Category Archives: Management

Executing a Corporate Transition

January 24, 2020 By in Management, Corporate Turnaround, Corporate Transformation Tags: , ,
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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Your idea of success is completely wrong

August 22, 2017 By in Management, Analysis Tags: , ,

There is this idea that success is 100% correct decision making. For some people, they understand this to be 90% or even 80% correct decision making. This idea is completely wrong. A success rate of 56%, implying 44% incorrect decisions, is a great result. Here’s why.

Let’s simplify things. Assume that you are the chief executive of a company and that each decision you make has, on average, an equal impact on the company performance. Let’s say that if you make a good decision you increase profit by USD 1 million and if you make a bad decision you decrease profit by USD 1 million.

What does this mean in terms of the company performance? Continue reading →

Your guide to handling ethical management issues

July 31, 2017 By in Corporate Governance, Management Tags: , ,

You have spent a lot of time honing your business ethics, governance and compliance skills, but time and again you find yourself in difficult situations and realise nobody taught you what to do.

If I just described you, then this article is for you.

Most of what is taught is with regards to how to act if we initiate an action and, possibly, how to react when a client initiates an action. What I have not seen taught is how to react if your manager initiates an action. In this case there are broadly two scenarios: First, it is a legal and ethical instruction; or second, it is an illegal or unethical instruction. In the first case the employee’s proscribed reaction is straightforward – execute. In the second case it is to not execute the instruction. But is that as simple as saying “no”? Of course not.

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Lack of Transparency in Senior Dubai Executive Departures

July 12, 2017 By in Management, HR Tags: ,

Last week saw the unexplained resignation of two senior executives, the chief executive of Jumeirah Group and the chief investment officer of EmiratesNBD.

There are several pertinent facets to these announcements. First, both seemed to be abrupt as there was no permanent successor named in the reports. Second, both left after a relatively short tenure, with both executives having had taken on their roles in January 2016.

In the case of Jumeirah there are a number of relevant organisational changes: the chairman joined from the parent, Dubai Holding, in March and who in turn appointed Dubai Holding’s chief executive to “run the [Jumeirah Group] business together” with an interim chief executive from within the group. When a chief executive leaves three months after a new chairman is appointed to the parent, there may or may not be an issue. When the chief executive of a parent is sent in to co-run a subsidiary business the implications are not usually positive. Add everything together and one might consider the scenario that the board had lost confidence in the chief executive.

The matter with EmiratesNBD’s chief investment officer CIO has less going on around it but the short tenure with no prior succession planning does not augur well.

Here is my fear: are the decision-makers in these cases clear on whether the issue is with the executive or if it is simply an unavoidable consequence of our challenging economic times? If it is the latter then boards and CEOs could create unnecessary employee turnover and lose the very people who have information to help the company.

It is difficult to ascertain if this is going on as there is not enough information. This lack of transparency is unfortunate in the case of EmiratesNBD, a publicly listed company that is the second largest bank in the country and regulated by both the UAE Central Bank and the Dubai Financial Market. As Jumeirah is private there is a lower bar in terms of transparency, but if Dubai’s sovereign wealth fund the Investment Corporation of Dubai (ICD) can adopt global best practice for corporate governance and publish audited financials then I don’t see why other private entities could not adopt the same philosophy. As an aside, ICD is also the majority owner of Emirates NBD, the bank could learn from its largest investor.

This article was originally published in The National.

Your employee stock ownership plan probably increases company risk

June 4, 2017 By in Management, HR 1 Comment

Employee stock ownership plans (ESOPs) are supposed to align employee and company interests and in theory decrease risk. But as an employee, you actually materially increase risk if you get paid stock rather than cash: if your company gets into trouble you lose your job and your savings (stock price drops).When things go well for a company it should take more risk, but ESOPs might make employees take less risk, in essence locking in their profit.

When things don’t go so well a company should reduce risk. But employees, who might feel they are about to lose everything, might gamble with the hopes of saving their jobs and savings.

Your understanding of “win-win” can harm you

May 28, 2017 By in Management, Negotiation

The idea of win-win outcomes is seductive, it implies that everybody gets what they want. This belief can harm you for three reasons:

  1.  You cannot know what a win means for the other party. After all, negotiation 101 teaches us that one should never reveal their goals to the other person.
  2. Life is not a zero sum game, but neither does it provide unlimited resources. You are competing for the same resources.
  3. This only works if the other person is playing the same game, otherwise you will get slaughtered.

Better to aim for “satisfied – satisfied.” More realistic.

No values? Here's a promotion!

May 25, 2017 By in Management, HR

My insight into how those with no values are promoted: If a supervisor instructs an employee to do something, then an employee with values will push back if the action conflicts with their values. The employee with no values will immediately execute the instruction without hesitation. From the supervisor’s point of view it can look like the former employee is obstinate and the latter employee is loyal.

Of course this false view can easily be corrected by remembering that it is final outcomes that count and ensuring that long term performance is measured and reviewed. Not to mention that the mirage of the loyal employee is the foundation of the fraudulent employee (no values, remember?).

I got this insight from a young compliance officer who was struggling to do his job and keep it. I was told that a bank CEO was let go precisely because of this. The list continues. Is this a self-reinforcing downward spiral? Of course what’s true of governance is also true of risk-taking.

Souq’s success reveals the kind of CEOs we need

April 25, 2017 By in Management, Leadership Tags: ,

Souq.com, a private entrepreneurial company, sold for more than Dh2 billion this year while in the same period at least two large listed companies, one with a sovereign wealth fund backing it, required Dh500 million to Dh1.5bn in new capital.

Understanding the difference between why an entrepreneurial company was so successful in a period when organisations previously perceived as successful now need huge amounts of capital injections and/or lay-offs is key to understanding the future of our economy.

I have been on both sides of the equation – an executive at Union National Bank, Shuaa and Credit Suisse Saudi Arabia as well as an independent investor and entrepreneur. Importantly, these are not two separate parts of my life, I have crossed back and forth several times.

I have spoken numerous times on how our social culture, which is non-confrontational, is unfortunately transferred to our business culture, leading to a large number of “yes” men.

Here is why this is not optimal. CBS News has an article that describes the institutionalised management environment that I have seen. The article uses as its basis a study by researchers from Northwestern University’s Kellogg School of Management and the University of Michigan, Set up for a Fall: The Insidious Effects of Flattery and Opinion Conformity toward Corporate Leaders, in Administrative Science Quarterly.

The study finds that chief executives “who have acquired positions of relatively high social status in the corporate elite tend to be attractive targets of flattery and opinion conformity from colleagues”, which can harm the company increasing the “CEOs’ overconfidence in their strategic judgment and leadership capability”, which results in a reduction in “the likelihood that CEOs will initiate needed strategic change in response to poor firm performance.” Importantly, the study found that this leads to a long-term continuation of the company’s bad performance.

The former British prime minister Tony Blair says it more succinctly: “The art of leadership is saying no, not saying yes. It is very easy to say yes.”

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Companies need to create the role of Entrepreneurial Leader

October 11, 2016 By in Management, Entrepreneurship Tags: , ,

Business is challenging. Being successful at business is extremely challenging. It takes a tremendous amount of time and energy to acquire new clients, retain existing clients, manage your team, manage your portfolio of projects and deliver the high-quality products and services that you need to remain competitive in the market.

Do you want an idea of how busy you are while running your existing business? How many unread emails do you have? Hundreds? Over a thousand? How old is the oldest email?

What about meetings? Excluding time reading and composing emails, what percentage of your day is taken up by meetings regarding existing business, for example, with clients or employees about existing products and services on offer? If you include travel time I have never even seen this percentage below 50 per cent and it is usually much higher, around the 75 per cent mark.

Now let’s get to the crux of this article. What percentage of the time do you spend learning, thinking or developing new business lines? What percentage of your resources are dedicated to evolving the business? I am talking about actual time and energy spent here, not wishful thinking. Is it 0 per cent? 1 per cent?

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Why British Airways is losing to Emirates, Etihad and Qatar Airways

September 20, 2016 By in Management Tags: ,

I arrived at the airport at 10.50pm. My flight was scheduled for a 1:45am departure but I like to arrive early. It gives me time to sort out any issues, especially as I had a connecting flight with a three-hour window. And if there were no issues, well that was the perk of flying business – relaxing in the lounge.

I walked into the check-in area for first and business class. I didn’t see a counter for my airline open. It happens sometimes, they don’t start at exactly the three-hour pre-departure mark. So I sat and waited.

What transpired next was a complete breakdown in the operational effectiveness of the airline.

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