Time for change in Islamic finance

Reading the article Why are we seeing so many corporate scandals?  
By Prof. Dr. Amit S. Mukherjee  I liked the questions that Prof. Amit raises.
The queries resonated with the planner in me and I found them to be interesting. I say interesting because, whilst the erosion of trust has impacted quite heavily on the financial sector and probably enabled the growth of technology based financial solutions or FinTech, these questions are very valid across all industries including the Islamic finance industry.

Here are the questions Prof. Dr. Amit raises:

  1. Have we rethought how we work in a digital age when work increasingly requires large doses of unseen discretionary effort?
  2. Have we redesigned processes and structures to surface problems before these become crises?
  3. Have we allowed the free flow of key information to distributed decision makers?
  4. Have we created collaborative, learning-focused cultures?

Looking at the environment, in which the Islamic finance industry is operating, currently makes these questions quite critical, from an organizational perspective, with regards to sustainability of the various business models
in operation.

There are three key issues that get highlighted when one runs the above mentioned questions through business continuity thinking.

Starting with talent management & development and its allied areas of
learning & development, given the necessity of managing increasing numbers of Millennials, entering the workforce, along with providing gender diversity and equality coupled with ensuring professional development of the existing employees, the need to develop and incorporate digital and its various usages in work and its processes assume significant importance.

This leads into the second key issue of leadership competency.

On one hand erosion of trust, in financial institutions is at an all-time high, on the other technology in the form of social media has made the world a very small place where real-time personal engagement and word-of-mouth recommendation is given preference over any corporate statement or communication. This has created a need for a different type of leadership competency requirement. The control & command leadership style of yesteryear simply does not work in a world where knowledge and technology are driving the comparative advantage for an organization. There is a serious need for industry leadership to be empathetic and transparent in order to create engagement with society and employees simultaneously in order to develop social capital for the organization, from a business continuity perspective.

Thirdly is the issue of technology and its impact.

FinTech, in its various forms, has already impacted the conventional financial sector greatly by disrupting the historical business models. The driving force behind this technology usage and acceptance is the development of the smart phone technology and the need for the layman to have direct and quick access to finances. Add to this the developments taking place in the Islamic economy industry verticals, such as the increasing demand for innovative financing by the start-ups and entrepreneurial ventures, and you have a potential scenario of the Islamic finance industry losing out on big-time growth opportunities as these opportunities will get fulfilled by new financial start-ups who are agile and able to collaborate faster, as maybe required, with the changes in the regulatory landscape.

Whilst asset growth, increase in Islamic social responsible investment and convergence of ESG and Islamic finance are occurring  we, the individual organizations of the  industry, need to create strong sustainability and continuity plans to protect ourselves from further economic upheavals which are still bound to happen. 

Quoting Dave Ulrich‘Wars are won through organisation and you have victory by being in it together.’

This can only happen when we focus on people—employees, customers and partners—and look at the experience we deliver to them and the social issues we solve in order to create and retain engagement and build social capital in our mission for business sustainability.

 

 

 

Is the Islamic Economy for People?

Image Courtesy: www.shutterstock.com
Image Courtesy: http://www.shutterstock.com

It’s amazing how little we actually focus on ‘people’ in business in spite of the fact that it is people who make everything happen. An organisation exists because of its staff, partners, customers and other stakeholders, i.e. people. The value proposition of any organisation and any industry, for that matter, is totally dependent on the people involved.

Globally behaviour of people, across countries and across socio-economic strata has changed vastly. Impacted by financial crises and the rapid proliferation and use of social media, people are now interacting more and more as interest-based communities.

Where does the ‘Islamic economy’ fit in among all this?

Given the high growth in the Halal & Islamic finance industries the Islamic economy has come into the spotlight with Dubai’s announcement of re-inventing itself as an ‘Islamic economic center’.

This is great news for a variety of reasons:

  1. Business growth opportunities for corporates and entrepreneurs.
  2. The seven pillar strategy of UAE provides strong growth impetus to additional industries in the Halal sector.
  3. Increasing job opportunities which will then impact on increasing consumption.
  4. Increased requirements of up-skilling of industry professionals.

For organizations to capitalise on the opportunity a very tightly focused strategic approach needs to be there.

The driving force for the Islamic economy is the Islamic financial services & Halal. These would be in pole position whilst the powerhouse that would provide the fuel to these two sectors would have to be the education sector.

As one takes an overview across these two industries one notes that the approach to strategic development still appears to be using the classical method of having a ‘USP’ – unique selling proposition – i.e. developing strategy from a product perspective.

Not that this is wrong.

But given the massive behavioural changes that occurred in the last decade, not acknowledging the impact of those changes in business strategy is akin to ignoring reality.

For organisations, to be successful in establishing a robust Islamic economy, a very clear focus and emphasis on developing business strategies based on understanding their people who are involved in the business eco-system, has to come about.

There are two key points here:

  1. Robust economy: This means ensuring sustainability of each organisation’ earnings so that the organisation stays in existence and industry growth is maintained.
  2. Understanding People: Business is run by people – the organisations’ staff – for people – customers, vendors, partners. Without acknowledging and understanding what motivates people, business strategies would be way off mark.

Why is there a need to focus on people?

A focus on people has to be taken on board as the behaviour of the people impacts very heavily on an organisations’ ability to perform well.

Here’s how:

  1. Culture:
    With business growth opportunities shifting towards Asia and Africa, organisations are now faced with understanding what the new consumer behaviours is like in these new markets. Within such vast markets the end consumers’ behavioral patterns differ across and within countries. Simultaneously, organisations have had to look at on-boarding knowledge workers and millenials in their work-force in order to manage this growth. Knowledge workers and millenials have different behaviours based on age, experience and environmental background.
    So today the need of the hour for organisations is to take on board how these diverse behaviours from people connected to their business are affecting their performance and acceptance of their brands. Internally, these behaviours impact the work culture within an organisation. This culture, in turn, manifests externally, and focuses on the way relationships are built with the external stakeholders.
  2. Leadership & Engagement
    The people or staff of an organisation are the physical manifestation of that organisation. The behaviours the staff display are, in essence, a representation of the organisation’s culture and values. This brings to fore an emphasis, for the organisation, on its leadership and employee engagement.

    Increasingly, the demand on leadership is becoming one of creating influence and social buy-in or, in other words, developing engagement based on aligning personal values and mission (of an employee) with that of the organisation.
    Leading to having, as far as possible, engaged and happy employees in order to ensure the organisational brand is delivering authentic value.
  3. Involvement
    Engagement leads to having the employees at the center of the overall brand experience. This focus involves understanding the organisational culture prevailing, discussing change areas if needed, fine-tuning desired behaviour and communicating it to the employees in a manner that brings about acceptance. Active involvement of employees becomes critical as without this the brand vision and brand delivery cannot be achieved.

Going forward what can the organizations involved in the Islamic economy do?

Focusing on people means re-calibrating how business strategy is approached. Instead of a product-centric approach, one has to move into a people-centric or behaviour oriented approach that fits the environment.

Here’s how:

  1. Develop business strategy from a perspective of the purpose you are in business for and how that purpose fits the environment. This process will entail understanding the people, impacted upon by the business, and their needs. This entails understanding cultural behaviour of all the stakeholders and developing the strategy based on that understanding.
  2. Develop the organisations’ leadership & management strategies to fit the business strategy. This means have the right people in the right functions.
  3. Lastly undertake activities, as initiatives, which clearly show the organisations’ understanding of the cultural behavioural nuances of its stakeholder.

Organizations that do focus on such an approach will be the ones sustainable in the long run and with strong brand loyalty.

 

(This post was first published in Investvine in Apr 2014)

Marketing today is all about people

The marketing function has undergone tremendous changes in the past decade. Today marketing involves technology, engagement and most importantly creating and delivering an authentic brand experience from the employees’ and consumers’ perspective. Brand value as an asset, in monetary terms , is now fully dependent on
this brand experience.

A Forbes article– Are today’s CMO’s tomorrow’s CEO’s?’ aptly shows how marketing heads have the best holistic picture of a business due to their concentration and clarity of understanding the end-benefit of touch-points and infrastructure requirements to deliver the required brand experience.

Does the Islamic Finance industry understand the huge potential that marketing brings to its business and brand?

This is the question I try to answer in my article– ‘Marketing Islamic Finance’– that was published in the Jan 2015 issue of the Islamic Finance Today, and I explore  how modern-day marketing can work for Islamic Finance, both across Islamic finance and non-Islamic finance markets.

 

2014 in review

The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 7,000 times in 2014. If it were a NYC subway train, it would take about 6 trips to carry that many people.

Click here to see the complete report.

Engaging perception through customer-centric CSR initiatives

Most organisations undertake CSR programmes as having to fulfill the corporate duty of giving back to society. Often the development of the program becomes the responsibility of the marketing team and is tied to the brand being seen in good light.

 

Here’s my article on this, published in the Islamic Banker Asia:

The cultural mask of an organisation is its brand identity

visual courtesy: www.clker.com
visual courtesy: http://www.clker.com

For an organisation, culture is defined by the behaviour of its leaders, its people and the processes.

  1. People—People are diverse. When they come into an organisation they bring, along with their technical competencies and skills, their individual behaviour with regards to leadership, team-work and communication ability.
  2. Processes—Processes impact on how the employees carry out their activities. Either the processes aid daily work or they hinder and as a result be the source of a tremendous stress.
  3. Business Purpose—Leaders need to clearly articulate the vision of the organisation or and what it is they need to do to ensure the organisation is sustainable.

A mix of these three creates the organisational cultural mask.

This mask, knowingly or unknowingly, is the behaviour of the organisation on a daily basis and impacts on its brand identity. In today’s globalized era organisations operate multi-cultural teams on virtual and physical basis. As organisations reach their brand to various parts of the globe, this cultural mask goes along as an image and identity.

This is the brand image, personality and identity.

Physically this identity manifests as a logo and the people representing the organisation and the contents being offered.

But interestingly, the external manifestation of the brand is totally dependent on the value system that the organisation believes in and alignment of the same with its employees.

Coming from different corners of the world, individually, we carry with us our own baggage of diverse cultural beliefs into work. Whilst most self-development books and managers’ guides tell us to operate, in what’s possibly, two silos– a personal self and a professional self– in reality that’s a tough call!

Tough because we are governed by our emotions and our emotions come about due to the habits we have.
Habits are behaviours that we project every minute of the day.

Throw into this mix the impact of behaviour from the leaders and you end up having a pretty heady concoction! 

The importance of behaviour from the leaders cannot be understated. What the leaders, knowingly or unknowingly, display sets the behavioural indicators for employees who then emulate the same. This has serious implications on the day-to-day functioning of an organisation, on the emotional (and physical health) of the employee, and finally on the organisation’s culture, brand image and reputation.

In developing a culture leadership is a key lever that needs to be pulled & pushed!

Depending on the industry sector and the organisations’ position within that sector and its mission, leadership is the only critical element that will either build or destroy the organisation. Leadership can impact on the organisational culture positively or negatively.

Based on my personal experience, of having worked across industries, countries and developed a few multi-cultural teams, an effective work culture comes about from developing a collection of beliefs and the resulting behaviour from it.

These beliefs come about from processes and leadership. For example:

  1. Monthly management meetings are used to track progress against strategy and is not a ‘work-in-progress’ management update meeting.
  2. The way senior management manages these processes i.e. the individuals own work-style personality that is expressed in the meeting is an indicator of the leadership at-work.

The processes, impacted by the leadership style results in certain behaviours which, directly impact employee motivation and engagement, as well as the quality of work output. Overtime this set of behaviours, becomes the unwritten norm for the organisation in terms of:

  1. Interaction within colleagues  i.e. internal brand representation &
  2. External interaction with stakeholders i.e. external brand representation

This behavioural environment represents itself as the character of the organisation through staff and becomes the organisational culture.

 

Developing sustainable brands in post-colonial Asia

A couple of weeks ago I had a delightful chat with Jon (Dr. Jonathan A J Wilson) on my career experience & the work I do involving employee engagement & brand sustainability.  The interview is in the “maestro” section of the Indonesian based marketing magazine– ‘www.the-marketer.com’ magazine.

The discussion provides some industry insights that aid companies in developing sustainable brands.