Author Archives: Sabah al-Binali

Trump Applies Business Strategy to his Political Campaign

September 15, 2015 By in Strategy Tags: ,

Donald Trump’s political strategy is to apply basic business methods and it is working spectacularly. Some people are shocked by his success and this is due to their cognitive dissonance, they cannot accept that Trump, who they revile, can be so successful. This is exactly the same as the Microsoft detractors’ inability to accept over 20 years of Microsoft’s market dominance.

The core of Trump’s strategy is his brand. Trump has had two phases of building his brand which is recognisable by every voter in the United States.

The first phase of Trump’s brand building was around his business success which not only resulted in financial success it also resulted in massive brand enhancing wins such as iconic skyscrapers across the US named after him and several popular business books. Although Trump stumbled in his business and personal life, his ability to recover from these setbacks only enhanced his brand as a resilient winner.

The second main phase of Trump’s brand building is his entertainment persona. The main vehicle was the hit reality TV show The Apprentice which he hosted for 14 seasons. To understand how successful this was – at its peak it had over 20 million viewers weekly, Trump reportedly received US$3 million per episode and he received his own star on Hollywood Boulevard. That is a lot of exposure.

Not as well known internationally, but critically important in understanding Trump’s current political strategy, is his involvement with World Wrestling Entertainment (WWE). The WWE are experts in understanding a large Republican demographic and Trump made sure that he was well received by them before talking to them politically.

No other contender for the Republican nomination has anywhere near the exposure that Trump has on a national scale. How do you compete with 14 seasons of a hit TV show? Trump is instantly recognizable in name as well as in person, and people will prefer that which they know. Trump didn’t build momentum in 2015, he entered the race going full speed. To truly understand the success of Tump’s rebrand, in 1999 a New York Times/CBS News poll found that 70% of Americans viewed Trump unfavourably.

The next part of the business strategy that Trump is applying to his presidential candidacy is the ruthless exploitation of his competitive advantage.

One example of such a competitive advantage is the asymmetric professional standing and goals of Trump relative to his competitors. By and large the rest of the candidates, Republican and Democrat, are lifetime politicians. For them, not being elected president is a big setback in their professional careers.

The competitive advantage here is that all of Trump’s competitors become risk averse and in particular they fear Maverick Risk, which is the risk of straying too far from the herd. This allows Trump to take the lead in setting the policy agenda as his perceived risk of failure is far less. In business parlance, Trump is willing to take the necessary risks to innovate. You might not like his innovation, but boy is he innovating.

The highly regarded business book The 7 Habits of Highly Effective People repeatedly reinforces the idea of focussing on your circle of influence, i.e. concentrating your resources on things that you can affect and ignoring things that you cannot change. Trump does this relentlessly.

An instructive example is what happened when Trump talked about immigration. The backlash that I read in some of the media and heard on television led me to believe that Trump was vehemently against all immigrants. Intrigued I investigated further and after reading what Trump actually said it was clear that his stated position was far less aggressive than some reports. Whether you agree or reject Trump’s position is not important for this analysis, what is important is his response.

Trump’s response was genius. He ignored the reports. Trump has clearly decided that there are certain segments of American society that he will not reach and simply is refusing to waste time or weaken his message to his core demographic. Business translation – Trump is designing his product for his current and potential clients and is refusing to dilute the product in the hopes of attracting hardcore holdouts. Far too many businesses build products that their clients should want instead of what they do want. If the demand exists and is unfulfilled, take advantage of it.

The conventional view of the left and some of the right is that Trump is a flash in the pan who is simply rabble rousing. In business it is a dangerous decision to dismiss the success of a competitor as being temporary. Let me offer some alternative interpretations that might be more in line with the intelligence and skill that Trump has shown over his lifetime.

Perhaps Trump’s real goal isn’t the presidency. Perhaps he wants to corner a demographic that is under served and use that as a bargaining chip to negotiate the vice presidency or a cabinet post. This happens in business all the time, for example Yahoo bought Maktoob predominantly to acquire the reportedly 16 million Middle East users.

On the other hand perhaps Trump does not believe in his policies and is only marketing them to get elected President. Once he is in he might have different plans. Not unheard of in the world of politics but also quite well known in the world of business. Microsoft propelled the word “vapourware” into the global consciousness by repeatedly promising products and features that never materialise. Off plan real estate sales that never materialise are not unheard of either.

The overarching business lesson here is that Trump has shown that conventional business strategy is so robust that it can be applied to politics to spectacular initial success. What is frightening is that the career politicians cannot recognise Trump’s tactics as a cohesive business strategy.

If you like this post, you might also like: The Trump Trade and Fox News: Manipulative not News.

This article was originally published in The National.

China Crisis? Risk-parity meltdown? Or financial gravity at work?

September 8, 2015 By in Investments Tags: , , ,

The last few weeks have seen equity markets around the world register significant losses. Sudden downward price movements can be stressful and the conflicting analysis and advice can be confusing. Although I cannot give specific advice on what to do, perhaps I can point out some issues that might have been overlooked and would be useful to consider.

The general consensus is that the current market woes began with a crash of China’s equity markets on Monday, 24 August. The 8.5 per cent drop in the Shanghai Composite Index is what many market commentators agree triggered the global wave of selling. What is not made clear is why the Shanghai tanked and why this would trigger a global crash. The answers proffered are that China’s economy is slowing, and that this in turn will trigger a slowdown in the global economy. This is puzzling because the slowdown has been common knowledge for quite a while now, and anyway Chinese growth is still running at about 7 per cent a year. So what news came out to trigger the price plunge? Nobody seems to have an answer.

Even more perplexing is the effect of China’s economy on the world. The narrative that a brake on China’s economy would slow down global growth has things backwards. China is a supply side economy and depends on robust global demand. It is only if global demand, in particular the United States, were to slow down that we would expect a slowing in the global economy, including China.

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The Absent Manager: Not a Mythical Creature

September 1, 2015 By in Management Tags: ,

The absent manager is someone most of us have worked for at some point in our lives. Let’s see how to recognise them and the only choice in dealing with them.

A manager can be absent in two ways. The first is to be physically absent. The second is to be mentally absent.

It is not easy to identify the physically absent manager as it is not simply a case of not showing up to work. Managers can be physically absent and still seem to be working quite hard.

One scenario is simply to be out of the city/country ostensibly going to training courses, conferences, marketing, due diligence trips and international client/partner/vendor visits. Although such trips can be useful they are not necessarily the best use of a manager’s time and certainly should not occur frequently.

The second scenario is similar but occurs in the same city as the manager’s office. Here the focus switches predominantly to clients. Again, a manager constantly visiting clients pitching the products and services of the company and trying to close deals is the normal course of business. On the other hand if the manager meets with clients with no specific agenda tied to identifying revenue producing opportunities then it is a waste of time.

There are many warning signs to meeting clients as a replacement for real work. This includes meetings that occur in coffee shops instead of the client’s premises. Why on earth meet in a coffee shop? There is no privacy, there are no resources to support the meeting and it is never quiet. Worse is the manager who spends his whole day wandering from coffee shop to coffee shop, an executive nomad, filling his time in between scheduled meetings with other ineffective managers swapping gossip and who believe coffee shops equate to managing. One almost wonders if the revenue of the local branches of Starbucks, Costa and Bateel aren’t a negative indicator of management effectiveness.

An internal warning sign is when a manager spends the whole day in coffee shop meetings but at the end of the day does not generate any action items. A natural consequence of any meeting is to produce minutes of that meeting highlighting decisions made, potential revenue opportunities and action items. This should happen for every single meeting. So a day filled with six coffee shop meetings and a lunch should end with several hours writing meeting minutes, reflecting on opportunities and identifying action items. Instead it seems that the only outcome of all that coffee is frequent visits to the restrooms.

The third and final choice that a manager has to be absent is to be physically present in the building but not present in the relevant offices. I do not know who cursed us with the concept of “management by walking about” but there is nothing effective about that other than to give absent managers legitimacy.

There are exceptions as always such as trading floors or factory floors where real-time work in an open space can be observed. However in most cases employees work singly in offices or cubicles and just randomly dropping in adds no value to the employee and provides no insight to the manager. Instead it gives an excuse to the manager to socialise with employees and usually waste their time. Sadly, anecdotal evidence points to attractive female employees as being the most likely target of this tactic.

One step up from this is meetings. Nothing gives the incapable and incompetent a better sense of fulfillment and accomplishment then attending a meeting. Warning signs include frequent ad hoc meetings (a week’s notice should be a minimum requirement), lack of agenda, lack of advance material, a goal other than to reach a decision (such as updates), lack of action items, lack of circulated minutes, etc. Again, these are not hard and fast rules but a pattern of such behaviour is a clear danger signal.

If you do manage to corner a professionally absent manager that doesn’t mean that you will get anything useful, especially if you are looking for a decision. The defensive judo skills of the absent manager include “Did you get sign off from the following 36 people?”, “There isn’t enough data, get more,” “Let’s run it up the flag pole” and the dreaded “Leave it on my desk.”

Entertaining as it is to talk about the absent manager, it is important to understand that he is lethal to your career. The fact that it is not overtly malicious behaviour makes it all the harder to recognise. But if you your boss is a professional absentee, you are best served by finding a new manager, even if it means going to a new company.

This article was originally published in The National.

UAE VAT Positive for the Economy

August 25, 2015 By in Government Tags: , 1 Comment

The announcement of the planned introduction of a federal value-added tax (VAT) and a corporate tax in the UAE has stimulated a lot of discussion on what this means for the country and its residents.

I have a slightly different view to the current mainstream opinions, and would like to share it.

The overall premise of the conventional wisdom is that the federal government of the UAE is introducing new taxes to offset a decline in oil revenue due to lower oil prices. The problem is that the federal government does not generate its revenue from oil sales, as it does not own or sell oil. The majority of oil is to be found in the emirate of Abu Dhabi, and oil price changes would affect the emirate’s revenue, not that of the federal government.

What this means is that the tax receipts generated would not be to replace revenue lost to oil price declines, but would instead be additional revenue available to the federal government to spend and invest in the country. That means an expansionary budget at the federal level, a good thing.

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Brooke Coburn of Carlyle on Middle Market Investing

August 18, 2015 By in Asset Management, Executive Insight Tags: , , , ,
Brooke Coburn of Carlyle on Middle Market Investing

My co-author this week is Brooke Coburn, Managing Director and Co-Head of Carlyle Growth Partners and Carlyle Equity Opportunity Fund.

The Carlyle Group is one of the largest and most successful alternative asset managers in the world. With nearly USD 200 billion in assets managed across 130 funds and 156 fund of funds it is daunting just trying to figure out where to start in learning from their best in class experience. I decided to approach the middle market team and highlight their story as, I believe, investors in the Middle East can learn the most from their approach and experience.

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Emirati Role Reversal: Learning to be an Expat

August 11, 2015 By in HR Tags:

Emerging economies go through the same cycle. The first step is the export of products or commodities that are relatively cheap or are native to the exporting community. For examples of emerging economies exporting product simply look at the history of nearly any country in Southeast Asia. As for commodities-based economies, the UAE is a perfect example.

This in turn triggers foreign direct investment (FDI) allowing for infrastructure investments that help improve the production capacity and efficiency of the emerging market. These upgrades will usually require the need to upgrade technology as well as processes and procedures. To that end operating expertise in the form of foreign advisers and managers is imported to upgrade the training of the local population to manage these changes.

The result is a virtuous cycle in the emerging economy of an improving workforce that becomes more efficient in its production which in turn spurs further FDI and the cycle continues.

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Improving Your Work / Life Balance

August 4, 2015 By in HR, Entrepreneurship Tags: , 1 Comment

It seems appropriate that my first article after my time off from writing should focus on the work/life balance. This topic has gained tremendous attention over the past few decades and is sold to the public as a crisis of work overwhelming personal life that is in need of urgent resolution, usually by buying a self-help book.

Leaving aside the fact that OECD data does not seem to support stories of employees being swamped by work to the detriment of their personal lives there is still something to be said about this subject.

The phrasing work/life balance implies that one should aim for, if not have a right to, a personal life that is equal to a work life. Two questions immediately come to mind and that is how is the balance measured and is it correct to assume that there should be equality.

I think that answering the first question will make it easier to answer the second. So how should we compare work life to our personal life? The most basic measure would be hours spent on each facet of our lives. If we consider eight hours a day asleep as a neutral time and assume a normal 9 to 5 work day five days a week then we end up with the puzzling equation of 40 hours a week working versus 72 hours a week personal time. This simple calculation shows us that we spend 80% more time on personal commitments than our work commitments.

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Greece's Problem is that the European Union is Speaking Greek

July 12, 2015 By in Economy Tags:

The language used in discussing Greece’s economic dilemma is getting in the way of a solution. In business negotiations it is usually quite useful to look at the major issues and try to reframe them. This is no different when talking about economies.

Issue 1: The Greeks “rejected austerity.”

Reframe 1: The Greeks rejected the controlled austerity offered by the EU in favour of the chaos that the current Greek government has ensured for its citizens. This reframe is extremely important as the structure of the Greek government’s referendum was negligent and potentially fraudulent: they did not offer their citizens an explicit choice between two courses of action, instead they allowed one of the choices to be implicit. By doing so the Greek government betrayed their own people by hiding the risks from them.

What comes out of this reframe is that the gap in reality as understood by the Greek government and its citizens needs to be narrowed and even eradicated. This will take a lot of courage from the Greek government.

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Dear Forbes: Dubai is more than alcohol and bikinis on the beach

July 3, 2015 By in Economy Tags: ,

A recent article in Forbes asks whether the Dubai government is entrepreneurial in nature and if so whether the government is more entrepreneurial than the people. These are important points to consider and are a frequent topic of conversation. Unfortunately the Forbes article got it wrong.

The article lists four points as to why the Dubai government is entrepreneurial. I will rebut each one and then make my argument as to what is happening.

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Tim Clark and Emirates Airlines get Proactive with a Three Pronged Counter-Attack

July 1, 2015 By in Leadership Tags: , ,

Emirates Airlines, headed by Tim Clark, are taking the role of a modern-day Rocky Balboa, climbing against all odds to the top of their business and getting attacked for it. Tim Clark’s proactive response is a relative first for a GCC company. As other regional companies grow globally they too will be faced with aging, inefficient behemoths that will try to spin doctor them out of their markets. These nascent GCC companies could learn a thing or two from Mr Clark and Emirates Airlines.

Wild unsubstantiated allegations against the GCC and playing to the xenophobic tendencies of certain groups are nothing new. What is completely new is the response. The modus operandi so far has been for the victims of such spin doctoring to meekly withdraw and try to protect their interests via back channels.

Tim Clark and Emirates decided to fight fire with fire and just as they have dominated the global long haul airline industry they look set to dominate this public debate.

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