Interview with Ibrahim Al Rawahy and Farida El Agamy:
Discussions between family business members often extend beyond office hours and spill over into family time. More often than not, when work discussions are carried on at home, they tend to intensify as all professional pretence is dropped and everyone insists more freely on his or her opinion.
It was during one of these casual work-related discussions that the family running the RAD group, a large conglomerate and a key regional player in retail, insurance, and the automotive sector, embarked on an interesting experience. NRAD, chairman of the family business, decided to challenge the 3rd generation family members: he asked his sons, daughters, nephews, and nieces, to come up with their own suggestions for improvement of the RAD group.
Most of the third generation members were in their late thirties and early forties and had been working with the family business for more than 15 years; others were much younger and had been working with the family for less than five years. Then there were those who since their graduation had been working outside the family business in industrial multinationals and international consulting firms.
The brothers and sisters of NRAD were quite surprised when he asked the junior members for their input, as he was known to show resistance to change. This had always been reinforced by the good performance of the RAD group; why would the family want to change anything? However, in recent years NRAD had increasingly realised that the family would have to become more innovative if it wanted to keep its competitive edge.
He gave the third generation a week’s time to submit their suggestions, which he was sure would range from diversification strategies to requests for more parking space. There was a lot of excitement in the monthly family reunion and everyone was full of anticipation to see who would come up with the most relevant suggestions.
It was a busy week; NRAD was curious to see how each of the third generation members would proceed in order to formulate his or her proposal. ANRAD and FARAD who were directors of the operational department and who were considered to be leading the third generation, gathered their teams and opened the discussion on how they could improve the business and stimulate growth. The younger members of the third generation created focus groups, involving family members working outside the family business. They held their meetings outside the work place and looked at the competition performing a quick industry analysis to position RAD.
NRAD was, however, most intrigued by the approach of young SNAL, the youngest son of one of his sisters: SNAL was in his late twenties and was working in the client services of the RAD insurance division. To formulate his suggestions, he contacted 15 major clients and fixed an appointment for short meetings. He asked the clients one question: what kind of services or value propositions would you like to be offered by RAD in order to make the company your preferred partner? The clients were thrilled by the initiative and provided interesting insights, which raised issues that had previously been ignored by the RAD group. SNAL summarised the client input and formulated them into suggestions.
NRAD received all the propositions on time and asked three non-executive directors from the group’s board to act as a jury. Most of the suggestions outlined how to improve processes, services, add new business sectors, more education for employees, hardware investments in operations, close down less performing business, change reward systems to motivate employees to compete, and how to expand in new markets. The jury had one week to come up with what they considered the most relevant and breakthrough suggestions.
The RAD group had seen a great number of innovative ideas before this time but they remained fragmented and were not supported by the proper procedures throughout the organisation. NRAD hoped that the young family members who were active in various sectors and at different levels in the group could provide ideas and guidance to sustain the business growth. Before hearing the jury’s decision he had decided that the person making the best suggestions would be nominated head of the new RAD innovation hub, which would capture new ideas and supervise their implementation.
After one week of deliberation the jury presented NRAD with the results. They explained their criteria and how they had looked at the suggestions based on how great a competitive advantage they would create for the group and the amount of resources required for their implementation. They also grouped suggestions to according their similarities in order to differentiate the breakthrough ideas from the rest.
In summary there were plenty of excellent suggestions based on the expertise and perception of the RAD staff. However, there was very little input that came from the outside. SNAL was leading in this category because he had engaged the most important clients in the process. By engaging them he had also committed them to a sustainable relationship with the group and set back the competition.
While NRAD was thrilled by the results he did not know how to face the situation. SNAL was one of the youngest of the third generation and had little work experience in comparison to most of his generation. On the other hand he had always distinguished himself through his great commitment to clients. SNAL’s method of approaching NRAD’s task showed a lot of promise. Yet, NRAD now hesitated: Would appointing SNAL to lead the RAD innovation hub make the elder cousins feel like the rule of succession had changed? At the same time it was a fact that SNAL had come up with those suggestions that were most relevant to group’s sustainability.
The next family gathering was to be held shortly and NRAD would have to announce his decision to the family.
1. Do you think NRAD should appoint SNAL to the job?
2. How would you advise NRAD to communicate his decision to the family assembly?
Ibrahim Al Rawahy
2nd generation family business member,
Founder Developed Offic, Oman
NRAD’s approach is an excellent one and brings many advantages. He might not be able to get the best out the family members but he will get an idea of each member’s ability, way of thinking, and focus. Later on he can work on developing their abilities as per their interest or the areas they excel in. This will later enable him to know what position to assign to which member.
With regards to the outcome of his experiment, I think that NRAD should balance between the experience of the older third generation members (ANRAD and FRAD) and the enthusiasm and ideas of the younger generation (SNAL). NRAD can appoint one or both of the experienced directors (ANRAD and FRAD) and make sure that SNAL is a key member of the innovation hub. At the same time, NRAD should make a detailed plan to improve SNAL’s experience and skills over the next five years so that he gains enough experience and knowledge to head the hub.
There is no harm in announcing SNAL as the winner, and to thank him for his effort. This will give him the confidence needed to progress in his life and take on greater responsibilities and challenges while, at the same time, setting up a detailed plan to develop his skills under the supervision of ANRAD and FRAD. The directors will feel their importance in developing the group as well as guiding the younger family members. The relation between SNAL,ANRAD and FRAD will be stronger as they will have to meet regularly to discuss their ideas. SNAL, will feel that his efforts and ideas are appreciated and the plan made to improve his skills will lead him to his desired goals.
I think an innovation hub is a must for any group that wishes to continue and expand successfully. It will help the group into the right direction that ensures continuous growth and success. Appointing a family member to lead the hub is another important aspect as it will ensure commitment and consideration of family values in any idea or project.
Farida F. El Agamy
2nd generation family business member,
UAE and Switzerland
I believe it was a very good idea of NRAD to involve the family in developing new strategies. It has certainly motivated the family and made them feel that they have a voice. Especially for the young generation already active in the business, it must have given a lot of empowerment.
However, NRAD now has to be careful: from the background story we know that this was the first time that he involved the family in any decision. This means that the family has no experience in dealing with many different ideas and opinions. Even though NRAD and the board have received valuable feedback and information through the family’s efforts, it now all depends on the structure they will put in place, if there is a sustainable follow up and real impact.
I would suggest that NRAD forms a task force, composed of some directors, SNAL and some other members of the young generation and some junior executive managers. The goal of the task force is to take the chosen idea of SNAL and maybe two or three others and work on a detailed implementation plan. He might consider to put SNAL in charge of the Task Force, to show the appreciation for his efforts. However, I believe that it would be a better solution to have him work in a team on the implementation possibilities than alone. The Task Force should be given a clear deadline and targets. In order to continue the involvement of the family, every report or update produced by the Task Force should be communicated to all family members.
This way, NRAD can ensure the professionalism of the strategy development through the involvment of directors and knowledgeable managers, but also open the gate to family innovation by involving SNAL and some other family members. Once the family and business have had a positive experience with this project, they can improve the procedure and approach other pressing issues, like succession planning or governance.