Interview: Ashraf Abu Issa, CEO Abu Issa Holding

Ashraf Abu Issa was thrust to the helm of Abu Issa Holding in his late teens, and in the 25 years since, the company’s chairman and chief executive officer has steered the firm to much success, this being in turn recognised by his peers when Abu Issa was chosen for the Ernst & Young Qatar Entrepreneur of the Year Award 2011 recently in Doha. In an exclusive interview with TheEDGE, Abu Issa discusses the challenges and nuances of running such a diverse business concern in Qatar.

Ashraf Abu Issa is noticeably happy to be representing Qatar at the global E&Y Entrepreneur of the Year 2011 Awards in Monte Carlo this month (June 2012). A tall, well built man with a strong handshake, easy going manner and soft-spoken voice, TheEDGE meets Abu Issa in his plush Doha headquarters above the Blue Salon luxury department store in Al Sadd, his office reflecting his passion for valuable sculptures, paintings and other artworks and antiques.

Being recognised by my peers and representing Qataris is an achievement for me as only four countries from the Middle East are participating,” Abu Issa tells TheEDGE with an easy smile. “It is an honour for me too, and it means a big responsibility towards my colleagues, my community and above all my country. I hope this award will inspire and encourage young entrepreneurs in Qatar to achieve their dreams and more.”

SINK OR SWIM

“Being a young business owner in Qatar is something that Abu Issa can relate to. In 1987 his father Abdul Raheem Abu Issa passed away suddenly and left the 19-year-old Ashraf to run the company along with his younger brother Nabil, who is vice chairman. The teenagers were not totally unprepared however, as he and Nabil had spent much time in the summer working at the family business Blue Salon, which then employed 36 people and was focused on distributing products such as Samsonite, Fuji and luxury perfume brands in Qatar. When their father would depart on business trips, the Abu Issa brothers would take over from him. “We were there in more of a watchman position rather than administration,” explains the Abu Issa Holding chairman and chief executive officer (CEO). “But of course after he passed away the feeling of responsibility was the main thing.”

This feeling of being beholden to his staff, adds Abu Issa, is what drove him to continue the legacy of his father was because the livelihoods of his employees and families depended on it. “Feeling responsible is really the key,” he furthers. “You are responsible for the people that work for you; you are responsible for your family, for your customers. These are the things that kept me going and made me work really hard, I didn’t want to let anybody down.”

One of the main initial challenges, recalls Abu Issa, was to prove to his staff, many of them much older and more experienced, that he had the mettle to lead company. Abu Issa says that no matter how intimidating this might have seemed at first, he had no choice but to forge ahead. Often, he adds, establishing their trust and support came from trying situations. “Circumstances happen where you get a chance to demonstrate leadership,” explains Abu Issa. “Sometimes it happens unintentionally and the guys around you are like, ‘okay, he can handle himself’.

“It didn’t stop myself from laying the foundation for a relationship with my employees based on mutual trust and respect, characteristics that are still strong in the company culture today,” he says of his youth and inexperience at the time. “Meanwhile I had to build stronger relationship with the suppliers at that time and prove to them my business capability and professionalism. Step by step I gained the trust of new brands, making the company portfolio grow, counting today more than 30 companies and 2000 employees.”

QUALITY OVER QUANTITY

Almost immediately Ashraf Abu Issa began to assert his vision for the growth of the Abu Issa Holding. However, first he and his brother had to alternate running the company while they finished their studies. A proponent of constantly improving oneself, Abu Issa also recent completed a business course at Harvard. “It is not a masters degree, but it is very close,” he says. “It is one of the only executive programs where they consider you as a Harvard Alumni.”

From this, Abu Issa says he has learned that instead of working IN a business, leaders should work ON it. “That is the difference,” he says. “In the business you are more involved in the day-to-day operations and you are looking at the details that, normally, you should have somebody else who is delegated to do. Working on the business, looking at the big picture and seeing where you could be making money somewhere, you are not adding value. This is where you want to be careful, making money is good in the short term, but you have to make sure that the business is also adding value. You have to always create a niche for yourself. Somewhere other competitors or newcomers cannot come into your zone of comfort. So I started to look into that and develop a know-how or a niche that cannot be easily copied by others in the future.”

Elaborating on the concept of “adding value” at least in a human resources (HR) sense, Abu Issa explains that this is done by creating a culture of knowledge in a company, whereby everything that is learned by all the employees is shared and stored for future reference. “It should be in the DNA of the company,” says Abu Issa. “If every new person comes to the business and has to learn from scratch that means you are throwing away 30 years of experience.”

But it is the genesis of Abu Issa Holding, in the form of Blue Salon, that for Ashraf Abu Issa is where the concept of “adding value” that forms the core of his company’s business values began.

“When we started in 1981 we introduced many new products, brands and categories to the market that didn’t exist,” he recounts, adding that the biggest challenge during that relatively unsophisticated consumer period was educating their Qatari customers about the concept of quality and paying more for something that might be more expensive, but is infinitely better and/or may last a lifetime. Increasing sophistication and adding value to their lives, in other words.

“For example,” Abu Issa continues animatedly, “we had the aim to introduce high end cosmetics for skin care [to Qatar], it was not easy to convince a woman to spend five or six hundred riyal on a bottle of creams, a small tube, just for her eyes. The thing is if you bring the right experts and the right advisors to explain all of these products than yes, you will succeed.”

Abu Issa cites another example of adding value through quality versus quantity, in the form of one of his company’s mainstay products. “Why would someone buy Samsonite when we launched it?” he asks rhetorically. “To pay six hundred riyals when they can find a similar piece in the market for two hundred? The warranty, the safety, and the wheels… everything that is involved with that, this is what we have to explain to people.”

MANAGING DIVERSIFICATION

Since the company’s inception through Blue Salon as its flagship enterprise (which soon evolved from distribution to retail), in the last 31 years Abu Issa Holding has diversified into many different sectors of Qatar business, including telecommunications and information technology (IT), energy and engineering, investments, joint ventures and consultancy and training.

Though we soon discuss the challenges and solutions to operating a such a wide range of concerns in the modern era, Abu Issa harkens back even to the challenges the company faced in the 1980s. He explains how they had to set up their own marketing and creative advertising division to achieve their aims to communicate their message of added value and quality. There were none in Qatar at the time they felt could do the job, and much of this work was outsourced to Dubai. But knowing their own products and being based in the country, Abu Issa adds, meant they were best position to make sure they remained relevant and on-message.

Abu Issa then makes an interesting point regarding why his company has grown and diversified in the manner it has. In forming a creative department, or in later investigating the need for a sophisticated IT system to service the company at a crucial stage in its development, growth and diversification in operations became two mutually beneficial parts of the same whole.

“The issue in Qatar,” says Abu Issa, “is that you only have the one very small market. For me to have a state of the art IT system, I have to pay ten million riyals. How can I justify that if I don’t have enough business to cover that? But if I don’t have that system, I will be behind all of my regional competitors. The principles expect some kind of reporting system and they want a balance sheet every first of the month, they want to know their stock position, they want to know their expiry dates, they want to know everything. So I cannot just have a normal IT system, I have to have a very sophisticated one, but not one business can justify that. So we have to build others.”

Abu Issa explains further, is that there are only 250,000 Qataris, and out of the remaining population at least half are low-wage workers who cannot be considered a consumer market for high-end luxury goods. “So really our target market is very small so we have to build and expand horizontally to be able to sustain a professional company,” adds Abu Issa. “For example, if I want to have a good HR manager I will have to pay him a big salary, [but] I cannot just only on my retail business alone justify that.”

On the challenge of the day-to-day management of such a diverse entity, Abu Issa is candid. “In terms of back office, the principles are the same, he reveals. “The back office work, the supply chain, the warehousing, inventory control, accounting, all of these things are the same, more or less. The front face, this is the façade, which is very different. The mentality of someone selling a luxury consumer product is different from a bottle of perfume or an expensive watch, it is different to selling a refrigerator or an air conditioner. Also my profitability in that is also different, so I have to create a new DNA for the front face of my electronics department and the same for every other business…we have all of these brands that we also distribute – so each area, each industry or each target customer has to [be approached with] a different state of mind.”

Interestingly, though, he says profit margins might be higher in selling perfumes or chocolates than air conditioning units for example, Abu Issa again returns to the concept of adding value, and bringing new products to the market and long-term sustainability, over short-term gains. “That is not the way to do it,” he underlines.

Another important aspect of Abu Issa’s company portfolio is joint ventures (JV), which Abu Issa Holding not only facilitate but also undertake themselves, should the partnership and circumstances make sense. These JVs, he says, are mostly focused on capital projects relating to government projects.

“These are much bigger scale projects where the technical know-how is very much needed. These kinds of businesses need experts with a track record, so we cannot do it alone. We always focus and make sure that we are into our core business, and the team that I created to do the joint ventures is totally separate from the core company,” explains Abu Issa, who also says he will not do deals with foreign businesses who do not commit on the ground in Doha and want to be involved by what he calls “remote control”.

There is a good reason for this. Like any businessman in Qatar, Abu Issa is naturally happy about the all business coming into the country thanks to the 2022 World Cup, and to a larger degree all of the public infrastructure, in line with the 2030 National Vision and private building projects that were planned even before Qatar was awarded the venue in ten years by FIFA.

However, it is the potential of Qatar post-2030 that interests Abu Issa the most. He is reluctant to invest in infrastructure companies, for example, as he feels these will not be here for the long term, he his happy to consult and be involved in JVs. Whilst the construction boom is underway, there will be constant need for external expertise, Abu Issa adds. But once everything is complete he feels that local companies will be sufficient to oversee the finished products. “You know that after you build those facilities you need some way to manage them,” he says. “You need to maintain them, so we will build these sorts of companies.”

ENTREPRENEUR FOR LIFE

In light of his recent E&Y EOY award, when asked if he still considers himself an entrepreneur, Ashraf Abu Issa ponders the question a moment, before he answers: “Yes I do, because for most entrepreneurs money is not the driver. It is the success and getting somewhere where nobody else has been. Or building an organisation and seeing people enjoy working or growing it to a certain level of number of people. From 1981 we had 36 people and now we have 2400 people and that is without JV’s.

When it comes to entering new business territory, “crazy risk” says Abu Issa, is for banks. He explains that his modus operandi is more one of calculated or intelligent risk with a measure of intuition. “You can maybe smell the business, you can feel where there is room for a certain brand, business, niche or whatever,” he says. “And then work towards that.

“My policy is and has always been to grow and build an infrastructure,” continues Abu Issa. Point in case: Mosafer, Abu Issa Holding’s new travel and tourism agency. “Mosafer means traveller in Arabic,” says Abu Issa. “It is the same word used in Hindi, Urdu and Turkish and Persian. Safari the English word comes from ‘safer’ the verb for traveller. This is a concept we are building, we are designing our own projects, we have an R&D department and a sourcing and quality control office in Asia. We are constantly searching for products that can help travellers move easier and travel lighter and that are more durable and convenient.

“We have seven stores between Qatar, the UAE and Saudi, all of them are very successful and that encourages us to go abroad. My concept of Mosafer is that it will work even better in the developed countries because there is not a business there that addresses that as a specialisation.”

Though Mosafer and some of Abu Issa Holding’s other business concerns also operate in the region and that kind of growth is always something he will look at, for now Ashraf Abu Issa is content to focus mostly on his overall domestic operations in Qatar, which he also believes, thanks to all the initiatives and momentum for SMEs, is a highly fertile ground for business start ups.

As far as following in his footsteps and setting an example for young Qatari entrepreneurs, many would do well to emulate Ashraf Abu Issa, who is a founding board member of INJAZ Qatar and he encourages them to contact him for advice.

“I think entrepreneurs in our region are very open to teach younger ones to go about their business. I advise young entrepreneurs not to be limited to and discouraged by our small market, but look beyond that and consider the region and even the world as their potential market,” continues Abu Issa in closing. “But with that in mind, there is no better base than our local market in Qatar. Because local companies are part of Qatar’s development and represent Qatar at the international scale, a favourable business environment has always been deeply rooted in Qatar’s expansion plans. We understand the vision of His Highness the Emir and the 2030 vision, we have an idea of how many people are going to come into Qatar and this is within the master plan of the country – so if you plan accordingly… and [for] the quality of people, the quality of services that are coming, you have to be prepared.”

This article first appeared in TheEDGE 34 Vol 4 No. 6, June 2012.