Address by Prince Amyn Aga Khan

Address by Prince Amyn Aga Khan
First Meeting of the Ismaili Economic Forum
The Ismaili Centre Dubai
Saturday, 26 April 2008

Leaders of our institutions
Distinguished guests
Ladies and Gentlemen

Prince Amyn addresses the Ismaili Economic Forum at the Ismaili Centre Dubai. Photo: Courtesy Ismaili Council for the UAE Prince Amyn addresses the Ismaili Economic Forum at the Ismaili Centre Dubai. Photo: Courtesy Ismaili Council for the UAE

It gives me the greatest pleasure to be able to attend, and indeed open, this first Ismaili Economic Forum in Dubai in this magnificent new building. The Ismaili Centre which unites in its construction and décor the experiences and aesthetics of the past with the materials of the present in order to meet the needs and objectives of the future, would seem an ideal venue for this conference, and that, all the more so, as in this Centre, we will aim to promote exchanges of knowledge, of creativity and of experience in the pursuit of excellence and of wisdom.

I have been asked to speak to you about partnerships in this world of ever increasing globalisation, where the number and types of alliances or partnerships are constantly expanding. Globalisation is here to stay; it is inevitable as are unions and groupings of different types between different countries and even between regions.

In AKDN, we have long-standing experience in such partnerships: between companies, between institutions, with different international financial institutions and the World Bank Group. We have also entered into partnerships with local and central government, in ventures in the social sector and in infrastructure, in what we call public-private partnerships. Such public-private partnerships are, in my view, likely to increase in the years ahead as they allow the managerial abilities of the private sector to be applied to publicly-owned facilities and institutions.

In AKDN, we even have experience in partnerships at what I would call the “grassroots level” – for instance, in places such as the Northern Areas of Pakistan where our village organisations could, I think, be said to represent a variation on a theme of partnerships.

Within the Jamat, I am told that a year ago the Economic Planning Boards had identified thirteen existing alliances, amongst which some had known success that was described as “spectacular.”

I believe that partnerships and alliances can take place at all levels: between professionals engaged in similar or complementary areas of work, or between businesses or even between institutions. They can operate exclusively within the developed world, or spanning the developed and the developing worlds.

Their aims, broadly speaking, would seem to me to be to leverage opportunities globally, to create strategic business alliances, to open access to new or broader markets, to increase market share, to assist in the redeployment of resources from the developed world in the developing world, to assist individual enterprises to ascend the value chain, to promote the sharing and the understanding of what constitutes “best practice,” to increase efficiencies and diminish costs, and also to assist young entrepreneurs to mature and expand.

And there are other benefits for such partnerships and alliances. As the Enron scandal implied some time ago and indeed as the current sub-prime chaos indicates as it unfolds, it is nowadays essential for all companies, be they private or public, not only to define what is “good governance” but to ensure that good governance is systematically practiced. Partnerships and associations, through the individual experiences they bring together, have an improved ability to define good governance and to decide how best to instil it within their operations.

Partnerships and alliances can also bring financial stability and lead to a more solid and stable financial base which can stand the partners and their venture in good stead in times of political, financial or economic instability. A recent example that comes to mind concerns the tourism sector in East Africa, where the enormous damage caused to our Kenyan tourism company in the aftermath of the contested Kenyan elections, was, in an appreciable measure, counterbalanced for us by the less-affected results of our Tanzanian, Zanzibari and Ugandan tourism activities, which we had joined together with the Kenyan operation to form a regional tourism venture.

I referred earlier to the assistance that could be given to young entrepreneurs in partnerships, but perhaps more importantly, and certainly more generally, partnerships and alliances must aim at improving and rendering more professional management. The pooling of knowledge, experience and expertise, should assist partnerships to determine how better to control quality, how best to provide whatever technical support or input may be necessary, how most effectively to mobilise resources. It goes without saying that these partnerships and alliances should also seek to leverage technology and IT platforms, to take the greatest advantage of what is coming to be known as the Knowledge Society. Finally, the pooling of knowledge and experience, combined with the broader industrial or commercial base that results from partnerships, should facilitate and improve the management of human resources, to ensure that the best and most appropriate professional development is given to the human resources involved.

An element that I have not mentioned, which I think should also be kept in mind, revolves around the increased influence, the “clout” of partnerships and alliances. History shows many examples of how a community, working together, its members backing each other up and operating as a community, can develop an influence in excess of what would normally or otherwise have been possible. Negotiating with government departments, whether it be for business incentives or to obtain favourable economic legislation, is in all probability easier when an alliance of individuals or companies, presenting a united front, is concerned. In AKFED, we have worked as you know with international financial institutions, ranging from IFC and the World Bank Group to the Dutch, the Norwegians, the French, etcetera, and those partnerships have certainly gone a long way to explain the favourable reception that we have almost always received from the governments of the countries where we operate.

Looking at the subject from another angle, I should mention some of the risks inherent in other scenarios, where businesses have not joined into any type of partnership or association. For instance, small businesses, particularly in times of economic slowdown (and the global effects of the US slowdown may well prove to be a case in point) – small stand-alone businesses are particularly vulnerable in such times to problems of shortage of credit, to any fall-off in consumer spending, to an erosion of public confidence, to competition from big businesses that are less effected by temporary turbulences or that operate in countries where production is cheaper for one reason or another. On the other hand, in a growing, expanding economy, if, for example, a bank may need to increase its number of branches to cover the market and consolidate its position, so too, even the most successful supermarket may also find that it too needs to expand the number of outlets, if it is not to lose its market position to a competitor that builds-up a national or regional chain of supermarkets.

A related question, which in my mind favours partnerships and alliances, concerns the social outreach of businesses in our modern world. It is clear that economic progress and social development are intimately linked and that one cannot go without the other. This is largely true in the developed world and I think entirely true in the developing world. Businesses nowadays have to be concerned not only with questions of good governance but with questions of social impact, of social outreach. As you know, in many AKFED companies, we have specific programmes aimed at environmental action or at the health and education of the societies in which we work and particularly those from which our employees come. Here in my view, partnerships within the Jamat would be particularly well-placed to engage in such a social outreach, as we have available both knowledge and activities in the spheres of health, education and even in planning and building.

All this said, I would like to emphasise how essential it is that sufficient, careful and dispassionate thought be given before partnerships and alliances are formed. I think it is fundamental that the parties ensure that they have common goals. I think it is equally fundamental that the parties quantify – each of them – their individual expectations. A clear framework must exist with clear goals shared by both or all partners, and quantified expectations must be agreed for each of those partners. The partners must agree, as early as possible, what are their criteria for success, how they will assess and evaluate their business, and how they will agree on and take any corrective actions that may be necessary.

We must avoid absolutely situations where one or another of the partners might feel that a promise has been made to him that has not been fulfilled, that his partner has benefited more from the alliance than he has, etcetera. This occurs too frequently and is something that must be avoided.

The Jamat has traditionally been intelligent and well-educated. Equally, members of the Jamat have traditionally valued their independence and been reticent indeed about giving up their freedom. A partnership or an alliance, however, can only really be successful if it is characterised by good faith among all parties and by a consistent transparency from the creation of the alliance through the everyday operations of the business. And, partners should not be afraid of putting in writing these basic, underlying foundations of their partnership so that, from the very beginning, everything is absolutely clear.

Partnerships and alliances can be approached, if you so wish, in a cautious or progressive fashion, where the partners concentrate on a short-term goal to begin with, and only thereafter move towards a longer-term commitment once they are happy with their initial experience. For instance, one can imagine a partnership that would start by seeking to achieve savings through joint purchases, and then after time might decide to undertake joint marketing and sales, or install a single audit function, or initiate joint recruitment and training, and which, only after time, would ultimately enter into a total partnership or even a merger. Parties debating the formation of an alliance should ensure that they have managed, or are managing, whatever they can perceive as a risk in or to their alliance. One should avoid that one of the parties find himself locked unwillingly or unhappily into the partnership or that his exit from that partnership should be undignified and painful. Exit strategies should be discussed and considered from the outset, and should be treated with the same transparency as other matters. Here again, the goals and objectives, constraints and challenges, of all parties must be put on the table and discussed “upfront”, from the outset, wherever and in the greatest measure possible. Potential modifications in the individual situation of one of the partners should not have an unduly damaging effect either on the other partner or, hopefully, on the business. All these variables, all these “sensitivities” should be thought through early on, just as the partners should agree from the outset how they will approach planning and agree on strategies.

Ultimately, any partnership must seek to ensure as a prime target or objective the most effective management, answerability and best practice. Appropriate, competent management must be in place from the outset when partnerships launch their ventures, and partnerships should ideally be run by the most competent. Full advantage must be taken of individual expertises and experiences within a clear and agreed structure for decision-making and leadership. Questions of meritocracy should predominate and be agreed, and they should apply in day-to-day operations as also in the selection and attribution of responsibilities. After all, if a certain qualification or expertise cannot be found at the best level in-house, within the partnership itself, the partners will go outside to recruit it. Experience of the right sort and of the right quality, proven talent or ability, must be given the lead. And this policy of striving for the best, the most efficient and the most effective management should remain the primary focus and should be applied too, where questions of succession arise. It should remain the basic objective and be upheld and observed by the partners across the generations, as and when a new generation enters the venture, if the business is not to disintegrate over time.

With any expansion of a business activity, it is necessary to professionalise management. If day-to-day personal involvement may often be beneficial in small or medium-sized private or cash businesses, it becomes more problematic in larger ventures. Partnerships and alliances should agree on forming professional Boards of Directors, on putting in place the structures of good governance, and on appropriate reporting procedures so as to allow them to maintain proper control.

In my view, Human Resource Management is a key area of all business ventures, not only in the service industries. The larger the venture, the more important it is to have a consistent philosophy in Human Resource Management and a consistent corporate philosophy and culture. One of the difficulties of managing conglomerates successfully is that the more the entrepreneur moves away from his core business, the harder it is to maintain a corporate culture.

I hope that this Economic Forum, in this special Jubilee year, will reach new levels of success in identifying opportunities, in analysing and meeting the challenges that lie ahead. In our world, where both the workings and effects of globalisation are evolving and are as yet neither fully evident nor fully understood, it is important, I believe, that Ismaili professionals and businesses around the world review how best they can work together, how our traditions of collaboration can be given new life and new, original, productive forms of expression.