Trust trumps talent
28 January 2015
During my four years in the Gulf, I worked with many international companies looking to enter or grow in the region. Some had been very successful, and wanted to expand into new countries. But others had found it more difficult, and had not achieved expectations. The more I worked with all these companies, the more I started to believe that the reasons for success were more about ‘soft’ factors rather than ‘hard’ capabilities. I started to believe it wasn’t just about having the best product, or the best credentials, but that other factors were just as – or even more – important.
So I interviewed 20 regional directors of international companies operating in the Middle East to explore their views in more detail. These were senior directors that I respected, who had a proven track record in growing their business in the region. They were running companies from many market sectors, including engineering, telco, media, business services, construction, oil & gas, financial services and retail, and had experience across the Gulf and wider Middle East. The companies included some giant multinationals as well as smaller entrepreneurial businesses.
I asked them what they found were the most difficult challenges they had to overcome, what they thought were the keys to success, and for their top tips for newcomers.
Some really interesting themes emerged. Here are the top five challenges as voted for by my sample of experts:
1. Choosing and managing partners. Partnerships are very important in the Middle East, but it's easy to end up ‘married’ to the wrong one.
2. Finding and keeping the right staff. It’s hard to identify the best people when the workforce comes from all over the world, and getting the mix right is important.
3. Making the economics work. Contrary to popular opinion, the Gulf’s streets are not paved with gold. They are highly competitive markets with a culture of negotiation, long lead times and slow payment.
4. Getting support and commitment from the rest of the Group. Local management soon realise that expectations are unrealistic, or that they may have to do things differently, which doesn’t play well with HQ.
5. Building relationships and understanding the culture. The quality of personal relationships can be make or break. Not everybody is good at this, and not all organisations are comfortable with it.
Most of the above have more to do with mindset than they have to do with the traditional hard strategic factors such as products, promotion and pricing. While traditional strategic thinking has its place, it is not sufficient on its own. For example, the quality of relationship you have with a potential customer can in many cases be more important than your ability to provide the best product or service – as one interviewee put it ‘trust trumps talent’.
If you look through a hard strategic lens you will be led to certain conclusions that may not be the right ones for your business. Here are some that I heard:
- Why would we form a JV if we have to bring the brand, the products, the management and the expertise?
- Why would I employ UAE nationals if they cost twice as much and leave twice as soon?
- The customer needs educating so I will staff up with sector experts from the UK
- We’re not going to look for local production as that would disrupt our global supply chain
All reasonable, logical decisions that may also be very wrong. A mentor of mine once said ‘strategy without numbers is dreaming’, to illustrate the perils of woolly thinking. He was right, but I believe that strategy in the Middle East, perhaps more than anywhere, requires something else as well – empathy. And strategy without empathy in the Middle East can lead you to cloud cuckoo land too.