Interview with Mohammed Bin Ahmed Al Obaidly, OITC
OITC GROUP was founded by Ahmed Bin Mohammed Al Obaidly in 1978 in Qatar and is today a largely diversified family business with 25 subsidiaries to the Group’s name. Famous for its full range of products and services, the Group is just as well-known for its alliances and partnerships with world renowned brands as well as other regional family businesses in properties and investments, joint ventures, business development, EPC contracts, commercial businesses, bulk materials, heavy industries, agriculture, farm management, production & beautification and environmental related works, travel management, hospitality services, transportation, and retail businesses. Mohammed Bin Ahmed Al Obaidly, Group Managing Director of OITC GROUP speaks about the diversity of the family business, the importance of family gatherings, and the future family generations.
At the time of the establishment of the OITC GROUP by Mr. Ahmed Bin Mohammed Al Obaidly in 1978, the country was in quite a different stage and has lived through considerable changes ever since. Could you tell us about the main milestones in the development of your family business over the last 30 years?
I believe it is very important to differentiate between the time that my father Mr. Ahmed Bin Mohammed Al Obaidly started doing business in the region and the formal establishment of OITC, our Group of Companies. In the 50s and 60s Mr. Ahmed Bin Mohammed Al Obaidly started in properties, and it was only in the early 70s that the family business became more organised. The family established the company as a contracting and trading business at the time. Our company was the first one to include fabrication. In that period, it was more usual for people to be in real estate and property management. While the construction of houses and buildings was quite established by then, my father and my uncles brought something new to Qatar by introducing fabrication in the electro-mechanical sector. The family started the company with a very hands-on management philosophy. While we children were studying abroad, the family started another company in 1978, which was named Green Tree Agricultural Materials Company, the focus of which lay on landscaping irrigation and agriculture and included some commercial activities in Qatar. It was run by my father and uncles and some expatriates, who got involved in the marketing sector. By this time our Group of Companies was starting to be more professional and organised in the diversified sectors of the businesses.
Under your leadership, the family business has expanded in many other industries and has been very successful in them. What was your primary motivation for these moves and why these specific industries?
During the 70s until 1984 business boomed, however, the recession came and more difficult years followed. I completed my studies in the United States and France. Throughout those years I always knew that I would join the family business, and therefore, I spent some time in contacting companies related to the businesses. When I came back after my graduation I had the ambition to create a group of activities across different sectors. I felt that while we successfully focused on agriculture and properties, it was not the right field to be in Qatar. Moreover, I believed that other business units could considerably contribute to an even better and more visible image. As a fresh graduate, however, it was not easy to push through these new ideas and to give advice within the family business. No one would accept such input at such a young age.
The initial business experience was not an easy path as we learnt more about the commercial, legal, financial, and technical aspects of running the affairs of the companies. All these learning experiences added up to the managing expertise that I have built through the years, thus, making the mission of the Group and my vision more solid and strong within the family business.
I was highly motivated and wanted more experience; to me the sky was the limit, and in fact, it still is. In the years that followed I failed in some things and succeeded in others. I am happy to state that I was able to diversify our company from the agricultural sector all the way to more modern and sophisticated engineering products. I remember how we had to work hard for it and how we would actually send around 400 to 500 letters to companies every month to introduce ourselves. This was very important in order to build up our network and to find partners for the projects, and the right know-how. Out of the hundreds we would send out we’d get back maybe ten or twelve positive replies. I remember one particular tender from Australia, which we got from the Ministry of Electricity and Water. There were electrical regulators as required by the Ministry of Electricity and Water and several challenges were there but we pulled through them and made money on two levels: from the tender and on the currency exchange. Before the delivery of the project, I had bought some Australian dollars, which appreciated shortly afterwards and yielded considerable benefits. Through the profits of that tender we were able to almost cover all our company’s losses. That was a shifting point in my career where I gained more control in the family business. I had to win this respect through achievements.
I continued to pursue my aim of diversifying the family business into the right sectors. At the time in Qatar this meant expansion into power generation, oil and gas, and other heavy industries. We still maintained the agricultural business. It does yield very much and it is a symbol of tradition and of our history. Part of the motivation in diversifying the business was for the sustainability of the family business and for it to withstand the fluctuation of business trends, for the encouragement in the region, for business experience and networking of family members, and for the coming generation to be able to cover all the sectors through high standard of management and know-how in family partnerships.
The sectors OITC works in today are various: The contracting and engineering sectors are in the field of Power and Desalination, Marine, Onshore and Offshore civil works; Infrastructures such as Roads, Bridges, Tunnels, Interchanges, Piling and Foundations, Ports and Harbors, Airports, Railways, High-end technology products such as Steam and Gas Turbine blades, vanes, hot gas path; heavy equipments; the commercial sector, which cater for Electrical engineered products and services, also for the Mechanical engineered products and services, and the services sector complementing the projects under the Group. The Group also caters to the travel and tourism sector as well as the medical and educational sector. The part that we are developing now is the retail business. Our activities till now mostly referred to engineering items, construction, and power industries. Essentially, we want to tackle four new sectors: Education, Healthcare, High technology, Manufacturing and Retail.
We are always looking for the right partners to undertake these new activities and are very careful in the selection process. The retail business is of particular importance to us as it will enable more visibility for our brand and will create awareness with all types of consumer segments. Healthcare and education as well are core objectives for us and we are collaborating with other family businesses on this towards social responsibilities. The diversification of family business sectors opens new market possibilities, new technologies and state-of-the art manufacturing of engineered products. This creates capital expansion of the family business partnerships in the GCC, regional and international arena.
The reason why I decided to diversify into these sectors was not because it was really needed. It was always my own vision to cover a wide spectrum of sectors: Why? The main reason is that we have noticed that it is good for family businesses to have different activities in one basked because of the next generation. I am not expecting the whole coming generation to be the of the same category. We have this diversification because it means that all the talent in our family can later be captured. The incoming generation will have a wide choice of how and where they want to add to the family business and develop the family entrepreneurship. Diversification becomes a way to ensure the sustainability and continuity of the family business.
The Al Obaidly tribe and family has been in the region for much longer than the existence of the family business OITC Group (Al Obaidly). Could you tell us what the family history is and what the family trades were before the establishment of the company?
Of course there is a big difference between the tribal history, the family, and the family business history. Our tribe has always been situated within the Al Audaid area belonging to the AL ABADLAH tribe. We trace back our family tribe to 999 Hijri. We stand for 433 years of tribal history. If we go further back, thousands of years, the AL ABADLAH tribe originates in the Arabian Peninsula. Now the Al Obaidly family are all over the GCC region in general and in Qatar in particular. At the time of my own grandfather we undertook the rather usual activities, which were ‘pearl diving’ and general trading in the GCC. At the time there were also many that were active in the food trade through the connections to India and Turkey. Then in the 50s we started in real estate.
Much criticism is applied to family businesses in the region for what is called a lack of transparency. Do you believe that there are aspects and issues that family businesses need to be more open about?
I think a difference needs to be made between transparency to the family and the transparency to the business community. Of course the law stipulates transparency to a certain extent. However, as a family business why would you worry yourself about this? Transparency amongst the family members is important and an obligation. However, it remains a family business and not a listed company. If a company is listed then, yes, information should be accessible to the public. Of course, sometimes a family business is partly listed, which changes the situation. Also when a family business enters a partnership, naturally, information needs to be made available.
You have played an important role in the development and expansion programs of the Government of Qatar in different fields. Moreover, you are now the Secretary General in Business Council as well as a Board Member in the Qatar Chamber of Commerce. What do you think is the role family businesses should play to contribute to or stimulate the growth of the national economy?
Whichever the country or context, family businesses always seem to face the same issues. The mindset is the same. During the financial crisis this mindset was the reason why most family businesses were much less affected than other corporations. Families may have a lack of governance according to the new sense of the term, which includes all aspects related to ownership structures, organisation charts, transparency and so forth. I believe, however, that there may be a lack of governance but that it has in some form or other always existed in family businesses. Of course the more formal definition gives us a good idea of how to organise ourselves. We have seen some other families that were well organised and have fostered close relations between family members. These families have grown and they have succeeded and are now market leaders. Others have failed due to the clashes amongst family members. Personally, I believe that it is not enough to just look at the governance structure and problems cannot always be solved by just simply listing a company; the family unity is what has to be maintained under all circumstances.
I think that one of the main reasons why families struggle to maintain unity in the region is that they have let go of the tradition of family gatherings. A Majlis or Grand House setting gives the opportunity to all family members to meet each other. Different generations can communicate and create a sense of unity that nothing can take away from them. I think that families nowadays have lost this connection and that is why we see so many family conflicts and clashes. The Majlis culture can help to support the sustainability and continuity of the family business.
Within the Chamber of Commerce we are looking for ways to support family businesses as well by creating platforms for exchange knowledge and by encouraging that family businesses set up ventures together and form business as well as personal alliances. Another goal that is a priority is to establish a better understanding between the public and the private sector businesses. We focus here particularly on SMEs as most economies are depending on them. We are working on developing a stock of listed SMEs with a special focus on the manufacturing sector.
Similarly, I am also putting an emphasis on the development of rules and regulations in the private and public sector, as in the Public Private Partnership (PPP). I am trying to formulate definitions of what the differences are between public and private companies. Another distinction we are now trying to make is the one between small and middle-sized enterprises (SMEs) as well as between the various industries. This is for the time being my role. I am a Board Member of the Chamber of Commerce as well as the Secretary General of the Business Council, also I am the Chairman of the Agricultural and Environmental Committee as well as the Deputy Chairman of Arbitration Committee and as Member of Arab Business Council. My main activity still remains in the family business as the Group Managing Director of OITC GROUP (Al Obaidly).
What advice can you give to the young generation that will face the challenge of ensuring family business continuity?
They have to work hard, they have to live up to the challenge, and they have to look after their family business. I believe that they should choose the family business over other jobs that may pay more initially. They may make less in the family firm in the beginning but in the long run the returns are much higher than if they go elsewhere. Of course, they should go for training but it would be advisable to go for businesses that are useful to the family business itself. Once part of the family business, they have to be creative and to retain entrepreneurial spirit for the company to expand and to create the long-term vision of how to develop the family business. It is important for them to understand how much effort it takes to keep a strong family business name and that failure in any area can weaken it and damage the whole family.
How would you advise the young generation to work with the generation that is in charge of the business? Is there a magic formula?
As I mentioned, we should not forget our own traditions. Being modern in management practices is very well but it is our tradition that we have to go back to in order to become closer to our families again. Governance structures and all these things are right solutions, the most important thing is to gather the family and to create the bonds of solidarity. When the family gathers, its members can learn from each other; parents and children are sitting together and knowledge is passed from one generation to another. I believe that you can tell the difference between people who have been raised with this tradition of a Majlis or Grand House culture and those that haven’t. They are usually creative, polite, interactive, friendly and sincere and they know how to respect others. And I think these are exactly the characteristics that should be displayed always by family business members.
Tharawat Magazine, Issue 10, 2011