Cover story: How to make it in the Middle East

With regional growth reaching unparalleled levels in the last three years thousands of senior executives and business owners have tasted what it’s like to become a success while others have seen ambitious projects, and on occasions, ludicrous plans fall by the wayside. CEO Middle East examines the secrets behind what it takes to make it to the top and stay there

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By  James Bennett and Andrew Mernin Published  June 6, 2006

|~||~||~|They say there is a thin line between success and failure and no where does it ring true more than in the Middle East, a region that has only truly started to boom in several major sectors over the past three decades. Having realised that oil reserves will eventually run dry in future years, particularly in countries such as the UAE, scores of now globally-recognised businesses and entrepreneurs have developed ideas and built companies that will last for many generations to come. The construction sector, for example has seen the likes of Emaar and Nakheel emerge to become top-level international players. The hotel and hospitality industry, along with the exhibition and tourism markets have also seen astronomical growth using, in large part, oil derived wealth to diversify and encourage foreigners into the region. A new entrepreneurial generation of regional CEOs has also emerged, increasingly leaving the more traditional family business orientated hierarchy behind in favour of their own ideas, dreams and ambitions. In simple terms, the Middle East has taken its own ancient spirit of trade and developed it into a haven of modern business success. The only stumbling block along the way is that with such a young and ambitious region that believes it can achieve any project it sets itself, comes the inevitable – the over ambitious businesses that either fail to maintain those high standards or set the goalposts far too wide and disappear without a trace. But business isn’t all about the success stories, and switched on chief executives know that you sometimes have to learn from your mistakes. Sit back and let CEO Middle East drive you along the road to success guiding you around the potential potholes along the way. • ESSENTIAL ANALYSIS In an emerging market such as the Middle East where the pace of change is quicker than most places on the planet, the old cliché of ‘doing your homework’ bears thinking about and should be applied in everything you do. If you don’t look into every aspect of your business and the decisions you take along the way, as well as its long-term growth prospects in an increasingly crowded marketplace, you will sink without trace, and very quickly. Construction is an industry where this happens on an all too regular basis. Remember Chess City, or perhaps Skitrac where a revolving ski slope would have (if it had been built) moved in the opposite direction while you were sliding down the piste avoiding the need to ever take a ski lift? Thought not. Bad research and bad planning can mean only one thing – failure. Wahid Attalla, former executive director, commercial and operations for property development giants Nakheel, and now his own boss as CEO of property management company Spectrum Consulting, knows a thing or two about success. Not only was he in charge of operations at the ongoing offshore Palm and World developments, he also took the Dubai International Exhibition Centre from a AED1 billion investment to a AED4 billion turnover business when he left four years ago. He says researching every minute detail before you go ahead with a business decision or investment has been the key to his successful career. “There are many indicators on whether or not something will succeed. But you have to know what you’re going into and examine everything before making a decision,” he says. “We did so much extensive research before opening the exhibition centre. We’d heard a lot of boom stories and didn’t want to go in the opposite direction so competitive analysis was crucial,” Attalla adds. The growing success in the region of Power Plate, the latest exercise craze based around a vibrating platform, also owes a lot to meticulous market analysis, according to its Middle East-based CEO, Nelke van Aspert. Since setting up in Dubai in 2004 the company has sold 250 machines, which retail at US $12,000 for the professional model and US $4,000 for the home version. And for van Aspert, the woman behind the increasing sales success, it is essential to know your market. “In each country (in the Middle East) we have a market survey so we know how many people live there, their life expectancy, what their income is, what their eating patterns are and even their family structures – so research is extremely a vital part of the process.” • AGGRESSIVE advertising Finding a product that fills a gap in the Middle East market is one thing, but bringing a product to your customers and cultivating a reputable image in the region can be a complicated and expensive task. Whether you have a cherry-picked niche of potential customers or you are looking to bombard the mass consumer market, exposure and creating a trusted brand are the keys to unlocking the doorway to success. The best means to achieve this, according to van Aspert, is to seek backing from the experts. “Although it costs a lot of money, it is well worth co-operating with a good media or marketing company because it’s the only way to make people take you seriously,” she says. “You have to be aggressive to the outside world and do what ever it takes to constantly be in the public eye.” Launching his own company to rival flat-pack furniture giants IKEA in 1994, Swedish entrepreneur Thomas Lundgren, CEO and founder of furniture retailer ‘The One’, is ideally suited to talking about successfully marketing a brand in the region. There are now 11 ‘The One’ stores across the Middle East, while group sales have breached the US $85 million mark. In order to make waves and become noticed in the regional market, Lundgren, who coined his company’s slogan ‘save the world from clones’, is a firm believer in being distinctive and setting yourself out from the crowd. “You can either be a copycat or you can be an inventor. In general, to have a successful brand, you have to really care about it and get that message across. If you can do that then you will be a success in the Middle East.” • Select the right local partners While entrusting a portion of your business to a stranger may be a difficult decision to make, if done selectively, it can provide you with a wealth of local knowledge and give you the ideal insight into the most effective ways to crack the regional marketplace. According to Attalla, having a local partner is an integral part of being a success in Middle East. “If you are a foreign CEO you will need to select a local partner and a local management team. Of course, you will be qualified, but a certain level of local intelligence is essential if you are to be successful here.” Attalla also believes that the people that make up a company are just as important as the business plan at the heart of the idea. “The idea of a business solution is not just a business idea, but one related to everyone you work with.” For Lundgren when negotiating with a potential local partner from the Arab world, honesty is core to a fruitful outcome. “Honesty is very important to be successful. If they (Arab business partners) think you are honest, they will invest in you.” Before selecting local partners, Mishal Kanoo, deputy chairman of Kanoo Group, one of the largest independant group of companies in the Gulf, specialising in logistics, shipping and travel, amongst other things - believes that you should “interact with the person informally” to make sure they are “ideal” for your company. You will be interacting with your partners everyday of your working future so who you choose to work with you is key.” • People power Reading through reams and reams of CV-jargon as you sift through mountains of résumés to recruit your regional workforce is often an arduous process, particularly as top Middle Eastern talent can be hard to find. Deciphering stock phrases such as ‘ambitious self-starter’ or ‘high academic achiever’ to assemble a team that will drive your business forward, however is an essential chapter in avoiding failure and ensuring success. When interviewing job applicants, van Aspert says it is important to look for “the passion in their eyes, their ambition and a willingness to learn”. She also believes it is good practice to employ a well-balanced mixture of experience and inexperience. “I have experienced specialists and professionals working for me, such as our medical trainer and director, but a lot of the people working in my office have little or no experience. This means I can mould and shape them into thinking and working like I do,” she says. According to Lundgren, the recruitment policy at “The One,” where he refers to his staff as his “tribe”, is based around the personality of the applicant. “When I meet somebody, I look for personality. I can’t change a person’s personality. I can give them tools, vision, dreams and direction, but I can’t change their personality. We are looking for people that will fit into the tribe,” he says. • Breaking boundaries In order to become a successful chief executive in the Middle East, it is easy to assume that there is a certain blueprint of characteristics and backgrounds that should be matched – the stereotype generally fitting the mould of a local, well-educated and well-connected male. There are, however, a number of groundbreaking chief executives who are leading the way in showing the world that, with the right blend of determination and forward thinking, anyone can make a success of their business in the region. Although the Middle East business world is constantly evolving, it remains an extremely male-dominated society and female CEOs in the region are few and far between. Therefore, you would expect the odds to be stacked against van Aspert, a mother of three from Holland, in her quest to successfully launch an exercise equipment brand in the region. Since bringing Power Plate to the Middle East in 2004 and taking it from a fad to a training method trusted by professional athletes, she has established herself as one of the most successful female CEOs in the region.“You have to be very organised and well-planned, not for today or tomorrow, but for one year or five years ahead,” she says. “You have to put all your time into educating people about your product and, if you are just setting up, you should concentrate 100% on one product instead of putting 40 or 50% into a few products, otherwise these won’t survive.” • Investor interest For fledgling and established businesses alike, drumming up investor interest in your latest venture, whether foreign or local, giving you the backing to find your feet or expand, is a major element on the passage to success. The Economic Intelligence Unit, for example, predicts a fivefold increase in Gross Domestic Product in the Middle East over the next 25 years. And with oil prices reaching record highs of over US $70, there are more investors in the region than ever before with the funds and liquidity to potentially boost your business and its long-term prospects. Major investment players in the region include Istithmar, the investment branch of Dubai World, that recently acquired American retail chain Loehmann’s Holdings for US $300 million. Citing the old adage “beggars can’t be choosers”, Lundgren believes that when your business is in its infancy, any investment is a good one. “I decided in 1994 to have investors from Saudi, Kuwait and the UAE, each investing US $1 million. So, including a million dollars of my own money, I would raise US $4 million,” he says. Lundgren eventually only generated US $2.5 million, but undeterred, he still managed to build an empire where annual sales now stand at US $30 million. • Spread the wealth Although the journey to become a success in the region is sometimes difficult, so too is the battle to remain a success for years to come. Investment apathy and spiralling start-up costs are only a few of the obstacles on the rocky climb to the top, while choosing the wrong investor or poor marketing can knock you off your pedestal at any time. And as the region’s economy evolves at break-neck speed, chief executives are under constant pressure to change and develop just to keep up with the other businesses around them. One of the best ways to do this, says van Aspert, is to strengthen your position by investing your profits back into your business. “When you earn, you have to invest. To keep your company healthy you have to invest all the time otherwise you are not able to make it continually grow.” Jim Morrison, CEO of i-mate says that a continuous amount of cash flow is essential when driving a company forward in the region. “Cash flow and cash flow are number one, then staff, partners, service and a belief in what you do.” • Forward FOCUS As mind-blowing breakthroughs in communication technology continue to propel the world towards a single global marketplace, it is becoming increasingly hard to predict where your company will be next month, never mind next year. Add to that the fact that more and more multinational corporations are playing ball in the Middle East and any future plans made can appear to be premature to say the least. Serious forward planning, however, can help you prepare for the changes and challenges that lie ahead. “I think five years ahead and set a goal of where I have to be by that time. I then move backwards and see what kind of steps have to be made – large or small – to reach that goal,” says van Aspert. One man who looked carefully into his crystal ball is i-mate founder and CEO, Jim Morrison who launched his own mobile handsets way ahead of the competition. He assessed the market and its differences and trends and knew exactly how to adapt his product to the Middle East. “The market differs from most in culture, age (the region has a large young population), language and the keenness to embrace new technologies. The best way to be successful is by talking to your customers, see what others are doing and what they are missing, then use this information to position your product into that space”, he says. Established in Bahrain in 1890, the Kanoo Group has certainly stood the test of time, recording a 48% increase on profits between 2004 and 2005. One of the main drivers behind this success, according to Kanoo has been planning ahead. “As a company we only plan three years into the future because it’s possible to forecast what will happen within this time, especially in a place like Dubai where things are changing all the time,” he says. “Five years is too far ahead to predict.” • POSITIVE PERSISTENCE Breaking into the market and getting your business off the ground in the region can, according to Lundgren, often feel like you are “banging your head against a brick wall”. At times, as you search for investment, loans or business partners, a resounding “no” can reverberate around your head as you are met with a closed door at every turn. It is at these moments, when it feels that every avenue has been exhausted, that it is important to stay positive, persist and back your product or venture to the hilt. Lundgren recalls: “The hardest thing is believing in your idea when no one else does. When you are looking for venture capital, but can’t get any, you start to disbelieve your idea and change your plan. “But you need old-fashioned basic values of hard work and determination. Even with a half-decent idea you can still succeed with dedication.” Two years ago, when van Aspert’s funds had almost run out and she was preparing to pack her bags and go back to Holland, she says she would have given up the business if it hadn’t been for her belief in the product. “I thought to myself, I’m not giving up because I know I have an excellent product and I just needed more time. “I put all my time into sending emails and educating people about the product, and then, eventually the phone started ringing and people started placing orders.” • Business etiquette As companies from all corners of the globe disembark on the region’s shores to capitalise on emerging markets, international differences in business etiquette are being overcome on a daily basis. Lundgren, who launched his company with the backing of Middle Eastern investors, believes it is vital for westerners conducting business in the Arab world to read between the lines. “You have to listen carefully to what is being said and to what is not being said. In Europe things are very straightforward, and people say things very clearly. Here they don’t. People are polite but in reality they are saying no to you. This makes it very difficult to listen to your gut instinct but it is something you have to overcome if you want to be successful,” he says. In the words of i-mate’s Morrison, to make it in the region you have to address the “needs, wants and desires of the local and wider GCC markets”. Follow the advice of these five entrepreneurs who, with a blend of patience and determination have made it to the top, and you can’t fail to succeed.||**||

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