Building family businesses in Arab world..

Nice interview of Sulaiman Abdulkadir Al-Muhaidib, chairman of Saudi conglomerate Al Muhaidib. Gives you glimpse of the strong tradition of family business in Saudi.

First some bit about the group. It is an investment company:

Founded in 1946, the Al Muhaidib Group is a family-owned and -operated Saudi Arabian investment company. The group began as an operating company focused on building materials and then entered the food sector in 1959. It is now a leading investment company, with stakes in such major companies as the Savola Group, which supplies two-thirds of Saudi Arabia’s edible oils and sugar, and SABB (a joint venture between Saudi British Bank and HSBC Saudi Arabia). The Al Muhaidib Group has also diversified into aluminum, hardware, insurance, private equity, power, real estate, and steel.

Based in Dammam, Saudi Arabia, the group has 15,000 employees and some 200 companies in its portfolio. Sulaiman Abdulkadir Al-Muhaidib, eldest son of the founder, is the chairman; he is also a member of the board of directors of SABB and chairman of the Savola Group. Family members, including his two brothers, hold other key positions. In this interview with McKinsey’s Ahmed Youssef, he discusses the importance of trust and how to weave together different generations.

In the interview, the head discusses the values taught by his father and how they try and preserve them:

McKinsey: What are the most important lessons you learned from your father and would like to pass on to future generations?

Sulaiman Abdulkadir Al-Muhaidib: Our father was a visionary and taught us a number of lessons, which we only came to appreciate as we progressed in our careers. Many of these lessons were derived from the way our father raised us and engaged with us at work. He got us used to a disciplined way of working.

At the beginning of my career, I used to go to the port every day at around 4 AM and wait for the first ship carrying building materials. We would have breakfast with the hardworking frontline laborers. As soon as the ship arrived, we would negotiate with the suppliers before the products were off-loaded. When the trade was completed, we would check around the port for names of agents, sources and destinations of the ships, and materials carried. And we would roam around looking for potential clues about the competition, such as product price tags. Later in the day, we would frequent the different retailers and traders and listen to their conversations; we would spend time at coffee shops where traders discuss and exchange information. In the evenings, we would be at the diwaniya—the reception area for business colleagues—pouring coffee and tea for our father’s friends and listening to their conversations.

We learned a lot from this, but we only realized that at a later stage. Several lessons stuck with me from that period. First, focus on what matters. After our visits to the traders, my father would always ask us to recount what we heard. Based on that, he would advise us to increase our visits to some stores and reduce visits to others. I realized only later that my father was encouraging us to develop stronger relationships with traders who discussed business and to reduce our exposure to those who were wasting time and gossiping.

Another lesson was about the value of rigorous discipline. There is an Arabic expression: “Fortunes are distributed before dawn.” This means that success comes to those that grab opportunities earlier than others. The fact that we used to start early would allow us to get access to the materials we needed, avoiding off-loading and storage costs.

My father believed you should roll up your sleeves. He taught us the importance of being on the front line, not staying in the office, to learn the business. We had our sleeves rolled up every day, engaging with every person involved in our business regardless of rank or status. Whether it was breakfast with the construction teams in the morning or discussions with drivers waiting to carry the loads or spending time with the merchants in their shops, every moment was important and a learning experience. We sought every opportunity to learn our business. We want to embed these values in our children and make them understand the importance of working on the front line.

The importance of building trusting relationships was another lesson. In our relationships, we didn’t differentiate between people. From senior executives to frontline employees, every person plays a critical role. Frontline employees are usually much more important when it comes to getting things done, because they know the trade. Understanding their challenges allows us to do our business better and gave us credibility with them. We were brought up to respect everyone and to develop trust at all levels.

Finally, choose the right people. “People who don’t achieve something for themselves will not achieve something for you.” My father always liked this Arabic saying. He wanted us to work with people who are hungry to develop and achieve something for themselves. This was a guideline in choosing the people we work with, the partners with whom we engage. It is also important to instill that in our children.

One more thing impressed me about my father: his foresight. He used to say that he had one wish in his life: to wake up every 50 years from his grave to see how the world and technology have evolved. He believed in investing in the future. I remember once we were considering whether to buy a fax machine, which at that time cost thousands of dollars. My father said no, we should not buy one—we should buy three for each office.

Superb reading.

Business families should open their own schools for students to learn aspects of business. This will prepare them much better for the world of business. Much of what they teach you in Business schools is just over the top and useless after a point. This is real learning which is limited to only those in families. It could be opened to others as well..


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