Nothing is essentially new, neither under the sun nor in the virtual world of digital marketing and social networking. The insight is not new either but — in the context of examining a digital acquisition in Lebanon — notable for having been voiced in a recent iteration by a key brain in the marketing communications empire of WPP, the world’s top-grossing conglomerate in the realm. “Our industry seems to move in cycles, with the same topics resurrected and rebooted every few years. In fact, one could argue that there is really nothing new, just old ideas and issues recharged with new technology, new names and new passion,” wrote Norm Johnston, top global strategist and chief digital officer of WPP unit Mindshare in an outlook on digital for 2016.

The context that warrants local attention to this view on digital marketing is the communications industry news of the acquisition of Cleartag, a digital marketing agency based in the Beirut Digital District, by J. Walter Thompson (JWT), a big brand agency in the WPP Group. While the assimilation of Lebanese advertising agencies into any of the four first-tier (WPP, Omnicom, Publicis and Interpublic) and half a dozen second-tier international marketing communications conglomerates is a long-standing practice, the pairing of JWT and Cleartag could be breaking new ground for Lebanese advertising talent from the perspective of the rise of digital in this industry. 

The strongest affirmation on the future of Cleartag covers its operational continuity. His company will not be turned into an internal supplier of digital services for JWT in the Middle East and North Africa (MENA), insists Tarek Dajani, Cleartag’s chief executive. “Cleartag is not being acquired to be annexed as part of the digital capability of JWT. To the contrary, JWT might and will probably be continuing its natural buildup, whereas we will find synergies where we find them and we will build on capabilities where we have to, but there will be some orchestration,” he emphasizes.

Dajani will stay on as the company’s CEO with no plans to step away from the enterprise that he founded in 2000 together with three teammates. According to him, the JWT deal was met with hearty enthusiasm by Cleartag employees to the point of the team being “ecstatic” about how he afforded them the opportunity to “make a difference in the world”. While he would not offer an outlook on how many new jobs the digital agency might aim to create at its Beirut head office in 2016 or in terms of other near-term expansion options, Dajani affirms that Cleartag will seek to branch out into additional offices and grow its reach first within the MENA region. He says, “We [have been operating] from Beirut and Dubai, serving a big chunk of the region; we definitely intend to continue doing so and hopefully have presence beyond Beirut and Dubai, to serve our clients locally. The idea is that there is no limit [to where we can grow internationally] but that there is plenty to do [within the region].”

Roy Haddad, chairman of JWT in MENA, is equally adamant that Cleartag will not be assimilated into the larger brand agency. The value which a company like Cleartag adds to the group resides in the areas of creative technology and analysis of customer interactions for delivering new solutions to clients, he explains. “Today a solution is not only a creative solution but it is more an end-to-end solution for how you engage the customer, build loyalty with the customer and enhance his experiences. This is where the forte of the digital comes in. It is a complementary offer; they are not either-or kind of offers,” Haddad tells Executive in an interview organized jointly with Dajani.

Even if the relationship was to see diverging opinions on the ecosystem and creative differences, this would be integral to the deal, Dajani chimes in. “If I give you another spin on the rationale it is simply because the beauty of the step is that we will be able to attack a market from so many different perspectives and facets. Unlike trends where agencies build capabilities in-house or acquire them through annexing a department, a key part of this partnership is an understanding that we all have a role to play and the decision is that the partnership is creating complementarity, scale, speed and agility,” he says.

Rise of the digital sophists

If what Haddad and Dajani say sounds like marketing speak, one can safely assume that it comes naturally to them. The art of producing a rationale for a transaction and narrating it convincingly is what the marketing communications business has been about since the dawn of argumentation. Aristotle, presumably influenced by Plato in his rejection of the trade of sophists, wrote disparagingly that “the art of the sophist is the semblance of wisdom without the reality, and the sophist is one who makes money from an apparent but unreal wisdom.”

This involves singing the praises of win-win scenarios for sellers and buyers as much as intoning chants of business culture preservation, employee satisfaction and new job creations, whether such statements are true or uttered because they sound good. But sophistry, by all historic evidence, is part of what people want in their communications. It thus cannot surprise that Lebanese marketing communications talents do not want to be left out as today’s global academies of sophistry, the worldwide marketing communications conglomerates, are taking their trade increasingly into the digital realm where they can sell their skills dearly as creators of virtual dialogues with the consumer.

As a matter of fact, the global popular hunger to be imbued with marketing narratives seems to be so insatiable that current predictions describe digital as the future cash cow of communications. A recent paper by the Boston Consulting Group cites industry predictions that global spending on digital advertising will reach $178 billion in 2016, or almost 30 percent of total ad spending. Skill gaps in the digital realm are therefore huge concerns for chief marketing officers, BCG says, and advises that “Marketing organizations need to evaluate their current capabilities and build those needed for the next generation of marketing. After taking stock of their current organization structure, they need to design their structure for increased efficiency and effectiveness.” 

A gap in digital capacity between other markets and the MENA region also peeks out from behind the numbers for WPP acquisitions in the digital realm and from the geographic presences of Mirum, the WPP holding for digital agencies that Cleartag will, according to Haddad, be a part of. Mirum, with its head office in Hong Kong, says on its website that it has presence in 20 countries and 46 offices. Not only does neither count yet include Lebanon and Beirut at time of checking in late December but, more tellingly, the only Middle East presence of a Mirum company until the end of 2015 was the Dubai office of UK-based HeathWallace, a digital specialist which WPP acquired in 2008 and which expanded into the United Arab Emirates in 2013.

In the overall picture of its investments into companies in emerging economies, WPP, according to its financial news releases, seems particularly hungry for digital market share in places such as China, India, Brazil and South Africa. Combined with acquisitions of digital and data capabilities in mature markets, WPP creates an impression of overall digital expansionism in which the Cleartag story looks like but one, and not very large, stone in the group’s communications and marketing mosaic.

Secrecy on cash valuations

This analysis of the rather humble position of Arab markets and Lebanese digital providers in relation to trends in the global advertising industry does not make the Cleartag transaction less interesting, however, and especially does not subtract anything from the partnership’s role as an example that other digital agencies in Lebanon might seek to follow.

In this regard, the rationale and the reward of an entrepreneurial company’s sale are two issues of primary interest to other members of an entrepreneurship ecosystem. For Dajani and Haddad, answers come easy in response to the question of the rationale for going with a strategic partner instead of a financial investor from the private equity (PE) or venture capital (VC) side. Dajani concedes that VC funding in the current Lebanese scenario is a valid formula for injecting capital into startups but says that Cleartag is a profitable business that was not in need of VCs. “We did not need capital. What we want is value added and synergy, and the big wave to ride. Cleartag was growing and we will grow more but I’d like to see Cleartag grow globally. [To do that], these are the kinds of partnerships or affiliations you want,” he explains.

JWT and its parent WPP don’t need to shy away from comparison with any PE firm when it comes to introducing new efficiencies to an acquired company, Haddad adds. He says, “The VCs don’t have the appreciation of how important it is to attract talent, grow talent and retain talent. WPP over its history has refined the art of creating financial models to the max and from a financial perspective, the added value contribution that we can have on a business like Cleartag is endless. Plus, sharing of back office, of our treasury, [and] giving them access to all that they require financially  to be able to only focus on their business is different to a VC where they will be hampered by the financial demand. [With us] all the anxieties about finance are the role of the holding company to assume whereas the [Cleartag] team basically just focuses on how to add value and add revenue.”

How much revenue Cleartag might add to the group and how much this potential was worth to JWT in cash compensation under the acquisition agreement is something that Haddad is not willing to discuss. He refuses to provide any number related to the transaction even upon the most emphatic plea for more transparency and only affirms that the transaction was based on a “fair price”. Elaborating a bit further, Haddad adds that the valuation of Cleartag was not discounted because it is based in the Middle East and that the transaction happened within parameters for which WPP has refined a model of multiples. “These multiples have to have a bearing on the way the business has been growing, the kind of clients it holds [and] the retention [span] of these clients. All these affect the multiple and the multiples are not unlike any other multiples around the world. Let’s be very clear. It is not a discounted multiple; it is a fair multiple based on a global standard. We are not vultures; on the contrary, we like to help people create wealth and that is basically why the deal happened,” he emphasizes.

A hint to numbers on which a multiple might be based in the case of Cleartag comes from the WPP financial news release on the transaction. While a parallel JWT release provided only soft information on the deal, WPP said that at year-end 2014 Cleartag’s unaudited revenues for the year were $3.6 million with gross assets of approximately $1.5 million.

Whatever its size, a good portion of the reward has to have benefited Dajani, who is not only co-founder and CEO of Cleartag but also chairman/shareholder of DNY Ventures which last month still was shown in the Lebanese commercial registry as the majority shareholder of Cleartag Holding, which is the majority shareholder in Cleartag sal. He does not want to discuss the size of his shareholding in Cleartag after entering the partnership with JWT and like Haddad, refuses to say anything about the value of the transaction. But the deal unmistakably has been personally motivating for him. “I will still be the entrepreneur that I am and I will still be taking Cleartag in the direction that I am taking it but I do feel that we have a kind of synergy and chemistry that will have an impact beyond the benefits for the clients and for us, also setting a new model of how you could take locally grown talent pools and create global impact. I think one should not shy away from such trajectories,” he enthuses.

Given that valuation multiples these days appear to range in single digit earnings, the Cleartag acquisition should not cause other digital entrepreneurs in Lebanon’s tech ecosystem to break out in dreams of billion-dollar fortunes quite yet. But this might actually be helpful since Haddad claims that local companies need to become more realistic and more pragmatic, managing their expectations when it comes to negotiating deals with strategic investors.

Despite cash rewards that may be lower than in a so-called perfect exit in London or New York, a partnership with a global player can be expected to provide fundamental appeal to young companies in the Lebanese communications industry and perhaps act as a virtual elixir of youth in reinvigorating the role of Lebanese talent in the regional advertising game, where prospects for mobile and online marketing are supported by high mobile penetrations and strong growth rates in Internet usage. According to Internet World Stats, Internet users in the Middle East region (excluding North African countries) number 123.2 million, or 52 percent of the regional population in the 14 countries included in the stats. The regional Internet penetration rate as per November 2015 was six percentage points ahead of the global average and the growth rate in Internet users for the 2000–2015 period, at roughly 3,650 percent in the Middle East, was the world’s second highest after Africa. When considering the mixture of achieved ground and open potentials that these numbers encapsulate, the Middle East appears to be a rather sweet spot for taking digital marketing communications to new profits in the coming years and the Cleartag transaction does herald potential for Lebanese marketing talent and all local adepts of sophism of the new, digitally enabled, type.

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In today’s financial universe, the private equity space is a vital quadrant to map and monitor. Private equity (PE) investments –   allocations of capital that institutions and the wealthy inject into companies, not through stock markets but with the help of professional intermediaries – have grown into an alternative investments class worth $3.8 trillion in assets under management (AUM) in 2014 according to the 2015 Preqin Global Private Equity and Venture Capital Report.

Achieving immense growth between 2004 and 2008 before suffering from bloodletting during and after the Great Recession, the worldwide PE industry has undergone a resurrection in the last few years. Worldwide in this context means, as it so often does in investment markets, first the North American market with 57 percent of all PE AUM in 2014, followed by Europe (24 percent) and then Asia (13 percent) – leaving 6 percent of activity for the rest of the world, including the Middle East and North Africa.

But the breadcrumbs of global money can certainly be well worth picking up when one is among the handful of PE specialist firms versed in investments on the southern rim of the Mediterranean – particularly if one has a good narrative and a value proposition for concerned institutions. The challenge is in being attentive to the interests of European development institutions, which in simple terms are to expand investments in MENA countries in the hope that economic empowerment of the native population would curb migration pressure.

The latest arrival to the MENA PE space with a focus on mobilizing European institutional money is Emerging Investment Partners (EIP). Operating from an office in downtown Beirut, the funds management company is run by two directors, Wassim Heneine and Karim Burhani. They are currently working on the establishment of their first PE fund, which they say is about to commence fundraising for $100 million from high net-worth people and from institutions such as the European Investment Bank (EIB), the London-based European Bank for Reconstruction and Development (EBRD), and the German and French public investment agencies Deutsche Investitions und Entwicklungsgesellschaft (DEG) and PROPARCO. “We are raising a fund to develop the economies of the region and of course to make money, but to make money with a developmental mindset. We are pitching all these organizations that have in their mandate to develop our region, to fight poverty, to encourage prosperity, because it is only with prosperity that you kill extremism and terrorism and give people better lives,” explains Heneine.

A social focus for PE

The two EIP directors aim to source up to 70 percent of the first EIP fund from European public investment institutions and target individual investors from the MENA region for 20 to 30 percent. The fund’s first close is planned for the fourth quarter in 2016 with an aim of $75 million, and a second close to reach $100 million is planned for six months after the first. Expecting to be able to deploy all capital within three years and intending for investment-to-exit cycles to range from five to seven years, EIP will be sector agnostic but will be more inclined to invest in sectors such as health, education and food and less to invest in companies in sectors such as tourism. Ticket sizes will be $5 million to $10 million and the fund already has contact with companies that are investment prospects, Heneine says.

“Any company with EBITDA (earnings before interest, taxes, depreciation and amortization) of $1 million to $2 million will be on our radar screen. We are mapping the market and are looking for companies that have a solid and scalable product, large addressable market and good management, and which want the $10 million for purposes such as expanding into a new country or establishing a new production line,” he elaborates. Capital increase and injection of growth capital will be the preferred mode of investment for the EIP fund but the investment approach will also allow for some buyout components when founders or investors of a target company want to liquify their shareholdings.

The fund’s geographic reach will not include Turkey but the managers could look at Iran and other countries in the days of a second fund, adds Burhani. “For the time being we are more focused on countries in North Africa and the Levant; countries that we know well, that we have invested in and where we have exited,” he says. According to Heneine, the first EIP fund’s intended investment focus is on Egypt for about $40 million, Jordan and Lebanon for about $20 million each, and Morocco, Tunisia or Algeria for the remainder.   

Seed money of about 10 percent for the fund has been promised or committed by two sponsors, the Lebanon-based BEMO Group and Generation Alfa, a Geneva-based asset management organization. The two sponsoring organizations are linked to the Obegi and Alfadel families, which are of Syrian extraction. Representing the two families in the venture are Riad Obegi and Imad Alfadel who are shareholders and board members in the EIP funds management company, alongside Heneine and Burhani.

A small pond

EIP is incorporating its PE funds in Guernsey, which is a popular base for PE funds and has been acknowledged by European regulators for compliance with European Union norms. “We will be doing everything by the book,” insists Heneine and tells Executive that the company has been set up with due diligence and procedures and corporate governance guidelines in place. “Once we progress, we intend to sign PRI [the Principles for Responsible Investment, an initiative supported by the United Nations] and UN Global Compact. We really want to make money but we want to make money responsibly and make money while having an impact on our society,” he reiterates.

In legal terms, the EIP headquarters in Beirut is a representative office according to Heneine and the two managing directors have thus far not entered into communications with Lebanon’s Capital Markets Authority (CMA) or issued a prospectus for the fund. “Fundraising in Lebanon is done on a very restrictive basis. We [and the potential investors] know each other and it is not really mass marketing; this is why we did not feel the need to go and have interaction with the authorities,” Heneine says. A prospectus for institutional investors outside of Lebanon will be issued at a certain stage in the fundraising process. It will be based on regulatory requirements of the Guernsey jurisdiction and if at some point EIP will be “required to have our prospectus reviewed by the CMA, we will gladly do so,” he adds. 

The first impression that EIP made on the Lebanese market was in a 2015 sideproject announcement of a 51 percent investment into Beirut-based hospitality sector company Venture Group, the developer of the Backyard Hazmieh cluster project. However, the Venture project was a small investment and done outside the fund’s scope, Burhani explains: “Until the official announcement of the fund we have a bracket to go opportunistically and invest wherever we like. Once the fund is established, the management team of me and Wassim and other team members will be exclusively working to achieve the strategy and ensure the success of the fund, so we will be 100 percent focused on these mandates.”

Strategies of PE investing into North African and Levantine growth companies are still a rarity today. A perusal of the MENA Private Equity Association’s directory of member companies shows a single company, Capital Trust Group, as a non-Sharia focused fund manager with focus on growth companies that addresses the same markets which EIP has on its target list for its first fund. As a matter of fact, Heneine and Burhani both worked previously with the three Euromena private equity funds that Capital Trust Group launched as general partner in 2006, 2009 and 2014.

Clear growth

When Euromena I was launched in Beirut back in 2006, it was a pioneering venture that encountered numerous challenges. At a comparatively humble $63 million in size, the fund included a $12 million participation from the European Investment Bank at a time when EU countries were concentrating their attention for development in areas outside their borders much more on Eastern European countries than on the Mediterranean rim. The Euromena I and II funds delivered notable successes investing in mid-size companies in Egypt, Jordan, Lebanon and Algeria. According to an EIB disclosure from last September, the bank committed $25 million to the Euromena III fund, the current edition, for which Capital Trust Group has projected a second close at $200 million in Q1, 2016.    

While there are quite a few similarities to make one believe that EIP’s founders did not transcribe the knowledge and connections they acquired at Euromena one-to-one into their new venture’s strategies, mimicry has a long tradition as a business development pattern and replication of successful corporate DNA can work well enough. That is, of course, if the replication is within ethical limits and if enough new value-added makes the new company a strong-enough competitor to the incumbent. From the perspectives of entrenching new investment skill sets in Lebanon and of developing economies in the Middle East and North Africa by employment of private equity methodologies, it is positively impressive that the community of PE funds with Lebanese management is broadening today. EIP for its part affirms its readiness to serve the region and deliver on the expectations of its investors. According to Heneine, the biggest worry for an investor in sponsoring a funds management team is team risk, but this does not apply in the case of EIP’s two managing directors. He says, “The last thing an investor wants is to invest in a team and experience on the following day that everyone goes their own way. With us, team risk is very low because we not only know each other but we worked together. This is a good comfort for investors.”

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Lebanese consumers, living in an oil-importing country, are expected to benefit in the coming months from some benevolent factors in their financial environment, but retailers should not celebrate too soon as the past few years suggest stronger purchasing power does not translate into significant spending boosts across retail segments. In its November 2015 reading, the Consumer Price Index (CPI) stood at 96.6 points, representing a monthly drop of 0.25 percent according to the Central Administration for Statistics (CAS). Index charts by the Consultation and Research Institute showed CPI inflation to be practically zero when comparing November 2015 to November 2014 and the 12-month moving average was in negative territory at -0.5 percent, down from 0.6 percent inflation a year earlier.

Additionally, projections issued by international online data platform Trading Economics at the end of December 2015 expect the CPI to hover around 97 points in the first three quarters of 2016. At the same time, Trading Economics’ charts for consumer spending in Lebanon project gradual increases in the first three quarters of 2016. The stage setter for the CPI in 2015 and for estimates on CPI and consumer spending going forward is the oversupply of oil coupled with its worldwide decrease in demand, partly due to the weakening of many international currencies against the US dollar, which has been translated into lower oil prices. This suggests that a global increase in disposable income would follow, hence strengthening consumers’ purchasing power and boosting their spending levels. However, while generally perceived as positive, this upward trend might be alarming in countries where it occurs simultaneously with domestic economic problems.

This combination of upward consumer spending and domestic economic troubles is the scenario that most likely applies to Lebanon, as expressed in remarks by central bank Governor Riad Salameh who, according to media reports, told participants in an investor summit on December 22 that gross domestic product increased at best by 2.5 percent in 2014 and is estimated to see zero percent growth in 2015.

More to spend

Available evidence suggests Lebanese consumers should have more disposable income, but retailers are largely not reporting benefits from this extra spending power. Lower global oil prices have had a direct impact on what drivers in this car-loving country pay at the pump. Assuming 1,600L of gasoline is needed for 20,000km, which is the average yearly distance traveled per citizen, $15 per 20L at December 2015 compared to $17 at December 2014 means an important yearly saving of around $3,200 per citizen. More considerably, compared to the $22 per 20L at December 2013, the two-year saving is estimated at $10,000. Oil prices also likely contributed to the deflationary environment Lebanon has been witnessing recently. CPI figures released by the CAS show that the leading contributors to a 3.9 percent year-on-year decline in November 2015 were drops in the categories of: water, electricity, gas and other fuels (-18 percent), transportation (-10.7 percent) and health (-6.8 percent).

Data on consumer spending, however, show two years of decline for most retail segments. The Lebanese Franchise Association provided Executive with a booklet showing the results of retailer surveys conducted every six months beginning in 2012. At time of writing, the most recent data covered H1 2015. The surveys cover six categories of consumer goods (clothing, food & beverages, cosmetics, household goods, luxury items and sports & hobbies) as well as four categories of retail services (hospitality, tourism, medical services and education).Compared to the first half of 2013, the sale of goods across all categories was up 2.8 percent; however, growth was driven by the food & beverages (+17.6 percent). Clothing and household goods were the big losers in the two-year period, with sales dropping 12.4 percent and 10.4 percent, respectively. In the same time period, retail services also saw growth of 16.8 percent, largely on the back of the 37.7 percent sales jump in the tourism category. While these figures do not suggest a nation with much excess cash to burn, they do reflect a dichotomy between higher spending and economic productivity. An extended analysis of the past 30 months highlights domestic economic problems, whereby the retail industry seems unable to achieve a positive rate of growth beyond seasonal surges.

Looking forward to 2016, there may be a ray of hope in the most recent Byblos Bank/American University of Beirut (AUB) Consumer Confidence Index (CCI), which covers the first half of 2015. In conjunction with the CCI, Byblos and AUB ask consumers about both their assessment of the current situation in the country and their expectations for the future. For the first time in years, consumers were consistently positive about the future. “The Byblos Bank/AUB Expectations Index posted higher values than the Present Situation Index in each of the first six months of 2015, constituting the first instance since the first seven months of 2011 where consumers have a more positive view about the future.” 

The post A problem of domestication appeared first on Executive Magazine.

For many Lebanese travelers, Air France is not just any airline but an institution of memories. When times were tough, flying from Beirut to Paris represented a lifeline connection to personal safety, not to mention savoir vivre and commerce. Today, the links between Lebanon and Europe are numerous and airlines have to win over travelers with more than just their name. But the journey to Paris still has many meanings and commercial values, and Executive sat down to discuss these facets with Patrick Alexandre, Air France’s executive vice president commercial, sales and alliances. 

E   Beirut and Paris were joined last November in shared tragedies and there were news reports of flight cancellations and flight diversions because of bomb threats. Given that Beirut and Paris were both victimized by bomb attacks, did the Air France route to Beirut suffer too?

First of all, we never canceled any flights after the events of Paris. We maintained the full network and the full flight schedule everywhere. Secondly, the safety rules changed a bit, of course, in Charles De Gaulle [Airport] but traffic remained fluid and on track at all times. We kept the operations going with the safety measures that we have [always had in place] and with extra measures for airports like Charles De Gaulle and also for Rafic Hariri Airport in Beirut. For the second part of your question, the answer is that, yes indeed, Paris as a destination was hit during the last 15 days of November, but what I can tell you is that as far as we can see for January we have now a positive sense of booking. Is there a special impact on [the route to] Beirut? The answer is no. Beirut traffic to Paris has been affected more or less the same way as others. But to be frank with you, markets are not reacting the same way to those events. The more affected markets were Japan for individuals, groups and business; North America, the USA in particular, and a little bit the Gulf region. We have seen less effects on Africa and South America, and in Europe it depended on the situation.

E   Lebanon has been requested to comply with Annex 17 of the Chicago Convention that relates to the security of airports. And while Lebanon has been trying hard to comply with these requirements, we know for a fact that there have been shortcomings in compliance. Given the heightened need for security in the current environment, to what extent does an airline like Air France see it as part of its duty to also put pressure on a government like the Lebanese government to comply with these globally recognized security regulations?

The application of international safety rules is an approach that we and the other airlines have everywhere, and that has a political expression through IATA (International Air Transport Association) and ICAO (International Civil Aviation Organization). Secondly, [adherence to] the rules and regulations for safety is a must for us. So you can imagine that we ask [in every country] for compliance with our safety rules mainly via those organizations and sometimes directly. The minimum that we request is more or less international. On top of those local measures, Air France itself applies some [safety] measures for its aircraft. But as long as we fly [to a destination] it means that we consider we can make [this destination safe]. And we fly [to] Beirut.

E   What do you rate as the top challenges for the airline industry today?

I think it’s a mix of at least two things, maybe more. Of course there are challenges related to operations, such as what are the aircraft and the most problematic issues, such as safety etc. But then the story is about the combination of product and price. This is why we actually do invest in the best approach with the long-range product presented today, which we have been flying to Beirut for a few [months] now, since the 14th of September. So first of all [the challenge] was investing, and investing a lot. Talking for Air France, we have made an investment of more than 500 million euros only for the long-range as the first part of the investment [into our fleet of Boeing] 777 for all the cabins including La Premiere, Business, Economy Premiere and Economy.

The second important thing is the price. We are addressing [this issue] with this kind of product. It’s a mix of two, which makes the customer happy. On the other hand we are also working a lot on our [cost] savings and this is why the famous plans have been launched since a few years. The first plan [for improved efficiency] has been implemented and the second plan is for transforming all the categories of staff. I was making some efforts to be and remain competitive. Being competitive is a mix of cost, which drives the price, [and using] tools we have in review management. [Because of] this we now have a lot of facilities to offer interesting prices, with fares that are so low. Low fare is something we can do and [combine with] the quality of the product we can give to our passengers. [This product quality is present] not only in the cabins, and in the service given by cabin attendants but also [in our] stations. [There is] also the investment we are making in technology, mobile applications etc, and that mix is how we compete.

[Value for money] is a very interesting point, because Lebanon as a market covers all the segments of our business, which is not the case in all the stations and destinations. But in Lebanon we have the ‘La Premiere’ (first class) segment and the business segment. [People here] travel for business reasons and personal reasons. This makes it very interesting to manage [this market] and it allows us to deploy the whole range of products, at least in-flight products including La Premiere, in Beirut just as we do for instance in New York.

E   Air France–KLM has seen a weakening of market shares and has been plagued by labor actions, whose only positive element might be that you are not the only big European airline to suffer in this regard. How, for you, do European carrier labor challenges, regulatory burdens and competitive pressures in Europe, rate when compared to changes in global traffic patterns, and rising competition from carriers in the Far East and Middle East?

It is true that not only Air France, but all the biggest European carriers are fighting to be competitive. So we have somewhere to benchmark ourselves, in order to have the right cost [of operations]. And what is the right cost to operate? [In other words] what depends on our efforts and what depends also [on the environment], which is labor, taxes and such. We have to address the labor cost through better productivity. It doesn’t mean we want to pay less.

Regarding fair competition [with other regions], some friends not far from here in the Gulf are playing games in which all the conditions for competition are [not] the same. So if for instance, a Gulf company is asking for open skies, the condition for it is transparency, reciprocity. I fully recognize that [the aviation industry] has been a tool used by those countries for their economic development, but do you really think that for instance there is traffic between Dubai and Orlando? Do you really think you can make it profitable? Do you really think you can open a daily Dubai–Panama City flight of 17 hours?

I recognize the fact that we have to make some efforts, as Lufthansa is doing. For me the reference is to be as competitive as Lufthansa and British Airways can be. Then there is a question of competition linked to European regulations and [with regard to] Europe and the Gulf carriers. Do we have the same rules? Can they go and take the market in Europe? And if yes, with what conditions? By the way the same [goes] for American companies. For me, it is a question of [how we compete], the rules of competition. That’s the main problem. But we will do our job. I really think today airline transport in Europe is bringing and creating value — not only by creating jobs. If one day European airlines are replaced by some Gulf line, there will be a lot of job losses — thousands. So the European airline business is creating value directly and indirectly.

E   The Air France–KLM collaboration is now more than 10 years old. In the meantime we are seeing a growing variety of consolidation and collaboration models, from alliances and mergers to equity partnerships such as practiced by Etihad Airways and strategic partnerships such as Emirates–Qantas. From your perspective, what collaboration models make the most sense today for air travelers and for operators?

When we discuss consolidation, our future will first of all see more alliances. You have different steps for alliances and as you know Air France has taken part in collaborations first in Europe. Some [alliances] are big but the value of an airline is not only its number of aircraft. The value of an airline is the market share they have, [and] the grip they have on the market. Knowing this leads [airlines to enter into] joint ventures. We as Air France–KLM have a big joint venture for instance with Delta Airlines. This JV is a virtual company which is larger than British Airways; I’m talking about a $16 billion joint venture on a yearly basis. So this kind of thing will continue to develop and one example for that is that we as Air France–KLM already have a younger JV than the one with Delta, with China. This goes back to my remarks saying that when two airlines discuss [a partnership] they need to have market positions to exchange. If you don’t have two market positions to exchange, [the deal] remains a deal with money against market. When you do that I don’t think you have improved your industrial positions; [this is] part of my answer in response to the comment you yourself made concerning the Gulf companies. The next steps to this [process of forming alliances] is in reinforcing a JV. You are right to say that this will most likely involve equity moves, as Delta is making today with China [Eastern Airlines] or as Air France has done by investing into [owning] a few percent in Gol in Brazil. So [there is] no future without alliances. Those alliances range from complicated joint ventures to simple ones, where the alliance we have with Middle East [Airlines] is interesting.

E   When you are looking at the Middle East and Africa, do you see any role for Beirut that could be larger than the role it’s playing now?

Beirut is a market for us because of Lebanese people and because a lot is happening with the diaspora all over the world. It is, as you say, a larger market than Beirut itself.

E   How are your efforts progressing in Abidjan as far as making it a hub for Air France in Western Africa?

I was in Abidjan last Monday, just to give you an example [for how important it is for us]. As you know, we are developing [this hub] with a strong investment.

E   Could you envision to have similar plans for Beirut as Air France has for Abidjan, for developing a hub for the Middle East or creating links between the Middle East and hubs in Africa?

That’s a good idea, linking Beirut to Abidjan. As Air France is currently investing in Ivory Coast into making the Abidjan hub, I think there is something to be done. Maybe I will take care of this tomorrow with [MEA Chairman] Mr. El Hout.

The post The blue appeal appeared first on Executive Magazine.

Three of the world’s top five companies by market value – Apple, Microsoft and Google – today run like nations unto themselves. Each has a utopian headquarters – home base for an army of employees with global reach and influence. Their aim is wealth creation both for employees and shareholders, but their products also help businesses grow, adding value to the global economy. Increasingly, it is the un-elected leaders of these influential entities who are changing everyday lives in the far-flung corners of the globe. The failed or failing states in our region should look to the boardrooms of Apple, Microsoft and Google for inspiration on how best to develop rather than pinning our hopes on mimicking the ballot boxes in the United States or Europe.

If properly calibrated, an authoritarian system can be a good thing. For proof, we can look to the value creation in the United Arab Emirates, Qatar and Singapore. These countries are arguably akin to overprotective and undemocratic corporates, duplicating prosperity instead of poverty and driven by meeting the needs of what business people require. Creating investment-friendly climates not only draws in the big international players, but also helps local enterprises flourish and gives hope to young graduates eager to begin climbing the corporate ladder.  Contrasting the success these three jurisdictions can boast of in the past quarter century with Lebanon – where progress on this front has been continuously thwarted by warlords turned politicians keen on increasing ethnic, religious and geographic segregation – makes the solution to our chronic emigration problem all the more clear.

After an inside look at how the new world order is being shaped, I’m all the more convinced that this new corporate-nation model is the key for unlocking growth in the Middle East and beyond.

Touring “The Campus”

When I paid a visit to Microsoft’s Redmond campus last November, it became clear how this new political and cultural form has evolved. The campus is an ideological epicenter for Microsoft’s 100,000 worldwide staff – a truly diverse citizenry comprised of an educated, innovative and creative class. Space on the campus is designed in a way that brings everyone together to work as one. Like its competitors Apple and Google, Microsoft knows that isolating employees and pitting them against each other will not build a great company.

Life on campus revolves around the Holy Land – the famed garage where the company was founded. Microsoft’s Holy Land does not inspire competition and conflict. It re-enforces the company’s mission by being a space that fosters innovation and creativity. It is through the garage, Microsoft’s visitors are told, that the company has managed to keep a startup culture. Kathleen Hogan, chief people officer, explains that merit is the only qualifier in this multicultural environment. Productivity, she says, is assessed by the watchful eye of higher management. And while the atmosphere and dress code screamed “carefree”, CEO Satya Nadella was omnipresent. Nadella’s name pops up in every speech and presentation. Everyone walks in step with the leader’s vision of a human-centric approach to problem solving (coincidentally the basis for new product development).

Design by inclusion

Jeanette Wing, corporate vice president for research, explains that all new Microsoft solutions are intended to let individuals and corporates do more. At the heart of how the company does this is abductive reasoning – or using human behavior to inform product development. It all starts by identifying possibilities – the “what if”s, as Wing puts it. Using an iterative approach infused with creativity and innovation, engineers and scientists studiously observe client instincts, wants, needs and behaviors when creating something new. Helping inform this process is enhanced data collection gleaned from each and every Microsoft device.

Wing stresses that failure is not reprimanded at Microsoft. Product development teams are encouraged to iterate their way to workable solutions. And once those solutions begin looking viable, there is no shortage of cash to incubate and develop them. All of this is geared toward helping Microsoft beat competition to the next tech breakthrough. And it is not unique to Microsoft. Companies in all sectors are increasingly realizing that any new product or service must incorporate client wants and needs from the very beginning. More and more, companies are designing experiences instead of products alone. With their entrenched bureaucracies and resistance to change, national governments could never be this nimble or successful in service provision.

With great power…

While the 1990’s fear of humanity becoming an identical hoard of robot-like creatures is being replaced by the excitement over robots that are becoming more human, serious ethical questions remain. Reinventing productivity for an increasingly mobile client base using multiple devices requires an intelligent cloud. “[It] could do things for you and increase your productivity that is constrained with time and progress,” according to Tim O’Brien, general manager  of global communications. In an attempt to mitigate the privacy and data security risks that come with this cloud, Microsoft gives control to users over how to manage information they store on the cloud. Corporates decide what and how they upload data, all from a singular platform available across all devices. Microsoft is also increasingly investing in several of their security programs: Credential Guard, Device Guard Hello and Defender to name a few. In addition, a Digital Crime Unit is busy improving the security of the products and services while protecting elders from tech scams and children from digital sexual exploitation.

Yet high-profile security breaches in the past few years have both made us all think twice about uploading naked selfies and raised questions about whether the corporate guardians of our private data are doing enough to keep our secrets safe. Time will only tell, but it is clear that corporations can adapt to these challenges quicker and more effectively than government. When my website or email servers get hacked, the nearest police station in Jnah is the last place I’d think to go. And hearing these promises of data protection, I remained skeptical about the privacy and security of my data in general but certain that Microsoft – and all tech giants – is doing more to protect me in cyberspace than my government is doing on the ground in Beirut.

At home abroad

Alma Kharrat, senior program manager, and Elias Bachaalani, security software engineer, are two Lebanese who made Microsoft their home and are now fully integrated in Microsoft’s community, contributing to the company’s ambitions. During a meeting with Kharrat and Bachaalani organized by Microsoft in one of its many dining venues on the Redmond campus, both became sentimental when I spoke about life back in Lebanon, but they also expressed the disappointment they felt when visiting family from time to time. Lebanon has failed and betrayed them. Microsoft has not.

They reminded me of countless friends in cities like Dubai, where everyone belongs to a different multinational company. I see corporate identity replacing national identity, especially among people who opt out of their broken national social contracts and chose to seek a new life within a sheltered corporate environment. With an average of four connected devices per person today, people are less isolated and more liberated from geography, local governance and territory. With globalization making national borders increasingly meaningless, our states need to adapt or risk being made obsolete by the corporate kingdoms to come.

The post Inside a corporate nation appeared first on Executive Magazine.

Sometimes it’s good to learn from history. It was the year 1075 and the Holy Roman Empire, ruled by German king Henry IV, stretched over much of central Europe. As ruler of the Empire it was Henry IV’s divine right to ordain bishops and other clergymen, an authority that the new pope Gregory VII, a reformer, canceled by papal decree. The German king renounced the pope and in turn the pope excommunicated and dethroned Henry IV. The Pope had the tool of excommunication to make Henry IV abide by his wishes. The end result of this enforcement was that the Germans became more and more against the powers of the pope, which ultimately deteriorated relations between the papacy and the monarchy, and the bond of trust with it.

In late February, Saudi Arabia announced it was withdrawing $4 billion in grant money it had pledged to Lebanon in 2014 but had not delivered. The generous $4 billion pledge is not some sort of PR notion or coffee talk; there was definite Saudi Arabian interest in a strong state and Lebanese Army to defend Lebanon from military intrusion. Riyadh made a promise to Lebanon that was in their own interests. For Lebanon, the kingdom’s decision diminishes an already weak state and raises concerns about national security negatively affecting trust and reducing confidence in the local economy.

The relationship of trust between you and your friends is predicated on maintaining a level of independence within interdependence. By accepting a Saudi gift, Lebanon owes the kingdom its allegiance. But even without that event, Saudi Arabia was perceived in Lebanon as one of the most reliable friends the country could have, despite the fact that some Lebanese had misgivings about the relationship. And Saudi is burning that capital of trust by telling the Lebanese that if they don’t play by Saudi rules then the friendship is over.

The Lebanese, for their part, by show of their procession to the Saudi ambassador, neglect their sovereign duties and reinforce the idea that the Lebanese are not ready to stand on their own feet in matters that are crucial. This is a violation of their national duty and a very indignified show of subservience that no sovereign state should ever accept – if it has to be done then Lebanon is not sovereign.

Saudi Arabia’s best interest is to have a reliable friend in Lebanon rather than a puppet that may flip flop in terms of shifting alliances. In terms of end game, what we can only speculate is that the Saudis have changed tack and are now pursuing their regional agenda under a new strategy. The Saudis are thinking neither of the long term repercussions to mutual trust, nor to what effect their actions might hold for Lebanon’s economy. A huge number of Lebanese are employed in the kingdom – a driver of remittance payments to family back home. Saudi Arabia is also the largest importer of Lebanese agricultural products, an important sector in terms of local employment. The Saudis also hold significant financial interests in Lebanon, whether through exposure to sovereign debt and shares in Eurobonds or shareholdings in projects and companies. Tourism, in which the KSA and its Gulf buddies are a driver, has already been targeted by Gulf travel bans. And yet the Lebanese are acting like spoiled children whose daddy canceled the credit card.

The single minded focus of Lebanon’s political leaders in responding to the Saudi decision again highlight that they cannot or will not make choices in the interest of Lebanese citizens without first checking up with the Saudi overlord. Lebanon needs its leaders to make decisions and present solutions to the many pressing crises that face the nation – an economy on life support, an unending garbage fiasco and a neighboring civil war that threatens to spill into Lebanon. Our leaders need not kiss the ring hoping Saudi approval will solve Lebanon’s problems. Instead, they should roll up their sleeves and get to work. The impression our leaders give is that they cannot, or are unwilling to, fulfill their duties. For the sake of our economy, our national security and our sovereign reputation, Lebanon needs now, more than ever, a vision for the future. Leadership change is a must.

The post Lebanon’s flawed acquiescence appeared first on Executive Magazine.

Despite being labeled “historic,” the trilateral summit held in Nicosia on January 28 among Cyprus President Nicos Anastasiades, Israeli Prime Minister Benjamin Netanyahu and Greek Prime Minister Alexis Tsipras did not yield concrete results. The 2013 Memorandum of Understanding (MoU) between Cyprus, Greece and Israel formally established the three countries’ will to strengthen energy cooperation and protect important infrastructure. The MoU also included a joint declaration of intent to lay an undersea electric cable linking Israel, Cyprus and Greece (Crete). But political wishes have yet to translate into actual projects. And on that front, the trilateral summit did not make significant advances.

In Nicosia, the three leaders reiterated their “readiness to further explore projects such as the EastMed Pipeline” (emphasis added). The carefully worded statement rules out any commitment, not surprising given the question marks that surround the project, even before a feasibility study is completed. Given the technical challenges, the project carries an exorbitant price tag, which makes its commercial viability doubtful in current conditions.

The first summit between the three leaders took place after a warming of ties between Israel and Turkey last December, which is hoped to bring about normalization between the two countries. Whether in the preparatory meeting leading to the summit (held in Jerusalem on December 16) or during the summit itself, Israeli officials were careful not to provoke Turkey. On the day the summit was held, Israeli Energy Minister Yuval Steinitz even said Israel wanted to have the ability to export gas through both Greece and Turkey, before adding that the Turkish option would be cheaper.

Despite the numerous official visits, declarations of intent, expressions of interests and MoUs, Cyprus and Israel have yet to translate their political wishes into actual projects. The two countries have been negotiating a unitization agreement for years and have yet to conclude it. According to former Israeli ambassador to Jordan, and senior research fellow at the Institute for National Security Studies, Oded Eran: “The unitization agreement between Israel and Cyprus will be signed if the internal political dispute in Cyprus is solved, and if gas from the countries can be exported to Turkey.”

Regardless if it is right or wrong, Turkey appears to be omnipresent in Cypriot-Israeli relations, much to the dismay of Cypriots.

One project in particular embodies Cypriot frustration: the now dormant plans to establish a liquefied natural gas (LNG) plant in Vasilikos. The amount of gas in Cyprus’ only confirmed find, Aphrodite, does not, on its own, justify the construction of this multi-billion dollar facility. More gas needs to be committed to make the plant economically viable. And despite certain positive (yet never decisive) signals, Cyprus waited in vain for Israeli gas. By not committing gas that would justify building an LNG facility on the island, Cyprus does not have the autonomy it badly needs to exploit its own gas. Instead, Cyprus now has to grapple to develop Aphrodite.

More than any other country in the region, Israel views its gas resources as a strategic commodity. Beyond their obvious economic benefits, contributing to meeting local demand, Israel hopes these resources would provoke a geopolitical change that would strengthen its position in the region. The idea is to weaken animosity towards it by creating shared interests with countries in the region. This largely explains why first export deals were negotiated with clients in Jordan, Egypt and Palestine (although precious few were finalized). Israel is also keeping an eye on Turkey, not only for its vast market, but also because Turkey enjoyed good relations with Israel long before Jordan or Egypt established relations with it, breaking a near perfect Arab and Muslim boycott of Israel. Today, Ankara still has the potential to play that role and cooperation between the two countries continues to be accorded high priority, despite ups and downs, and despite a sometimes virulent rhetoric.

For Israel, Cyprus and Greece contributed to filling a void left by Turkey over the past few years. A partnership with these two countries offered Israel a “breathing space,” in a region that is mostly hostile to it. But, important as it is, this partnership does not provide Israel the strategic edge it is hoping its newfound resources would give it in this part of the neighborhood. Turkey on the other hand (and other countries in the region) can offer Israel a strategic gain that Cyprus and Greece cannot offer: a breakthrough into the Muslim world, hoping that it would contribute to controlling hostility towards it. As long as Israel believes there is room to improve relations with Turkey, it will not take its relations with Cyprus and Greece to a place that would threaten its relations with Turkey.

This explains why Israel still perceives Turkey as an important strategic partner, despite strained relations since 2010. If reconciliation between Israel and Turkey is sealed – in large part motivated by energy considerations – future gas cooperation between the two countries hinges on Cyprus if a pipeline is to be laid from Israel’s Exclusive Economic Zone to Turkey. Which provides both Israel and Turkey with an incentive to encourage Greek and Turkish Cypriots to settle their conflict, though it remains to be seen how strong they perceive this incentive to be.

The post An eye on Turkey appeared first on Executive Magazine.

Successful Lebanese businesswomen are usually extra busy at the beginning of March, four of them tell Executive. It’s not the imminent close of the first quarter demanding increased attention, but rather requests from media outlets paying their annual homage to International Women’s Day on March 8. Frankly, this kind of coverage is demeaning. Equality is not advanced by speaking to female business leaders once a year and asking questions like: “How did you do it?” or “Is it hard being a woman and being successful in business?” If anything, this type of reporting only helps to reinforce in the audience’s mind the notion that a successful businesswoman is somehow an anomaly. Equality means we’re not surprised a woman is successful in business, just as we’re not surprised when men succeed in business. This is even more true because of the cyclical nature of it. Every other month of the year, the voice of female businesswomen is nearly inaudible in the local press.

Human capital – meaning the talent of women and men – is one of Lebanon’s greatest assets. We can’t maximize our economy’s earning potential by undervaluing or ignoring roughly 50 percent of our possible workforce. Providing women the same career opportunities as men is not only a goal for reaching gender equality in the workplace, it’s an economic imperative. And for those who are unconvinced by equality as a moral argument, there is an increasing body of research suggesting that gender diversity gives corporate performance a boost.

A study by the US-based Peterson Institute for International Economics released in February 2016 suggests “that the payoffs of policies that facilitate women rising through the corporate ranks more broadly [than only having seats on corporate boards] could be significant.” Unlike some earlier research, the Peterson study did not find significant positive or negative correlations between a gender diverse board and company performance, although the authors note “the statistical analysis may be too crude to detect such effects.” The research looked at 21,980 companies across 91 countries. One limitation is that it only assessed performance in 2014, but, as noted, the study found statistically significant correlations between gender diversity in corporate leadership and better performance when compared with peer companies lacking gender diversity in corporate leadership positions. And the study’s authors elaborate, “The estimated magnitudes of these correlations are not small: For profitable firms, a move from no female leaders to 30 percent representation is associated with a 15 percent increase in the net revenue margin.” Based on these findings, the study’s authors highlight “the importance of creating a pipeline of female managers and not simply getting women to the very top.”

These findings have important implications globally, of course, but particularly for Lebanon and the wider Middle East and North Africa region. According to a 2016 report by the UN’s International Labour Organization, “The MENA region has the lowest representation globally for women in management and leadership positions [within corporations].” Region-wide, the study found, women’s formal labor force participation is only 27 percent, compared to 77 percent for men. Women in the region, however, tend to leave the labor force in their early 30s, which the study notes is “a time when women are experienced enough to assume higher positions and more responsibilities at work.” For those who continue working, structural barriers to advancement remain, in part because “within the corporate world, women tend to manage mainly the support functions such as human resources, public relations and other similar functions. Women in these functions may climb up the ladder, yet such experience rarely allows them to move along the central pathways that lead to the very top of corporations.”

Lebanese corporates must recognize gender diversity as a pro-growth strategic policy. Internal corporate mentorship programs are one way to invest in female employees and expose them to the experience needed to rise through a company’s ranks. There are also potential legislative ways to increase the number of women in corporate leadership positions, and various women’s rights organizations are pushing hard on that track, but we don’t have to wait for legislation alone. Corporations can act today. One way to encourage them is to normalize the idea of women as business leaders. Here, the media have an obvious role to play. Local NGO Women in Front produced a useful directory of contact information for female business leaders that journalists can use to find sources to quote on a regular basis. The directory is available free – in English and Arabic – on Women in Front’s website. The media should give businesswomen the same attention that they routinely award to men. By covering their stories instead of calling them once a year for a courtesy interview, media must set signs for corporations and lawmakers to follow.

Executive wrote this article based on a 90-minute conversation with Asmahan Zein, president of the Lebanese League for Women in Business and general manager of InfoFort, a data management company; Joelle Abou Farhat Rizkallah, co-founder of Women in Front and general manager of Jô, an advertising company; Lama Oueijan, a senior specialist in the regional office for Arab states with the International Labour Organization; and Rana Ghandour Salhab, a partner with Deloitte.

The post Because it’s 2016 appeared first on Executive Magazine.

The boardrooms of modern corporations are nerve centers. The decisions made here influence the course of the entire corporation, which in this sense can be compared to a ship. Biases and blind spots in the boardroom can easily ruin the entire voyage, and superstitions against inclusion of capacious people on a board of directors can be deadly. Misogynistic attitudes and superstitions are facts of history on ships and on corporate boards.

There were times when seafaring superstitions were not gender biased. This can be seen in the powerful narrative of a man who was thrown overboard to calm the seas in a vicious Mediterranean storm. The man, a certain Jonah, ended up under a tree where he complained about a city that averted divine wrath because of listening to his warnings, but that is a different story. Yet for many centuries in Western maritime history, women were targets of male superstition that prohibited their presence on board ships, and especially on military vessels.

By way of female equality trivia, the first women (other than nurses) to serve on vessels of the United States Navy and in the United Kingdom’s Royal Navy came during World War I. The Germans’ resumption of unrestricted submarine warfare was the trigger that caused the US Navy to accept the first active-duty woman. Loretta Perfectus Walsh was sworn in as chief yeoman, a petty officer rank, in March 1917, exactly 99 years ago. The Royal Navy introduced a women’s branch in the same year but only for service on shore. It took falling recruitment figures and the First Gulf War in 1990 for women to officially serve on one of Her Majesty’s operational warships, the HMS Brilliant.

Given that women are of immeasurable value for devising corporate strategies and implementing governance at publicly traded companies, one wonders how long it will take for the numbers of women to rise on corporate boards in the Middle East and North Africa. But first one needs to know how many women currently serve on Arab corporate boards.

Quotas and other avenues

Recent years have seen the introduction of female board quotas in some European countries and research into boardroom successes has produced evidence of positive correlation between corporate performance and the presence of female board members. A media-savvy initiative by Morgan Stanley made use of the correlation by launching a gender lens investment strategy in 2013. One of this “parity portfolio’s” investment requirements was the presence of at least three women on the invested company’s board. This strategy was based on research findings suggesting that such companies outperform their peers.

Advocates for greater boardroom influences by women highlight the ratio of women on the boards of listed companies in a number of developed economies, using inclusion in major indices as criterion for coverage. According to 2014 data from advocacy group Catalyst, the ratio of female board membership in companies included in the S&P 500 index of Standard and Poor’s is 19.2 percent. Corresponding numbers from Canada were 20.2 percent. In developed Europe, ratios were highest in Norway, a country where legislation in 2006 made a 40 percent female board quota mandatory. Norway’s ratio was 35.5 percent, followed by Finland and France at near 30 percent. Female participations in Austria, Ireland and Portugal were at the low end of the European range with 13, 10 and 8 percent, respectively. Ratios for companies listed on East Asian exchanges were lower still, stretching from around 10 percent in Hong Kong and India, to little over 3 percent in Japan.

Arab boardroom compositions

Latest inquiries into the board roles of women in Arab countries show that rates of female presence are similar to Japan on a regional basis; when looking at the most culturally conservative societies, the rates are lower still but they are not zero.

Executive has gained access to a study by consulting firm Capital Concept (note: the company was founded and raised by Executive’s minority shareholder, Managing Director and Editor-in-Chief Yasser Akkaoui) that unveils female board participation rates in listed companies of the Middle East and North Africa. Different from studies that accounted only for companies included in major indices, the Capital Concept figures examine female participation ratios for all companies with available board membership information in all MENA securities exchanges.

According to the research, the female participation rate in Arab corporate boards as of early 2016 stands at 336 individuals, or 3.7 percent, when accounting for 1507 companies with a combined 9057 board members. When analyzing the data market by market, participation rates range from 10 percent in Tunisia and Morocco to less than 1 percent each in Qatar and Saudi Arabia.

The data series is too recent and thus too preliminary to allow for drawing any hard conclusions. From taking an emotional intelligence or conventional wisdom angle, however, one can have the conviction, or the gall, to point out a few possible implications of these numbers.

In favor of gender equality prospects, the percentages of companies with women in board roles are not 100 percent dismal in any Arab market. In the context of the extreme negative perception biases against Saudi society, for example, the fact that almost five percent of listed Saudi companies have one female board member each can actually be read as a positive. Were a harshly enforced barrier in place, these corporations would desist from naming female board members at all.

The implication behind the ratios of companies with any female board member and the actual percentages of women on boards are at the same time highly ambiguous. On one hand, Arab markets on average have female board members in one of five companies. That is much lower than the ratios in most developed economies, but it suggests that women on Arab boards can increase their presence and impact at least in principle. The Iraqi stock exchange was shown in the research as the only jurisdiction with less than ten percent of listed companies having at least one female board member – and this data point had better be excluded from interpretation at this time, because it is a downward outlier in terms of information availability.

On the other hand, the data suggests that women are not represented to substantial degrees on any Arab boards. Noting that the backgrounds of board position holders may include not necessarily merit-based ownership factors such as inheritance and family belonging, only very few – if any – boards can be expected to have the three or more female members that have been described as the threshold for impact generation in research undertaken on corporate boards in developed markets.   

The low numbers of existing female board membership in Arab companies therefore imply more than anything that there is a need to invest in a culture of opening career ladders to women and keeping leadership roles accessible for women. Any recommendation as to the best pathway for reaching greater diversity on Arab corporate boards would probably be best arrived at from further questioning and research. The increase in diversity on European and American corporate boards, which still has a long way to grow, emerged from a painfully slow process. Regional policies in MENA could benefit from a dual approach. Firstly, by investigating corporate performances through the lens of positive impacts of diversity. Secondly, from non-partisan reviews of the practices – such as mandatory quotas and non-binding quota recommendations and lobbying – that are being applied in Europe and the United States.

To offer a small flashback to the lessons from women’s long and slow ascent in the navies of the top Western naval powers, it is amazing how great need – such as the eruption or acceleration of conflicts – can contribute to the discovery of equality. In light of global economic competition, uncertainty and loss of commodity-based revenue streams, the need for greater boardroom efficacy in Arab companies is current, clear and compelling. The indications from developed economies are that increased boardroom diversity is a low-risk, high-reward path to better boardroom guidance and consequently, improved corporate performances. The question is if it could take another 99 years for Arab boards to wake up to that need.

The post Defying superstition appeared first on Executive Magazine.

There’s plenty we’re proud of after 200 issues of publication. We’ve worked with hundreds of talented people and have honored a commitment made in our first editorial from September 1998 to provide high quality business reporting in Lebanon. In that editorial, we noted, “This issue is our first step in playing a part in Lebanon’s energetic and expanding business world.” Both the magazine and the country have come a long way in nearly 18 years. In this issue, you’ll find a look back at our evolution and a much-deserved thank you to all the people who have made it possible. But first, we’d like to re-commit ourselves to the promise of providing exceptional business journalism. We’re renewing our vows, if you will,  motivated not by a fear that the fire is dying, but by the happy realization that our passion for this work still burns strong.

Our content commitment

As a monthly magazine, we’re not burdened by the pressure of daily news coverage. While we often attend and ask probing questions, we don’t cover individual events or product launches as such. We may mention them to discuss trends within an industry or to exemplify a company’s strategy, but we abhor marketing speak like “iconic.” We don’t re-word press releases. We invest the time and energy to fully understand a topic so we can relay the most important information to our readers. The research and reporting that inform our journalism are conducted as impartially as possible. “Question everything” is office ethos, and we’re not afraid to challenge each other during the editing process. Have the facts been corroborated? Have assumptions or bias crept in? Have we engaged enough stakeholders to get the full picture?

While we strive for objectivity when collecting information, we don’t take everything we’re told at face value. If a company says it wants to grow 20 percent in 2016, we remember it said the same thing in 2010. We ask about the earlier projection and find out what went right or wrong to put the latest target in the proper context. Our pieces are analytical not because we want to be difficult or cynical, but because context and historical performance are key to fully understanding any issue or event. If a minister makes a promise his or her predecessors also made – and broke – several times in the past, we demand to know what has changed. Why should we believe the promise will be kept this time? If the answer is unconvincing, we don’t hesitate to point that out.

Producing quality analytical content month after month requires dedication. There’s an industry adage that goes, “A journalist is only as good as the last thing he or she published.” Whether we’re speaking of individual writers or the magazine as a whole, coasting on past success is not what Executive does. Every month is a new challenge and a new opportunity. Do we promise to continue providing in-depth, analytical business journalism? We do.

Our digital commitment

Optimizing use of the internet to reach an even wider audience has proven a challenge for Executive (see On the road to Oz). We have a web page and social media accounts, but we recognize that we lack an aggressive digital strategy. We know our website needs a better search engine and are more frustrated than anyone when we can’t find an article we know we published. That said, we’re going to approach our digital strategy prudently. We offer added value which is not available anywhere else. Marketing that value online will take planning, time and money (just as it took time to build our brand offline – see Intelligent designs). It will require identifying and working with the best talent for our purposes. We realize the future is online and we need to find our place there. Do we promise to invest more in developing our digital strategy? We do.

Our shareholders’ commitment

No Lebanese media outlet (be it a TV station, newspaper, website or magazine) is financially independent. They all have one or more wealthy sponsor. Executive is no different. While our marketing and sales teams have consistently done great work (see The business team) bringing in ad revenue (drawing from an ever shrinking stream – see Battle for the ad dollar), the truth is we’re not profitable and never have been. In some publications, you know the sponsor as soon as you turn the cover, because his or her face gleams from every second page. In even worse cases, the editorial content is a one-to-one reflection of the financial backers’ political views, business interests, or both. We can credit Executive’s backer for doing neither. Our sponsor does not attend editorial meetings nor demand homage paid on the pages of this magazine. The subsidy we receive each year does not come with strings attached. Our conclusions are not foregone. Our stories are not cleared before publication. We’re not told what to cover and what to ignore. We’re not told whom to speak to and whom to avoid. We’re lucky. And in debt.

What the process of reflecting on 200 issues has made clearer than ever is that we’re sitting on a gold mine. We have a strong reputation and both content assets and human capital that simply must be better monetized. The how is tricky and no doubt related to our digital strategy, but we owe it to ourselves and that special someone whose generosity through the years has made building this legacy possible to increase revenues however we can. Do we promise to look for innovative ways to reduce our financial backer’s burden? We bet’cha.

The post A magazine to be proud of appeared first on Executive Magazine.

Snapshots of an environment with many wants

Looking at the world from a Lebanese vantage point, 1998 was an ominous year. Hopes for a prosperous future were still as ubiquitous as the construction cranes that dotted the Beirut cityscape. But optimism was being tested by harsh realities that had not been included in the scripts written back in 1989 – 1992 when war-ravaged Lebanon embarked on its ambitious path of reconstruction and development into the third millennium.

As the epitome of faith in a new future, the second half of the 1990s saw the Beirut Central District return in increments from a state of total physical ruin. On the outskirts of the Lebanese capital, construction highlights included road and transportation infrastructure and the Sports City Stadium, which in 1999 would be filled to capacity – a rare occurrence ever since – for a Pavarotti concert. In Beirut proper, the highlights of urban building were still mainly restorative, such as the reconstruction and enlargement of the Grand Serail in 1998 – including historic limestone cladding sliced from stones salvaged from destroyed downtown structures – and the re-erection of the American University of Beirut’s College Hall and Clock Tower, solemnly inaugurated in 1999. It was still years before anyone would start talking about the city as being defined by its skyline.

International recognition of the country’s sovereignty was real, in theory. In all other terms, the lingering presences of two occupying neighbors were impeding the national identity and the daily lives of everyone: citizens, Palestinian residents and foreign labor of all classes. Until July 1997, United States passport holders were still in violation of US law when they traveled to Lebanon. Amid Israel’s military occupation, Syria’s armed presence and various foreign political pressures, the Lebanese vigor and spirit of the period were acknowledged in a fundraiser – the Friends of Lebanon conference in Washington in December 1996 – and a pastoral visit, the celebration of Lebanon “as a message” of coexistence in Pope John Paul II’s 48-hour visit in May 1997.

Life in Beirut was rediscovering freedom. While some visiting writers speculated glumly that the city might never return to its pre-conflict multiculturalism and relaxed intermingling of communities, Lebanese writers and thinkers told international conferences that the country had preserved its amazing character of being a mosaic of identities. Having fast food meant eating at Juicy Burger or Barbar. The young and the hip sought places to party and celebrate the now in clubs and pubs. The old cafes on Hamra Street couldn’t keep up with that. Modca faded into history. Shopping centers popped up in unsuitable indoor spaces in Verdun. Taxi drivers from the different communities learned to find routes in parts of the city that they had not navigated for 20 years and new public bus lines crisscrossed the metropolitan area, with varying degrees of success in punctuality and efficiency of service. People worshipped their cars while being oblivious to rules, and traffic lights were the rarest of street ornaments. Traffic was chaos (as if that was likely to ever change).

Phoenix moments

When compared with the political environment, the economic realm was a haven of confidence. The stability of the Lebanese Lira encouraged financial inflows into the banking system. The Beirut Stock Exchange was expected to see new listings and investment companies were hanging out their shingles. Companies in construction and development, hospitality and even waste management services were all engaged in new projects. New schools and institutions of higher education were taking shape. And perhaps most importantly, Lebanese expatriates from all continents were heeding the call to return and invest in their homeland. They arrived with the knowledge and experience of doing business in the most competitive places and were prepared to contribute to, and profit from, Lebanon’s expected rise.

In global economic affairs, the 1990s were a period of increased international integration of goods, capital and labor markets. The establishment of the World Trade Organization and of two regional trade agreements in North America and Europe enhanced globalization in conjunction with innovations in the information technology sector. Embedded in this environment, Lebanon’s post-Civil War economic aspirations shifted from the fragmented structures of the 1975-91 era of internal conflict into a desired role as a trade and services hub for economies of the Middle East and North Africa and bridge between MENA economies and markets in Europe, Africa and the Americas. As a continuation of Lebanese positions in global trade from historic and even semi-mythical perceptions, this desire was perhaps mainly intuitive and implicit in the words and actions of business leaders. It was not formulated by policy makers in the context of a national economic strategy and could not have been, given that there was no trace of any unified economic policy making.      

The quagmires of restoration

Administered by three representative stakeholders of the country’s three largest communities, efforts at social and physical reconstruction from the center out were extremely costly and required investing own, borrowed and donated resources. Paying off the huge development drive of a new downtown, new economic infrastructure and the return of the displaced required making a bet on the recovery of the once pivotal Lebanese role in regional finance and trade, combined with anticipation of a peace dividend which was expected to result in an economic boom in southern and eastern Mediterranean countries. 

But in the second half of the 1990s, the Middle East was sliding back into a dark and stormy political night. Less than 10 years after the fall of the Berlin Wall epitomized the hopes for an end to the Cold War, United Nations-driven efforts at peacebuilding in crisis regions such as Somalia had proven ineffectual. In the Near East, the Palestinians were waiting for the state promised by the Oslo Accords under a 1999 deadline, while Israel was becoming increasingly preoccupied with national security at the expense of implementing the peace deal. In Lebanon, people were waiting for the full implementation of the Taif Accord, which had declared the end of internal violence and a reboot of the state based on a concept of national unity and the promised arrival of meritocratic politics. Regional rulers and the shakers of geopolitics, however, had other concerns than rooting for Lebanon. It was a complex time that called for the articulation of smart and authentic voices in Beirut-based (business) journalism.

In the 1990s, it was the waning days of what some historians had identified as the century of totalitarianism. The seachange of political and economic systems in favor of democratic capitalism led some other historians to talk of the end of history. Other scholars spoke of the clash of civilizations and there was much speculation on the feasibility of a new world order. The markets for explanations were brimming with ideological propositions and information markets started to see the dissolution of entrenched patterns of both media ownership and media consumption. The World Wide Web was the new kid in town and digital publishing was coming. The epic battle between propaganda and journalism was shifting from the political and ideological realm to competition over influencing the thinking of consumers.

Admission to an economic future

Within this wider context of a changing communications landscape, the media culture of the Middle East was searching for new beginnings. Newspapers and state-owned or aligned media entities were in deep need of developing their own angles and communicating the reality of Arab politics, business and social life beyond delivering propagandistic perspectives and announcement-style information on who the ruler of each realm had met or talked to on the previous day. From Qatar, the region’s most daring new media venture had just started to roll out – but as the Al Jazeera Media Network sent its marketing representatives to communication-themed trade shows in Beirut in the late 1990s, the Jazeera news brand was still unknown even among many Arabic-speaking audiences.

The stirrings of independent journalism were feeble. In countries with limited freedom, formal barriers and informal obstacles were used to keep the media controlled. Lebanon, one of the region’s historic hubs of freer expression since the Arab Awakening, saw the relaunching of its English-language print media with the return of The Daily Star and the establishment of Lebanon Opportunities as well as other, shorter-lived broadsheets and economic publications. The ticket to ride to success in any form of serious journalism was economic and business writing, albeit from within an environment where entrenched communication patterns were obstructive to analytical/critical writing and investigative reporting. Moreover, the tech was not up to speed. Internet penetration rates were minimal and there was no digital media culture worth mentioning. In Beirut, journalists at forward-thinking daily or periodical publications would typically have a dial-up connection to ultra-slow internet service at a rate of one per newsroom.

It was into this environment where two twenty-something Lebanese, banker-to-be Antoun Sehnaoui and entrepreneur Dany Rizk, returned from their university studies in California. Having been inspired by mature US business periodicals and brands such as Forbes and Fortune, they carried with them the idea of creating an independent business magazine for Lebanon. Throughout 1998, they set up the framework for creating Executive, the Lebanese business magazine. Working from a not quite purpose-built newsroom in the Brazilia district in Hazmieh, they contacted prospective editors and journalists. Rizk, wearing the hat of editor-in-chief noted in one conversation with a freelance contributor that neither his partner nor he had any experience in journalism or publishing. “But we don’t believe this to be a detriment,” he said.

It was probably better to not be too aware of the demands involved in developing an independent professional publication in the Lebanese setting and it was almost certainly an even bigger advantage not to know what challenges and costs the coming years would throw in the way of this venture. We have come a long way since those early days. The rest of the story is in the timeline.

The post Once upon a magazine appeared first on Executive Magazine.

I was appointed Editor of Executive in the late summer of 2002. I’d been a freelancer with the magazine for just over six months, but had been out of journalism for nearly two years. My metaphorical footprints in the sand were in danger of being washed away and I needed to get back into a managerial editing job.

Then, in August 2002, the editor very publicly resigned. It was a week before going to print. I was in the office and heard it all. I waited for the dust to settle before popping my head around Yasser Akkaoui’s door and telling him I was willing to help bring out the issue. He agreed. I stayed for five years.

And what a five years they were, capturing arguably the most amazing (and often sad) period in Lebanon’s short history. They were five years of hope, dismay, more hope, unbounded joy, fear and eventually solidarity as we reported on an economy hamstrung by occupation; driven by reconstruction, defined by prosperity, terror, revolution, assassination, war and even more reconstruction.

But back in 2002, the Downtown, Solidere, Beirut Central District – we never quite knew what to call it – had just opened up for business and it appeared that Prime Minister Rafik Hariri’s “build-it-and-they-will-come” dream just might morph into a money-spinning reality. The fallout from 9/11 meant that Beirut was once more the darling of the Arab World and we truly felt that the soul of the city had returned.

And even though Syria ran the show (and regularly arched an eyebrow at our content, some of which sailed very close to the Baathist wind) there was a feeling that economically Lebanon was back in the saddle. Hariri and his Trade and Economy Minister Basil Fuleihan organized a second Paris donor conference in November 2002, while other money (clean or otherwise) was flowing in, be it tourist dollars, remittances or from growth in banking, real estate, hospitality and retail. Hotel chains inked deals, international brands arrived and life was good.

But we forgot, or chose to forget, or figured we couldn’t do anything about, the fact that Syria was in charge and, on Valentine’s Day 2005, things changed forever. Hariri, the man who had single handedly gripped Lebanon by the scruff of its neck and convinced us we could get back on our feet, and Basil Fuleihan, the poster boy for a postwar generation who wanted to give back to its country, were murdered along with 20 other innocent passersby in front of the St. Georges Hotel. We realized then that we could no longer turn a blind eye. The whole office, like a quarter of the country, descended on Martyr’s Square on March 14 to demand that Syria leave. And when Syria did leave, we couldn’t quite believe what we had done.

In the run up to the 2005 elections in a two-part cover story, we decided to ask the parties contesting the first Syrian-free polls about their economic policies. We called Hezbollah, we called the PSP; we even called Michel Aoun in Paris. They thought we were mad; we thought they were clueless. History has proved us right.

The 2006 war nearly closed us down but the owners decided, bravely and defiantly, to reinvest and go regional. During that month long war, we didn’t miss an issue even as the Israeli Air Force rained bombs on southern Beirut and other strategic targets. We then had to contend with the occupation of the Beirut Central District by the pro-Syrian, and, it would appear, anti-business, March 8 bloc, the repercussions of which are still felt to this day.

2007 was my last year as managing editor. If I close my eyes I can still hear the daily arrival of army helicopters ferrying the wounded soldiers from the battle of Nahr el Bared onto the roof of Hotel Dieu Hospital. Lebanon was still reeling from the momentous events of 2005 and it would not be until the next summer, after a failed coup by Hezbollah and its allies and the subsequent election of a new president, that the country would once more bask in the sun of economic optimism.

Today Lebanon faces arguably greater challenges, with the fallout of the Syrian Civil War once again forcing Lebanon to adapt to the shifting tectonic plates of the region. Executive continues to hold the government to account. The private sector is the heartbeat of the country, and the political class can play regional clientelism as much as it wants as long as it lets the business class do what it has always done: keep the country working. In this way, Executive has not shirked away from its duty, be it in asking what has happened to Lebanon’s scandalously managed oil and gas files, the corruption at Electricite du Liban, or the more recent garbage crisis – an event that is a stain of shame on our entire political class.

When I was appointed full time editor in October 2002, I was determined to make the relatively young magazine a success in a cutthroat market. To do this I knew I had to defend my editorial corner, and I am grateful to have been able to work with such a wise team. We all knew that the magazine could not survive without ads, but we also recognized that our readers would desert us in a millisecond if they knew our content was just rehashed PR. We played it smart. The sales department made it clear what the commercial imperatives were if we were to stay in business and it was up to us to satisfy these without selling our editorial soul. It worked. Even the stories I’d have rather not included in the magazine were never sell-outs, and the vast majority of our content was fresh, original, dynamic, daring and, most importantly, credible. It was content that made me proud to put my name to the masthead for over 60 issues.

So, to the talented and committed people I worked with who became like a second family, and to the contributors, who I always thought would desert me from one month to the next but who always came back for more work – thanks. It was one hell of a ride.

The post Steering through stormy times appeared first on Executive Magazine.

Merhi Abou Merhi, a Lebanese business tycoon and former board member of IBL Bank, has not been acquitted by federal prosecutors, sources at the United States Department of Justice and the Department of Treasury told Executive March 8. A report carried by Lebanon’s state-run National News Agency (NNA) on March 7 claimed that Abou Merhi, family members and their companies had been acquitted of charges of facilitating a narcotics and money laundering ring overseen by the Joumaa Criminal Organization.

The Treasury Department says that the report is false and that sanctions are still in place for the Abou Merhis and 11 companies. “They all remain designated. Claims that Mr. Merhi has been “found innocent of the claims by OFAC” are inaccurate and there has been no action regarding Mr. Merhi that would change his status as a Specially Designated National and Blocked Person,” says Betsy Bourassa, spokeswoman for Terrorism and Financial Intelligence at Treasury.

Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned Abou Merhi, alongside three family members that held management positions in eleven designated companies, in October 2015 for alleged business dealings with members of the Joumaa network that had previously been sanctioned by OFAC. Acting Director of OFAC, John Smith, said in a statement announcing the sanctions that, “Merhi Ali Abou Merhi operates an extensive maritime shipping business that enables the Joumaa network’s illicit money laundering activity and widespread narcotics trafficking. The Joumaa criminal network is a multi-national money laundering ring whose money laundering activities have benefited Hizballah.”

Treasury sanctioned Abou Merhi pursuant to the Kingpin Act and added him and the family members to the OFAC’s Specially Designated Nationals (SDN) list. A listing on the SDN freezes the financial assets of the Abou Merhis and eleven companies held in banks under US jurisdiction and blocks them from accessing the international financial system. Getting off the OFAC list is an arduous process requiring those listed to sever business and personal relationships and provide financial records. Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics and former deputy assistant secretary at the Treasury Department, has previously told Executive that it is an expensive and timely process that places the burden of proof on the designated entities. Designation under the Kingpin Act also carries possible fines of up to $5 million and criminal penalties of up to 30 years in prison for each listed individual. The designated companies could each be fined up to $10 million.

When the NNA broke the news that a US court had acquitted the Abou Merhis of any alleged wrongdoing Executive was skeptical. The timing of the report is peculiar in that only 6 months have passed since the sanctions were announced, a very short period of time considering the allegations they face.

According to the NNA, the US Attorney’s Office for the Eastern District of Virginia (EDVA) has dropped the case against Abou Merhi, his family and the companies. But Joshua Stueve, a Justice Department spokesman for the EDVA, told Executive that “The reports are false.” Stueve did not elaborate and did not respond to follow-up questions sent by email.

The NNA says the statement was issued by the EDVA and reported by its correspondent in the United States. Executive reached the NNA’s director, Laure Saab, by telephone and was told that all pertinent information regarding the source of the statement and any other details could be found in the Arabic version of its article published Monday, March 7. But the article neither indicates whether the NNA correspondent actually spoke with the prosecutor’s office or with the Abou Merhis’ legal counsel.

According to the statement obtained by the NNA, “the United States has conducted a lengthy and broad investigation into the allegations against Merhi Abou Merhi, his family and companies. It turned out that the allegations made void of any party, but the prosecutor’s office in the United States has taken the decision to close this case and has informed OFAC of the innocence of Abou Merhi, his family and companies and there is no need to carry the investigation any further.” The NNA stands by its report that the statement acquitting the Abou Merhis came from the EDVA.

The fact that the NNA does not clearly identify and attribute sources, even anonymous ones, is an alert to the need of higher reporting standards when tackling such issues that have implications for the Lebanese–American relationship, Lebanon’s financial system and the business community at large. These stakeholders need to have reliable information because any type of business relationship with a sanctioned entity can raise red flags with Treasury.

The post Still sanctioned appeared first on Executive Magazine.

Executive magazine was born during a boom. The Lebanese Civil War had been over for a few years and the Lebanese were high on optimism, eyes alight with opportunity. Many – like the very founders of this magazine – were returning to their homeland to invest, build and create the Lebanon of their dreams.

Those coming back and those who had never left joined hands for their country, launched new businesses, imported novel concepts and jump-started industries, sectors and the economy at large. It is these optimists, risk-takers, dreamers and doers of the 1990s and early 2000s that began to reestablish a Lebanon for us to love. Their persistent patriotism was demonstrated through incessant effort despite losses, both material and moral. Their belief in this country was the foundation of our current way of life, one where we have access to a rich social and cultural lifestyle.

Over the years the Lebanese government has increasingly floundered, bringing us a debilitating national debt and an embarrassing, hazardous trash crisis, while failing to provide 24-hour electricity and a president. Throughout, Executive has exposed these failures while highlighting positive private-sector, social and cultural advances that have kept us here despite the difficulties.

The Mövenpick hotel in Raouche, Beirut, was one of the many high-end projects of the post-Civil War construction phase. (Ad from December 2000)

Throughout the past 200 issues, Executive has also been a platform for businesses to advertise their brands’ initiatives and innovations. Though created to sell, collectively these ads also tell a story. As we look through the earliest editions we laugh, cringe and fondly reminisce about the life we used to have and what we aspired towards at the turn of the century. These ads are a reflection of that time – a time of hope.

A citywide construction site

In the 1990s Beirut began accessorizing its skyline with cranes. It hasn’t stopped since. Advertisements for real estate and development exhibitions, as well as individual buildings and neighborhood projects, demonstrated how the country was literally being rebuilt. At the time Zaitunay Bay was nothing but a twinkle in Solidere’s eye and the Mövenpick hotel was a budding debutant, but downtown Beirut was a bride in all her glory. After restoration, the heart of our capital quickly burgeoned into a lively pedestrian district lined with restaurants and shops. Fast forward to this past year: a barbed-wire-strangled Downtown was the site of police clashes with civilian protesters demanding basic rights. Many unwavering businesses have retained their central locations but many more have relocated or shut down since a series of setbacks, beginning with the 2005 Rafik Hariri assassination, followed by the July 2006 War and escalating internal strife. The buildings constructed and advertised then are mostly vacant now.

Brave new banking

In the days before the Lebanese Lira underwent a Monopoly-inspired facelift, ads were telling us we hardly needed to carry cash at all. In the 1990s we were just learning how to shop with plastic, and banks – some of which have since disappeared from the market or revamped their brand identities with shorter names – were announcing such advancements along with online banking and subsequently mobile banking. Credit Libanais even tried to pitch TV banking – a concept that didn’t quite take off.

Who would’ve thought you could do online banking on a phone like that? (Ad from June 2001)

Tech rising 

The Lebanese have always had a taste for tech. The many technology-related advertisements once placed in Executive show just how far the world has come in a few short years, and how close behind Lebanon has always been. Looking at the ads today is amusing: they promote fast internet “breaking the speed barrier with 64kbps!” and electronic devices that store the equivalent of a few digital photos today. TVs labeled “flat screen” were cumbersome, refrigerator-sized things – some, 46 cms thick at the base. Vital office equipment included fax machines, printers and cordless phones; today you can run a business on a smartphone. Weirdly, phones are about the same size today as they were back then – after a brief and unsuccessful detour towards miniature mobiles. Pre-smartphone consumers actively sought out digital cameras but phone cameras were starting to evolve too: Samsung produced an innovative 180-degree rotating camera lens – pushing us into the selfie era.

Back when mobile numbers all began with 03 we were learning how to text. Cellis and LibanCell – before they became Alfa and Touch – were proclaiming astonishing advances: roaming and internet (did life exist before mobile internet?) The networks offered WAP, GSM and later GPRS – the painfully slow great-grandparents of 4G. Believe it or not, call rates were higher than they are now, so to save “units” young phone-owners didn’t always reply by text; friends had code replies: one missed-call meant ‘no’, two missed calls meant ‘yes’, and three meant ‘come down, I’m under your house’. NaharNet targeted the tech savvy who wanted to be different, their advertisements proudly announcing users could text pictures (however unclear and pixilated), download pop-song ringtones and even use photos as a phone background.

Getting comfortable

At the turn of the millennium the Lebanese began to get more comfortable and spend more money on living well. During that time there was an onslaught of advertisements in Executive for luxury watches, clothing, cars and boats. Clothing brands marketed the latest fashions and stores, though shopping destinations looked nothing like they do today. Beirut Souks was just a plan, Metropolitan City Center (now Le Mall Sin el Fil) was looking for tenants in 2002, ABC Achrafieh didn’t open until 2003 and Aïshti was just beginning to sow its empire in Downtown, though we did have the now-defunct Factory Center in Mkalles.

The Association of Lebanese Industrialists encouraged economic patriotism – buying products made in Lebanon. Meanwhile trade fairs for various industries encouraged import and export exchange. HORECA had continued success and other food businesses advertised their activities too.

Welcome to Lebanon

In the true spirit of Middle Eastern hospitality, Lebanon began to rebuild its reputation as a hospitable tourist destination in the late 1990s. There was a constantly increasing influx of tourists – expats returning to see family more frequently, foreigners from the Gulf coming for a good time, as well as other tourists curious to visit. Travel exhibitions were held and the airport even promoted its duty-free shopping.

Text-heavy ads used to be the name of the game. (Ad from October 2002)

Quicker than other sectors, the hospitality industry was reinstating its status as a hub. Restaurants were mushrooming on the coastline, in the heart of town and on mountain tops – and they included cuisines for every taste. From the Thai Blue Elephant and a worldwide love affair with sushi that made its way to Beirut early on, to Western concepts like bagels at Tribeca and Bread Republic, Beirut saw a surge in new restaurants and concepts.

Lebanon was also turning into a nightlife epicenter, earning quite a reputation as a party city. Before The Grand Factory there was The Basement. Before O1NE there was Element, Circus and Strange Fruit. Before the hour-long traffic pile-ups in Mar Mikhael, we slowly inched down Monot Street, where now only a few iconic bars remain. While popular nightlife districts have witnessed several shifts, the legendary B018 is one of the few venues of the late 1990s that’s equally popular today.

Our wine industry was gaining momentum too – with sometimes cheesy advertising. At the time cigarette manufacturers were still allowed to advertise and went all out with several multiple-page spreads.

Culturally, the country blossomed with concerts, performances and live events, increasing every year in caliber and quality. Established festivals like the Baalbeck International Festival were drawing in more and more international performers and local legends, while new events were launched every year and individual concerts increased.

Also young at the time, Sukleen advertised in Executive’s early issues, proclaiming: “Having a cleaner Lebanon is what we all want.” Indeed, if only we could go back to the good ol’ days of trash collection.

200 issues later Executive persists – as do its advertisers. Businesses have come and gone, politicians have stayed, and those who have survived continue to power through the tough times and give their all to keep Lebanon on its feet. As hopeless as things may sometimes seem we are still here too, taking risks and believing. Because, after all, hope dies last.

The post Selling a dream appeared first on Executive Magazine.

In the beginning of human expression, technically speaking, there was the pictogram. The marriage of image and meaning, irrespective of the degree of abstraction involved, is how communication can be kept “on record”. Where glances and body language cannot be preserved without comparatively extensive technology, words and pictures codify human history.

In this sense, it is indeed appropriate that the 200th issue of Executive magazine entails a section on advertising. The endeavors of content communications and marketing communications are semantically subsumed under a shared term – media. Being both part of media, the economic relationship of marketing glorifications and critical reviews of the same stuff – products, news, opinions et cetera – is a perennial competition. 

The truth of this competition is that media will have a prosperous future only if we can, on both sides, understand and practice our opposing approaches as a non-zero-sum game. Non-zero-sumness, as defined by American thinker Robert Wright, is the development scenario where competing interests overlap positively and an optimum outcome can be produced that brings more advantages to the interested parties than a zero-sum, or win-lose, solution. Walking a mile in the shoes of Adam Smith, one might perceive the logic of non-zero as an evolution of the “invisible hand”, which the philosopher-father of economics did not actually elaborate on.

According to Wright, non-zero-sumness requires advances in communication, technology and information processing, factors that are central pistons of the global economic machine. But it also needs something called “moral imagination”, which enables us to envision life as being at the same time ethical and successful, or what for Smith might have been captured in the “impartial spectator” concept; a humanly inherent ability to assess our own actions from another person’s perspective.

Applying such assessment techniques to the situation of Lebanese media at the current juncture, Executive editors see it as prudent to call for more interaction of journalistic – in the real sense – and responsible advertising media. This interaction is needed to address the questions of media ethics that in the digital age can no longer be answered in the ways in which answers were constructed a hundred years ago. 

The economic survival of both marketing and journalistic media depends on the ability to tell better stories, all the time. If the Lebanese advertising market is suffering, we are both as fishers in two tiny vessels that are shaken by the same gales and battered by the same breakers. Telling stories better requires talent which we are happy to ascertain for the Lebanese creative advertising community and, with a modicum of humility, ascribe to our track record of 200 issues and almost 500 contributors.

Also required for production of better narratives are competency in the digital sphere and diversity. In the first regard we have much to learn at Executive. Thus, our note to the editorial self and call for action are to improve our digital capabilities and their applicability in all parts of our enterprise, and then embark on a new life in the avant-garde of business publications. If top standard setters of 20th century journalism could start their careers in 19th century places such as Boonville, Missouri, and St. Louis, Missouri, we see no reason why the next impulses for top business journalism should not germinate in our inspired environs of Achrafieh, Beirut. 

In parallel, we urge the entire Lebanese marketing communications community to invest in their digital capabilities. As evidenced by a contribution of only five percent to advertising spend, Lebanon is still a laggard when it comes to digital practices, and we hear from leaders in the media planning industry that many agencies have yet to invest into and develop convincing digital offerings, as well as initiate measures to increase awareness within the local advertiser community. We call for more such outreach from marketing communications players.

We further reiterate the call to collaborate on codes of conduct and standards of ethics for the entirety of Lebanese media enterprises on both the marketing and journalism sides. All players need to devise and agree on a code that gives audiences confidence that outlets understand and respect the country in its specificities, and that incorporates ethical accountability in media behavior.

And last, on the topic of diversity and leadership, we – all in the Executive editorial team but especially its male members – offer our masculine curtsies and tip our feminine hats to the leadership evolution of local marketing communications companies, where an impressive number of agencies have achieved parity of women and men in managing director positions. Thank you for setting examples for us to learn from.

The post Improving the economies of words appeared first on Executive Magazine.

Remember the one from Brooklyn-born designer Kenneth Cole? “Millions are in uproar in #Cairo,” he tweeted in early February 2011. True. Because they allegedly had heard about his fashion company’s “new spring collection”, the gifted marketer blared on. Triple ouch.

Every year, there are some advertising campaigns that backfire badly. Most can be attributed to cultural ignorance/insensitivity in combination with stupid timing. Cole’s was in that class, although a few grades below Coca-Cola’s epic miscalculation of first Israeli and then Arab sensitivities that led to the brand’s 23-year Arab boycott from 1968 until 1991. As far as marketing communications blunders that hurt foreign brands in the Middle East and North Africa, one cannot assess if and how much Cole’s tweet damaged Kenneth Cole Productions beyond the large immediate outcry that it generated in 2011, since the company delisted in September 2012 and henceforth had no obligation to publish results.  

Some marketing mistakes are clearly costlier than others but in general, these blunders come and go and do surprisingly little damage to the advertising industry’s profitability. The profession has become more accountable – even if that is mainly due to scandals, litigation, bad press and the arrival of digital consumer power, it also seems rooted in the will to improve. Lying to the educated consumer is the big no-no of today. Cigarettes don’t improve your health, shampoo doesn’t make you irresistible, wearing sports shoes does not make you lose weight, food is just food and there is no one drug that cures all cancers. Moreover, marketing success doesn’t grow on trees. Therefore agencies have learned to steer away from lying to the customer and from deceiving the advertising client.

Grand ideas

At the same time, however, the advertising industry has an existential need to tell stories that are bigger than life. That’s why the right deodorant and the even more flavorful toothpaste get you your dream partner, why every detergent, mobile phone and breakfast cereal is far superior to last year’s version, why every hamburger looks much better in the ad, et cetera. The knowledge that people will respond positively to embellished tales of beauty, goodness and well-being is deeply engrained in the ad industry’s DNA. Advertisers on their end always want more return for every dollar they spend on campaigns. The problem for the marketing communications profession is that the two mandates of not telling a lie and delivering a great, funny, enchanting and profitable narrative are contradictory.

Agencies seem to have embraced life within this contradiction so thoroughly that they often perceive and describe matters in their own industry through bifocal lenses with very different focuses. Like now. Judging by the numbers, the Lebanese advertising market is drifting in very dangerous currents.

This danger is not prima facie because of the mind blowing discrepancies between billings according to rate cards and estimates of real advertising sales revenues achieved by local audiovisual, print, outdoor and digital media suppliers. This gap is so customary and currently so accepted that regional ad market researchers Ipsos Media CT in their report on Lebanon, published last month in trade magazine Arab Ad, just specify what they assume to be the correct inflator for each advertising medium. It is apparently useless to fuss about the fact that these inflators range from 50 percent in the cinema category to almost 1,600 percent in television, meaning that 2015 rate-card billings of $1.62 billion in Lebanon must be revised lower, much lower – namely to an estimated $190 million.

That amount is equivalent to not more than 0.4 percent of Lebanon’s Gross Domestic Product which has been estimated at $47 billion in 2015. In the context of the country’s fragmented media landscape, with many outlets that each cater to very partisan target groups, the smallness of the revenue pie sheds harsh light on the economic viability of even prominent audiovisual networks and practically all print media.      

The danger hidden beneath the disinflated ad spend figures is that this estimate contains too much ambiguity for making a proper assessment of the industry’s health or sickness. Real advertising purchases in 2014 and 2015 could have been even lower than the Ipsos Media CT estimates of $188 million and $190 million. Directors of media planning agencies – the experts in assessing the advertising clients’ demand and purchases of media supply – work with the numbers but cannot actually confirm their accuracy.

Cloudy outlook

At Mindshare, a media planning agency that is part of WPP, the world’s top marketing communications conglomerate by annual revenues ($19 billion in 2015), the Lebanese market is judged to have been below published estimates in the past two years. Ghada Hmedeh, who manages a portfolio of luxury business from the Beirut office, tells Executive that by Mindshare’s assessment, Lebanese ad spend in 2014 was similar to 2013 and reached about $180 million in each year. “We have estimated a decrease of about 20 percent and I would say from looking at all the numbers that 2015 was closed at around $150 million,” she says.

Wilson Issa, the managing director for the Levant at market-leading planning agency VivaKi, part of the global Publicis conglomerate, gives an opinion when asked if he considers the $190 million figure for 2015 to be the real one. “Let’s put it this way: if [advertising spend] is flat, that means it is shrinking. Even if spend remained the same in 2015 versus 2014, it means that efficiencies have shrunk,” he says.

According to Issa, it is not a good signal if overall spending on advertisements is stable, because it coincides with shifts into digital marketing and this investment then necessarily is at the expense of traditional media, such as print. He observes, “Media owners were tremendously challenged in 2015. Overall budgets are more or less the same [in 2016 to date], but in a scenario where you know that you need to increase your efforts on digital, this is bad news for certain media owners.”

Beyond being worrisome for traditional media, stagnancy of advertising markets is not sustainable for the entire industry if it goes on for extended periods. “Absence of increase for one or two years is understandable, but if the lack of growth goes on longer, it is alarming,” he says.

This, however, makes 2016 something of a year on the edge. Advertising budgets of multinational clients are not something that the Lebanese media planners can bank on, because the national market is part of their regional planning and a small one at that. Given that regional economic growth outlooks are subdued and Lebanon is steeped in uncertainties, local spending by multinational clients might be at levels unchanged from previous years but increases are unlikely.

Expanded spending from regional and local clients is not much of a prospect either, given absent or minimal domestic GDP growth expectations and necessary adjustments to lower oil revenues in energy exporting countries. The advertising industry numbers of 2015 show that most Arab advertising markets reflected the tighter economic realities with drops in spending.

The outlook of further drops in regional ad budgets is therefore very concrete, even if such a downturn at this time does not directly translate into contractions of the Lebanese market, as it did in the 2008/9 burst of the real estate bubble and crisis of financial markets in the Gulf Cooperation Council (GCC). In terms of impact, the prospect of another year of no advertising growth in Lebanon is something that large and well-positioned media agencies will be able to weather but this may not be the case for everyone, says Carole Hayek, the Lebanon general manager of planning agency Optimedia, which she established in 2004 under the Publicis umbrella from Beirut.

Hope for the future?

“The problems will be affecting mainly small and medium advertising agencies, independent ones. Lebanese agencies can easily survive another difficult year but I am not so sure about small agencies,” explains Hayek, who is also vice-president of the Lebanese Advertising Association. Moreover, the resilience is limited, she admits. A lack of growth beyond 2016 would be hard to stomach. In that case, “I personally think that there will be a difficult moment for the entire industry,” she says.

The best-case scenario for the local market, in the view of Mindshare’s Hmedeh, would be a boost from a new Lebanese president. A successful election in the near future would cause a number of local advertising clients to activate campaigns in response to the upswing in national sentiment over an end to the presidential crisis, she says, but even in that scenario, her best-case expectation is for a stable market. “If we can have elections, we can optimistically look to a similar performance as last year; otherwise we might be facing another drop [of the same magnitude as in 2015],” she says.  As to markets where Beirut-based agencies could become newly active, she sees Iran as a tentative potential, based on research undertaken there by companies in the Lebanese marketing communications industry.

For Hayek, the industry’s current problem is exemplified in a lack of agency recruitment that makes local doors hard to enter for new Lebanese talent. In terms of improvement options, she sees the potential as dependent on factors in the Near East region. The stagnancy of the Lebanese market is not helping with the recruitment problem but the market will remain on the maps of multinational clients, she says: “Improvement is not on the near horizon but things cannot continue like this. This market has good potential and I am optimistic that things will change. Once there is political stability in countries around Lebanon, things will change drastically.”

In Issa’s view, the market will sustain itself because some advertisers always see an opportunity to invest into more marketing and improve their positions when competitors react to an economic trough by lowering their marketing budgets. In this sense, his worst-case scenario for 2016 is for overall budgets to remain at the level of 2015, as he expects withdrawals by the cautious type of client to be balanced by the expansionary minded ones. He says, “This is why I am telling you that advertising in a way regulates itself. Both breeds of clients, however, want more [return] for the same [marketing investment] or more for less. That is the challenge for the advertising agencies and the media suppliers as a whole.” That now seems to be the optimistic view.

The post Battle for the ad dollar appeared first on Executive Magazine.

Early in 2016 was once again the perfect moment for a comparison check on the strength of the Lebanese advertising market: the Super Bowl. As the primary sports spectacle in the United States was celebrated on February 7 with national pride (anthem sung by Lady Gaga), superbly choreographed spectacle (halftime show with Coldplay, Bruno Mars and Beyonce) and inevitable circumstance of glorious competition (throwing, running and catching of a ball by the country’s most talented sportsmen in this specialty endeavor), it would have been a fantastic chance to promote Lebanese exports to over 110 million US viewers with a creative commercial.

Super Bowl advertising spots are the real-life Olympics of marketing, far beyond the live TV audience; they are watched, evaluated, talked about and shared online by millions, long after game day. Talk about quick and viral? More like the grail of engagement. And it was not only local beer and foreign car makers that entertained with commercials during Super Bowl 50. Mexican avocado exporters advertised this year (again) and got global attention for their produce. Judging from their commercials and those of the competition, Lebanese agencies would certainly have the creative potential to produce a spot that could compete in the Super Bowl.

However, here is where the dichotomy shows: a spot in the event sets the advertiser back by about $5 million – per 30 seconds. According to industry publication Advertising Age, the 2016 Super Bowl ad sales revenue amounted to an estimated $377 million, a new record in a long line of rising marketing investments at the event. The total advertising investments in the Lebanese market in 2015, $190 million by the most optimistic assessments, consequently would hardly be enough to book the spots in the Super Bowl’s first half.

While such comparison is just a mental exercise, it illustrates a big tear in the fabric of the Lebanese advertising industry. The local market is small and stagnant to the point of going into an advertising recession. Regional markets are not looking good because of the oil price slide or are, in the case of Syria, completely paralyzed. Lebanese creative agencies, however, are reaping accolades for their productions and have been ramping up their reputation for more years than the market has been slumping.

Case in point, last month saw several agencies awarded high rankings in several ad industry introspections, such as the Big Won Report, the Gunn Report and the annual listing of “brave” agencies by trade magazine Contagious. The biggest winner from Lebanon was agency Leo Burnett Beirut, a member of the Publicis conglomerate. It tied in Contagious’ list of global standard setters with another Arab agency, Menacom’s FP7 Dubai, in tenth place worldwide.

That’s not all. From their fairly modest offices – even by regional standards – on ever-busy Charles Malek Avenue in Achrafieh, Leo Burnett Beirut swept awards for top creative productions with commercials such as the keep the flame alive campaign of Diageo’s Johnnie Walker whisky brand (a Lebanese national confidence booster) and two civil society messages – Sakker el dekkene’s Lebanon4Sale, an anti-corruption campaign, and vote for us; we’ll vote for you, the women’s legal rights campaign for Kafa.

According to Nada Abi Saleh, managing director at Leo Burnett Beirut, these three campaigns were in the top ten globally in one or more categories which the Big Won Report computed from compiling information on 3,406 pieces of advertising work which in 2015 had won nearly 7,200 awards in 32 awards shows around the world. Additionally, Leo Burnett Beirut was lauded as one of the top 20 creative agencies in the Gunn Report.

This needs to be put into context. First, advertising awards are a marketing genre in itself. What else would one expect? While best-in awards and recognitions have become frequent in activities from banking to horticulture, the advertising industry has a larger propensity than most to assess its own products and advertise outstanding performances. Dubai Lynx, a regional chip off the old Cannes Lions block, and MENA Cristals, an ad feast that was staged on an annual basis in Kfardebian until it moved to Dubai last year, are regional specimens of the advertising awards genre. This notwithstanding, advertising industry award news are not mandatory reading for either advertisers or business reporters. It’s fine if you never looked at the Big Won Report, Contagious Communications or the Gunn Report.

Secondly, advertising industry leaders often speak dismissively of award shows when they are not at the events to sit on juries, deliver speeches or receive trophies. Time and again, agency owners and decision makers across the region have told Executive in interviews that awards are good for the morale of their teams and help talented individuals to get ahead in their careers. But that’s it. When it comes to the bottom line, multinational clients don’t assign big accounts on the basis of the number of awards won by an agency.

A narrative of inspiration by adversity

Yet, once the hype and marketing praise is stripped from the narrative, there is an admirable core. According to Abi Saleh and Kamil Kuran, the agency’s managing director for the Levant, the story took off a few years ago with the Leo Burnett Beirut office’s first successful grab at quality international attention when the team, in Kuran’s words, “cracked Cannes” with Khede Kasra, a women’s empowerment campaign for the Hariri Foundation.

Winning a Gold Lion in the public relations category in 2009 ignited curiosity about who these people from an out-of-the-way agency were, Kuran explains. “I think credit of course goes to the entire team but under the leadership of Nada [Abi Saleh] at the time. The thing is, it’s so hard and you work so hard to crack something, but once you crack it, you become more confident and you start to know what it takes [to create prize worthy campaigns],” he says.

Abi Saleh interjects that the roots of the Beirut agency’s increased creativity became visible several years earlier in 2005 and 2006 during a period when the Lebanese people were eager and then desperate to see change. The agency at the time started infusing encouraging messages into ads for local retailers and banks. “We wanted our brands to not be distant from our Lebanese reality. We wanted them to be parts of the people’s mind and affection and emotions,” she explains. This marked a shift in thinking that was not planned, she adds: “I would love to say that we started with a vision, but this is not the entire truth. I think we started doing it very intuitively and thanks to the culture that some key people at this agency wanted to establish.”

The momentum was kept and in 2012, the agency was acknowledged as the world’s number 6 in creativity in the Big Won Report. According to Kuran, the dynamics in the interaction between the agency’s individuals, its collective team identity, and its simultaneously diverse and adverse Lebanese environment provided the factors that kept the creative juices flowing and coalescing in the successful campaigns seen since.

“The beauty of it is the dynamics of all of those together. Communication and advertising and all that are a form of learning and a form of culture. [If you] try to instill change, try to combat all this complacency and the spirit of giving up within our population, you’re always trying to push the envelope,” he says. When the mindset of wanting to give the message that Lebanon can achieve collides with the defeatist sentiments found in large parts of society, this frustration creates “fertile ground” for causes and for coming up “with campaigns that touch the hearts of people,” he elaborates further.

Campaigns designed with the objective of promoting needed change then were driven by “a hunger to prove ourselves and demonstrate that in such a small country we can make a difference that is 100 percent made in Lebanon. I don’t think anywhere in the world there exists a country like this where people keep beating you down and you keep resisting and wanting to instigate change,” Kuran goes on.

It was a progress along the same mental road that led Leo Burnett Beirut to its latest award winning campaigns. As Abi Saleh and Kuran tell it, the Johnnie Walker keep the flame alive campaign was the result of intense brainstorming and teamwork on how to make the long-running commercial more relevant to Lebanon. Seeds for the production had been secured when the agency got approval to acculturate the brand’s keep walking theme to Lebanon, engaging local celebrities to star in spots and using images such as walking across bridges that had been destroyed in the conflict of 2006. When conceived and realized in 2014, the ‘keep the flame alive’ commercials were informed by the resilience of Lebanese people and their affirmations of determination and overcoming in the face of the hardships.

In the greater context of changing attitudes in the communication with customers, Abi Saleh and Kuran say the winning Leo Burnett Beirut campaigns are part of a wider flow toward people-centric thinking and to developing the why of brands instead of emphasizing only the what. When it comes to the fact that a comparatively small office with relatively few staff now rates far above international expectations in its creativity, Kuran conjures an image of a different kind. “Imagine you are watching a tribe of lions which are all roaring. Suddenly you notice this small Chihuahua which shows up in the tribal meeting and instead of barking, that Chihuahua roars, and it roars louder than the lions. It gets your attention.”

We all agree that in the lions’ dens of global advertising, the Lebanese currently stand out as the roaring Chihuahua.

The post Activating the creative gene appeared first on Executive Magazine.

“There is no going back,” began the cover story for Executive’s March 2011 issue. “Recent months have severed the future from past precedent and brought about a fundamental shift in the Arab paradigm.”

When we published those words, uprisings had just begun to sweep country after country across the Arab World. In response, global media outlets rushed in to broadcast “the story” to the masses around the planet – but that was never our game. From our seventh floor office near Beirut’s Adlieh roundabout, we produced coverage for the discerning reader. Our lens on the upheaval was economic. Our analysis followed the money and within our niche we were unrivaled.

For the March 2011 magazine, issue #140, we interviewed an economist at the University of Tunis El Manar, who told us that Tunisian youth – who were again marching in the streets after having driven President Zine el-Abidine Ben Ali into exile just a month and a half before – would have to wait years for the inequities they rose up against to be righted.

Libya was then newly divided between the country’s east, which a rag-tag rebel movement had newly liberated, and a west where Colonel Muammar Qaddafi still held sway. Global oil prices had surged past $100 per barrel as a result and our editorial team brought to the fore how the Libyan government’s fortune – tallying in the hundreds of billions of dollars and stashed in investments in more than 130 countries around the world – would be up for grabs if Qaddafi’s 42-year-reign were brought down.

As for Egypt, we reported on how regional banks were shrugging off the potential for short-term loan defaults post-revolution in anticipation of the massive financing needs the new government would have, while Egyptians – who our team had been with in Tahrir Square when millions demonstrated to end the 30-year dictatorship of Hosni Mubarak – were debating the future of their country and feverishly building new political parties to elect into the parliament.

In Morocco, Algeria, Jordan, Iraq, Bahrain, Yemen and Oman, the people had taken to the streets and squares of cities and towns, demanding just governance and a new social contract. Yet, even as the Arab world seemed alight from end-to-end when Executive hit Lebanese newsstands March 1, just a two-and-a-half hour drive away in Damascus, calm prevailed. Syria was different. The regime’s power seemed absolute. An uprising there was impossible. Until it happened.

A Damascene shopkeeper – speaking to our reporter who went in the next month to covertly cover the unrest – made it a point to remind us that Syria was still different.

“They will kill millions to hold onto power. Millions,” he said. “This is not Egypt.”

We documented how the rural areas in Syria that first rose up were the same ones that had been the worst affected by the government’s repeal of farm subsidies, or where small-scale artisans had been driven out of business en masse by trade liberalization with Turkey. As protests against the regime of President Bashar al-Assad spread across the country we followed how the economy retreated, unemployment surged and the Syrian Central Bank began burning through its foreign currency reserves to prop up the sinking Syrian pound.

The more viciously and violently the regime tried to quash the peaceful protest movement, the bigger the demonstrations became. Within months media around the world began to speculate about the imminent collapse of the regime. But it withstood, and as the opposition tired of being butchered in the streets, at Executive we traced the rising price of weapons on Lebanon’s black market, fueled by groups in Syria who were rallying to arms.

In contrast to Libya – where western countries quickly secured a United Nations Security Council resolution for a “no-fly zone” and then bombed Qaddafi’s ground forces to make way for a rebel advance – the West “has generally limited its stance to the unrest in Syria with repeated calls for Assad to reform or face losing his legitimacy,” one of our comment writers noted in Executive’s August 2011 issue. “We don’t want to go for the option of an armed struggle against the regime,” the same writer quoted a Syrian activist as saying in our October 2011 issue, “but if the international community does not step in, we are afraid that it will lead to civil war.”

Five years later I look back at the words we published in March 2011, and they now echo hauntingly: “What was the status quo is now dead, trampled beneath the feet of millions marching through the streets. And while it is yet far from certain that freedom and democracy await them at the end of this road, what is assured is that where they are going is radically different from the place they left. Welcome to the new Arab World.”

The post “The new Arab World” appeared first on Executive Magazine.

The times are not easy, concede advertising industry members Jihane Nasrallah and Hani Haddad. But whereas growth in the Lebanese advertising market has been elusive for about three years, and while Haddad’s agency had a rare year of seeing turnover drop in 2015, the two are joining forces in a merger. The merger process formally commenced last month with the relocation of Nasrallah’s agency, Inhouse Communications, into the offices of Haddad’s Spirit.

The integration of the two businesses is currently in phase one, entailing evaluation of the team and new human capital needs. There were some redundancies or departures of staff members who did not see themselves fitting into the new organization, but, according to Haddad, these represented a small portion of the new combined team of 35 individuals. “There was some [employee] turnover but we are also recruiting and will have some vacancies that need to be filled as we are restructuring,” he says.

A common vision

A key element in their corporate plan is to use economies of scale for improved profitability and stronger positioning in regional markets. “The interesting part of the merger is not turnover but profit,” Nasrallah explains. Efficiency gains from joining their forces entail lower office costs and reduction of overheads, she adds.

The owners of 11-year-old Spirit and six-year-old Inhouse Communications say they share a history of collaboration going back almost 10 years when Haddad interacted with Nasrallah as a client of his marketing services. Discussions on joining forces evolved in 2015 at a time when Nasrallah was a nominee for an entrepreneurship woman of the year award and received coaching on ways to grow her business by regional expansion or merger.

The newly minted business partners tell Executive that they share the same vision of running an advertising business. Each of the two firms has been operating as an independent agency offering the full range of media planning, public relations and advertising services. As a merged entity, they will operate on the basis of the very same formula. “Both of us were working the same way, which is different from the market, and have the same vision, which is being a full-service agency. We are focused on proximity to local clients,” Nasrallah says.

Merging two local advertising companies into a larger independent agency is an alternative path to the advertising industry’s prevalent business development route, which is alignment with regional groups and, ultimately, with one of the multinational conglomerates. As shown by numerous cases in the recent and not-so-recent past, local Lebanese agencies using the latter route have found their final homes as fully-owned and controlled units of global marketing powerhouses.   

For Haddad, who started his career in the advertising and marketing communications industry more than 20 years ago, aligning his first agency with a multinational group back in 2000 was a disappointment and he reversed out of the relationship by setting up Spirit in 2004. Given that advertising talent moves easily from local agencies to multinational ones and vice versa, he says the difference is not in human capital but in the rigid corporate cultures and bylaws of the multinational organizations by which they oblige local clients to commit to a certain way of doing things. An independent agency can be more flexible in responding to client needs. “This is added value and this is what clients are telling us when they say they are comfortable working with us,” Haddad claims.   

According to him, the addressable market for independent agencies is getting larger because more Lebanese companies are expanding abroad. By Haddad’s own assessment, Spirit is the largest independent agency based in the country. He declines to say how much Nasrallah and he are expecting from the merger in terms of margin improvements but admits that growth of profitability should be double digit. 

Moving forward

The only number he is willing to disclose is also by self-assessment. Following the merger, Spirit is now a $30 million company when all assets and the Dubai office that serves Gulf clients are taken into account, he says.

The company will invest into capacity building, job training and business development, including travel, to explore and develop new markets in the region, but budgets have not been finalized. “We have drafted a plan but we are still testing it as we are now in phase one of the merger,” Nasrallah says.

The merger was done by exchange of ownership shares and did not involve a capital increase. Haddad refuses to say how the ownership stakes are now distributed. However, his position of chairman and chief executive of the company, and Nasrallah’s position as managing director of new business give an indication. According to Haddad, Spirit operated in the past with a perfunctory board and is now advancing to a three-member board as the strategic decision platform. Board members are Haddad, Nasrallah, and Spirit’s Regional Creative Director Maya Saab, who are all shareholders in the company.

Both agree that having the right chemistry is crucial for a successful business partnership. While sharing the same basic approach to the business is essential, “there should always be areas where one complements the other,” Haddad opines and Nasrallah notes, “That is why we are now putting proper structures in place and defining responsibilities.” She adds that the merger of cultures between the two organizations still has a lot of ground to cover, saying half jokingly, “I am realizing this today from your interview. I moved [into the Spirit office] three or four days ago, so we are still in the honeymoon phase.”

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Regular readers of the magazine will notice something’s different. Cleaner. Crisper. We’ve tweaked our layout, and matte paper is back for the first time since 2004. It’s a slightly new look, but we’re keeping some basic elements that define our identity. We’re a business publication. And a serious one. We write three-course meals, not light snacks. That means text. And lots of it.

“It’s easier,” Executive’s design guru Tanya Salem says of moving mountains of words around. “But I don’t like it.” Salem’s creative expression is limited to finding dignified ways to “break up the text to be easier to read,” she adds.

That’s not to say there’s no fun to be had. If page layout is our identity, covers are that identity dressed up to make the best impression. And who doesn’t love picking out clothes? Covers have static elements, and we’ve tinkered a bit, making our logo smaller and sliding it up into the left-hand corner of the page, for example. The change is not merely aesthetic. We’re freeing up real estate for the most important cover element: our message.

While people were common cover art in 1999 and 2001, we’ve never had a hard rule on what covers should look like. Rather, the results of whatever investigation we’ve undertaken that month drive our cover design choices. “What are we trying to say?” is how nearly every cover design meeting begins. Once the message is chosen, there are no restraints on the ways to represent it. We’ve done plain text. We’ve staged photos, such as when we put a colleague in a gas mask for our August 2002 cover story on environmental damage. We’ve used illustrations. We’ve used stellar work from our talented in-house photographers. We’ve even left the cover blank in a poorly organized and executed effort to encourage readers to draw their own covers. If you’re a fan of our past work, be reassured there’s plenty more to come on the design front.

Re-design is part of Executive’s visual evolution. This isn’t the first and won’t be the last. Our mission, however, remains the same.

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