< Previous20 C EO M I D D L E E A S T APRIL 2020 BUSINESS | CYBER ATTACKS UAE AND SAUDI ARABIA ARE ‘UNDERACHIEVERS’ WHEN IT COMES TO THE NUMBER OF WOMEN ON BOARDS OR OCCUPYING LEADERSHIP POSITIONS, ACCORDING TO THE LATEST STATISTICS FROM EGON ZEHNDER EMBRACING FAILURE SUCCESS IS GLAMOROUS, BUT FAILURE TEACHES US MORE. EMBEDDING A CULTURE OF FAILURE IN LARGE ENTERPRISES REQUIRES A FEW PROACTIVE STEPS, SAYS MIRIAM MCLEMORE, ENTERPRISE STRATEGIST AT AMAZON WEB SERVICES (AWS) BUSINESS | JOURNEY TOWARDS SUCCESS APRIL 2020 CEO MIDDLE E A ST 21 ITHIN BUSINESS AND ACROSS SOCIETY at large, we have put a premium on success. However, innovative business leaders recognise that it is through failure – our own and that of our colleagues – that we learn the greatest lessons. Failure teaches us more than success does, and it is certainly more memorable. Without the possibility of failure, there will be no appetite for innovation, and no curiosity to fuel discovery. If teams feel there are adverse consequences to making mistakes, they step away from risk – and in doing so, sustain the status quo. In large enterprises, failure is rarely seen as positive or even acceptable. As an Enterprise Strategist for Amazon Web Services (AWS), I can confirm Amazon’s reputation as a company that supports and even encourages failure – and this starts right at the top. As Jeff Bezos famously says, “Amazon is the best place to fail.” Our view is that you’re not reaching for enough if you did not fail along the way. Amazon’s Fire Phone failed completely, but we learned how to build very complex hardware and that has helped us with getting Alexa voice service right and developing the Echo home speaker product line. Through my conversations with enterprise leaders in the Middle East, there is consistency that building an organisation that supports the idea of failure revolves around three key areas: encouraging experimentation, cultivating an organisation where it is safe to fail, and learning from failure to make the next phase stronger. Encourage experimentation All companies are looking to innovate more rapidly to build new capabilities, but they don’t know how to enable their organisation for failure. Creating a culture of experimentation calls for dealing with failure and accepting it as an important part of the process. Cloud adoption was a catalyst for enabling Aramex’s teams to experiment, iterate, and fail fast. Mais Rihani, chief technology officer of Aramex, says, “Building on AWS, the team today has the freedom to provide MVPs (minimum viable products) for the slightest ideas for the business, test them in the market, and then assess and recommend whether to continue in that direction or quickly move to the next thing.” Make it safe to fail Managing failure is a fine balance. As a leader, it’s important to give people the freedom to fail, while not letting things go too far before stopping and fixing them. Businesses must lower the cost of failure, and that could mean different things in different organisations. For Chalhoub Group, it meant creating a safe environment within the Group for new ideas in the form of a transformation initiative called Shift Chalhoub. Rania Masri, chief transformation officer at Chalhoub Group, says, “As part of the movement, we launched Ibtikar, an in- house incubator for Chalhoub employees. Ibtikar provides the unique opportunity for employees to experiment and test ideas with dedicated time, funding, and mentorship, where risk-taking and failure are expected and welcomed, and considered learning moments for the organisation.” G E Find the lessons Failure is an opportunity to look back, examine why it didn’t work and what was your role in it. It’s tempting to dismiss any failures and focus on projects in hand that might offer future successes, but if you don’t understand why something went wrong, you could be setting yourself up to make the same mistake again and again. At Seera Group, failing fast means learn- ing fast. Louise Blake, vice president of Data at Seera Group, says, “We once built a machine learning model to predict a user’s propensity to purchase on our website, which significantly failed to deliver at launch as a result of not involving the team who would be utilising this model. “Recognising this mistake, today we are trialing multidisciplinary squads for product development, from the discovery stage through to implementation, and are already seeing the benefits.” Failure is not always an easy topic to talk about, particularly in times of economic transformation, but it’s at these very mo- ments that teams need the reassurance that it’s okay to fail. History is replete with examples of successful products born from failed experiments and the future success of businesses is set in their ability to embrace failure. W Learning from failure History is replete with examples of successful products born from failed experiments, says McLemore22 C EO M I D D L E E A S T APRIL 2020 BUSINESS | ECONOMY CC COUNTRIES HAVE LONG APPLIED A GENEROUS MODEL FOR SOCIAL WELFARE . Governments are the main provider of jobs for citizens, along with such services as education, healthcare and social protection. Today, that model no longer works. There is a growing gap between what governments in the region can provide and what their citizens require. Given these shifts, countries should adopt a coalition approach to social services, partnering with not-for-profit (NFPs) organisations and private sector companies, and creating new financial rewards for successful performance. Other countries already use this model successfully. There is a need to improve services in the region. GCC countries can provide higher quality in terms of education, employment and healthcare. Part of the issue is the change in state finances. For decades, oil revenues were plentiful enough to fund government-backed social services. However, lower oil prices have affected the ability of governments to meet all their constituents’ needs. In the short term, slower economic growth will increase the urgency of finding a solution. Over the long term, demographic trends will compound the challenge. Aging populations and high unemployment rates among nationals are increasing the strain on government-funded services. At the same time, the younger generation is more connected and more aware of social service levels abroad, and is thus more demanding. In short, the current model among GCC governments is unsustainable financially and operationally. Other countries are already addressing this issue by recognising that governments cannot be, and should not have to be, the sole provider of public social services. Instead, governments can work with not-for-profit organisations (NFPs) and private sector companies to supplement government offerings – an “all of the above” approach. To apply this approach, GCC governments need to take three specific steps. 1. Build an ecosystem of NFPs In many countries, governments are supplemented by a network of NFPs that deliver specific services, often for distinct groups of people. For example, an NFP may offer job training to disabled individuals, or help citizens with troubled backgrounds (such as ex-convicts) integrate economically, or help educate children in underserved communities. GCC countries can also benefit from NFPs, but such organisations are too few in the region. Most GCC countries have fewer than 2,000 NFPs, compared to nearly 1.5 million in the US (including public charities, private foundations and business and civic groups). Accordingly, the first step is to build an ecosystem of these organisations in the region. Governments cannot create NFPs, but they can provide the conditions in which people can start and grow such organisations. To start, governments should designate priority services, such as poverty relief, education, or health care, so that organisations have a clear objective. Governments in the GCC can, and should, provide more direct financial support. In other countries, NFPs have several sources of income, including government funding, which represents anywhere from 10 percent to 20 percent of NFPs’ total revenues. In GCC countries, by contrast, most funding still comes through private donations, which often go to charities rather than NFPs that actively work on social issues. GCC governments provide minimal funding. G THERE ARE THREE WAYS FOR GCC GOVERNMENTS TO SHARE THE GROWING BURDEN OF SOCIAL SERVICES, WRITES FADI ADRA, PARTNER, AND SAMI ZAKI, PRINCIPAL AT STRATEGY& MIDDLE EAST A SUSTAINABLE FUTURE FOR SOCIAL WELFARE?APRIL 2020 CEO MIDDLE E A ST 23 In some countries, fundraising for non- charities is legally prohibited. To make NFPs more viable, governments should increase funding to these organisations, either through donations or by paying fees for specific services – particularly in the early stages of the development of the ecosystem. Over time, the goal should be to allow NFPs to become self-sustaining, in part by relaxing fundraising rules to allow NFPs to access private funding and donations. Just as critical, governments can eliminate burdensome regulations and simplify some of the bureaucratic processes required to launch new organisations. Instead, regulations should be conducive to new NFPs, with the minimum requirements to ensure proper governance, monitoring, and reporting, along with sensible laws regarding funding. 2. Enlist the private sector Private companies are important allies in this new approach. Similar to the disparity in NFPs, private-sector organisations in the GCC region do too little in terms of social development. For example, companies in the region often have a transactional approach to corporate social responsibility, in which they donate a portion of their revenue to charities, or launch a green product line or two. The scope of the challenges in GCC countries calls for a bolder approach: corporate social innovation (CSI). Rather than minimise social ills, CSI requires that companies do good proactively. This can involve creating more innovative products and services that improve the well-being of customers or by working with suppliers from vulnerable groups and communities. Contributing in this way is more than an obligation, it is good business. Companies that promote social impact through their products and processes show better performance in several areas. They can tap into a consumer base that is more aware of sustainability issues and is willing to pay for cleaner and greener products. It is notable that the ambitious national plans of GCC countries all have roles for the private sector to help address social needs through innovation, including New Kuwait 2035, Saudi Vision 2030, and UAE Vision 2021. A challenge with CSI, however, is that it can be tough to measure objectively. Accordingly, governments should standardise metrics and indices so that organisations can be compared fairly using common benchmarks. That allows companies to see their strengths and weaknesses so that they can prioritise improvements, and it gives external stakeholders more reliable information about which providers are generating real change in social areas—and which providers need to improve. 3. Create financial incentives GCC governments can create financial incentives to solve social problems, in part by redesigning how social projects are funded. Traditionally, governments buy public services in a fashion similar to how they buy tangible goods like vehicles or office supplies: by paying vendors a preset amount. That approach fails to acknowledge the wide range of qualitative differences in how services are delivered. Instead, governments need to assess the quality of social services and programs that vendors deliver, and link pay to performance. These kinds of performance-based payments can be even more powerful if countries use innovative funding mechanisms such as social impact bonds, which allow third-party investors to fund some of the costs of a specific project. The payout for those bonds to investors varies depending on how well the project performs against predetermined criteria. All three of these mechanisms may seem cutting-edge, but they are already in use in other countries and generating positive results. In that way, they offer a tested means by which GCC governments can improve the quality of their social services. Consultant Fadi Adra has deep expertise in pensions, municipalities, labour and social services Principal Sami Zaki has 15 years of strategy and business development experience in the Middle East24 C EO M I D D L E E A S T APRIL 2020 BUSINESS | HEALTHCARE health problems. Early detection is as close to prevention as we can get. In many regions, provisions for mental healthcare come secondary to those for physical healthcare. What can be done to address this imbalance? Within society, public campaigns to raise mental health literacy and building awareness of mental health issues are a great way to start the conversation and to diffuse existing stigma around mental health difficulties. Having prominent people championing the agenda can help reduce the stigma. The leadership must be a critical component of shifting any culture, especially in regards to mental health. Having those in leadership become champions of mental health, encouraging people to get help and sharing what they themselves do to cope. This changes the cultural narrative from being that of “we might lose our job if we discuss our challenges” to “it’s okay to talk about it.” THERE IS STILL TOO LITTLE PROVISION TO SUPPORT MENTAL HEALTH, BUT THERE IS PLENTY OF SCOPE FOR WORKPLACES TO PLAY A PART IN SUPPORTING EMPLOYEES WHO NEED IT, AS WELL AS CREATING A WORKING ENVIRONMENT THAT IS CONDUCIVE TO BETTER MENTAL WELLBEING, SAYS DR. SALIHA AFRIDI, PSYD, A CLINICAL PSYCHOLOGIST AND THE MANAGING DIRECTOR OF THE LIGHTHOUSE ARABIA, A LEADING SPECIALIST CENTRE FOR SUPPORTING PEOPLE WITH MENTAL HEALTH ISSUES WORKING TOWARDS MENTAL HEALTH How can workplaces support mental health as part of their CSR policy? There needs to be a culture shift. We still have a very outdated way of thinking about mental health. This is apparent by the way we think about medical insurance which allows for claims to be made on physical health issues, but mental health is very often not part of the medical insurance policy. One of the quickest and most obvious ways a company can make the shift towards wellbeing and mental health is to include it mental health care in their medical insurance policy. Another way is to include mental health awareness and prevention campaigns as part of the company’s internal communications and make sure all stakeholders within the company are included and involved. Finally, businesses should consider training HR and individuals within the team to be mental health first aiders. We know that one out of four people worldwide struggle with a mental health problem within their lifetime, but the majority of those will not be detected or treated. We also know that every 40 seconds someone in this world dies by suicide. Knowing these facts, we can do our very best to train people to detect mental APRIL 2020 CEO MIDDLE E A ST 25 What is The LightHouse Arabia, what does it offer clients, and what is its mandate and philosophy? The LightHouse Arabia’s philosophy is to enable human potential by eliminating internal barriers to that potential. Human potential is essentially values driven by actions minus interference. Our goal is to help individuals quieten the interference caused by difficult emotions such as anxiety and depression and make decisions that are anchored in their values. One of the challenges to people accessing the support they need is the stigma in the region that surrounds accessing mental health support. So our goal at The LightHouse Arabia is also is to raise awareness about mental health and holistic wellbeing. It is so clear when people go through a journey of introspection and reflection that they feel transformed and they experience life like they have never before. How a business or company can connect with The LightHouse Arabia to allow a transparent route to their staff who may need support or services? It is a separate channel from the company’s internal systems. Employees contact The LightHouse Arabia separately, book their appointments, and everything is confidential and not shared with the employer, even if they claim in from their insurance. There are some companies who book appointment slots to avoid waiting time and to get their employee immediate access to a therapist – even in this case, the name of the individual is not revealed to the employer and all bookings and payments are done confidentially. Why is mental health stigmatized, especially in this region? The stigma of seeking therapy for mental health difficulties is not only prevalent in Middle Eastern regions but around the world and with people of all ages and backgrounds. Mental health is stigmatized because there is a lack of awareness amongst the general public about what depression, anxiety, and other mental health problems look like. There are also cultural reasons why people do not get mental health treatment and support. One of these is the perception that it shows a weakness in faith. Sadness or worry are considered a sign of weakness in faith and, for example, “Don’t worry, just pray” is something people hear when they are reporting very clinical symptoms of anxiety. And yes, spirituality is an important factor in good mental health, but it does not account for everything and there are times you need professional treatment. For a lot of men especially, asking for ‘help’ is admitting weakness and in many Middle Eastern and South Asian cultures, men cannot show weakness. Viewing therapy as a weakness has a lot to do with societal norms and expectations. Even now, we see men who believe that emotions are only to be felt by women, and seeking help is a sign of weakness. This is because they were raised within cultures that endorsed the ‘big boys don’t cry’ philosophy and phrases like ‘don’t act like such a girl’ are used when a boy expresses sensitivity or sadness. The only emotions men are allowed to feel is worry and anger – which is why in many men depression and anxiety actually manifests as anger and stress. There is also the prevailing attitude that ‘we don’t talk about personal things with people outside family’. We live in collectivistic cultures, and ‘what people will say’ is still very much a phrase that guides social behaviour. I think we are still very outdated in the way we look at overall health. If we cannot see the problem with the naked eye or with an MRI, we don’t believe it exists. We have a long way to go till we realise the importance of mental health on a person’s physical health. Over 80 percent of primary care health visits are stress related. Furthermore, stress is related to the top six causes of death that include heart disease, cancer, lung ailments, accidents, cirrhosis of the liver and suicide. We have all the research but we ignore it because we cannot ‘see the problem’. 26 C EO M I D D L E E A S T APRIL 2020 BUSINESS | CSR N THE MIDDLE EAST, WE ARE SEEING a growing maturity and understanding of CSR as encompassing economic aspects of an organisation, as well as environmental and social. Moreover, with national initiatives like the ‘Year of Giving’ and the ‘Year of Tolerance’ in the UAE, organisations are starting to think about the wider context and implications of social responsibility. More than a potential ‘nice-to-have marketing stunt’, it is recognised as a responsibility monitored by regulatory authority. Environmental, social and governance (ESG) may have played a big part in enabling this shift in perspective. ESG refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. In January 2004, then UN Secretary- General Kofi Annan wrote to the CEOs of significant financial institutions to take part in an initiative to integrate ESG into capital markets . Since then, ESG has evolved and moved from the sidelines to the forefront of decision-making. In the last decade, various governments worldwide, including those of Switzerland, France, the UK, Italy and Germany, have enacted over 500 new measures to promote this approach, and players from governments and regulators to capital markets, from businesses to consumers are becoming involved . ESG disclosures gain momentum Direct and indirect pressure on corporates and other types of enterprises to make more detailed ESG-related disclosures are increasing, and companies are acting now to establish these. With ESG, organisations are subject to a set of non-financial reporting. Coupled with increasing investor demands, these new rules could have a profound social and economic impact on companies. Regulatory authorities, for example, are establishing standards and frameworks to ensure mandatory sustainability reporting. For example, Abu Dhabi Financial Services Regulatory Authority (FSRA) plans to introduce ESG criteria for entities at Abu Dhabi Global Market (ADGM). According to Richard Teng, CEO of FSRA, organisations are likely to win favour with investors if they make ESG disclosures, as the financial sector is increasingly looking for such compliance . Furthermore, as stakeholder expectations increase, companies may be faced with growing pressure to manage risks and are expected to be more responsive. Many of these issues are also partly driven by consumer and market demand, such as the need for energy efficiency. Engagement with stakeholders is therefore central to an organisation’s sustainability, whether shareholders, customers, employees, the community or non-governmental organisations (NGOs). Many companies only think about human stakeholders, but they have to consider representing the rights and interests of non-human entities as well, including our natural habitat, which is facing unprecedented risks today. ESG in the wake of crisis According to the Global Risks Report 2020, which offers a ten-year outlook of some of the biggest challenges facing us, the top five global risks in terms of likelihood are I CAN AN ENVIRONMENTAL, AROUND THE GLOBE, THE DEMAND FOR CLIMATE-AWARE INVESTING AND CARBON CONTROLS IS INCREASING. NO LONGER IS IT JUST ABOUT CORPORATE SOCIAL RESPONSIBILITY (CSR). THERE IS NOW A SHIFT TOWARD CREATING REAL SOCIAL IMPACT, MOVING BEYOND EVENTS SUCH AS BEACH CLEAN-UPS, MARATHON RUNS AND TREE PLANTING ACTIVITIES SOCIAL AND GOVERNANCE STRATEGY HELP NAVIGATE UNFORESEEN CRISES? BY JAMES BABB, PARTNER, HEAD OF CLIENTS & MARKETS, KPMG LOWER GULFAPRIL 2020 CEO MIDDLE E A ST 27 American Express pledged that it would not lay off workers, despite the credit card group suffering severe revenue losses . The Italian government announced that it plans to introduce a large-scale moratorium on debt repayments, including mortgages, to help families and businesses cope with the COVID-19 outbreak. Closer to home, leading banks such as Emirates NBD, Dubai Islamic Bank, Mashreq Bank, Emirates Islamic and Commercial Bank of Dubai announced relief measures for their individual and corporate customers to deal with the impact of the outbreak . Food delivery platform Talabat announced contactless delivery to safeguard its customers and prevent the spread of the virus . The UAE government has also announced an AED 126bn stimulus package to reduce the impact on both individuals and businesses in the country. The emirates of Dubai and Abu Dhabi are also implementing a number of measures to counter the economic impact of COVID-19. These actions aim to reduce the cost of doing business and simplifying business procedures, especially in the commercial, retail, external trade, tourism, and energy sectors . Al Futtaim Group has said it will make substantial contributions to ease the financial burden of its retail tenants by offering a fund of AED 100m to help affected all related to environmental concerns (the report was published before the COVID-19 pandemic). The publication sounds the alarm on extreme weather events with major damage to property, infrastructure and loss of human life, failure of climate-change mitigation by governments and businesses, and major biodiversity loss and ecosystem collapse. These may result in irreversible consequences for the environment and severely depleted resources for humankind, as well as industries. There could also be several interlinked consequences, as witnessed with COVID-19, which has far-reaching social, economic and environmental impacts. The stock markets have taken a hit, and as productions units are shut down, business activity has slowed tremendously. Global and local initiatives How relevant is ESG in the context of coronavirus? Are organisations mitigating the tremendous effects of the virus and creating any social impact? Now is the time for organisations to listen to what stakeholders want and to implement relevant policies that will safeguard their interests. Some are rolling out relief measures to safeguard the well-being of their customers, suppliers and shareholders. For example, retail businesses as a result of the slowdown . Meanwhile, Majid Al Futtaim-owned Carrefour has seen a spike in online grocery orders, which has prompted the company to transform many of its supermarkets and hypermarkets into fulfillment centres to cope with the demand . Majid Al Futtaim is also reskilling staff by redeploying workers from cinemas and other entertainment destinations to work in supermarkets . Sound leadership can make a big difference at times like this, by giving stakeholders confidence that the company will be resilient through crisis. Regionally, many CEOs have conducted virtual sessions with their employees to convey messages of strength and resilience during this difficult time. These challenging times prompt societies to better understand organisations’ social responsibility towards employees, customers, and other key stakeholders, based on how well they engage and help them cope in such situations. Social responsibility In the unprecedented times we live in, ESG is perhaps more relevant than ever. While the regulatory developments in the region are a positive step, there is still room for organisations to better understand and recognise the all-round advantages of environmental and social governance. 28 C EO M I D D L E E A S T APRIL 2020 BUSINESS | HOSPITALITY O LET ME START BY SAYING IT GETS better! And it truly does. And that is saying it from the perspective of someone with over 30 years of being an entrepreneur and having presided over 20 openings in the restaurant business. I have never faced anything like this either, but I still want to say that things will get better. We can look at a situation as a disaster, as or we choose to look at it as a temporary reset. A ‘bigger picture’ mindset can be a useful coping mechanism, but also a genuine opportunity to stop for a moment and to consider where humanity is going and how frenzied we have become in our lives. You may be wondering why I am so positive in a time like this. Well, there are a few reasons. One is that at the time of writing, in East Asia, we have already been going through this for around nine weeks. There is a cautious feeling that we are starting to see the light at the end of the tunnel even despite a second wave of new cases with people returning to Asia from places that are now getting infected. In China, restaurants have been slowly reopening, including Mango Tree. Meanwhile, in Hong Kong, we got positive news that our Mango Trees are seeing sales start to climb 5 - 10 percent week on week. Landlords have realised that they have to help operators survive by implementing drastic rental reductions. They understand that they can either choose to work together or have spaces empty for a long time afterwards. In other places where we have Mango Tree, such as in the Philippines, we closed everything for 30 days as a directive form the government. Our MT franchise partners have no rental, no food cost, no day-to-day operational costs and so cash losses are minimised, which is positive for when we eventually get back on our feet. In Dubai, similar to our home in Thailand, restaurants stayed open with measures for distancing, before ultimately closing for home delivery only. In Thailand, we have DURING ONE OF THE MOST CHALLENGING ECONOMIC PERIODS IN LIVING HISTORY, MANAGING PARTNER OF MANGO TREE, TREVOR MACKENZIE, HAS A MESSAGE OF POSITIVITY FOR THOSE IN THE FOOD AND BEVERAGE INDUSTRY AND OTHER SECTORS S FOR THOUGHT FOODFOODFOODAPRIL 2020 CEO MIDDLE E A ST 29 been launching takeaway promotions for $2, which are more about helping people than making big money, but helps us in creating cashflow to be able to pay employees. Every single person in the world will be affected financially and will need to play their part to help. We cannot expect government to do it all for us and in many countries governments are not set up this way. However, let’s hope that governments learn from this to create stronger support systems for the future. As we are seeing temporary closures in our restaurants worldwide, our HQ workload has substantially reduced, so we have taken this opportunity to review our foundations and make them stronger and better. From online training to teaching our partners about new ways to generate revenue , to strengthening our online presence and delivery models, there is plenty to focus on, and that must be true of most businesses and industries. This completely unexpected situation has forced us to look at things in a new way, and has forced all of us to rethink how we will go forward after this crisis. I was recently inspired by the New York mayor’s speech where he said “It is time for people to stand up and be leaders, lead by example, lead in helping those who may be caught in fear, to be calm, lead in comforting others, in knowing that they will be ok and that we will get through this all together.” My business coach reminded me recently about the importance of meaning and how it has become the new currency. When we do meaningful things in the world, society, community, and even in our own home, it is worth much more than money, and we should not place a value on something like meaning or contribution. I think we should all act as leaders now and think how we can each contribute and add value in the situation we are in now. It inspired me so much that I felt compelled to adopt a similar approach. I am usually a positive person who can find the good in every situation, and I’ve been doing my best to inspire our franchise partners – to communicate with their communities and to find small ways to do good things to make everyone feel a bit better. When we feel better, when we are not in fear, we have the strength to endure, and endurance is important right now. Next >