Executing a Corporate Transition

This entry is part 4 of 4 in the series Corporate Transformation

In this fourth article in a series on corporate transformation focused on my experience in the GCC I look at how to execute a corporate transition. In the first article of the series I described how I use a SWOT matrix to define four different corporate states and the relevant strategy for each state. This article focuses on strong firms in stressed markets. Such firms need to transition their product and service offerings to meet the new challenges of the market. This is the simplest form of corporate transformation as the company is starting with a strong management team and the market challenges are known. At this point an organizational diagnostic has been performed and an internal team has been assembled. In terms of strategy, the triage in terms of removing executives is probably unnecessary. What’s left is executing an adaptive strategic plan.

Don’t just give a man a fish

The conventional approach to change management is hiring consultants to map out the current state of the company, the market direction, the future state of the company and to provide the transition plan. Although a solution is provided the client is left to figure out how to execute the change plan on their own. This like giving a man instructions on how to fish. If you’re a fisherman, you know that this doesn’t work.

A relatively more recent approach is to hire the likes of Alvarez & Marsal or AlixPartners who provide an interim management team to lead the change management project. This solves the issue of how the change plan is executed. But the client still hasn’t learned how to fish, they have simply paid someone to fish on their behalf.

My approach of leading a team assembled from the client’s employees allows for not only knowledge transfer but also direct experience and practical skills transfer. This difference in philosophy means that my goal is to build change management capability into the company and allow the company to then effectively manage the change on their own. This is an important difference to simply managing a single change process.

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Strategic Planning in Transformations and Turnarounds

This entry is part 3 of 4 in the series Corporate Transformation

This is the third in a series of articles on corporate transformation, focused on my experience in the GCC. In the first article I developed a framework to define the current state of a company: leader, obsolete, stressed, and distressed. Identifying the current state then allows me to select a strategy type to develop: innovate, transform, transition, and turnaround. In the second article I introduced the first phase of strategic planing, which is the organizational diagnostic. This  first phase determines which of the four states the company is currently in. In this third article I describe the main phase of strategic planning that I use.

Organizational triage

The organizational diagnostic will usually result in identifying some quick wins that will have a material impact on the business. When a company calls in external executive management to manage change there are usually two main reasons:

  1. The existing executive management is competent in its job and just needs support planning and executing change while they continue to run the business; and/or
  2. The existing management cannot or will not effect change.

Which scenario is present will come out during the organizational diagnostic phase. If the second scenario is present it is critical to resolve the issue immediately. This leads to two immediate tactical changes necessary for the development and execution of a transformation / turnaround strategy.

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My Zawya Story, 2nd Edition

In 2012, Zawya, a UAE-based business media company, was sold to Thomson Reuters for a 20 times cash return by Saffar, a low-profile private equity company. I am the founding chief executive of Saffar and became chairman of Zawya after we acquired it, between 2001 and 2011. This is my story of how I bought a bankrupt, London-based company with five employees, moved it to the UAE, built it into a profitable company with more than 200 employees and then sold it to a global competitor, thus generating a 35 per cent annual rate of return over an 11-year period.

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Enacting Economic Reform

In and around the region we are seeing lots of economic and economy-related reform, be it Egypt’s floating of its exchange rate, the UAE’s reduction and removal of certain subsidies as well as enacting laws or India’s currency-note move aimed at stamping out the black market. But by far the most intriguing, transparent and far reaching is Saudi’s Vision 2030, which I will address in this first part of my series on economic reform.

Turning around an economy is far more complex and challenging than turning around a company but there are lessons one can learn and apply. In discussing the merger of FGB and NBAD I talked about the primary importance of culture and in a separate article I discussed a more intelligent way of downsizing.

The common thread in these two articles is that the employees of a company and the culture that they create are of critical importance to the success of any restructuring, the business equivalent of economic reform.

There are some key differences that are important to highlight though.

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Company grief: when a company falls in the economy, does it make a sound?

There is a well-known model on the stages of human grief called the Kubler-Ross model. I believe it can be the basis for a form of company grief, a grief that we are seeing in a growing number of companies during these difficult times. In this article I describe the seven stages of company grief – ignorance, shock, denial, anger, bargaining, depression and acceptance.

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What UAE banks can do if oil stays low

In November, news broke from the UAE Banks Federation that banks in the UAE would face losses of Dh5 billion to ­Dh7bn for the year on SME-related lending. A small sum from an asset point of view, but a considerable amount from a profit point of view. Worse, it heralded the beginning of a contraction in the economy.

But something didn’t sit right. Oil was hovering between US$65 and $50 per barrel last year, well above levels that might trigger an economic contraction. It was only in August that oil prices dropped below $50 per barrel to $30, a price that heralds tougher economic times.

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Corporate Turnaround: Identifying a Toxic Corporate Culture

Fast growing economies, such as those found in frontier and emerging markets, have a symbiotic relationship with fast growing companies. Good company performance drives economic growth which in turn drives business. The flip side of the coin is that economic downturns hit companies hard. Both of these scenarios are fertile ground for the development of a toxic corporate culture. Continue reading