Today we have a tremendous upsurge in the interest in Islamic Finance and Halal products and services due to the burgeoning global Muslim segment (estimated to be at 1.6 bln population currently and growing) and the financial crisis. However, in spite of this vast consumer segment and growing interest in Islamic Finance, the approach to retail marketing (by both industries) is quite traditional in terms of marketing approach.
This is what we marketing practitioners know and, historically, have been taught. And in marketing when we spot an opportunity we approach it with the tools that we have. Alas what, at times, we don’t take into account is the consumer! If we pause and listen to what the consumer (within the global Muslim community) is saying and view it logically we just may see a new set of tools staring at us.
Blue Ocean strategy is oft used in strategic management scenario planning in order to evaluate risk in a new opportunity. Marketers love utilising a “blue ocean “ strategic approach, as it enables them to start with a clean slate and develop strong, sustainable and competitive business positions.
So would a “Blue Ocean” approach for the Islamic Finance industry be useful?
- The Islamic Finance Industry has come into prominence in the past decade and this has been more pronounced in the past 2-3 years. But the business models of the IFI’s ( Islamic Finance Instituitions) seem to mirror those of their conventional counterparts whilst adhering/obtaining sharia compliance and having Islamic ethics spoken for in their corporate cultures. The result is “old wine in new bottle”—re-packaged products which still do not answer the consumers need fully.
- IFI’s are business units and (as per our current knowledge base) a business unit is set up in order to make profit ie: the Adam Smith school of thought “One man’s expenditure is another man’s income”. Therefore, “Shariah-compliant” has become another ‘instrument’/ method in marketing financial products and services. And businesses continue to approach their objectives from this P.O.V. (point of view) i.e. making ‘financial profits’ is the sole purpose of the business and thus the sole aim of the employee is to deliver this objective.
Of course a business needs to be profitable in-order to be self sustaining. It can do so whilst taking care of the eco-system it works within. This is more true for a business that’s based on Islamic ethics. In Islam, the purpose of business is different. In Islam business is governed by the Holy Qu’ran & Hadeeth encompassing trade and commerce. These laws were developed to fulfil a variety of objectives:
- To counter man’s greed and consequent abuse of the rights of others;
- To ensure that the earnings of man are halaal and pure;
- To create a harmonious atmosphere among people, something which can be utterly destroyed by man’s desire for wealth and position.
Among these, the second factor is vitally important to the Muslim individual, since the acceptance of all man’s ibadah (In Islam, ibadah is the obedience, submission, and devotion to Allah (God) along with the ultimate love for Him) and service is largely dependent upon the consumption of Halal food and the utilisation of Halal goods and products.
There is definitely an integral link between man’s earnings, which entail business dealings, and his ibadah unto Allah Ta’ala. This one factor alone underscores in no uncertain terms the significance and emphasis Islam has laid on correct and valid business dealings.
If we approach the business model from this perspective and utlise the tools from blue ocean strategy development, what we would have is a “value based” business model with strong ethical foundations. We would get:
- A strategic business plan that’s based on delivering financial and social value to the eco-system.
- Which in turn would lead to sustainability and a ready pool of human resource as well as market (for the organisation’s products).
- And a process that delivers value (financial and brand image) to the organisations employees as well as to its stakeholders.
The question that now remains to be answered– are we game to give this a try and make a much needed paradigm shift?
- GROWTH: Islamic Finance Unbound (project-syndicate.org)