Innovation and Islam

I spoke recently about innovation at a conference (organised by Continuum) of family businesses from the Middle East.

Many issues were raised by the delegates, but there was one that seemed to hang in the air unspoken. And it was this: does Islam itself have a dampening effect on innovation?

I have thought about this a good deal in the intervening days – and my tentative answer is that any dampening effect springs not so much from Islam, but rather from the very hierarchical nature of Middle Eastern society. And, of course, this is so often strongly present in family businesses.

After all, Islam is alone among the major religions of the world in having been founded by a trader. And the Koran is supportive of success in business – quite unlike the New Testament, which has practically nothing positive to say about the creation of wealth.

The powerful presence of respect for elders, within a command and control culture, always has a negative impact on the expression of new thinking and new ideas. This is true in all societies where hierarchy is a primary force – in Russia, China, India, the Middle East and elsewhere.

If these countries wish to grow dramatically in their capacity to innovate – which they all do – the question in my mind is not so much how to reduce hierarchy in general, but how to create situations where it is temporarily removed, so that people can express new ideas without fear of reprisal.

M&A – respect and contempt

Why are some mergers and acquisitions brilliantly successful, while most under-perform miserably?

In my experience, it has nothing to do with the numbers – critical mass, cost-savings etc.

It’s something to do with mutual fit. But it’s much more to do with mutual respect.

When Saatchi & Saatchi merged with Garland-Compton - the hottest creative ad agency in the world (but with a somewhat iffy reputation for strategic thinking) went to bed with an excellent strategic agency, who served Procter & Gamble and Rowntree, two of the most demanding and professional clients. So certainly there was a good fit, but, more than that, the people inside the merged business respected and valued each other for their complementary skills and talents from day one.

The result was an inexorable rise to number one, first in the UK, then worldwide.

More recently, when the Interpublic holding company merged two of its global networks, Lowe and Lintas, there were apparently the same ingredients. A leading creative agency with a strong strategic one. But there the comparison ends. Contempt, “sharper than a serpent’s tooth” (as King Lear puts it), was the order of the day. Particularly on the side of the dominant partner, Lowe.

The result? Two plus two equals one. Mass exodus of clients and staff, and a slump in all key markets around the world. (The agency I had chaired in Sydney went from Top 5 to bottom of the Top 50 inside two years.)

It’s never struck me that M&A marriage brokers know this, focused as they are on the numbers (and in particular their own bonuses).