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Horizons: Family Office & Investor Magazine

Private Time with Mishal Kanoo

Saturday, March 10, 2018

Mishal Hamed Kanoo is a UAE business magnate and currently serves as the Chairman of The Kanoo Group based in UAE and Oman. Kanoo was listed as one of the Top 100 Powerful Arabs 2017, Power 100, Rich List 2009, and The World's Richest Arabs.

Mishal Kanoo is the 4th generation to run the Kanoo family business. Established in Bahrain in 1890, The Kanoo Group's parent company grew from its early trading and shipping enterprise into a diversified conglomerate across the Middle East. From Bahrain, the business spread to Saudi Arabia in the 1930s. In 1967, Kanoo's father came to the UAE to expand the family business. In 2015, Kanoo took over his role as the Chairman of The Kanoo Group.

As visiting lecturer at the American University of Sharjah School of Business Administration, he is an advocate of education and has been integrating corporate philanthropy in one of his missions to foster community-based sustainable developments. He is also an influential figure in the progress of Dubai's art scene and a great lover of books, especially about arts, literature and philosophy genres.

Matthias Knab: Mr. Kanoo, what were some of the books you recently read that left a lasting impression?

Mishal Kanoo: Two books come to my mind, the first one "Lords of Finance: The Bankers Who Broke the World" by Liaquat Ahamed.

While somehow The Great Depression is in a way part of the collective memory of humanity, when reading this book I found that we still know way too little about this period that brought so much misery to so many people. Lasting for about ten years - 1929 until 1939 - The Great Depression was the worst economic downturn in the history of the industrialized world. By 1933, when the Great Depression reached its lowest point, the unemployment rate reached 25 percent with some 15 million Americans unemployed and nearly half the country's banks failed. While it started in the US, depression-era hardships quickly spilled over to other economies.

Lords of Finance recalls the events leading up to and culminating in the Great Depression as told through the personal histories of the heads of the Central Banks of the world's four major economies at the time: Benjamin Strong Jr. of the New York Federal Reserve, Montagu Norman of the Bank of England, Émile Moreau of the Banque de France, and Hjalmar Schacht of the Reichsbank.

We can see that despite of their best intentions, the central bankers' actions which of course were based on the economic orthodoxy of their time were exacerbating and prolonging the catastrophe that in the end would even lead to World War II

The second book that I read with great joy was The Lost City of the Monkey God by Douglas Preston.

What is interesting about this book is that at this point in time and age, we've reached to a point where we really think we know everything. But then something happens and comes up which can totally change the lay of the land.

So here, in 2012, the author Douglas Preston joined a team of explorers searching for Ciudad Blanca (The White City), a legendary ruin hidden in the jungle of Honduras also known as "the Lost City of the Monkey God". This team had an advantage that previous searchers had lacked: LIDAR, the advanced laser-imaging technology able to penetrate the dense jungle and eventually leading to the discover of major sites whose scale and architecture indicated a civilization to rival the more famous Maya.

But apart from technology, I would say the even more fascinating dimension of this book deals with the changes that happen in the mindset of humanity where you also realize how greedy people can get.

There were several things about the book that had nothing to do with business but they are all business-related in some way

For example, we come across the issue of the theft of artifacts. That's a huge global business that is also happening right here in the Middle East in Syria or Iraq. Now, some people may think artifacts are just pieces of some old pottery, but we should all acknowledge and be aware that there is a strong relationship between these artifacts and the people and that they can form part of their cultural identity. But then you always have those people who don't care about anything, they just see the a financial aspect or personal benefit, and so it's just business for them they don't care about a whole nation getting robbed.

And then in the book you see how at some point even politics comes into play where there is a rift between the current president and the new president. None of them had to do with the discovery itself, but you could see how they were tearing each other down because one guy doesn't want the other take the credit. Well, let's think for a moment how many times have you had this in business where someone may want to move on with a great idea and just because it happens in the wrong division with bosses of one divisions fighting with the head of another one, so that great idea is killed. We really all have to be aware not to fall prey to those things.

And then another thing that happened is that the author and others in the scientific group contacted the horrifying disease leishmanias (leish) through sand flies in the forest. This is "neglected tropical disease" that kills 50,000 people a year but it is not really talked about because it's a disease of the poor rather than disease of the rich. Excuse me for saying this, but things like not being able to have sex because you can't have an erection gets so much funding because there's a huge captive audience willing and able to pay for it, but here we deal with something that is affecting people lives and a disease that can literally eat people's face, but this disease doesn't get any attention because it affects the poor and they may not be able to afford the treatment.

Apparently 4 to 12 million people are currently infected in some 98 countries. Risk factors include poverty, malnutrition, deforestation, and urbanization, and about 2 million new cases and between 20 and 50 thousand deaths occur each year. About 200 million people in Asia, Africa, South and Central America, and southern Europe live in areas where the disease is common, so I credit this book for raising awarenes about this neglected and terrible disease.

Matthias Knab: Before we finish, allow me to ask you another personal question

One thing that struck me was reading a study from 2015 that said more than half of GCC's family businesses are in the midst of the transition from the second to third generation (between 1.2 trillion and 1.3 trillion without considering offshore assets are set to pass from parents to their millennial heir within the next decade), and that just around 15% of those businesses are likely to succeed.

15% success rate is obviously very low. You are now the 4th generation running the Kanoo family business, and your firm has thus already gone already through a number of these generational changes.

What would be your recommendation to increase the odds and have a better chance to secure the longevity and sustainability of a family business?

Mishal Kanoo: Well, I understand that people always want to have a panacea that solves everything, but the reality is of course that every family is different and so you really need to have a focused, custom-made approach. It depends on the type of family, the types of mentality within the family, the type of interaction with the members of the family, all these things have an effect in terms of how a com pany will succeed or not succeed.

So there is no one single way of resolving everything, there simply isn't. But surely a lot if not everything will depend on the people. Now, actually the more educated - and I don't mean a formal education in terms of having a degree or not - person who is managing the business or heading the family, the more enlightened the person is in terms of really being open to ideas or suggestions and willing to bring in others to be part and parcel of the decision-making process, then there is a better chance of it succeeding for one generation to next.

Matthias Knab: This is very interesting. I know that you worked as an auditor for Arthur Andersen in Dubai before returning to The Kanoo Group as the Deputy Chairman in 1997. I would have thought that this formal training as an auditor would have built you in having a strong foundation and skill set to successfully lead your firm?

Mishal Kanoo: I don't think any business degree plays that role.

I rather think that communication is the real issue. If you look around, how many people and organizations have issues or challenges around that issue of communication. If I am willing to communicate, if I am willing to listen to the other party - and I say listen, not not just hearing them, so meaning to actively listening and understanding what the other person is saying - if I am willing to do all of these things and potentially also willing to give up some of my preconceived notions and thoughts, then again there is a good chance that there will be a success in terms of a successful transition

If on the other hand it's a very rigid, hierarchical structure, the chances of a successful transition and long term success is really much smaller. Now, the worst ones or the most challenged are those who think that they are benevolent, but they are really draconian, but nobody is willing to tell them that they are draconian or a tyrant. If you scare people, who is willing to come and tell you what you are thinking or doing may be wrong?

If you don't have that open communication where you are willing to accept what other people are saying to you - and again, this is why communication and certain basic skills are so important: ,No one actually likes to be told you are wrong, but you could say things like "Have you considered this? Here is something we found that we like.... This is another way of looking at it..."

Matthias Knab: This is extremely interesting because what I think you are saying is that soft skills trump those formal degrees and formal education in the end.

Mishal Kanoo: How many people have you seen with a degree when they come to work? And then, everything they have learnt goes out the window, because they think theirs is the only way?

Such an attitude can be very detrimental, no matter at which level you work, but of course the consequences can be much harsher the higher you are in an organization.

So again, each family and every business will be different, but I would say all will benefit by focusing on this skill or culture of having an active, open and engaged communication.

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