Building On Shared Values
13th July 2019 Sumeet Valrani, Al Shirawi Group, United Arab Emirates
Sumeet Valrani believes businesses often underestimate the value of cooperation, particularly among the people within a company.
Sumeet Valrani believes businesses often underestimate the value of cooperation, particularly among the people within a company. That is hardly surprising, because the two businesses of which Valrani is Chief Executive are part of the Oasis Investment Company and represent a model for how two families can come together and build a successful company.
Dubai-based Oasis Investment Company, holding company of Al Shirawi Group (where Valrani is also a board member) are rare in the world of family businesses in that they are run by two families from two different countries and cultures who have come together to form a company and have managed a successful transition to the second generation of both families.
“We are a business between an Emirati family and an Indian family in partnership,” says Valrani. “We have common values and operate within this model extremely successfully. I believe the underlying dynamic of the business is built on our two-family dynamic.”
The Al Shirawi Group was founded in 1971 by Abdullah Al Shirawi and Mohan Valrani, Sumeet’s father, as a trading business and has since become one of the biggest conglomerates in the United Arab Emirates. It operates in multiple sectors, including oil and gas, manufacturing, logistics, publishing and education. The group employs more than 10,000 people across the Middle East.
Valrani believes the two-family ownership structure has been beneficial in reaching important decisions. “The fact that we are two families means we each behave with more decorum and with more unity,” he says. “Each family keeps each family united. Whenever there is any decision, one family member of each family must be part of that decision. We’re their regulators, and they are ours.”
He adds: “If I were to speak from my heart, the most important part of the business is that we are two families. It is our greatest value as a business – this cooperation between the families.”
Perhaps the best example of the benefits of the two-family dynamic happened when the business went through tough times in the 1980s. In 1986, the price of oil collapsed, and the group faced an existential threat. A massive restructuring was started.
But everyone stuck together, went through the painful process of cutting the business back to a much smaller operation and started recovery efforts – and eventual renewal. “That process would have severely tested any relation between business owners, but, if anything, the bond between Uncle Abdullah and my father strengthened,” explains Valrani.
The crisis also led to the decision by the founding fathers that has become a guiding principle for the Al Shirawi Group: it won’t open any offices abroad unless a family member is committed to going there to sort out any problems. “Unless we are prepared to roll up our sleeves to fix the problems, then we don’t open an office there,” says Valrani. “That is a big part of our philosophy as a business today.”
The second generation of both families, whose senior members are represented by Valrani; his brother Navin; Mohammed Abdulla Al Shirawi; and Hisham Al Shirawi came together in the early 2000s to formalise a family governance structure. Two members from the second generation of each family met to talk about how they should proceed. The final version of the plan was presented to all members of the second generation.
Those efforts led to the group’s so-called ‘protocol’, the first formal structure addressing how the two families interact with the business. “The protocol remains in place today pretty much exactly how it was formulated,” says Valrani. “Through the protocol, everyone knows where they stand. So far, it has stood the test of time, and that’s a testament to the strength of the relationship between the two families.”
The two founders did not participate in the formation of the protocol, instead choosing to stand back and allow the second generation a free hand to draw it up. Valrani reckons this is another reason why the two families work so well together: the ability to cooperate at all levels and to let go. “The legacy of the first generation is the ability to give up control in their lifetime,” he says. The ‘letting go’ by the founder-entrepreneur is often one of the most challenging family governance issues faced by a business transitioning to the second generation.
There are seven members of the second generation working in the business now. According to the protocol, each member is allowed to bring one child into the company. Both families believe this rule will help maintain unity as the business eventually transitions to the third generation. Any member of the third generation who isn’t entering the business will be fully supported, including with the provision of capital, to assist their entrepreneurial ambitions.
Another significant value for the Al Shirawi Group is the separation of the company’s wealth and the family’s wealth. “The business is focused on profitability within the rules and regulations of the countries we operate in,” says Valrani. “With this being the case, we separate company wealth and family wealth very, very clearly.”
He adds: “The minute we start bringing in the question of a non-measurable, non-commercial purpose, we are very scared that we get into subjective decision making, and that could undermine the business.”
“The two families respect each other’s families values and cultures,” says Valrani. “And for this to work well, philanthropic efforts are always a personal decision and a private one."
About the Article - This article was first published by PwC as part of their Global Family Business Survey and has been republished here with their permission. Find out more here