The Obeikan Investment Group is a diversified Saudi-based company established in 1983. The group focuses on the packaging, paper industries and education, in addition to other strategic investments. Today, Obeikan Investment exports goods to more than 70 countries, has 16 offices and operates 18 plants. There are currently four family members active in the business. The third generation members of Obeikans presently have careers outside of the family businesses while the family readies for them to join in a few years.
Abdallah Obeikan is the CEO of Obeikan Investment Group. His father and brother started the company and he joined the family business in 1986. As is typical for a new family member joining the family business, Abdallah Obeikan was given an overview of operations by working in nearly every arm of the company. After working in production and sales, he worked his way into a position aimed at levying strategic contributions to the family business’ growth. In an interview with Tharawat magazine, Abdallah Obeikan provides insight about what the obstacles and upside of family ownership are and how good ownership starts at home.
What do you think is the biggest challenge that comes with family ownership?
I think the main challenges are alignment of interests, different levels of risk taking, keeping to the same direction, agreeing on priorities and many others. But probably the greatest difficulty of them all is managing the egos of family members. I mean for family members to be aware of their own weaknesses and strengths is challenging. Of course, some people are naturally humble, yet others have problems with assessing their own competencies. How do you manage this without creating conflict? As mentioned, alignment is difficult since some people like to go fast and at high risk level while others prefer a more conservative approach. To align all interests and these different mentalities is a challenge.
What is the greatest advantage of family ownership?
There is great added value to be gained when you succeed in aligning all the talent you have in the family. It’s a journey because human beings change all the time, as does the environment. Other advantages of family ownership are that due to the high level of trust we can take more risk. We can also make fast decisions. We are not just short-term oriented; we are in it for the long run and committed to creating a legacy. These are some of the advantages of family ownership.
Is it difficult to structure the ownership model of your business?
We have eleven brothers and sisters who are the owners of our companies. There are four members active in the business. We have a joint closed stock company and so everybody has their own shares. This clarity makes it easy for us to know the rights of each family member.
How do you honour the interests of family members who are not active in the business?
We are very close as a family. The first and second generation works together closely and meets regularly outside the professional environment. Our challenge in that respect is not now, but may become more dominant in five to ten years. We are aware that we need to prepare.
What tools do you advise other family businesses should use to structure their ownership?
You need to build the social capital within the family. You have to put an emphasis on caring for your blood relations. It is an important value in Islamic religion and tradition and is the capital of the family. Caring for your family is the greatest protection from future challenges you may face with your business.
What makes a good family business owner?
As an owner you need to practice your values and the values of the family. Care about your people, care about your relatives, care about society. Do the right things and don’t be greedy. Take things seriously. Comply with the rules. Set an example. But, most importantly, do not cut corners and always use your common sense.
What do you think makes for adequate preparation of the next family generation?
It has to begin at home; if they cannot feel it at home and the transfer of culture and behaviour doesn’t happen there then it will never happen. Your children watch you every day. What you do and say will transfer to them. As a parent you are a catalyst. You cannot fix this later by sending children to renowned schools to teach them how to behave like you. The family is the source of learning. The thing is that your children, your family know you much better than anyone. They react to you and if they believe in you, they follow you whether the example you set is good or bad. It means you need to be genuine at home. If you don’t earn the respect of your family, especially, the respect of your kids, nobody will respect you outside the family circle either.
Do you think the family ownership model is always a good idea?
There is no one answer. Everybody should identify his weaknesses and strengths. There are people who are good at being managers and there are people who are good at being on boards. And then there are people whose skills are somewhere in between. It is all about skills and having the strength to identify your weaknesses. There is no such thing as a “superman” who is always good at everything. Even as a founder you must understand your limitations. Your family business needs different types of leadership at different stages and it is your role as a family owner to understand when which leadership styles are preferable.
Tharawat Magazine, Issue 16, 2012