Welcome to BENEFIT POINT where we aim to provide Strategic Management expertise through subject matter experts who want to share their knowledge, expertise and experience in order to benefit your business. Benefit Point's focus is on Sustainable Business management and on the growing Islamic Finance and Halal sectors. Our ISLAMIC BUSINESS section, specifically, focusses on these two sectors to provide Strategic Management based thought leadership to corporates and individual businesses utilising Islamic ethics and governance, and encompass issues and changes prevaling in the Islamic Finance and Halal sectors.

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The Value Benefit of Convergence

The global Halal industry (estimated at USD 2.3 Trillion) & Islamic Finance industry (estimated at USD 1.3 Trillion) have been in the spotlight for some time now due to the rapidly increasing size, need and purchasing power of the global Muslim community (as a primary driver of growth). As both industries reach dizzying heights of business volume, and elicit a great deal of interest, the question that still remains is one of the imminent convergence of these two industries.

Whilst, within the ambit of commercial business, a lot is being done with regards to standardisation that is meant to aid this convergence. The developments, unfortunately, are not communicated or known to the general public. This in itself, has a limiting effect on hastening the pace of the much needed convergence of these two industries.

Why is this so?

Looking back at both industries, from a strategic planning perspective, there’s one key gap area, common to both industries that stand out. And that’s the gap of a strong, consumer based, value benefit!

In both the industries, the extremely high emphasis on process i.e. –“halal certification & sharia compliance”—has led to, some extent, alienation of the consumer. There is a distinct lack of understanding, by businesses, of critical issues that affect the individual consumers, such as:

• Consumer intelligence ( which provides insight for business  planning),
• Comprehension by the consumers (of the value concepts that Halal and Shari’ah symbolise)
• Understanding the consumers’ latent emotional need for a specific value benefit from the products and services

Businesses, in both industries, undertook what is required to make the product adhere to the given, respective, standards and approached marketing, inside out
i.e. product development, standard compliance and then communicating the compliance as the value benefit.
In the process, they left aside critical knowledge (of what the consumer needs and wants) which is vitally necessary for a business to grow.

Is there a way forward?

The consumer world has changed. Within that the global Muslim community (as the mainstay for both Halal and Islamic Finance) has undergone a paradigm shift in their attitudes, perceptions and behaviour!

For starters the two industries need to get consumer-centric and have respective industry bodies undertake intensive education, at a consumer and industry level, on the two basic terms–Halal & Shari’ah compliant– in order to clearly establish the value benefit emerging for the processes of both.

Why is this a necessity?

I looked into how these words/terms are actually comprehended and, surprisingly, I came across a few references of how often “halal” is not understood clearly, and is associated only with food and how Muslims consumers themselves are, a bit in the dark due to lack of transparent information.

Through social media, a quick dip-stick research targetting Muslim professionals from various industries, comprising of various nationalities and cultural backgrounds was done. It clearly brought to fore the fact that the common man’s usage and comprehension of the terms are not the same all over the world.

In fact, the perception is that, “Halal is the process of slaughtering and packing meat and poultry products according to the (respective) country’s halal certification process” & “Shari’ah is Islamic law that governs financial products”.

This perception in itself clearly shows the lack of awareness and clarity on the concepts that Halal & Shari’ah embody.

But Halal and  Shari’ah are much more than this current comprehension!

The questions that arise are:

1. Are Halal & Shari’ah compliance only processes then?
2. Or are they “value concepts” that can be used to develop sustainable business strategies that deliver benefits?

Intriguing questions,as in the spirit of Shari’ah, a business is deemed halal if it is, end to end, adhering to certain principles and not just the manufacturing or slaughtering process.For eg: if a food brand, marketing canned beef obtains the halal certification, but its business operations like financing is using conventional finance and its organisational culture is not based on Islamic ethics and its governance is more regulatory than civic responsibility oriented–Is it truly Halal?

Similarly, if a financial product re-words, re-processes the ‘interest’ component in its product make up and ‘complies’ with known Islamic financial legalities and becomes ‘shariah-compliant’ does that make the product halal?

Questions to which,perhaps, there will be clear answers  once organisations undergo a cultural shift and look at Halal and Shari’ah as (critically needed) ethical values and focus on being consumer-centric in their business planning in order to be sustainably competitive across time.

Such a change will provide organisations a new business model that would be fully value centric than the current practice of being stakeholder profit centric.

 

Related articles

• Consuming Islam – the Rise of the Halal Economy (hifzanshafiee.wordpress.com)

What is Strategy Misalignment?

Corporate strategy is an amorphous term.  There are countless definitions available, so let’s start with defining this term for the purposes of our discussion.  Corporate strategy is the amalgamation of an organization’s defined strategic key outcomes (or strategic goals in other words) in support of the mission and the vision of its business.

Alignment, on the other hand, is a much broader issue involving all aspects of the organization’s business eco-system. The business eco-system is the sum of internal and external functions of an organization’s environment.  The complexity of the environmental conditions play a role in the unpredictability of the outcomes specifically when random elements are introduced (ref: Chaos Theory).

So strategy alignment is  synchronization of the strategic business goals with the operational and tactical executions of the business units targeting achievement of the respective unit’s business goals.

Strategic misalignment occurs when operational initiatives are not in sync with the defined strategic goals of the organization.

And this occurs quite often leading to GAP !

Related articles

• Strategic Planning: 12 Common Mistakes – Part 2 (vistage.com)
• 12 Common Traits of Companies With Successful Corporate Planning (vistage.com)

Why your personal brand is dying on Linked in?

By Hilton Barbour

Of all the brand conversations I have on this blog, the one I don’t discuss often enough is Brand You. The one brand, I’d argue, that you have more control over than any other.

It is unlikely you’ll lose your personal brand in a worldwide realignment or that the CMO of Brand You will suddenly be fired. So now that I’ve tortured that metaphor, let me put this out there – each day I’m confronted by folks who have recklessly abandoned their most prized asset – their personal brand. Abandoned in a market, despite what Washington or Ottawa says, that has millions of competing “personal brands” vying for attention. Abandoned in a very public, highly visible and very unforgiving way.

I’m talking, of course, about how you market your brand on LinkedIn. The place where “over 150 million professionals exchange information, ideas and opportunities”.

Play a little game with me called “Would I buy Brand You?” – warning more tortured metaphors ahead.

Read the full article here.

Halal & Shari’ah Compliance.. A Process or A Value?

How Do We Bring About Commitment?

Continuing  from my earlier post– Is Islamic Finance up to the Challenge– how do we bring about commitment from industry in making the required changes?

Let’s start with what Mr. Daud Vicary Abdullah– President & CEO of INCEIF in his article-”EPL in Islamic Finance: Education”– stated. He has, very correctly, shown highighted three key areas in which education on Islamic Finance needs to be implemented and implemented with the objective of ensuring clarity and comprehension.

To me, of the three areas, the single most important one is “General Mass Awareness”.

 

Improving mass awareness is critical in ensuring that Islamic Finance industry grows through acceptance of is value proposition. Specifically mass consumers would drive growth for the industry through acceptance of the retail products. But at present, the retail market has its own set of complexities. Depending on the geographical market, awareness and comprehension, of Islamic Finance varies from negligible to aware but not convinced and coupled with that comes specific biases based on socio-cultural conditioning. There is, unfortunately, not a “one-size’fit-all” strategy for educating the mass. In each end market one will have to adapt according to the needs of the consumer.

However, on a macro level and as a possible CSR activity, it is possible to undertake a financial literacy education campaign, that targets primary school children and upwards. A campaign that focuses on the salient points of investment, savings, individual financial management from the perspective of Islamic Finance and, most importantly, the value proposition of Islamic Finance.

The content (of this campaign) would be the key in ensuring increasing awareness and comprehension and would need to ensure it:

• demystifies Islamic Finance and clearly puts forth a rational value benefit
• highlights what is the benefit of key retail products
• simplifies the investment products and communicates transparently on how the ‘back-end’ works

In terms of delivery of the campaign a multi-media approach, with emphasis on social media utilization, would be necessary in order to allow the mass to interact with selected industry practitioners and enable:

1. feedback–which would help measure improvements of the educational campaign–AND
2. let the practitioners to know the ‘pulse’ of the mass i.e. what are their financial needs

Bringing it back to the industry and the benefits of such an undertaking for the industry:

• Strategically such a campaign will position the organisations suporting and leading it as the “go-to” source for the consumer. Thus creating a pool of potential customers.
• It would enable the Islamic financial institutions to identify what the consumers want in terms of investment and retail products and thus ensure product portfolio profitability.

However the question that goes begging at this stage is,  To Be Consumer Centric or Not To be?

Whilst Islamic Finance continues its growth based on corporate business. Will this provide it a sustainable growth? Would global organisations want Islamic Financing? OR should the industry develop a strong retail base in order to ensure this sustainability?

Education of the masses can assist in the growth and, in fact, ensure preference for Islamic Financial products and it will lead to improving current perceptions about Islam thereby bring about the much required change in mindset.

Is Islamic Finance up to the Challenge?

In my day job I’m getting more opportunities to see the acute need of a robust financial system, not just by emerging economies, but also by what used to be the developed (or first world) countries.

Industry after industry has had to tackle the massive socio-economic change that the financial crisis brought about amongst consumers. Massive lay-offs and unemployment brought about a huge squeeze on the individual consumer’s wallet resulting in significant changes in buying decisions. Irrespective of whether the businesses are in B2B (business to business) or B2C (business to consumer) functions, many of the golden rules have had to be cast aside and new game rules learnt in order to simply ensure survival.

The Islamic Finance industry is not impervious to these changes.  In fact the industry is at a crossroad: Does it carry on as it has (and possibly, stay embroiled in a constant state of ‘talking’ but ‘no action’) and get relegated to a ‘regional financial management facility’, or does it absorb the changes around it and adapt itself to the socio-economic realties and grow?

At a public lecture forum–Global Calls for Economic Justice: the potential of Islamic finance— Prof. Dr. Volker Nienhaus explained the socio economic benefit and the potential of Islamic finance to be a mainstream financial system.

However, at ground level, there exists an issue of awareness and perception of ‘Islamic Finance’ both from within the industry and at the consumer level.

One of the reasons for this is, probably, the lack of a clearly articulated value proposition of Islamic finance which would aid the awareness and perception of Islamic finance to the man on the street. This boils down to a lack of “education” (i.e. awareness and comprehension).

The industry has to adapt in order to grow.To do this, it needs to re-focus itself on to what the consumer wants.

The key lies in the industry being willing to be “consumer-centric” and in identifying clearly what the consumer needs. At the end of the day, in any industry, the consumer is the reason one is in business and it is critical to identify a strong ‘value proposition’ that connects with the consumers at different levels. Without a well-articulated and robust value proposition there is no strategic platform for a commercial enterprise to have sustainable growth. Without growth there is no future.

Can Islamic Finance be consumer centric?

Perhaps this may seem easier said than done. But it’s not impossible. The key ingredient, in order to achieve this turnaround is commitment. Commitment in understanding the global socio-economic trends and in providing necessary education to people in order  for them to have a clear understanding and thus, the correct, perception of Islamic Finance.

Where do we get this commitment from?

The organisations (commercial, regulatory and standards bodies) that makes up the Islamic finance industry needs to put a stake in the ground where industry development is concerned. At the various levels of the industry, these organisations need to evaluate their long term strategic direction and identify key areas that each can champion.Based on the key areas the organisations should then identifyspecific collaborations (that are delivery and performance oriented) with leading academic institutions. This would:

1. Increase the competency and knowledge of industry practitioners through sharing of the developments across juridistictions.
2. Bring in industry practitioners to teach students thus ensuring a talent pool that ready to hit the ground running and contribute to the organisations.
3. Sponsor commercial research  (for the academia) with the objective of improving products, processes & regulations.

How do we bring this about?

Watch this space for the upcoming post on how do we bring this about.

Related articles

• How Blue Ocean Strategy can help the Islamic Finance Industry (benefitpoint.wordpress.com)
• GROWTH: Islamic Finance Unbound (project-syndicate.org)
• Opinion:Is Islamic Finance a failure? (noorislamicbank.wordpress.com)

Value of Transparency

Transparency–an oft used word in today’s corporate world. The question (by the average consumer) is the brand actually being transparent in its claims?

Transparency, is what today’s consumers is seeking, in all forms of engagement with a brand. But transparency comes about when an organisation has the same embedded in its culture. A mandatory declaration of an organisation’s financials or a 100% customer service deliverable is no longer the benchmark of transparency. But clarity in action (that the brand takes across touch points) and open engagement with its key stakeholders lead to transparency (for the brand in communication).

So how do we go about having “transparency”?

• Ensure that the brand communications (internally & externally) are clearly based on the business strategy.
• Each of the key messages must clearly tie back to the support that the brand gets or in other words to tangible deliverables from its service lines (or product).

The pitfall to watch out is in the marketing planning stage. This is where, having ensured a clear and consistent set of key messages and the processes that will deliver the same, it needs to be put in to action.

But that’s where the DROP occurs!

When it comes to putting the process to practice i.e. having free flowing two-way information between the employee and his/her superior, between the senior management and the mid, and junior management levels, somewhere some of the ‘information’ is “not communicated” in its full form. Resulting in assumptions, presumptions, and individual interpretations and finally producing a ‘pot-pouri’ where the brand experience is concerned.

Can such drops’  be avoided and a back-up plan developed in case it does occur ?
YES, it can be avoided.

The way to do this is:
1.Role clarity: Right from the start of any project/activity, the team leader should ensure that each individual of the team involved understands his/her role in terms of how the communication would flow, who is responsible for what, and the timelines of the same.
2.Reviews: in the implementation process, productive reviews should be factored in. Productive reviews are team meetings which are aimed at bringing up to date the team members on each specific area of the project as well as each team member using that review session to clarify queries, flag issues and agree to the next deliverable.

Transparency can’t be simply spoken about. As a work cultural value it needs to be demonstrated or shown. And the best way to show is by practicing it.

If an organisation, in its daily operations, follows the above two steps of basic project management, they will automatically be creating a ‘transparent culture’ ie a culture where failure is not penalised as the occurrence of failure will be diminished due to the teams having role clarity and frequently meeting and clarifying all issues.

This in turn would form part of the ‘brand experience’ that the employees in turn will make the stakeholders experience. Simply put, the employees would behave (with the stakeholders) exactly as they do in their interactions internally as it would be a habit for them. As a result, the stakeholders would be getting full information on their brand through their interactions and this would enable them to trust the brand more and more thereby leading to becoming the external brand champions.

Related articles

• Building The Brand Experience – Inside Out (benefitpoint.wordpress.com)
• Are Your Employees Engaged? (benefitpoint.wordpress.com)