A Best Practice in Strategy Formulation

A Best Practice in Strategy Formulation

  • One of the main reasons of the dissolution of numerous major corporations is the lack of vision and appropriate strategies for coping with the fast pace of business trends & technological innovations.
  • The Management Mix Guide is a 7 step referential platform for developing corporate strategy; it is also a guide for reengineering, & restructuring and dynamically managing the change.
  • The Guide is based on nine organizational elements to be analyzed & formulated taking into  consideration the impact of the five micro-environmental factors and four macro-environmental factors.
How can companies & organizations assure a sustainable strategic development?
One of the main reasons of the dissolution of numerous major corporations is the lack of vision and appropriate strategies for coping with the fast pace of business trends & technological innovations.
NCR, Wang Laboratories, BBAC are companies that have been vanished long time ago; and more recently major names such as Delta Airlines, General Motors or World Com have also disappeared.
In view of the above, a Managerial Guide is recommended which is implemented in hundreds of companies & organizations in specific industries such as the Banking & Finance, Telecommunications, Healthcare, Information Technology, Pharmaceuticals, Food Processing & other industries such as Machinery Manufacturing.
The Management Mix Guide is a referential platform for developing Corporate Strategy; it is also a Guide for Reengineering, & Restructuring and dynamically managing the change.
The Guide is based on nine organizational elements to be analyzed & formulated taking into consideration the impact of the five micro-environmental factors and four macro-environmental factors.
A Best Practice in Strategy Formulation1
The seven steps for implementing the 9-5-4 Guide are as follows:  
  1. Analyze the micro-environmental factors:  Competitors, Customers, Substitutes, Partners & Suppliers;
  2. Analyze the opportunities & threats in the macro-environment: Political, Economic, Socio-Cultural & Technological (standard PEST analysis).
  3. Identify the organization’s stakeholder’s constantly evolving needs.
  4. Analyze the organization’s strengths & weaknesses in the nine organizational elements, Each element elaborated separately in the following page.
  5. Formulate the Strategy regarding the 9 organizational elements.
  6. Set an action plan & implement the strategy.
  7. Continuously monitor & evaluate the strategy.
The nine organizational elements are as follows:
  1. Strategy: After revisiting and restating the Organizational Vision, companies should develop the corporate strategy, which includes the organization’s strategic orientations & objectives, based on the existing and required resources and assessment of the micro & macro environments in which the organization operates.
  2. Processes: Optimization, standardization & streamlining of the organization’s management, operational & supporting processes by controlling process related risks and ensuring the continual monitoring & improvement of the management system through the identification of KPI’s. Various types of international management standards are adopted, according to the industry and the needs of the organization.
  3. Talents: Development of a customized competency based talent management system for attracting, developing and retaining talents. The talents will implement the formal processes and informal processes for achieving operational and strategic objectives.
  4. Structure: Development of the required competencies and layers and setting the communication lines, the reporting system & cross-departmental coordination systems for supporting the achievement of the corporate strategies and organizational vision.
  5. Marketing: Development of a marketing plan by setting a Market Monitoring System for transforming information into intelligence and then into initiative in terms of new products and services, a pricing policy, a placing and a promotional policy by taking into account the constant changes of the customer behavior and the market requirements.
  6. Sales: Optimization of the sales process through the seven steps sales model and establishment cross-selling & up-selling approaches. In addition, development of sales channels in different geographical regions.
  7. Customer: Being in the center of the stakeholders, the company will develop a customer satisfaction and loyalty policy; the customer experience management system will be set and some specific procedures will be identified such as: loyalty programs, satisfaction surveys & complaint management systems.
  8. Information technology: Development & optimization of a holistic Information Technology policy that will support the implementation of the processes, including but not limited to Information security Management system.
  9. Resources: Development of financial Management and asset management systems for optimizing the exploitation of the resources.
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The Strategic Management Guide presented above has proven its efficiency in numerous corporations. Management Mix experts constantly monitor the results & performance of companies implementing the guide and provide customized recommendations to reduce the managerial waste (muda) and cope efficiently with the environmental changes.

The article is written by Raffy Semerdjian for Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review

 

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Using external consultants to save time and money

Using external consultants to save time and money

  • Recruiting staff can be a painful experience because there is a dearth of highly qualified and competent professionals, and more often than not organizations end up hiring the least bad applicant and not the best.
  • Further, to manage ad-hoc overflow of work companies need temporary staffing, but finding qualified candidates who are ready to work for a short term is even more difficult than finding full time employees.
  • A viable solution to these issues might be to hire external consultants on short or long-term contracts. These consultants are specialists at recruiting, and eventually prove to be a cost-effective options as they help organizations mitigate the opportunity cost risk.

I was formerly a senior manager for a service company in the UAE and I discovered that recruiting staff was a painful experience as there are were always plenty of people seeking work, or alternative jobs in many instances, but there was a dearth of highly qualified and competent professionals. Any job advertised would have many applicants but it took a long time sifting through the CVs and at the end of the process you might have 5 people at most to interview as most applicants didn’t even meet the advertised job specs. And even after short-listing two or three candidates it felt more like a case of hiring the “least bad” applicant rather than the best.

Although my recruiting experience are limited to Dubai I believe the problems I suffered are common to managers throughout the Middle East region.  I have concluded that hiring professional staff in this region is a long-winded process and not everyone recruited will be a best fit for the role in mind. And with experienced professionals coming at a premium cost it can be an expensive hiring mistake should the successful candidate ultimately need replacing.

In addition companies often have temporary staffing needs for special projects or to solve work overflow issues. But finding experienced professionals who are prepared to work for a company on a short-term basis is even more difficult than hiring them long-term.

One solution to these issues might be to hire external consultants on short or long-term contracts. There are several benefits to this option including:

Contracts can be time limited: Although some consultants work on indefinite long-term contracts it is more usual for contracts to be time limited although often with an option to extend by mutual agreement. So if the contractor is not performing as expected, or is no longer needed, then the extension option will not be taken up. Most contractors work on annually renewable contracts but it is not for special projects a 3 month or 6 month contract might be more appropriate. (For one organization I worked on 3 month renewable contracts for over a year). By contrast very few employees would agree to a one year renewable contract and it might even be a breach of the relevant Labour Code to offer same in some jurisdictions. And I know by experience that initially good employees can experience dramatic performance deteriorations during the time that they are employed for various reasons.

Contracts can be terminated relatively easily: If a contractor is not even meeting basic requirements, or is creating some other business problem, then it is possible to terminate the contract even before the renewal date subject to meeting the notice period. Most annual renewable contracts will have a one to three month notice period. And there is no grievance process even if the consultant believes his contract has been terminated unfairly. So he can have no legal complaint if the termination complied with the terms of the contract. By comparison any manager knows just how difficult it is to fire an employee and there is always the risk of a wrongful dismissal case even if the employee was non-performing. (I have worked with companies that settled out of court with former employees claiming wrongful dismissal, rather than endure the expense of fighting the case, even when the companies concerned felt they were fully justified in the termination).

Consultants are already technically trained, are reliable and can work unsupervised: Many consultants are older people with long experience in their relevant industry and most such contractors have been managers so are used to motivating employees without the need to be motivated themselves. (Indeed in some industries it is common for persons who have reached mandatory retirement age to be hired back as consultants almost immediately after the retirement party).  These consultants understand the need to meet deadlines and other targets and have the motivation to know that their contracts can easily be terminated if they fail to perform as required.

Consultants have their own resources: External consultants can often work from home and will usually have their own fully equipped offices meaning that they don’t require valuable desk space or equipment that can be reserved to the company’s own employees. Nevertheless most consultants are willing to work from the company’s offices when required to. In my own experience I spend a lot of time working at home but also work on assignment sitting at an office desk each day but almost always in a different country to my home country. (The company usually pays my travel and living costs in such case).

Consultants can reduce employment costs: Most consultants do not receive employee benefits such as paid vacation and sick pay. And they are not eligible, in most cases, for the company’s health insurance and pension programs. So these are cost savings in themselves. It is also the case, (but not always), that consultants will accept hourly pay rates that are below that of a full-time employee for the equivalent position. (Consultants who work from home will usually require a lower fee than those that are expected to work from a company office). In addition consultants are often also prepared to accept retainer fees, which means that the company can retain their services for a very low fee, and then pay them at the regular hourly rates when the consultant’s services are actually needed. In my case I offer a substantial discount on my hourly rates if a company pays me a retainer fee.

There are other benefits to retaining external consultants including the fact that a retained consultant can eventually become a full-time employee if it is mutually beneficial to all concerned.  And there are a few downsides such as no perceived loyalty to the retaining company although I doubt that many full-time employees have much loyalty to the companies that employ them for the first few years of their employment.

The article is written by Ed Rogers  for Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review

We Can Do It as Arabs

We Can Do It as Arabs

  • Lack of successful entrepreneurs, especially in the technology space has been challenge faced by our region for a long time, despite abundance of human as well as financial resources
  • The main reason for this lack of self-belief in Arab Entrepreneurs in their ability to innovate or emulate the success of Western counterparts.
  • Another reason is that most Arab investors do not like to act as Venture Capitalists, but “play it safe”, which makes it difficult for entrepreneurs to get access to capital for growth.
  • If these problems can be addressed innovation and entrepreneurial success for Arabs should be easily achievable.

One thing that has always intrigued me whilst I was abroad, during the first half of my life, was why we as Arabs seemed not to be able to produce any measurable, perceivable success in the various facets of technology.

At the time (exactly 30 years ago) I was just embarking upon a prospective surge in my carrier, as a post-doctorate researcher at the former McDonnell Douglas Aircraft Company and part-time Assistant Professor at California State University, Long Beach, U.S.A.; I decided to return to my home country, Egypt, to try to do find out why we, as Arabs, were lagging behind and to try to do something that would make us stand out!

Over the years, I discovered a few problems that are holding us back from making positive steps forward in the advancement of technology; the most prominent problem is the inherent lack of the ability that we are able to achieve any progress, because of the lack of resources, such as money, human competency, amongst other ‘excuses’. However, I soon found out that the Arab nations possess a plethora from both these resources, which seemed to me to be very strange.

Upon further analysis, I discovered that the real reason was that we lacked the self-confidence to achieve success, as entrepreneurs; one very dear friend, with great honesty, once confessed that we have the “Khawaja’s (foreigner’s) hat embedded inside our hearts”! As such, we are incapable of achieving success to the level of the Western countries. This is where I strongly disagree with this falsity.

As a challenge, I decided to travel the road of entrepreneurship in order to experience it for myself and discover the realities. To do this, I changed my career to Arabic Computational Linguistics, as I believed it was fervently needed for our Arab nations; thirty years ago, I was labelled as mad, as the field was not known then. What made it worse was that I had the dream of developing an Arabic search engine that would someday be the “Google” of the Arab nation!

Here is when I started to meet the real problems that entrepreneurs suffered in the Arab world; in addition to the lack of aforementioned lack of self confidence amongst entrepreneurs, I also faced the lack of confidence, on the part of investors, in the capabilities of entrepreneurs. I believe that this is one of the main hindrances that is holding back the formation of the entrepreneurial ecosystem in the Arab nations. I spoke about this particular problem when I was invited as a panellist at the annual meeting of the World Bank Group in 2011.

Arab investors are “playing it safe” and are treating the financing of entrepreneurs as a bank which should guarantee a return on investment, only with a much higher rate than a bank. This redefines the term “venture capital” to “extremely safe capital”, which, in my opinion, defies the objective of the entrepreneurial exercise. I wish to mention something that a well-respected marketer once told me: The Chinese word for “Threat” is composed of the two words “Danger” and “Opportunity”.

This “Take the Safe Side” attitude, I believe, will never allow the Googles or Microsoft’s to emerge in the Arab world; what we really need is to produce real technology and not just a whole lot of applications, of which there are already a dime a dozen. What we really need are daring real risk takers who are willing to finance regional projects (“regional” meaning for the whole MENA region), that are capable of catapulting the Arab nation to the realm of real technology.

I also wish to stress that technology cannot be imported, but is created in its own environment; this is why I have embarked upon linguistic technologies for the Arabic language, as it is unique to the Arab world. Its applications are innumerable, as we have recently discovered in the areas of sentiment analysis, trending and various analytics, let alone search results that return meaningful and useful search results for the Arab user.

I believe that if we overcome the problems highlighted in this article, we can do it as Arabs!

Source: http://www.infodev.org/highlights/out-valley-death-meeting-challenges-financing-innovation

The article is written by Hossam Mahgoub for Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review

Being an Entrepreneur in the Gulf

Being an Entrepreneur in the Gulf

  • There are numerous challenges in the Gulf blocking the entrepreneurship path for development.
  • Entrepreneurship is about leading, accepting high levels of risk and living up the challenge.
  • Gulf governments are not doing enough to support gulf entrepreneurs; albeit some good initiatives.
  • Entrepreneurship should be looked at as an integral part of the economy, leading to innovation and job creation.

For those of us who have studied abroad, being an entrepreneur in the Gulf has its own set of challenges. I still remember the first six months I spent in Kuwait after coming back from Denver in 1999. Everything was so different from what I had become used to. It felt like being in another universe. Not only was I suffering from reverse culture shock, but I was also surprised at how different my expectations had become. Coming from a place where you can get anything done over the phone or by email in a matter of hours or days to a place where getting anything done takes months, requires your personal presence, and involves a lot of paperwork. I had to completely readjust to my new reality and reassess my priorities.

At the time the best way to grow was to join a large company. Starting a business was very risky at the turn of the millennium and you couldn’t do it as your main source of income. I literally made good use of the phrase “Don’t put all your eggs in one basket.” If I learned anything about diversification it was to mitigate the risk of a high probability of failure for startups. As I uneasily joined the rest of the country in looking for a secure job, I began to wonder how I could pursue my own personal dream without the necessary ingredients to do so. Having a good idea simply wasn’t enough. The lack of the necessary entrepreneurial infrastructure and a clear path for startups meant that even the best of business plans would face enormous risks. But what is an entrepreneur if not someone who has a proclivity for risk-taking?

Entrepreneurs are contrarians by nature and always go where everyone else says there is nothing to go to. But even contrarians have their limits. Entrepreneurs are generally creative, extroverted, risk-takers by nature and they tend to see opportunity where others do not. The only way to have more of them is to reduce the impending risks that they have to overcome. This is where governments need to step up their efforts. The Gulf countries have undergone a drastic modernization phase over the past sixty years to catch up with the rest of the developed world. Obviously there are still significant issues in the developed world that remain to be overcome—one of them being the lack of a sound ecosystem for entrepreneurs to thrive in.

The Gulf countries that control the largest oil reserves in the world—with billions of dollars in revenue—certainly have no shortage of funds. With such huge surpluses accumulating over the years, there was no urgency to cultivate the private sector or free enterprise. People who traditionally had small businesses saw a better opportunity in a safe government job. When the governments provided more than people’s needs while the cost of living was cheap it tipped the risk-return equation in the favor of a safe job. Those with larger businesses were better positioned to take part of the growing petro-economies. The result is a huge government sector with a few very large family oligopolies controlling the rest.

The Gulf, for the most part, is tax-free. Therefore, the governments have no real incentive in maximizing tax revenue. Cultivating small businesses was low priority because there was no added value. As the population grows, with the biggest chunk under the age of 25, the cracks in the system are beginning to show. The increase of cost of living over the years through inflation as well as an increase in jobless figures means that the only way governments can sustain the storm is through the proactive development of SME’s. More importantly the governments need to provide the right ecosystem for entrepreneurs. A focus on the needs of entrepreneurs would lead to job creation and, eventually, a good tax revenue source that would benefit the whole economy.

Four essential elements are needed:

  1. Ease of setup
  2. Funding
  3. Skilled labor
  4. Real estate

Entrepreneurs can’t be created out of thin air. It takes time to cultivate entrepreneurship. But reducing barriers to entry and risk levels would be taking huge steps toward cultivating that entrepreneurial spirit. However, there are some very good initiatives in the Gulf such as Thukhur for Entrepreneurship & Corporate Innovation, the national program for entrepreneurs in Kuwait and Dubai SME, a Department of Economic Development agency in Dubai. These programs not only build the foundations for entrepreneurs, but also serve to motivate new entrepreneurs by highlighting the success stories and the importance of entrepreneurship in society.

Entrepreneurs have been and will always be the driving force in an economy. I took the rough road to building my business and despite how difficult it was, I would do it all over again without hesitation. It’s not just the money, it’s the satisfaction of creating something out of “nothing.”

The article is written by Basil Al Salem for Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review

Needed: A Strong Patent System & An Innovation Friendly Culture in the Arab World

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  • The on-going transition from oil to non-oil based economy has heightened the pace of patent development in the Arab World, with Saudi Arabia leading the region.
  • However, patent development activity in the region pales in comparison to other countries worldwide, and is reflective of a lack of innovation friendly culture in the Arab world.
  • The pace of innovation and patent development needs to increase rather quickly in order to protect new technology being developed by Arab countries, and also to attract more foreign investments.

The on-going transition from oil to non-oil based economy has heightened the pace of patent development in the Arab World. In the past 3-4 decades, most of the economic output in the MENA region was generated from the hydrocarbon sector, and other sectors were undeveloped leading to low levels of innovation and patent development. However, the trend has started to change in recent years as MENA nations (especially GCC) look to diversify their revenue base by increasing focus on non-oil sectors like technology, hospitality, tourism, infrastructure development, etc. This has led to increased patent filing in the region, which has gone up from 41 in 2003 to 403 in 2013, a jump of nearly 10 times, as per a recent report by Orient Planet and MADAR Research & Development.

Saudi Arabia has consistently led the region in patent filings and continued its dominance in 2013 as well with 237 patents. The kingdom is currently home to ~50% of the patents in the Arab world, followed by Kuwait and Egypt with 272 and 212 patents respectively. UAE, which has the most vibrant non-oil sector in the region, stands fourth with 120 patents. Comparing the number of patents issued per million of a country’s population makes the above numbers more significant and drives home the dominance of GCC nations. In 2013, Kuwait had 21.24 patents per million, while Saudi Arabia followed with 7.79 patents per million and UAE was placed third with 1.90 patents per million. Qatar, which is gearing-up to host the 2022 FIFA World Cup, currently has 3.42 patents per million, and this number is likely to go-up as it plans to invest USD 200 billion on infrastructure development over the course of next 8-10 years.

Utility Patents by Country and Year

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Source: USPTO, Orient Planet, MADAR Research & Development

Now the above numbers may seem impressive on a standalone basis, but pale in comparison to the patent development activity in other countries worldwide, and are reflective of a lack of innovation friendly culture in the Arab world. The US alone has 133,593 patents, ~75 times the 1,818 patents in all Arab countries combined. Therefore, it is not surprising that most of the next generation technology development happens to take place in the US, leading to birth of disruptive business models and companies. The US is followed by Japan, Germany and South Korea as shown below. Saudi Arabia is the only Arab country in the top 30, indicative of a lack of innovation friendly culture in the region.

Number of Utility Patents Granted – 2013

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Source: USPTO, Orient Planet, MADAR Research & Development

The pace of innovation and patent development needs to increase rather quickly in order to protect new technology being developed by Arab countries, and also to attract more foreign investments. Arab nations are currently undertaking massive projects that will require new technology development and it is imperative that these technologies are patented to ensure competitiveness of Arab nations and companies at a global scale. Some of these include Saudi Arabia’s King Fahd City, UAE’s Dubiotech research park, Masdar City Project in Abu Dhabi, and multiple infrastructure projects (special economic cities, carbon neutral climate technology, railway, metro, airport, power plant, hotels, etc.) being developed in Qatar and Dubai in the build to World Cup 2022 and Dubai Expo 2020, respectively.

Also, patented technology is essential to attract foreign investment. As per the latest UNCTAD 2014 World Investment Report, FDI inflows to West Asia have declined from USD 71.9 billion in 2009 to USD 44.3 billion in 2013. While part of the decline can be attributed to global recessionary conditions and geo-political volatility in MENA nations, slow pace of innovation and high dependence on oil revenues is also a key contributing factor that is keeping foreign investors at bay, thereby reducing the growth prospects of companies in the Arab world.

Therefore, it is imperative that Arab countries learn from other leading nations to develop a strong patent system and nurture an innovation friendly culture. Till they do it, opportunities in the Arab region will remain unused leading to a loss of billions of dollars.

The article was originally published at: Arab Business Review

To read more thought-leadership stuff by leaders from Arab Region, please visit Arab Business Review