Category Archives: Strategy

Crisis Response Strategies

March 10, 2015 By in Strategy Cornerstone, Strategy, 1feautred Tags: , ,
This entry is part 3 of 3 in the series Strategy

In a world of uncertainty management is constantly evaluating potential risks as they unfold and deciding how to respond.

At one end of the response spectrum is what might be called the Anglo-Saxon Fast & Furious model: ignore all risks until they become an existential threat of such dire proportions that there is only one available response and it is blatantly clear to all involved.

At the other end of the spectrum is what might be called the Asian Ancient Wisdom model: treat everything as an existential threat at all times and avoid taking any proactive decisions whatsoever lest it lead to greater danger.

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Adaptive Strategy Construction

November 16, 2014 By in Strategy, Strategy Cornerstone Tags: ,
This entry is part 2 of 3 in the series Strategy

In a previous post, Deconstructing Strategy, I discussed some of the difficulties in developing a strategy. In this post I present a method that has worked well for me. The philosophy behind this method is based on the two ideas that the Pareto principle, also known as the 80/20 rule, applies to business strategy and that strategies must adapt to new information and changes to the business environment.

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My Zawya Story: Global Financial Crisis

November 5, 2014 By in Strategy, Strategy Cornerstone Tags: ,

This post is part of the My Zawya Story series.

The global financial crisis that broke in the latter half of 2008 was painful. At Saffar we had concluded negotiations on a partial exit of Zawya at a fantastic IRR but the crisis put an end to that transaction. The bad news continued as the crisis decimated Zawya’s core client group, financial services, and impacted revenue in multiple ways including a big decline in online advertising. We built the company and reached dizzying heights of success, where we about to now ride it all the way down again?

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My Zawya Story: Strategic Growth Decisions

November 2, 2014 By in Strategy, Strategy Cornerstone Tags: ,

This post is part of the My Zawya Story series.

If negative cash flow the main characteristic of the foundation phase of a start up and break even cash flow represents the institutionalisation phase then the third phase is growth represented by increasing positive cash flows. This is where the fun begins. All stakeholders are basically happy, assuming a lack of greed, and strong excess cash flow growing at close to a triple digit rate really opens up the options in achieving your vision. The three main choices, not necessarily exclusive, are pay dividends to the shareholders, invest in organic growth and grow via acquisitions.

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My Zawya Story: Positive Cash Flow Challenges

October 30, 2014 By in Strategy, Negotiation Tags:

This post is part of the My Zawya Story series.

Most entrepreneurs would be surprised that positive operating cash flow can present challenges. After months, even years, of striving for the magical cash flow break even point what problems can there be once this goal is reached? The challenge is sustainable growth as painful initial sacrifices on expenses are reversed and short term investment horizons on the income front need to be extended.

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Deconstructing Strategy

October 27, 2014 By in Strategy, Strategy Cornerstone Tags: , ,
This entry is part 1 of 3 in the series Strategy

I think that it is safe to say that most people entering the work force view strategy as some kind of mystical plan developed by all knowing executives using arcane skills. At the other end of the spectrum I don’t think that there exists a C-level executive who at least once didn’t wonder whether strategic planning wasn’t a ritualistic sham, a cosmic joke played on executives the world over. I know that I have experienced both feelings.

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My Zawya Story: Deciding the Business Model

October 27, 2014 By in Strategy Cornerstone, Strategy Tags: ,

This post is part of the My Zawya Story series.

As an investor I have seen many entrepreneurial mistakes and one of the greatest misunderstandings has to be the difference between a market opportunity and a business model. A market opportunity is a gap in demand and supply, in particular a demand for products or services which is not met by current supply. This creates the potential for profit but does not guarantee it. To get from the what, potential profit, to the how, actual profit, requires a business model. I have seen many promising entrepreneurs fail even after identifying lucrative market segments simply because they jumped in without planning how they were going to convert the opportunity into revenue let alone profit.

In terms of Zawya the opportunity was clear: there was a high demand for Middle East data and information with little comprehensive supply. Ihsan and I were on opposite sides of the two main issues: how to source the data and information and how to generate revenue.

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My Zawya Story: Two Initial Decisions

October 26, 2014 By in Corporate Governance, Strategy Tags: ,

This post is part of the My Zawya Story series.

After the acquisition there were many decisions that had to be made by Ihsan and I, some quite contentious. Two that stand out are the new geographic location for Zawya and control of the finances of the company.

Although I am an Emirati, I founded Saffar in Bahrain, which up until that point had been the dominant financial hub in the GCC. Although Dubai had by that time taken some steps to building itself into a financial hub it was still early days and the terrorist attacks on the US on 11 September 2001 looked to be an extremely negative event for any positive developments in the region.

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Long Term Strategy in a Short Term World

October 25, 2014 By in Strategy, Strategy Cornerstone Tags:

عربي

Price earnings ratios (P/E) of some of highest traded stocks in the country are crossing into the 20’s. You don’t need a lot of analysis to realise that there is no way that anyone, especially a professional asset manager, should be invested in such stocks. The dilemma for asset managers is that the reason these stocks have high P/Es is that their prices have appreciated spectacularly in the short term and avoiding them leads to lagging performance by the asset manager relative to the market and his peers, at least in the short term.

In 2005 there was a real estate (RE) boom in the UAE that was clearly unsustainable. If you were a commercial bank it was clear that continuing to lend into the RE sector was not a sound credit decision. The dilemma for the bankers is that avoiding lending to that sector would cause their profits to lag relative to their peers.

These challenges are not restricted to the UAE financial sector but are global in nature and afflict all business sectors. Indeed I believe that the global financial meltdown was driven just as much by conflicting signals as it was by greed.  Continue reading →

The UAE: Gateway to Emerging and Frontier Markets

October 18, 2014 By in Emerging Markets, Frontier Markets, Strategy

عربي

As the global economy continues to pick up steam after the aftermath of the financial crisis of 2008 businesses are looking for opportunities to grow. Ideas for growth have traditionally revolved around three main pillars of government infrastructure projects, tourism and domestic demand. Strong as these pillars are, and an important foundation for the economy, it is unnecessarily short sighted to restrict a business’s vision to these areas. Once the foundation is built, a regional and even global expansion should be considered.

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