Business Leadership in the Arab World

Business Leadership in the Arab World Change is a constant in the Arab world, and the business leaders who consistently thrive there are individuals of remarkable agility and mettle. In this timely report from The Korn/Ferry Institute, the chairmen and CEOs of preeminent corporations discuss the region’s economy, business dynamics, and unique leadership demands. They discuss forthrightly the challenges they face, including a still-developing civil society, hurdles to entrepreneurship, political instability, and education gaps. From their observations and experiences emerge powerful insights for business leaders from the East and West, and those hoping to build bridges between them. i THE Korn/Ferry INSTITUTE Business Leadership in the Arab World Contents Page Foreword. v Introduction. vii Economies. 1 Business leadership . 9 Changes . 17 Responses. 23 Conclusions. 27 Leadership profiles. 32 BUSINESS LEADERSHIP IN THE ARAB WORLD v Foreword The protests and riots in the spring of 2011 on the streets of Tunis, Cairo, Benghazi, and Manama did not arise overnight from disapproval of spe- cific government measures ..They arose from a groundswell of change taking place across the Arab world, a world where the desires of a pre- dominantly youthful population increasingly have come into conflict with the attitudes of their elderly, long-serving rulers .. With their mobile phones and Internet access, young Arabs today want to be part of the global community in a way that their parents never did .. Theirs is a way of thinking that is increasingly reflected in the region’s business community, where enterprising firms are blazing a new trail .. They are pushing forward the bounds of openness, seeking further inte- gration with the global business community, and adopting Western standards of governance .. Yet the vast majority of enterprises in the region remain family-owned firms that are stuck in the ways of the past ..They need to change, to come in line with the wider shifts taking place in the society around them ..But how are they to get from here to there? And, more important, who is going to take them there? Where are the future leaders of this fast-changing Arab business world to come from? In a search for answers to these questions, Korn/Ferry International asked some of the leading business figures in the region for their thoughts on the matter ..This report reflects their views ..We hope you find it stimulating . Bernard Zen-Ruffinen Serif Kaynar President Managing Director, Central Asia & Europe, Middle East, and Africa Turkey, Middle East, and North Africa Korn/Ferry International Korn/Ferry International BUSINESS LEADERSHIP IN THE ARAB WORLD vii Introduction Change is coming fast to the Arab world ..In recent months the focus has been on the political turmoil ..But behind the headlines, an enormously significant transition has been taking place in the business world ..Many long-established family firms are passing to their third generation, the stage at which such enterprises historically run out of steam ..Globalisa- tion and the erosion of national barriers to trade and investment are, more and more, forcing competition upon them ..Increasingly, they are having to contend with the very best .. These shifts are persuading the traditional base of family-owned enterprises to look outside themselves for new blood, for professional man- agement, and for market discipline .. They are weighing the value of Western styles of corporate governance: to look, for example, at the ben- efits of outside directors, or of a stock-market listing (with all the ac- counting requirements that imposes), or to being more transparent and more open ..At the same time, the wisest of them want to retain some of the age-old special features of doing business in the region: the long- term perspective that family obligations impose, the continuing belief in the tenet that a man’s word is his bond, and the greater modesty of behaviour and aspirations . Korn/Ferry International is privileged to have been given access to a number of the most prominent business leaders in the region to discuss some of the issues that are raised by these changes, such as: Where is the Arab world’s future business leadership to come from? From home or abroad? From men and women? How and where are people to learn the skills of leadership? What can firms do to develop their own talent, and then retain it? viii THE Korn/Ferry INSTITUTE And does the Arab world require any particular leadership skills above others? The answers to these questions bear directly on the future prosperity and well-being of the 300 million people who live in this critical region, which straddles the line between the old world in the West and the new world in the East .. This report reflects the thoughts of some of the most experienced and most successful business leaders that the Arab world has produced ..On the one hand, its purpose is to share their insights with those from outside the region who might want to do business with Arab-owned enterprises ..On the other hand, it is a celebration of business leadership in the region and, hopefully, an encouragement to future generations of business leaders ..The Arab world has much to learn from its own successful role models . Metin Mitchell Former Managing Director Korn/Ferry International Middle East and North Africa BUSINESS LEADERSHIP IN THE ARAB WORLD 1 Economies The region covered in this report has one language and one primary religion, but many differences ..For a start, its religion is not universal ..As much as 5 percent of the population is Christian ..And Islam, as all the world well knows by now, is itself divided between Sunni and Shiite .. Moreover, there are significant differences of language: the more gut- tural version of Arabic spoken in the Gulf countries; the lighter tones of the Levantine Arabic of Lebanon and Syria; and the Egyptian version, the most widely recognised, the Arabic of the 1940s and 1950s black- and-white movies that are constantly rerun throughout the region .. Historically, the economies here have been closed and protected, which has left them relatively free from international competition ..But they are coming under increasing pressure, not least from the World Trade Organisation (WTO), to open up ..Dubai-based Mishal Kanoo, CEO of The Kanoo Group, is concerned about being compelled to liberalise before the appropriate infrastructure is in place ..“Remember,” he says, “this is in many ways the wild, wild East ..I don’t have a credit system, a legisla- tive system, or a judicial system that is ready to support me ..In the West, all of these systems are in place to protect members of society ”. Loay Nazer, founder of the Saudi Nazer Group, is concerned that the lib- eralisation process that has begun may be set back by the 2008-2009 banking crisis in the West ..He fears it might be used by local officials to justify re-regulating sectors that have been slowly opening up . Saudi Arabia is the biggest economy in the region and is its representa- tive at the G-20, a grouping of some of the most powerful economies in the world .. In the International Monetary Fund’s ranking of national GDPs, Saudi Arabia comes twenty-sixth, just below Sweden and Taiwan 2 THE Korn/Ferry INSTITUTE and above Greece and Iran ..The United Arab Emirates (UAE) is thirty- seventh, and Egypt forty-second, just below Thailand and above Nige- ria .. Dubai is the region’s commercial hub, a city-state within the UAE that has grown at a phenomenal pace ..It now boasts the tallest building in the world—the Burj Khalifa—and three extraordinary man-made islands—the Palm Islands—that are often referred to, not without justifi- cation, as the Eighth Wonder of the World .. “Dubai is incredible. The quality The Dubai property market of its schools, housing, and grew at such a pace that it could not hope to escape en- services is unmatched in the tirely from the repercussions region. It is world-class in of what was essentially a glob- terms of its airline and its al property crisis in the second airport, and it has become a half of the 2000s ..Most of the hub for trade and for leaders interviewed for this re- knowledge. It is also a very port, however, see the troubles liveable city—and it is not of Dubai as being temporary .. The place has such momentum going to be built anywhere that there is now no stopping else.” it ..Mohammed Alshaya, chair- —Fadi Ghandour man of the M H. ..Alshaya Com- pany, says that “the speed of execution in Dubai was fantastic ”. But, he adds, “Dubai had to take a break, have some time off to reset itself ”. The fact that Dubai already has achieved such advanced development is almost the surest guarantee of its future prosperity ..Fadi Ghandour, CEO of Aramex, says: “Dubai is incredible ..The quality of its schools, housing, and services is unmatched in the region ..It is world-class in terms of its airline and its airport, and it has become a hub for trade and for knowledge ..It is also a very liveable city—and it is not going to be built anywhere else ..It’s not the first country on earth to default ..We’ve seen it in South America and we’ve seen it in Russia ..They all come back and re- bound ”. BUSINESS LEADERSHIP IN THE ARAB WORLD 3 Public-sector jobs dominate the region ..In Kuwait, more than 90 percent of Kuwaiti citizen employees are reckoned to work for the government (Encyclopaedia of the Nations 2009) and there is little to shift that ratio more toward the private sector currently ..Mishal Kanoo points to the reason ..He says he cannot recruit local people to work in his Kuwaiti stores .

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