News

March 31, 2009

Challenging the Business Culture in Cairo

Charley Rose ’58 leads reversal of fortunes for Egyptian companies

Working in a different country and business culture can be challenging and frustrating, but for me, it has been a very rewarding experience. My work in Cairo, Egypt began in 1993 and in December 2008, I returned from my 24th visit working as a business/management consultant.

I have spent a total of about three-and-a-half years in country and over the years I’ve worked for six different companies representing the paper, appliance, textile manufacturing, store fixture, and fast food industries. The paper company was Jordanian owned while the others were all Egyptian owned. All had Egyptian workers and managers, and a common theme among all the companies was the inappropriate Egyptian business culture, which will be discussed later.

I’m in my twelfth year with a textile manufacturer, Hesni Dyers and Finishers, and my third with a fast food chain, Smiley’s Grill. I work with these clients twice per year for five to seven weeks each visit.

Some time ago a friend asked me, “Why do you work in Cairo?” It required a lot of reflection, but I was able to understand and explain the rationale for my ongoing return in order to help business owners and other organization members improve their business and personal lives. The following will provide a sense of what it is like to work in this different culture, the challenges, some beliefs and principles, and some of the rewards.

I’ll begin with some background or truisms describing what someone like I, in a consulting role, have to deal with in order to be an effective resource to companies (not in any order of priority):

  1. Egyptian universities teach by rote. The result of this is very little thinking “inside the box” and for sure little thinking outside the box.
  2. In the 1960s, Egyptian President Gamal Abdel Nasser nationalized private businesses, which eliminated many competent, creative, and forward-thinking managers/owners. The businesses ended up being led/managed by government or retired military persons who lacked the needed business skills. This has changed over the years, but there is still too high a preponderance of poor management behaviors and methods.
  3. Egyptian business owners all too often do not value, trust or respect their workers. They believe the workers are incapable of learning and being responsible. This results in the owner or senior managers making most all the decisions, large and small – not the best allocation of their time. Plus there is little growth of any skill or capability throughout the organization.
  4. Many business owners and senior managers “don’t know what they don’t know.” A very dangerous place to be, making it difficult to know and understand where to begin any improvement process.
  5. There are business owners who readily admit “I don’t know how to manage.” These are entrepreneurs whose businesses have grown beyond their ability to manage, control, and improve. This admittance does represent a good start, however.
  6. Too many Egyptian managers and even young college graduates still believe you can’t change the Egyptian worker. They believe them to be incapable of learning, changing behavior, understanding values, being trusted, taking responsibility, and wanting to make a contribution to help improve the business.
  7. Egyptian culture is one where the individual seeks personal recognition and is reluctant to share any information or ideas unless they will receive the credit. The result of this is very little information sharing among managers and workers as they attempt to problem solve and improve operations and the business.
  8. It is a very common practice for managers to speak in half truths, making it difficult to get the facts or the full story. Data is not used to support suppositions.
  9. Business owners are all too often very reluctant to eliminate poorly performing managers.

The importance of describing these behaviors is to show that with forward-thinking leadership and a belief in the goodness of people, they all can be overcome. My work in Cairo has taught me that people/workers are the same all over the world. This has highlighted the following beliefs that drive the change and improvement work:

  • Workers can and want to make significant contributions to the business.
  • Investing to develop skills and capability will increase worker performance, morale, and loyalty.

I have integrated these beliefs into the fundamental responsibilities of business owners and senior managers, and they are:

  • Provide direction for the enterprise/business.
  • Build capability for both workers and systems.
  • Reduce variation in all processes and systems.

At Hesni I work for a brother and sister who run the business founded and built by their father in the early 1980s. The business employs about 1,200 employees working primarily as dyers and finishers of cloth products, with a key customer base in Egypt, the Middle East, the EU, and the U.S. In 1998-2000 the business suffered from low productivity, fair quality, poor delivery times, high costs, and under-optimized sales. On top of this poor business performance were poor management talent, skills, and capability. The company had too many managers who were incompetent and unwilling to open their minds to new learning and methods, representing a huge barrier to significant progress.

I began a change process in early 2000 by introducing basic problem-solving methods and the use of data to better understand processes and make decisions. A few managers subscribed to this new learning and began applying it, but were constantly frustrated because senior management continued to be a barrier to progress. Then two significant events occurred in late 2003 and first quarter 2004:

  • Owners eliminated eight senior managers.
  • The concept of values along with confronting inappropriate work behaviors were introduced and discussed with about 40 managers.

These changes allowed for some very competent managers to emerge and take on more responsibilities. As importantly, there began a shift in how managers worked together and valued each other and the workers – the beginnings of some excellent teamwork, team problem solving, and information sharing.

In just two years from these early 2004 events, Hesni became recognized in the industry and in the greater Cairo manufacturing community as having the best quality, cost structure, delivery times, and management team! Today there are about 40-50 managers capable of leading/facilitating problem solving directed at reducing variation in processes, resulting in improved quality, fewer rejects (less waste), and a much improved cost structure. In December 2006, two Hesni managers presented their learning and skills about the problem-solving/improvement process to managers from Smiley’s Grill, my other client. They are now teachers! How great is that!

Of equal importance is the sharing of leadership and decision making by the owners. Back in 2004, a leadership team formed from the functional heads of the business and more recently it was expanded to include a financial-accounting resource in order to bring new knowledge and skills into the team. The net result of all these changes and improvements include:

  1. Huge increase in business profits.
  2. In 2005 and 2006, a payout of two bonuses per year for every employee, with minimum payout equaling one month’s pay.
  3. Growth and expansion.
  4. Owners now have options, business and personal, not available just four to five years ago.

The owners have provided excellent leadership with a focus on finding ways to build capability in order to help lead the business to higher levels of performance. And through this improvement process – their “journey” – they have been able to overcome the “Egyptian truisms” presented earlier. Their business and personal lives have changed significantly as a result of having competent managers throughout the organization. They now have the latitude to pursue other business and personal interests, knowing the Hesni business is in the hands of competent leadership. It is a real success story and one I’m proud to be part of.

There also has been excellent progress in my work with the owner of Smiley’s Grill. In March 2006 my work was mostly with the owner, who early on told me, “I don’t know how to manage.” He knew what he didn’t know! At that time we introduced to his senior managers a logical thinking process to use for problem solving along with some basic beliefs about people. At the time Smiley’s was suffering from:

  1. Sales much lower than the previous year (2005 vs. 2004, and 2006 starting poorly).
  2. Quality of food too variable (according to customer feedback).
  3. Delivery times poor and not at competitive levels (in Egypt 65-75% of fast food business is home delivery).
  4. Management skills lacking.
  5. A serious misfit and less than honest behavior by his newly hired operations manager
  6. Appropriate store operating procedures not in place, resulting in some very low efficiencies, waste, and lost sales.
  7. Owner spending far too much time working and personally doing a lot of the follow up work that should have been done by other managers. Poor quality of life!

Using the principles mentioned earlier, the work plan we developed in 2006 and now continuing in 2009 has resulted in the following positive shifts:

  1. Noticeable improvement in food quality (according to customer feedback).
  2. Company has regained sales and now is exceeding 2004 levels.
  3. Elimination of operations manager.
  4. Management uses a logical thinking process to do problem solving. It is transferring this knowledge and building the capability within each store.
  5. Introduction to concept and importance of beliefs and values. Owner and his management team have developed values for Smiley’s Grill to live by.
  6. Development of a Smiley’s Grill business strategy that is driving the work of the organization.
  7. Opening of two more stores along with factory expansions.
  8. Owner has a whole new level of “confidence, competence, and comfort,” which has made him a much more effective leader and colleague to his management team and the organization as a whole.

The capability of the management team will continue to improve as members use and apply the appropriate management behaviors and continue to incorporate their values throughout the Smiley’s organization. This year will see continued growth in business performance as measured by sales, quality, and delivery-customer satisfaction–and higher profits!

With both these companies, business performance, as measured by their key metrics, has dramatically improved. Through ongoing feedback from managers of both companies, I know my work and energies have positively changed lives, both from a business perspective and a personal one. Knowing that I have been able to impact others’ lives is the true reward for my continuing work in Cairo. I’m doing worthwhile things with some wonderful people and enjoying the journey!

posted in Alumni, Alumni Success Stories

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