Melanie Stern is Section Editor of Families in Business magazine.
Corporate social responsibility sounds cool, but seems a contradiction in terms in an ever-aggressive global business landscape. But it is part of the business remit for Bahrain'sKanoo Group of companies
As has been made painfully clear these past few years, the chasm dividing the West and the East is spirituality and the way spirituality drives our beliefs and conduct. The advent of 9/11 cast a particularly long shadow over the West's understanding of Islam, but if ever there was an opportunity to better understand the positive guiding principles of Islam and Middle Eastern life, Gulf-based Kanoo Group is it. Placing such reverence in Islamic beliefs, family hierarchy and 'corporate social responsibility' seem altogether more serious issues for this organisation than its Western counterparts. With 35-year old deputy chairman of Kanoo UAE & Oman operations, Mishal Kanoo, the company is moving towards the leadership of the fourth and fifth family generation led by Abdulla Kanoo, chairman of YBA Kanoo.
Proud of yesterday…
Kanoo's beginnings were much the same as many other conglomerates from the region: small trading outfits, established decades ago by families enterprising their way out of the sand dunes and trading in essential goods and services such as transportation. Increased competition in the same markets saw many fall by the wayside, but Kanoo survived by responding quickly to the industrial needs of its growing domestic markets as they opened up to international commerce. This was facilitated first by a succession of wars, then the discovery of oil in the region and latterly the need for sophisticated business systems in order to work with the West.
Haji Yusef bin Ahmed Kanoo started the business in 1890, aged 22, setting up the first ever local shipping agent in 1911. The company established refuelling facilities for British seaplanes stopping en-route to India in 1935, achieved the coveted IATA listing in 1948 and co-founded the Gulf Aviation Company (now Gulf Air) in 1950. Gulf Air remains the leading regional airline in the Gulf.
The company is also a leader in machinery (representing leading global manufacturers such as Hyster, Perkins and Bobcat in the United Arab Emirates), technical facilities for oil and gas exploration, and services to the Gulf's power and industrial companies. Smaller divisions include freight forwarding, packing and cargo handling, logistics and corporate services.
…Confident of tomorrow
A clutch of strategic joint ventures have been established with trusted brands to provide international inroads, offering reciprocal access to a market which, for non-Arabic speaking companies not versed in Middle Eastern business etiquette, might prove hard to crack. Key examples include leading UK insurer Norwich Union who operate through Kanoo in the Arabian Gulf serving personal and industrial customers. Last June the company signed up with American Express to develop a joint corporate and leisure travel market throughout the Middle East and they are currently in negotiations with leading American business family, the Johnsons.
Reflecting the image Kanoo enjoys with its customers, the company has a large cabinet of awards from state and international bodies, including the Dubai Quality Award for Travel, awards from Dubai and Abu Dhabi's governments, awards for its community work, and even an award dubbing it a UAE 'Superbrand' from the UK's Brand Council.
The generational handover
In line with the importance of the extended family, all but one of Mishal's uncles and all his cousins work in the business. Mishal's cousin Khalid is chairman of the commercial division which oversees the core businesses (also serving as chairman of Bahrain's chambers of commerce); cousin Yusuf is chairman of Kanoo Group UAE and Oman, and his younger brother Fawzi is managing director of Kanoo Group Bahrain and deputy chairman of the shipping and travel divisions. Mishal's cousin, Mohammed Abdul Latif is Kanoo area executive, and his sister, Maha Hamed administration general manager.
Deputy chairman Mishal was appointed in 1997 and is one of the next generation leaders of the company as it works through its current generation handover. It's a delicate balance for any family business, but particularly so in the Middle East. "My uncles are setting the stage to act as the ambassadors of the company, and slowly but surely my cousins and I are moving into the running of the company in a more active role. Decision-making is moving from my uncles to my cousins and I with their blessing," he says. "Since they are the founders of the modern company, they are slightly hesitant to give it all up at once. This is not because they fear we'll destroy what they built, but rather because of the unique status issue that families in the Gulf have. The loss of position within the family business hierarchy could cause unwelcome social problems. Our society gives social merit to people based on their economic position. Once they lose power, they become less influential and their social status decreases. This is a blow for those used to being the decision makers – the loss of power and status frightens them."
Next generation frontiers
Mishal has written candidly about many ethical and social issues – playing devil's advocate by his own admission – using the influence his stature brings in his homeland to effect positive change and thought.
He pulls no punches and has strong views. For example, on the feverish development of Dubai – "Each one of these developments is looking for tens, if not hundreds of thousands of users to fill them to make them financially viable. Perhaps I don't see it, but could someone please enlighten me as to where these people are going to come from?"
On what is holding the Middle East back – "Legal immaturity. The world is moving too fast to take time adjusting our commercial legal system. Our legal systems need to be revamped, and quickly."
And on nepotism sheltering a less-than-worthy family member in a business position – "In a culture where kissing the feet of one's parents is not only acceptable but the right thing to do, the idea that any member of the family should not share in the bounty the business brings is unthinkable. In other cultures the idea that a dead weight can have the same privileges as the performer is an insane one."
Does being so outspoken not clash with the family unit presenting a united front? "My family tolerates me because they know I play an important role in moving the company forward," Mishal explains. "But they're ready to set me straight if I stray too much for their taste! As for other business leaders, I don't know what they think. Some think I'm doing society a favour and others can't stand my approach as I appear to rock the boat way too much for their taste. Only time will tell whether or not I add real value to society.
"We are traditional in our values and respect the culture we have around us. However, we must always try to push the envelope if it drives us to improve. Religion is not the issue; interpretation of religious texts is where the problem lies."
Commerce and community
The family dinner table must be quite an interesting place at the end of a day's work. Mishal is unafraid to tackle perenially tough family business issues. "We must not forget that the only way one can overcome a problem is first to accept that there is a problem and then look for potential solutions," Mishal tells Families in Business. "If one believes the world is rosy, they are bound to fall flat on their face. "I am unlikely to make any rash decisions – I prefer to discuss the potential scenarios with my cousins who at the end of the day have the burden of continuing this 114-year old success story."
Mishal's father, the late Hamed Ali Kanoo, was widely recognised as a driver of social and community links between Kanoo and the people of the UAE. This was initiated by traditional Islamic beliefs that those of wealth and power should use it to full effect for the good of society, not just one's own family or enterprise. Mishal is open about his wish to continue his father's work in these fields, and seems to act as corporate social responsibility patron for the company. "I think financial wealth that doesn't promote social benefit is void; we believe in giving back to the community. Islamic traditions and family values drive us to do so."
Islamic traditions prevent the Kanoo family from elaborating on the charity boards they operate. "It would be impolite to do so," Mishal explains. While they acknowledge the work Kanoo does in this field strengthens the company's position in society, they make it plain that "we do this for the sake of community."
The company runs internal programs encouraging staff to contribute as teams and individuals to the community, and they frequently sponsor everything from charity sports events to blood donation drives.
Turning sand to concrete progress
Since the 1970s Kanoo has led an 'Emirisation' drive aimed at getting younger UAE nationals qualified and into good jobs. Just under half the UAE population is composed of foreigners and expatriates, bringing with them a high standard of education and experience. Companies naturally seek the best employees. Kanoo has received a Human Development Award for these efforts from Dubai government and appreciation certificates from Abu Dhabi Chamber of Commerce and Industry, and as well as fuelling local development (especially in Bahrain where unemployment is a long-term problem), Kanoo has enriched its quality workforce into the bargain. "We are strong believers in supporting the local population, not just from a sense of social duty but from an economical sense too – if nationals don't take part in the growth of the nation they won't feel part of it and that is a significant danger no economy can stand. There isn't an adequate high-quality supply of UAE nationals to fill company roles but this shouldn't stop companies from pursuing progress in this field," Mishal says. 'We are a multinational and we operate in a very cosmopolitan environment; but to train nationals to be competent contributors to the economy is the only proven way to make an economy a success."
The company understands the concept of return on employee investment. 'Kanoo Stars' is an annual award and lavish gala dinner for some 600 chosen staff recognised for their contribution to the company and the Kanoo Long Service Award honours staff that have served the company for between 20-30 years.
The Hamed Ali Kanoo Business Innovation Award was launched in 2000 to draw out the innovation and creative talents of Kanoo staff and to encourage interaction between different levels in the company hierarchy. Individuals and teams are encouraged to present business plans on strategy, values and business operations.
The family has made an example of a successful interface between Western 'best man for the job' values and the Eastern commitment to involving the family in the higher levels of the business. Nepotism has been outmoded for the good of the company, in favour of providing the best schooling and experience for family members in order to ensure the best person for the job could be the family member.
Having obtained his MBA in Finance in America, Mishal travelled extensively before joining Kanoo under his father as assistant shipping manager for 18 months, "This was no easy task as my father was a hands-on leader and I knew that would be what was expected of me," the deputy chairman says. "The title was purely decorative – the function meant 3am visits to the ships to handle their requirements." In 1996 he left for a role in audit at Arthur Andersen and spent time writing for the local business press, before being asked by Maha and Baseem to represent them on the family board, which he did. One year later, Mishal was asked to officially re-join the business as deputy chairman (or CEO). "As far as positioning family members goes, we're a meritocracy," Mishal explains. "While there are family members who, should I say, are not the brightest bulbs, and even though age is a significant factor within our family, we all agree to this arrangement for the future of the family business. All of my cousins are graduates and their abilities must be proven before they are allowed to control any part of the helm."
A steady ship
2003 was a mixed year for Kanoo. Though Iraq is separated from Kanoo's main business regions by many miles, the war saw business in its normally lucrative travel division there grind to a halt temporarily; but more crucially for the long-term, it poisoned the waters of good relations with the rest of the world, and impacting trade. "This was our main challenge last year and the consequent problems – as well as the opportunities – it brought about," says Mishal. "I am sorry to say that Arabs and Muslims are now all painted with the same brush, whether Arabs were involved in 9/11 or not. We're the new bogey man, the Pinata everyone likes to beat and it is one of the most annoying points of the whole episode." However, he adds that the rise in oil prices in the second half of the year was very lucrative and he expects it to continue for the next couple of years.
Mishal is optimistic for the future but when asked what his priorities are for the business, it is still strange for the Westerner – in a pleasant way – to hear the director of one of the Middle East's largest conglomerates talk more about community affairs than the bottom line.
"2004 will be a year of growth, God willing. We have many ideas in the pipeline that we hope to flesh out. I want to build on the success I was handed and push forward my family's agenda of social responsibility and care for our community.
"Most importantly, I have happy employees who look forward to coming to work and love working for a successful company."