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.

 

 

 

Do learning and development strategies have a part in business strategy?

Visual Courtesy: http://pt.slideshare.net/
Visual Courtesy: http://pt.slideshare.net/

Whilst most organizations have learning and development units the question I’m raising is:
Are organizations really focused on learning and developing the talent pool that they have?

In today’s business environment the competitive edge, for an organization, comes from its culture and its talent. The latter is at the core of success
an organization can achieve.

In the usual commercial organizations, where profitability is the end objective of all activities, learning is often lost in the daily rush of what needs to get done. Resulting in the organization losing sight of developing its critical asset—people.

Without planned development of its people an organization cannot expect to be successful and sustainable in the long run.

What triggered this post is this article:

Continual Learners And Learning Organizations: A Two Way Street Or
A Dead End

It has four simple ideas which I find simple yet oft forgotten in the hustle and bustle of daily work.  

Being stimulated from this article, in this post, I’m taking a look at how the education and professional development sector approaches learning and development in their business strategy.

Is there a lack of focus on learning and development of talent in the higher education and professional development sector?

After all academic institutions, by their very nature, are meant to have an environment focused on learning and development.  If this is true it would mean that such institutions would put talent and their own knowledge thought leadership front and center of their business strategy.  

Or is it that the environment is only created for the students the institutions
cater for?

Looking around one sees the necessity of the academic institutions to operate more and more as commercial entities in order to ensure financial sustainability. That, however, does not absolve the institution from losing focus on its talent and in turn on learning and development. Such a loss of focus would be disastrous as its impacts on the reputation of the institution.

Reputation is a key driver of business continuity for any academic institution.

Such reputation is built through strategically identified initiatives all of which should tie back to a central learning and development focused strategy impacting on the people of the institution and their output. By having clearly identified quality benchmarks of the initiatives the institution can ensure business continuity and commercial sustainability.

A clear focus such as this will lead to the institution developing a competitive edge and become an institution of choice by potential students, the industry it serves as well as the academia.

By investing in its people and its knowledge base strategically, organizations involved in the education and professional development sectors,  can see the positive impact of specific activities in terms of reputation and bottom-line.

 

 

Is the Islamic finance education sector in a stall?

Visual Courtesy: www.petricklaw.com
Visual Courtesy: http://www.petricklaw.com

The Islamic finance conference circuit has finally woken up to realise that organizational growth comes about through a focus on Human Capital and Talent Development. Better late than never. Yet one wonders if it is a bit too late in coming.

Courtsey @SimplyShariaHC @HuttonIF
Courtsey @SimplyShariaHC @HuttonIF
Courtesy: @SimplyShariaHC @HuttonIF @nafisalam
Courtesy: @SimplyShariaHC @HuttonIF @nafisalam

The Islamic finance education sector is highly fragmented. On one hand there is a plethora of established universities globally offering academic qualifications. On the other, there are a multitude of commercial education service providers delivering various professional qualifications. Global recognition of these qualifications is an output of how best an institution can show compliance of individual standards as required by countries. Increasing programme fees, cost of living, increasing preference of digital or e-learning and uncertain economic conditions are impacting quite heavily on the usual business model employed by the education service providers.

On the other side the industry has been acutely focused in the technical aspects of growing itself and trying to position itself as an alternative financial framework. Regulatory and product developments have primarily been the key areas of focus over the past decade. Other key areas of research, soft skills and talent development have not been on their radar.

The impact of this, on the education sector, is a massive one.  

Industry prefers to bring on board talent that has work experience and globally recognized qualifications. This has resulted in academic programmes and its co-related research being classified as theoretical and not providing the necessary skill-sets that the industry requires.

Couple this with the behavioural changes that has occurred, due to technological adoption and usage and economic conditions, and one finds the overall Islamic finance industry a bit out of touch with reality. Costs have brought about a demand for shorter and shorter programmes. The tech world has seen a huge rise in this area. One example is the nanodegree. Support from the Islamic finance industry in recruiting required talent on campus, by virtue of having a clear talent need and development plan that’s based on business strategy, has been sporadic and is based on regional relationships between academic institutions and industry organizations. Development of academic programmes based on data and cases from the industry are far and few. These are available as short-courses or executive programmes few of which have clear CPD (Continuous Professional Development) points and benefits linked to it.

Simultaneously the education sector is seeing significant changes with regards to programme content, delivery and accessibility. Globally ranked academic institutions have taken their general product offering to where the market is and have created business models that provide operational viability. The Islamic finance education sector, on the other hand like its industry counterpart, seems to look at hegemony as key. Staying rooted to theoretical education content across regions.

In a world where collaborative economy and disruption are now constants, such hegemony type of approach is akin to shooting down a dinosaur with a pea gun!

 Where is the Islamic finance education today?

Looking at all the talk, in public domain and the chatter in the conference circuit, one would have to surmise that the sector is, indeed, in a stall. Whilst a lot of great advice is being offered, everyone everywhere, across is the industry is waiting for some else to pick up the leadership and the associated risks. The impact is dropping rates of academic and private programme applications and lack of jobs for qualified graduates along with dearth of innovation and creativity in the industry.

Going forward the Islamic finance industry has to decide if it wants to play in the global stage or otherwise. If it’s the latter, it is a must that the industry invest in the education sector in order to develop knowledge, skills, innovation and talent as it will require in the coming decade.

 

 

 

 

 

What Happens When Leadership Dies

Visual Courtesy: www.pininterest.com
Visual Courtesy: http://www.pininterest.com

This post was sparked by an excellent article on this subject by an expert
Moyra Mackie who I respect tremendously for her insights into leadership development. In her recent article—Where leadership goes to die—Fear and (self-loathing)in the C-suite– Moyra deftly links data to the impact of leadership failures and how it can be avoided.

Her article made me think of the importance and impact leadership has on an organization’s purpose—its’ very reason for being in existence– and its attitude in pursuing and delivering that purpose.

Today if any organization is not seriously evaluating its leadership and the effectiveness of that leadership then it’s simply fooling itself.

Strategy is as good as its execution—goes the saying.

But in developing an effective strategy listening and leading from the front are two key elements that are instrumental in creating a positive or
can-do attitude. It’s this kind of attitude that galvanise people, providing them with a cause, a bigger purpose over and above the revenue targets and cost efficiency that delivers results and, more importantly, create stories that are shared  all through the organizations’ eco-system and adds hugely to its reputation.

Do leaders really understand what leadership actually is?

In the course of my career in various industry sectors across Asia, I have noticed how leaders fail in their understanding of leadership due to some of the issues highlighted by Ms. Mackie in her article. From an organizational perspective such failure results in critical leadership gaps which leaves them paralyzed or, worse still, broken in the long-run without any warning.

The critical gaps are:

  1. Lack of strategic business understanding:

Arises from a self-denial behaviour, with regards to inability in understanding business purpose and needs beyond the P&L, and in enlisting necessary support. Resulting in creating a self-inflicted isolation and being dis-engaged.

  1. A survival not growth focus approach on projects:

Flowing from the isolated approach key projects are directed on a survival-mode manner i.e. cost-cutting and higher short-term profits at any cost and not from generating a planned effective growth in the long run.

  1. Lack of clarity and direction to the next level down:

A survival-mode approach results in the inability to engage, fruitfully, in explaining the long-term benefits and results in lack of direction.

  1. Inability to connect, from the heart, and engage rank and file:

Due to the inability in explaining the long-term benefits, stemming from a lack of understanding the strategic business purpose, such leaders are unable to be authentic and speak from the heart and lose out on engaging employees for the bigger purpose of the organization.

Whilst this may read depressingly it’s not a scenario that cannot be changed provided one is willing to make the change. Accept and acknowledging the help you, as a leader need. Be courageous to ask for that help from the team. This impact positively on the respect your team have for you and, in fact, builds respect as you are reaching out for their expertise and showing them the value you have for them.

Being vulnerable by asking for help will not reduce your leadership respect. On the contrary it will increase the same and have a positive rippling effect across the organization.

 

I’d love to know your story on leadership. Do share here.

Does Islamic finance have an economic and societal value?

Visual Courtesy: www.quotes.lifehack.org
Visual Courtesy: http://www.quotes.lifehack.org

As the world reels from a continuous series of financial, economic, humanitarian and natural crisis’s, the world of Islamic finance is growing. In the past decade the various projected global industry growth figures show this industry sector to be going up, up and away. Yet if one were to co-relate this growth with social development a direct correlation is, as yet, hard to find.

Is there an anomaly?

Within the global Islamic finance industry the strain of growth is starting to tell on the business models in use as issues of talent, technology and socially responsible investments are now the topics of discussion in industry conferences. Couple this with the developments occurring in the mainstream finance industry where areas like social responsible investment, alternative currency  and crowdfunding are drawing the organizations to view the disruptions taking place and review their business strategies and models.

On ground, technology has empowered people to be able to seek intellectual, financial and managerial collaborations, generating entrepreneurship and a mushrooming of small businesses. The financial industry, as a whole, is looking at the way investment is changing and the way finance is being run.

Against such a backdrop Islamic finance is beginning to look isolated and bereft of a clearly defined economic and societal value.

Decades ago as Islamic finance came in, as an alternative financial system, organizations took the system for use within the regulatory environment that existed. Regulations changed over time to accommodate market sentiments and with those changes organizations seemed to focus on compliance and not on the purpose of their business.

Therein is the anomaly!

The global industry undertook Islamic finance activities based on their then business models and processes. Models that focused on shareholder return of dollar value as primary objective not social or community development and, thus, it was business-as-usual.

Is there light at the end of the tunnel?

The many financial, environmental, economic and sociopolitical crises, coupled with the advancement and adoption of technology, over the past 20 odd years has brought about seismic shifts in the common man’s buying behaviour. Trust in organizations has eroded given the many scandals. A clearly recorded increase on the dependency of word-of-mouth reference, with regards to engaging with organizations, has come about. Resulting in organizations needing to have specific competencies that simply weren’t in existence 20 years ago. Social media usage has resulted in organizations having to depict simply and authentically their business purpose.

Institutional business has come to the realization that it’s people who make the deals. People who want to work with credible, honest and trustworthy counterparts. Trust has come a full circle and is now at a premium. At the same time, Boards are driving organizations to be more socially responsible and to ensure that the eco-system where a concerned business operates benefits from the services of the organization.

This provides an ideal setting for Islamic finance which, inherently, has economic and societal benefit in-built in its ethical use. Let me clarify through an example—a conventional bank would evaluate various parameters when opening a new branch, in a remote area, including cost-recovery and present a cost-benefit analysis to its board when recommending opening a new branch. The decision would be based on the return its investment would earn and the period in which it would occur. Currently an Islamic bank or financial institution would be doing the same.

But therein is the opportunity!

For an Islamic financial institution the purpose of business is not profit but providing, ethical, financial service to the community. Profit is a secondary objective coming after the benefit to the community has been established. Thus an Islamic finance institution opening a new branch in a remote area should be driven by the societal responsibility of providing services in an area where no such service is available. This involves disrupting the current business models and thinking fresh on the purpose of an Islamic financial institutions business and developing strategy from it to generate required financial gains.

Such gains will encompass developing the eco-system in which the business operates bringing about economic and societal benefit that would not only benefit Muslims but the society at large and enable Islamic finance to show a tangible and distinctive value-benefit.

 

I’d be delighted to learn of your views on the opportunity that the global Islamic finance industry has and how organizations could capitalize on the same. Please feel free to share your observations.

 

 

Is your business getting TLC?

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

A year ago I had attended a talk by Prof Dave Ulrich, who is the Rensis Likert Professor at the Ross School of Business University of Michigan, which was hosted by AIF. The topic is close to my heart—how businesses can create their competitive advantage, in today’s environment, through talent. In his talk, Prof Ulrich highlighted the importance and changing function of human resource within an organisation.

Being involved in developing  a ‘cultural awakening’ project in my day-job it was fascinating to learn  about these three essential elements that organisations often overlook.

  1. Talent
  2. Leadership
  3. Culture

People are at the core of anything and everything organisations do in pursuit of their business. Yet we often overlook ‘talent’ coming from a product-centric point of view where business management is concerned. But it’s the process of identifying key talent and having their development at the forefront that enables an organisation to build a competitive edge.

The process of developing talent, within an organisation, impacts upon the leadership’ and the ‘culture’ of an organisation.

Leaders of organisations, if they are truly interested in the long-haul, have to selflessly put the development of their people first and foremost.  

Leaders create leaders not followers.

Employees followed by the external stakeholders or,  people who make up the environment in which the business functions’, have to be the priority in terms of strategic decisions the business makes.
There are two critical steps for this:

  1. Leaders in the organisation (not just the CEO) have to have clarity in the
    purpose of the business. They should be able to join-the-dots strategically and provide strong direction to their teams.
  2. Leaders need to have empathy and be able to display that empathy.

In essence what these two critical steps do is to evaluate the leaders themselves first as leaders need to have high emotional intelligence and strong communication skills to engage with all ranks of employees.

The displayed leadership styles lead to a, often non-articulated, creation of the organisational culture.

As humans we are wired for social acceptance and decades of environmental practice in the ‘command & control’ style of management has left us with the behaviour of adopting what we see our leaders do. But there is light at the end of the tunnel as more and more organisations, globally, are waking up to a new reality—people are asking for empowerment & recognition.

Where organisational culture is concerned there is a lot going on with regards to employee engagement. In a nut-shell employees, or the people who are the face of the organisation, are asking to be heard, to feel their suggestions are valuable to the organisation so that they feel they are of value.

If we now put TLC together it’s easy to see how powerful a strategic advantage for organisations it is.

Focusing on talent development leads to ensuring having the right competencies & commitment in place to generate healthy performance for the organisation.
In order to get to this stage good, authentic leadership is absolutely critical.
The leadership coupled with the right people in the right roles contributing positively creates a culture of empowerment, accountability and most importantly innovation, where employees feel they can contribute new ideas and not be afraid of failure.

Did you like this post? Do share your thoughts and comments.

Why You Should Undertake a Brand Risk Analysis

As brand marketing professionals we delve into the structural issues of developing a brand and often invest heavily in the brand building process but do not take into account the associated risks or undertake a Brand Risk Analysis on those risks .

As the importance of brand for an organisation has grown over the years, the risks too, have proportionately grown.

The global financial crisis triggered major socio- economic changes and issues of transparency and trust along with growth of social media usage, have been catalysts in moving brand risk to center stage and in the limelight.

Brand risk management should be identified, measured and managed within the enterprise risk management framework of an organisation.

Given that brand risk is multifaceted—strategic, operational, financial, regulatory and are often managed by organisations in individual silos or through departmental based planning– being able to get a true picture of potential brand risk is poor.

Brand risk evaluation and planning doesn’t deserve such silo based approach but a much more strategic and integrated approach.

Let’s start with “What is brand risk?”

Under traditional risk management, which is originally the domain of the finance department, brand risk has no definition. It comes across as an output from other identified risk areas such as lawsuits or adverse regulatory decisions or supply chain issues.

In layman terms we can define brand risk as threats to the brand equity or threats to the brand differentiators that make consumers choose one product or service over the other. Thus brand risk can be defined as anything that threatens:
1. The sustainability of current and future demand for a company’s product or service
2. The company’s commercial freedom

The key internal areas where brand risk is, usually, generated are:
1. Poor manufacturing quality
2. Poor customer service (brought about by dissatisfied or not-in-sync with the brand philosophy employees)

External areas are:

  1. Behaviour by consumers—boycotting the products or services of the company due to change in perception brought about either by a change in the brand differentiator communication or experience OR due to changing social values
  2. Retail space capturing, buying out of stocks, removing stocks on display etc tactics by competition
  3. Political or community opposition to the brand to do business within a geographical region which limits its ability to develop.

The value of approaching brand risk, in a comprehensive manner, by looking at the brand all round from the point of view of answering the question— “what can affect the sustainability of the brand?”– provides a useful framework for risk analysis.

Such an analysis can aid in corporate planning for business growth as well as in being a measurement for brand equity as a value.