Mahmoud Makki, Partner with Strategy&, writes that the public and private sectors in the UAE have been working hard to encourage the growth of small- and medium-sized enterprises (SMEs). Yet, most SMEs often fail to grow into large-scale businesses. To help SMEs grow into major enterprises, the UAE public and private sectors could benefit by differentiating between the needs of various SME segments.
In the news 2018
According to Strategy& Partner Haroon Sheikh and Manager Bassem Fayek, every military commander knows that battles are won and lost long before operations actually begin: the force with the highest level of training and readiness often prevails. Yet commanders and planners in the Middle East and North Africa (MENA) frequently do not have a clear understanding of the readiness of their forces. They strive to maintain extremely high levels, under the logic that more is better, leading to standards that are often unrealistic and unsustainable.
Jean Salamat, Principal with Strategy&, writes that digitization within the manufacturing world is advancing. Innovations, such as complex smart sensors, artificial intelligence and robotics, are facilitating integrated factories that use digital technology to produce a fully automated system. However, the transformation towards the digital factory will not be achieved overnight, and companies must act now to prepare the ground.
Strategy& Partner Dr. Shihab Elborai writes that Gulf Cooperation Council (GCC) countries are investing heavily in state-of-the-art labs, university buildings, and research facilities. Their total capital expenditure from 2010 to 2030 will reach $38.4 billion. However, so far, they have not put similar efforts into high quality research and development. Consequently, GCC countries require importing knowledge, which is often difficult to adapt to the specific context of Gulf States, or may not even be available.
According to Strategy& Partner Fadi Adra, a consensus is growing among GCC states that they must revamp their systems for educating students with disabilities, so that these students improve their learning experience and live to their full potential. However, there are numerous cultural and institutional obstacles, and success depends on a large ecosystem of stakeholders coalescing to change the status quo.
Strategy& Partners Georges Chehade and James Thomas, Executive Advisor David Branson, and Manager Devesh Katiyar write that National Oil companies (NOCs) must take a holistic approach to the oil and gas value chain to fuel economic development, according to a recent study by management consultancy Strategy& Middle East. Recent oil price volatility, coupled with an uncertain outlook for global oil and gas markets, is putting pressure on NOCs to maximize the overall benefit of hydrocarbon resources by pursuing an integrated policy towards the management of their portfolio of operations.
Strategy& Partners Dr. Raed Kombargi and Dr. Shihab Elborai and Principal Dr. Yahya Anouti write that in the coming 20 years, non-OECD states are projected to spend more than $57 trillion on infrastructure projects, compared to $34 trillion by OECD countries. In conjunction with this spending, policymakers in non-OECD countries have increased their commitment to promote localization of their infrastructure spend. Nearly 300 local content requirements measures are currently in place in non-OECD countries.
According to Strategy& Principals Jean Salamat and Camil Tahan, as the GCC countries diversify their economies to generate sustainable growth, there is an urgent need to digitise the freight transportation and logistics (T&L) industry. T&L is a key driver of economic activity in the region, yet local players are falling behind their global competitors in terms of digitisation.
Strategy& Principal Dr. Yahya Anouti and Director Alice Klat write that policies are generally designed on the basis that human beings make rational choices that lead to the best possible outcome. Yet if that were the case, people would not drive carelessly or smoke. In reality, certain biases can lead people to make decisions that are not necessarily in their self-interest.
According to Strategy& Partner Jad Hajj, the technology industry is performing well, with major players reporting strong financial performances. The major US companies are thriving, some of the large Chinese firms are growing internationally, and startups are receiving funding. The future looks bright thanks to the prospects for growth in such technologies as the Internet of Things (IoT, the networking of connected devices), cloud computing, advanced data analytics, artificial intelligence, machine learning, autonomous vehicles, advanced supply chains, e-commerce, and robotic manufacturing.
According to Strategy& Partner Dr. Ulrich Koegler, Principal Jean Salamat, and Principal Camil Tahan, as the GCC countries pursue economic diversification and sustainable growth plans, the need to digitize the freight transportation and logistics industry (T&L) is becoming increasingly important. At present, the T&L industry in the GCC, which is one of the key drivers of economic activity in the region, faces a combined threat of declining business revenue and outdated infrastructure.
Strategy& Senior Executive Advisor Karim Sarkis writes that the Saudi government is now throwing significant support behind the local media industry, emphasizing entertainment in particular as a quality of life issue and a means to build a private sector that is less reliant on oil revenue. The ambitious Saudi Vision 2030 strategy includes quality of life as one of 12 key priorities.
Strategy& Principal Hani Zein writes that telecom operators understand that it is no longer enough to offer high-speed data and good quality of service. Their customers regard these as standard services. Operators continue to lose customers to digital players and are being forced to venture into digital services, in which operators have little experience and meagre advantage over any other investors. There is now intense competition from service providers whose business models are founded on a differentiated customer experience and frictionless services.
Strategy& Partner Sevag Papazian writes that the GCC countries are undergoing a major socioeconomic transformation. Digitization will be essential in this process, reinventing business models, permitting a seamless customer experience, and exploiting the potential of data.
According to Strategy& Partner Dr. Raed Kombargi, Partner Dr. Shihab Elborai, and Principal Dr. Yahya Anouti, renewable energy sources hold great promise in the Gulf countries, but the region is at risk of falling behind as investment in the sector rises globally. Globally, Strategy& expects annual investments into renewable energy to grow by $130 billion, compared to 2016 figures, reaching around $370 billion in 2020. It estimates that the cumulative investment total between 2016 and 2020 will reach $1.5 trillion globally
Strategy& Director Adrian Del Maestro writes that the upstream oil and gas sector lags behind most other industries when it comes to digitising operations. This is largely attributable to a deeply ingrained aversion to risk.Given the sensitive nature of offshore operations in terms of health, safety, and the environment, operators have been reluctant to deploy relatively untested digital technologies.
Tarek El Zein, Partner with Strategy&, writes that this year, the Middle East telecom industry will press ahead with digital transformation like never before. Although the Middle East telecom market has reached its peak, and is even contracting in some countries, regional operators are positioned to reverse this trend in 2018 with four key strategies. They must accelerate the building of digital capabilities, scale-up their adjacency ventures through acquisition, push forward efficiency programs, and advance in building partnerships with their regulators.
Strategy& Partner Haroon Sheikh writes that GCC countries need to prepare for the next wave of change in military technology. Armed forces across the world are increasingly integrating digital technology, artificial intelligence, and robotics into defence platforms and military operations. In the foreseeable future the armies of developed countries will deploy robotic vehicles, whether for transport or combat, providing them with a significant combat and intelligence advantage
According to Strategy& Partners Fadi Adra and Yahya Anouti, GCC states are engaged in ambitious national transformation programmes that depend to a considerable extent upon people making different choices. Improving national health levels, to use just one example, involves people adopting healthier eating habits and leading more active lifestyles — an area where traditional policymaking methods like applying fines, incentives, or taxes are not always effective as standalone tools.
Strategy& Partner Ramy Sfeir writes that in the GCC, owning large pieces of land has traditionally been a means of safeguarding wealth for both governments and the private sector. However, this land often lies dormant and unexploited. Growing economic pressure calls for a new approach in order to unlock the land’s true value.