Sabah Al Binali: Companies need to create the role of Entrepreneurial Leader

There is a gap between what businesses say they want to do to innovate, and what they are actually doing. It takes a leader to bridge this gap.

Business is challenging. Being successful at business is extremely challenging. It takes a tremendous amount of time and energy to acquire new clients, retain existing clients, manage your team, manage your portfolio of projects and deliver the high-quality products and services that you need to remain competitive in the market.

Do you want an idea of how busy you are while running your existing business? How many unread emails do you have? Hundreds? Over a thousand? How old is the oldest email?

What about meetings? Excluding time reading and composing emails, what percentage of your day is taken up by meetings regarding existing business, for example, with clients or employees about existing products and services on offer? If you include travel time I have never even seen this percentage below 50 per cent and it is usually much higher, around the 75 per cent mark.

Now let’s get to the crux of this article. What percentage of the time do you spend learning, thinking or developing new business lines? What percentage of your resources are dedicated to evolving the business? I am talking about actual time and energy spent here, not wishful thinking. Is it 0 per cent? 1 per cent?

Let us take a step back. Whenever there is a discussion, article or book on business, the words most often used as foundational concepts are entrepreneurial, innovation, disruption. I do not ever recall a book with the title Keep Doing What You Are Doing.

I am a big fan of doing what works. I am not here to debate whether it is better to stay with what works or whether to change. What I would like to do is address the gap between the wishes of companies to innovate, usually considered a priority, and what they are actually doing about it, usually very little.

Let us start with some easy points. Managers are working hard. They are, by and large, not being lazy when they remain focused on current business. First, it is only human to keep doing what you have been doing, a human form of Newton’s first law of motion. Carrying that analogy further, it takes a new force in a different direction to change the trajectory of the manager.

The second major point is that managers are usually incentivised to avoid developing new business lines. Anything new has a long lead time to profitability. It also usually needs a considerable upfront investment. Companies might talk a long-term strategic game, but in truth they act based on a short-term basis. In fact, many listed companies have a three-month horizon as they need to report quarterly.

I have seen two approaches to this problem, both of which are ineffective. The first is to place the responsibility to innovate with the strategy department. Although strategy clearly plays a planning role, the entrepreneurial execution of the business clearly falls outside of their remit. The second approach is usually called a New Business department. The problem here is that the role of this department is execution of the operational elements, eg get an office, get the relevant licences, put in place the relevant legal contracts, etc. Again there is no entrepreneurial element.

The answer is to actually have an Entrepreneurial Leader role with the necessary resources to fulfil that role. Technology companies usually do not need this given the speed of innovation in that sector. Everyone else does.

An Entrepreneurial Leader will have a higher risk appetite than his regular business colleagues, a necessary requirement given the higher risk of developing new business lines. An Entrepreneurial Leader will be able to adapt and exploit new opportunities without necessarily being an expert. No single person can be an expert in everything, yet an Entrepreneurial Leader needs to be able to review and evaluate business opportunities across the board.

This concept is not new. In an age when companies predominantly delivered products, the Entrepreneurial Leader and his team used to be called the research and development department. In a world that is fast transitioning to knowledge-based economies driven by service companies, the idea of an R&D department has not translated well. The need for such a function, on the other hand, remains acute.

Sabah Al Binali is an active investor and entrepreneurial leader with a track record of growing companies in the Mena region. You can read more of his thoughts at al-binali.com.

This column also appears in today's edition of our sister paper Aletihad.

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