Advising enterprises, the Tharawat way

The Life: Dr Hischam El Agamy talks about how Tharawat encourages Arab businesses to experiment in order to take on challenges.

Family businesses are facing a challenge, says Dr Hischam El Agamy. Courtesy Dr Hischam El Agamy

Dr Hischam El Agamy is the executive director of the IMD business school in Switzerland and one of the founders of the Tharawat Family Business Forum. He talks about how Tharawat encourages Arab businesses to experiment in order to take on challenges.

How are you hoping the Tharawat Family Business Forum will assist families in this region?

We provide workshops and certain educational things for the younger generation. We do some research and advisory, and while it was started with [fewer than] 20 founders we have expanded our service to approximately 200 families in the region. The highest concentration of businesses - maybe 40 or 50 of them - is from the UAE.

What's the greatest internal threat family businesses face today?

I would not say threat. It's more of a challenge, which can become an opportunity or threat. For the time being, we're facing the issues of succession: how to prepare properly. How do future leaders have space to experiment their ideas, learn how to implement ideas, understand what the business is all about and deal with the challenges surrounding the business?

Do some of these succession issues play out differently here compared with the West?

Absolutely. Here, it's coupled with a certain social culture. For example, the elder person should be the successor. In the West, that's not necessarily the case. Here you have to deal with the issue of succession in a different way.

What else is unique here?

People in the West will say, "at 65 or 70, I will retire". Here, you are born with the business, and you die with the business. So it's very important to speak about family governance and business governance.

So you're advocating to have two different systems to help manage a business?

There are two systems - scientifically there has to be. But they're interdependent. Corporate governance is dealing with business. All the emotional issues can be discussed under the roof of the institution of family governance.

How is the family governance piece different?

Family governance is the family institution that supports the family to grow the business, communicate the business and ensure the non-active members of the families have the right information about the business. This is the alarm system for conflict. It's filtering a lot of emotions.

What's an external issue family businesses in this region are contending with?

They're dealing with products that have a very short life. In the past, you could represent a product and make money. Nowadays, a family business you take over today has no value tomorrow.

How can the new family managers ensure that past value will continue?

More and more companies are interested in buying technology - not the product, but the source of the product. So they will go and buy shares or even buy out the company. This we saw over the last five years. This is a very smart trend, and it will increase. The issue of having a licence of a product is not anymore reliable in the long term.