and any new competitor could enter the market. It was critical in this context to build credible barriers to entry.

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improved neighborhood quality, the elimination of marauding animals and

foul smells, and the disappearance of “indigenous people” hovering around.
For Aseo Urbano employees, they would no longer be sweepers and trash
pickers but technology deployers. Finally, the “indigenous people” will have a
new role (since they don’t have to ruffle through heaps of trash).
Interestingly, no one initially wanted a container near his or her house and
pushed it from location to location. Once the benefits were clear, however,
residents competed to have the containers near their homes. Why?–So they
have to walk a shorter distance to put their trash bags in the containers. Now,
I am called by other neighborhoods for advice.”

By June 2015, Los Corales had become the first neighborhood in Colombia to be
100% containerized, and Rodriguez believed the high density of containers was a significant
barrier to competitive entry. The containers came in two sizes; regular 750- and 1,100-liter
containers were more common, but, on a selective basis, Aseo Urbano had also placed larger
15-cubic-meter containers for big items. In addition, residents and businesses could call
Aseo Urbano for the pick-up of appliances, furniture, and other large trash items, as well as
construction waste. The company had seventy-two hours to pick up such trash.

Separately from the neighborhood containers, Aseo Urbano Cartagena had also
introduced a bank of three 1,000-liter hydraulic underground containers, of which two were
for non-recyclable trash and one was dedicated for recyclables (see photo in Exhibit 8).
Trash from these containers was picked up three times a week.17 The goal was to have six to
seven such systems in operation by 2016.

Hazardous Waste Incineration and Technology Parks

A third innovation was in the area of the incineration of hazardous waste. Here,
Rodriguez and his team initially looked to Europe for a possible solution. Considering the
alternatives, Nelson Gonzalez, a part-time academic and inventor, and a part-time resource
for Grupo SALA, approached Rodriguez and said, “Give me $200,000, and I will build you a
one-million-dollar incinerator that is Colombia- and U.S.-compliant, more appropriate for
the Colombian context, and three million dollars cheaper than what you can get from
Europe.” This was a significant promise, because the closest Spanish incinerator cost $4
million. It took one year, but Nelson delivered. After this innovation breakthrough for
Colombia, Grupo SALA successfully captured 35% of the Colombian incineration market.

From the incinerator project emerged a second innovation concept in Colombia–the

establishment of a “technology park” for all technologies surrounding hazardous waste,
including biomedical waste. The concept drew on Spain’s “Ecoparks,” where all
environmental solutions for a region were located in one area, and included short-term
storage for hazardous waste while it awaited incineration, security cells for long-term
storage, the handling of slush from the oil and natural gas industry, the handling of
construction waste, and the destruction of biomedical waste. For the last of these, Grupo

17 Grupo SALA had also installed five large underground containers in Cúcuta, but these were non-hydraulic.

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SALA was investing in new autoclave and microwave technologies, each with its own
capacity considerations and investment and operating-cost economics.

In June 2015, Grupo SALA was operating five technology parks under the Tecniamsa
brand, located in Aguachica, Barranquilla, Cúcuta, Manizales, and Mosquera. Rodriguez
expected the number to go up to seven in 2016.

Water Treatment
For many years, Colombia had lagged behind other Latin American countries when it
came to water treatment regulation. In 2015, the Ministry of Environment developed a new
law to rectify this situation. The new law was to go into effect in January 2016, and, in
preparation, Grupo SALA had begun operating a water treatment plant in Mosquera and was
expanding its technical team to start offering water treatment solutions on a national scale.
Rodriguez was planning to start a new business unit focusing on water treatment in 2016.

Sustainability and the Environment

Waste disposal, collection, landfills, and other forms of disposal were, in a sense,
damage control once citizens consumed products and generated trash and waste. Over the
twenty years since its founding, this damage control–whether in terms of urban waste or
dangerous residues–had been good business for Grupo SALA’s growth and economic
success. However, with the growth of megacities, resource constraints, income inequality,
and pollution, the game of consuming and trashing evermore and damage control
afterwards was not sustainable. At the same time, there were only so many landfill sites
Grupo SALA could create and fill and only so many technology parks it could establish.
Here, Rodriguez saw a fifth innovation opportunity, one that was consistent with Grupo
SALA’s greater goal of improving lives, spaces, and the environment in Colombia. This
would require innovative approaches to citizen education and action concerning
sustainability and environment. Though this would cannibalize Grupo SALA’s present
business, at least in theory, Rodriguez saw it as the only way to go in the future. His team
began to take tentative steps in this direction.

The goal was to crowd-source innovation in the areas of environment improvement

and sustainability. A simple example was the “environmental broom,” an innovation by
children using plastic from recycled water bottles to assemble a sustainable broom that can
be used for sweeping and trash collection. Not only did a team of children come up with this
concept, they had it prototyped, and they had formed an entrepreneurial venture to
manufacture and sell the brooms to EMAS.

Separately, Rodriguez was keen on making Grupo SALA a more sustainable

enterprise and bringing the sustainability message to the group’s suppliers. He and his
management team were encouraging Grupo SALA employees to contribute their innovative
ideas, and this was a key part of Rodriguez’s vision into 2016 and beyond.

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A Different Management Approach

When it came to leading and managing Grupo SALA’s businesses and its different
operating units, Rodriguez focused on three aspects: growth, organizational culture, and
environmental identity. The earlier discussion on Grupo SALA and its evolution has already
characterized the scale and scope of the group’s growth in the context of Rodriguez’s
aspirations and the expectations of his investors. Notably, Grupo SALA had achieved the
growth without adversely impacting existing operations and through the management of
local, regional, and national regulatory policy-making and frameworks.

Equally important for Rodriguez was organizational culture,18 and here the focus was
on three areas of influence: “Citizen Culture,” “My Best Culture,” and “Environmental
Culture.” A good starting point here was what Grupo SALA characterized as “my best
culture”–each employee offering his or her best to help enhance the welfare of all citizens of
the markets served by the group’s various businesses and to protect and improve the
environment where he or she lived and worked. The emphasis on “my best culture” was
consistent with Grupo SALA’s five core values: 19

1. Integrity: “We act with ethics, transparency and are consistent in what we think,
say and do.”
2. Service: “We do our best to exceed customer expectations.”
3. Excellence: “We do our work with quality, enthusiasm and commitment to
achieve challenging goals.”
4. Sustainability: “We contribute to the growth of enterprises, the development of
people and work responsibly to build a better world.”
5. Innovation: “We are open to opportunities and consistently seek new and better
ways of doing things.”

The five values were, of course, easier to proclaim than to live, especially given Grupo
SALA’s growing scale and scope, a June 2015 head count of 3,270 employees, and,
importantly, the regional and cultural variety of people from different parts of Colombia.
While management principles and policies could be constituted in Grupo SALA
headquarters in Bogota, Rodriguez realized, values had to be practiced and reinforced
locally.

Grupo SALA’s operations in Manizales were a case in point. Pablo Arango headed the
group’s EMAS Manizales business and had been with EMAS Manizales since EMAS’s
founding in 1994. Arango had a background in law and also served as Grupo SALA’s Legal
Director. He also was a voracious reader and owned a book collection the size of a small
bookstore. Arango spoke about his and his leadership team’s approach to managing the

Source: http://gruposala.com.co/es/lo-mejor-de-mi/. English translation accessed August 20,

18

2015.
Source: http://gruposala.com.co/es/el-grupo/quienes-somos/. English translation accessed August
19

20, 2015.
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operation and bringing to life Grupo SALA’s emphasis on “my best culture,” “citizen
culture,” and “environmental culture”:

Our goal in EMAS Manizales is to be the very best and to execute the very
fastest everything that is conceived by the holding group in Bogotá. And what
we have accomplished in Manizales is because of our human team.
In Colombia, we have traditionally been taught in an old-fashioned
educational system, and people tend to be confined to the boundaries of their
disciplines. Not so with my team. We are multidisciplinary, and this shows
when it comes to how we are managed. Thus, we deeply believe our individual
working habits as well as the unit’s operations must roll into the larger
mission of environmental sustainability.
This approach begins with our people. Take our employees responsible for
collecting urban waste from the streets of Manizales. We don’t see or treat
them as street and pavement sweepers. Importantly, they shouldn’t see
themselves as just trash pickers, and this is a fundamental issue of mindset,
human resources policy, and behavior. For us, all four hundred and fifty of us
working in EMAS Manizales, whether on the streets and pavements of the
city, whether operating street sweepers or waste-collection trucks, whether
working in the adjoining landfills, whether at our desks in our offices,
whether engaging local citizen and business communities, or whether
engaging municipal leaders and policy-makers, we see ourselves as being in
the service of the environment. It is in this spirit that we have expanded our
offerings for the city of Manizales to include gardening and other
horticultural services. We want not just to help the city rid itself of its trash
but to help make Manizales more livable in terms of a green and attractive
environment.
Take landfills. Most people typically want to be nowhere near an urban
landfill. In contrast, we located our Manizales headquarters next to the
landfill. We wanted to make a point: landfills do not have to be a filthy,
stinking mess. In contrast, and out of respect to the citizens of Manizales who
live in the surrounding neighborhood, we deliberately went about creating a
space that is green, clean, hygienic, and does not smell like a landfill. Thus,
we keep the immediate surroundings green and garden-like and the adjoining
hills planted with trees so the environment is wooded rather than barren. As
for landfill itself, it is sculpted into rolling hills, and we make sure to cover
every new filling with a layer of soil to stop any rotting or smell or fumes. This
is not an easy or inexpensive task seeing that, every day, we fill in an
additional 450 tons of urban waste collected from the city of Manizales and
75% of the state in a 100-150 kilometers radius. (See photos of the Manizales
skyline, the landfill neighborhood community, and the landfill in Exhibits
9A-C.)
Then, there are our people, our equipment, and our facilities. First, our
people. Our employees are partners in our quest for operational efficiency,
but they are more than that. They are our resources and our ambassadors. As
ambassadors, those working on our front lines always wear uniforms that are
washed and clean; as resources, we provide them with masks and gloves for

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their safety. We also give them a source of pride and ownership in the
business: our equipment drivers believe the trucks or sweepers are theirs;
everyday, at the end of their runs, teams wash and clean their trucks and
street sweepers. As for our facilities, we make sure they do not look like, well,
a dump. (See photos in Exhibits 10A and 10B of equipment and facilities.)
One more thing on the employees-as-resources front. We visited
employees’ homes to create a database of their families and living situations
and to survey what the families might need. Using these data, we offered low-
interest loans to purchase not television sets but basic necessities such $20
tables where the children could study or appliances such as washers, dryers,
and refrigerators–this, in addition to the usual benefits such as bonuses for
food and groceries, 3-month maternity and 2-week paternity leave, and
coverage of expenses on needs such as textbook purchases and funeral
services. Our goal is to build sustainability into employee benefits.
Finally, there is the community in which we are located. Next to the
landfill, we have constructed a building to house the Centro de Pensamiento
Ambiental or the Center of Environmental Thinking and Action. Conceived in
2010 and 80% complete by June 2015, the space has a “Bio Room” patterned
after the Getty Museum in Panama City, an education room for 10-12 year-
olds, a “ludoteca” or playroom where children can play, an exhibition and
meeting space for environment-related exhibits and events, and a theater. We
were deliberate about engaging women and residents from nearby
community in crafting and decorating the space – this, as a first step in trying
to make the community “own” the center and make it the heart of
environmental education, action workshops, and outreach efforts to the
neighboring community, the city of Manizales, and the larger region. The idea
is to reinforce the citizens’ pride in their identity and roots in Manizales and
Colombia and, at the same time, to create deep awareness of the threat of
climate change – especially among the children who, when they grow up,
hopefully will focus on improving the environment. We see the center
complementing – and not competing – with what already exists to imbibe an
environmental ethic and commitment in our society.
Of course, none of the above can be at the expense of our operational
excellence. The fact is that all of the above take investment, and this
investment needs to be financed from the income realized from our
operations. And the income, to put it very simply, is the difference between
our operating revenue and our operating costs. On the revenue front, our
contract with the city gets negotiated every five years, and you can count on a
10% tariff reduction in each contract renewal cycle. That leaves us with three
variables to play with: trash pick-up volumes, operating efficiency, and costs.
On the cost front, we watch our costs, but we avoid being cheap. Humberto
[Rodriguez] has a very simple investment philosophy: Invest not on what is
cheapest but what lasts longest and is consistent with our values. Which
brings me to trash pick-up volumes and operating efficiency. These, all of us
monitor and act on with great, great care. Thus, every EMAS Manizales truck
is equipped with GPS tracking and, back in our facilities, large indoor and

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outdoor displays constantly monitor operations, equipment, and report

statistics on the tons of trash picked up each day.

A "Shark Tank" to Pitch Ideas for Growth

On June 19, 2015, Rodriguez hosted Grupo SALA’s first “shark tank” event, in which
six teams cutting across businesses, functions, and geographies pitched innovative business
ideas in front of five judges, three of whom were from two different investment banks, one of
whom was an independent business consultant who splits his time between Washington,
DC, and Bogota, and Rodriguez himself. The event’s premise was that Grupo SALA had to
change if it were to sustain aggressive growth in the context of changing business in a
changing world, and this would require moving in new directions. Each group was scored on
the basis of the idea itself and its medium- and long-term impact on Grupo SALA’s business.
The six teams pitched the following opportunities for Grupo SALA:

Team 1: Develop a new business focused on recycling construction, excavation, and

demolition waste into new raw materials for construction.
Team 2: Expand water services to different parts of Colombia and from extraction,
treatment, and distribution to after-use recovery, treatment, and recycling.
Team 3: Expand into an end-to-end “technicare” services to hospitals, focusing not
just on biomedical and hazardous waste collection, treatment, and disposal
but also on needs assessment, staff education and certification, process
(re)engineering, on-site operations, and regulatory compliance.
Team 4: Develop patentable bioremediation-plant technology, enabling the
biological treatment of oil waste. Colombia produces light to light-medium
oil, and the industry generates a considerable amount of oil waste.
Team 5: Develop an environmental park in Yanaconas, a community in southern
Colombia which contained the landfill for Mocoa and five additional
municipalities (see map in Exhibit 3). The park would focus on ordinary
waste, hazardous waste, and the bioremediation of oil waste. The bulk of the
opportunity was expected to be in bioremediation.
Team 6: Expand into portable sanitation through an innovative “SeptiClean” public
toilet system with a total facilities and waste management solution.

The five judges picked the top three “winners” after the six groups had presented.
The winning team was Team 1 (construction debris reuse), Team 4 (oil remediation) came
second, and Team 6 (innovative portable sanitary units) third. The following day, Saturday,
Rodriguez met with the judges and the teams to discuss next steps.

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The Road Ahead?

Rodriguez had achieved much in the nearly twenty years that had passed since he
had read the “little green book,” had called on Gary Neill for a $100,000 investment, and
had started his enterprise in a 62-square-meter space. Over the two decades, Rodriguez and
his team had grown Grupo SALA in both scale and scope and had been approached to
replicate Grupo SALA’s model in other countries in Latin America. The question was, what
next and how?

Linking this question to the six Shark Tank pitches, Rodriguez shared the following
“5-year value drivers” with the case-writer:

 Construction debris business: estimated Colombian market, COP 150 billion;

mid-2015 Grupo SALA share, 1%; expected market share in five years, 30%.
 Water and sewer business: estimated Colombian market, COP 500 billion; mid-
2015 Grupo SALA share, 1%; expected market share in five years, 25%.
 Biomedical waste collection and disposal: estimated Colombian market, COP 70
billion; mid-2015 Grupo SALA share, 15%; expected market share in five years,
35%.
 Remediation of oil and natural gas waste: estimated Colombian market, COP 200
billion; mid-2015 Grupo SALA share, 1%; expected market share in five years,
15%.
 Portable bathroom business: estimated Colombian market, COP 60 billion; mid-
2015 Grupo SALA share, 4%; expected market share in five years, 33%.

“Of course,” Rodriguez added, “these are just my growth estimates given the trends
already in place. Like many young enterprises, the big question for us is of scale and scope in
terms of business and capacity and capability in terms of enterprise. Growth alone will not
be enough; we also will need to evolve and transform.”

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Exhibit 1 The “Little Green Book”

Source: Grupo SALA. Used with permission.

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Exhibit 2 Rodriguez’s Journey in Search of Entrepreneurial

Funding

Brentwood, Tennessee

Miami, Florida

Bogotá, Colombia

Source: Grupo SALA. Used with permission.

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Exhibit 3 The Map of Colombia and Grupo SALA’s Presence

(June 2015)

Source: Grupo SALA. Used with permission.

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Exhibit 4 Grupo SALA’s Businesses, Locations, and Brands

(June 2015)

Source: Grupo SALA. Used with permission.

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Exhibit 5 Grupo SALA’s Organizational Structure

(June 2015)

Source: Grupo SALA. Used with permission.

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Exhibit 6 Grupo SALA Ownership Structure (June 2015)

Source: Grupo SALA. Used with permission.

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Exhibit 7 Alexo Coronado, Los Corlaes, Cartagena,

Neighborhood President, Next to Container

Source: Grupo SALA. Used with permission.

Exhibit 8 Underground Containers Near Shopping Complex

in Cartagena

Source: Grupo SALA. Used with permission.

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Exhibit 9A Manizales Skyline

Source: Grupo SALA. Used with permission.

Exhibit 9B Manizales Landfill Neighborhood Community

Source: Grupo SALA. Used with permission.

Exhibit 9C Manizales Landfill

Source: Grupo SALA. Used with permission.

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Exhibit 10A EMAS Manizales Facilities

Source: Grupo SALA. Used with permission.

Exhibit 10B EMAS Manizales Equipment

Source: Grupo SALA. Used with permission.

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