By Claire Ferris Lay
AT Kearney is one of the globe's oldest consulting firms. Claire Ferris-Lay talks innovation and sustainability with the key men in the Middle East.
I'm not sure where I am based - my family lives in Washington and we have offices there and in Chicago but I'm not really in any of those places," Paul Laudicina says as he sits in the conference room on the 27th floor at the Burj Al Arab, just hours before he is due to meet with His Highness Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister and Vice President of the UAE, and Ruler of Dubai, for an unexpected Iftar.
The managing officer and chairman of the board at AT Kearney, the international management consulting firm, was in Abu Dhabi the previous day and has a meeting with the government of Bahrain the next. No matter where he travels, Laudicina is bound to feel at ease in a huge number of countries that have all experienced the AT Kearney way. As well as consultancy for business and governments, part of the company's key strategy is also implementation which is an area Dr Dirk Buchta, vice president and managing director, AT Kearney Dubai, says differentiates the firm from its competitors. "The company's founder, Andrew Thomas Kearney, used to say that 5% of the effort goes into consultancy but it is the other 95% which goes into making it a reality. This is the basis for our success both here and globally."
Our founder said 5% of the effort goes into consultancy, but it is the other 95% which goes into making it a reality.
One of the company's success stories in Dubai is the creation of the Dubai Aerospace Enterprise. Buchta says: "Two years ago it was just an idea and nothing more than a blank piece of paper. One and a half years later we are talking about a company that has nearly US$2bn in revenue and 38,000 employees globally."
AT Kearney is one of the world's largest management consultancy firms with an 80 year history and a staff of nearly 3000. Founded in Chicago, the company has been in the region since the 1970s when it first opened offices in Riyadh and Cairo. Due to the economic downturn, however, the offices were shut down. It was two years ago that a Middle East office was re-opened, at the DIFC in Dubai. Next month the company will open offices in Abu Dhabi and Bahrain, and by the end of the year it will once more have a base in Riyadh.
On AT Kearney's Middle Eastern presence, Laudicina says it is not just there to boost revenues, it is also the challenge that appealed to the firm, "It really is about providing the kind of private sector base in experience to help our clients succeed, because we really do believe that if this region succeeds then the rest of the world is going to be a much better place."
It may be an adventure for AT Kearney to be in the region, but what challenges do the businesses of the region face? "One of the greatest challenges in this region is demonstrating that you can in fact have integration, globalisation and economic progress consistent with culture," he says. Interestingly, however, Laudicina comments that while the rest of the world embraces integration, the Gulf has done exactly the opposite.
"If you look at the statistics, such as direct foreign investment and the amount of travel across borders, and all of those which are associated positively with a degree of integration, the Gulf has actually gone in the opposite direction. The Middle East has actually not taken advantage of integration and made itself even less integrated."
The author of The World out of Balance, which highlights emerging trends and discusses the challenges faced by corporate leaders, is an advocate of integration but believes it is lacking in the Middle East because of the continuing conflict between business and religion. "The Middle East as a region is out of sync in terms of benefiting from integration and is actually in the other extreme, so it runs the risk of becoming increasingly isolated.
"Part of that has to do with this debate about modernity and Islam which are fundamentally irreconcilable. In large parts of the Middle East there is question from people about whether or not you can be modern and advanced and still true to Islam - I think you can."
So does he think this region faces a lot of challenges as it transforms itself into a booming global economy? Only those which go hand in hand with a rapidly growing society, he responds.
"There are the obvious challenges, such as moving people quickly and efficiently, pollution and bridging disparity between those who have it and those who don't."
"The challenges of the Middle East, however, are not the only ones that the world is facing. Our discussion ranges from revaluing the dollar to globalisation and innovation," he explains.
"My sense is that we are up against a ceiling now that we have taken globalisation as far as we can. With this new level the world is going to have to address this asymmetry between all of the forces that provide opportunity and constraint, which are all of the big issues of the day that are transnational, but still denominate policy on a national basis. This fundamental asymmetry creates a world out of balance, which in turn, challenges the best of us to be able to do what we need to do in order to deliver our needs," he adds.
Despite the challenges the Middle East faces, the West, Laudicina believes, can learn a lot from the way in which the region is constantly preparing itself for the "post hydrocarbon era" in terms of innovation. He is also a firm believer in Amory Lovins' now-famous statement: "The stone age didn't end because the world ran out of stone."
"Every economy that succeeds has innovated even before they have been compelled to do so," he says in a firm American accent. "The decisions being taken here for the post hydrocarbon era are critical decisions and are the right ones. They would be the correct decisions even if oil wasn't a depletable resource because if you look at histories of economies that have run out of natural resources, most of those economies have developed. It was the natural resources that diverted them from making the kind of policies necessary for economic growth."
It is this innovation that is preparing the region for the post hydrocarbon era, that others can take inspiration from, Laudicina reveals. "Innovation and continuous re-invention are fundamental drivers of economic progress. Successful countries are continuously re-inventing themselves. Just look at Singapore, which is fundamentally devoid of any natural resources but still finds tremendous leverage and opportunity for competitive advantage.
"Now with the velocity and amplitude of change things have to adapt more and more quickly which is what we are seeing here. Innovation is another expression for creativity and change. It is driven by technology," Laudicina adds.
Laudicina believes in Lovins’ famous statement: the stone age didn’t end because the world ran out of stone.
Information technology, real estate and Islamic finance are all initiatives in the Gulf that should be envied for their innovation. Robert Ziegler, principle director at AT Kearney in Dubai, says that it was the Gulf that prompted a huge conference in Austria on Islamic finance just a few weeks ago. "Where did we learn about Islamic finance? We learnt it here. Just this morning, I saw a picture of a development in the middle of the sea that was shaped like Russia. Where did they get their inspiration from? There are a lot that this region is giving back and that is now being sought after by other companies around the world particularly in financial and real estate services."
IT technology and the direction it is taking businesses forward has formed the basis for much of AT Kearney's consulting not just in the Middle East but also in the rest of the world. "The years between 2009 and 2011 will be the era for advanced computing. The internet will have a tremendous impact on how we do business, how we behave, how we interact with one another, so time and distance will become much less important."
Local telecoms companies becoming significant world players and Emaar developing into other countries such as India and China, for example, are also strong innovations that are causing the rest of the world to sit up and take notice of the way in which business is being developed in the region, Buchta reaffirms.
But as he points out, it is important to find innovation outside of technology, something which the region is keen to promote. "There is a lot of innovation and change coming out of this region that goes back to the world, the emergence of the Muslim consumer as an identity, for example. Service innovation is also an important factor that comes into play."
As the Gulf prepares for the future and the post hydrocarbon era, sustainability and preparing for resource constraints should be at the top of businesses agenda. Sustainability is a topic AT Kearney not only practices but also preaches to its clients. Two months ago the firm announced its commitment to becoming a carbon neutral company within two years. As Laudicina says, "it is right and it is smart".
"Sustainability is becoming more than something that relates to corporate social responsibility. It is right at the heart of what you need to do to be competitive. It is a very important issue and one that in many ways will be looked at in this part of the world more intensely. We are talking to our clients about energy resources and renewable energy and this region is somewhere that has enough renewable energy resources to be a market leader."
If Laudicina were to recommend anything for the Gulf, it would be to keep moving in the same direction as well as to further develop human resources. "Human resource is the single most important component in any development strategy and the continued development of this in the region is critical to its future.
"Is it moving fast enough? You can make your own judgments. You have both the hard and soft infrastructure with it being worked on rapidly," he explains.
"All you need to do is look out the window to see that, but human resources have to be developed just as critically. I think that is true anywhere and certainly true in the region in which we live and work."