Challenging days for GCC business leaders (page 1 of 4)

Who would want to be a Gulf CEO? The cozy business environment in which they have thrived for so long is being swept away at an alarming pace.

For years, Gulf companies have made huge profits thanks largely to the strong arm of government protection. Exclusive distribution rights have made many Gulf importers dollar billionaires; tough foreign investment laws have deterred all but the most aggressive overseas entrepreneurs; and the common practice of granting monopolies has seen many utilities become bloated cash cows.

Today, all that is changing. In Kuwait, MPs have approved plans to welcome foreign banks to their shores for the first time in decades. Across the waters in Bahrain, lawmakers have made similar moves in the telecom sector. Ditto Saudi Arabia and Qatar. This pattern is being repeated - to a greater or lesser extent - in every sector in every country across the Gulf.

For regional business leaders, it adds up to the greatest challenge of their professional lives. "Regional CEOs are going to have to adapt to playing by the same rules as the rest of the world," warns Jihad Nader, dean of the Business School at the American University in Dubai (AUD).

He adds, "Until now, the playing field has not been level, but the World Trade Organization is changing that. When most of the Gulf countries joined in the mid-1990s, they were granted 10-year grace periods [before they had to scrap protection]. Those grace periods are now expiring.

For CEOs in this part of the world, it is particularly important to have the ability to rise to the challenge of change and uncertainty."
Arif Rahimi, consulting partner at BDO Jawad Habib, one of Bahrain's leading professional services firms, says that the ability to react to these changes is arguably the single most important quality demanded of today's Gulf CEO. "I think it is an important issue - maybe not in the immediate short term, but it will definitely bring challenges. Companies and CEOs will have to be prepared for that."

The bad management habits of the past will not work in the new era of competition. "CEOs will have to be prepared," warns Rahimi. "And they will have to be aware of what is happening in their industry. They will have to be more in touch with endusers and customers than they have typically been. There will be a move towards a customer-oriented strategy. That is different from the previous 20-30 years. In the past, this region has been mostly supply-driven. You bring products and then think about how to sell them, rather than structure your business around the customer. With increasing competition, that will change."

Rahimi says CEOs will have to adopt an increasingly regional perspective if they are to resist the threats - and grasp the opportunities - of globalization. "I would say that so far, typically companies and CEOs have focused on their own countries, with the exception of a few businesses that you could call regional.

"We are seeing a trend with companies going regional as opposed to just being in their own country. Part of the reason is that they're thinking about globalization issues such as the World Trade Organization. On the other hand, I think the World Trade Organization can bring opportunities. The whole market will expand. Competition typically does increase the market size. It creates opportunities."

Headhunters report that the ability to effect change is emerging as a top priority when Gulf companies set out to find a new CEO. "Perhaps the most important issue is: are they capable of implementing change?" says Lema Shanti, director of executive search at Bayt, a Dubai-based recruitment consultancy.