Anthony Miles: The Coherent Conglomerate

Many of us in the Middle East work for one of the large, family-owned conglomerates that dominate the region’s business world. The big names are well known – from Al Habtoor Group and Al Ghurair Group in the UAE to Olayan Group in Saudi Arabia and MH Alshaya Co in Kuwait. These family firms, some more than a hundred years old, remain the engines of the GCC economies.

Developed in environments of strong economic growth and limited competition, these firms focused on rapid expansion across multiple sectors. Of secondary importance was the development of strong central values and a grand narrative – in essence, the glue – to bring their vast and diverse empires together. As new challenges emerge for these firms, it is clear that the ones that will thrive will be those which have this clear articulation of values and narrative – their brand. The unifying power of a strong corporate brand cannot be underestimated.

Majid Al Futtaim Group understands this. Its recent rebrand unifies a large company behind a common purpose –in its case, ‘creating great moments for everyone, every day’. The brand makes the vision and values of the firm visible. Other family-owned conglomerates across the Middle East should take note.

MAJOR CHALLENGES AHEAD — EXPANSION, TRANSITION AND TALENT

From a dominant home market base, further growth frequently requires expansion into new markets where these businesses are less well known. Family conglomerates will need to communicate a strong common purpose to convince governments, clients and partners to work with them.

There is a huge war for talent raging within the GCC, too, and it’s set to intensify. Large family firms looking to build strong management teams will increasingly find themselves fighting for the same talented staff. How will they attract and retain them?

Then there is the transition of power across generations of families.

STRONG CORPORATE BRANDS

Booz & Company’s Paul Leinwand and Cesare Mainardi believe that the answer to these challenges is the ‘coherent conglomerate’ – conglomerates that focus strategy on key differentiating capabilities that can be shared across business units.

Management academics J Ramachandran, KS Manikandan and Anirvan Pant believe that branding is central to achieving this. In their recent Harvard Business Review article, ‘Why Conglomerates Thrive (Outside the US)’, they say: “The creation of a robust and meaningful uberidentity that can help executives ‘think like one group’ is crucial to cohesion. The uberidentity will lend stability and continuity to the group as the environment changes and provides the boundaries within which affiliates can articulate their individual identities.”

Global examples abound of firms that have created a strong corporate brand that binds their stakeholders to the firm, serves as a set of guiding principles in every aspect of their operation and builds the coherence referred to by Leinwand and Mainardi. GE operates across various sectors but has a common focus on excellence in industrial engineering, achieved by owning only the top two or three companies in each of its sectors.

In the UK, Richard Branson’s Virgin Group owns businesses spanning aviation, banking, health and leisure, mobile phones and even space travel. These businesses are unified by the founder’s core values of creating excitement, entrepreneurship and a contrarian attitude.

Locally, Majid Al Futtaim Group joins these two examples. If used correctly, its new brand should influence everything the company does – it should motivate employees; drive recruitment campaigns; inform strategic decision-making; and enhance customer engagement.

In short, a great corporate brand should unleash the combined energy of the entire organisation in one clear direction: the future success of the firm.