One can be forgiven for mistaking Mishal Kanoo’s office for an art gallery. Paintings and models—some encased in glass boxes—dot the room, interspersed with miniature car models and posters of watches. Eclectic dark brown pieces of furniture, with grand and sometimes intricate designs, indirectly contribute to an understated grandeur of the room. It might be lost on someone who is not an art aficionado, but for Kanoo, the scion of one of the region’s oldest family businesses, the collection has a calming effect that he says helps him clear his mind.
“In business, the last thing you want to do is make a decision on impulse,” explains the chairman of the Kanoo Group. “You want to be in a position to think before you act, and beautiful things help.”
For Kanoo—who manages a holding company that spans nine countries and employs approximately 4,000 people across industries as varied as shipping, logistics, property, power generation, heavy machinery, construction, and travel—an impulse decision is not an option, mostly because he bears the responsibility of a business that has now seen five successful generations at its helm. But unlike other Arab family businesses, which have primarily grown on the back of an oil-fueled boom, the Kanoo Group has a more diverse history.
With its origins in Bahrain, the Kanoo family’s business was first started in 1890 by Haji Yusuf Bin Ahmed Kanoo. It survived through two world wars and a rapidly changing economic landscape, gradually rising to dominance after it built a formidable shipping business in the Middle East, challenging its British compatriots who ruled the routes then. It later expanded into travel by providing refueling facilities to Imperial Airways flights enroute to India and Australia.
Today, the business—which includes joint ventures with international giants such as Maersk and American Express among others—is spread across the GCC countries operating in around 16 divisions, with different branches managed by various cousins. The Kanoo Group is based in Dubai and led by Mishal, while the headquarters of the Yusuf Bin Ahmed Kanoo Group in Manama is run by group chairman, Khalid Mohammed Kanoo. Mishal is a member of the board there.
It is a complex structure given the size and breadth of the businesses. “It’s a conglomerate,” explains Kanoo, 50, as he tries to break down the family structure. “We all are interconnected—I would not say we are independent because we have a structure, but each one of us has an entity to run.”
Valuing the Kanoo family’s business empire is not easy Like many traditional family businesses in the region, the Kanoo Group keeps its revenues under wraps. But its turnover could be sizeable. Insurance giant Axa Gulf—with whom the Kanoo Group is in a 50-50 joint venture within the region—had gross revenues worth $857 million in 2018. In Forbes Middle East’s latest list of the region’s top 100 business tycoons, the family comes in at number 53, between prominent Emirati private businesses Khalaf Al Habtoor and family, and Easa Saleh Al Gurg and family.
But as deep as its reach is, the family business is still having to come to terms with a rapidly changing environment and ways of doing business. An economic boom over the years has attracted competition from around the world, which has put pressure on the profit margins of home-grown companies while upending traditional models of business. Falling oil prices and an overall liquidity crunch in the market have only turned up the heat for many firms in the region. While he declines to reveal revenues, Kanoo says that there has been “a small growth overall” without specifying which sectors either performed well or saw a downward trend.
Kanoo has countered economic complications by offloading or divesting stakes in joint ventures or other divisions. In August this year, the company sold a 65% stake in its travel business—Kanoo Travel—to American Express Global Business Travel, which has been one of its long-term partners in the region, for an undisclosed sum. The rationale is clear and Kanoo is painfully aware of who he is up against. “To continue in travel where you have the likes of cleartrip, hotel.com and booking.com coming into this space, it becomes harder and harder unless you really want to throw in money, hoping to God that it works out,” he quips.
With a reputation for being a reformist and a philosopher, Kanoo does not mince words as he lays out his investment strategy—one that focuses on investing in sectors the group is already present in, and another that aims to venture into new sectors that are high on innovation and profits. Change, though, is not easy for a 129-year-old business to put into motion.
With models of ships and portraits of family members lining the walls, the Kanoo Group’s offices in Bur Dubai are still reminiscent of a traditional U.A.E. business. But similarities to the past stop there. Internally, Kanoo is ushering in change as he looks to diversify its reach into new areas.
As the head of the business, Kanoo is steering it towards investing in emerging fields like fintech, but also continuing to invest into its areas of expertise such as logistics and travel. “It is to a certain degree a shotgun approach—shooting and hoping that you hit something,” he adds in his typically frank manner.
But as a chairman, Kanoo seemingly runs a tight ship. On a group level, the company reportedly operates with as little debt as possible, borrowing only for its subsidiaries. Kanoo is known for taking a hard-nosed approach to solidify the bottom line. A little more than a year ago, he bought in non-family members to run the business at group level and he has since been hard at work to integrate them into the business.
The dilemma of adequate succession planning and corporate governance is not unique to the Kanoo Group. A recent survey on family businesses by consultancy PwC noted that many traditional businesses are reworking their operational models to adjust to the current economic reality, with 34% of those surveyed planning to “significantly change their business models over the next two years.” Such changes are important if these businesses are to successfully preserve their wealth. According to a 2019 Wealth X study, about 16,700 millionaires in the Middle East will pass wealth worth $572 billion to the next generation over the next 10 years. Research from the Family Business Council – Gulf indicated that assets worth $1 trillion are expected to be transferred over the next 10 years.
Despite still mostly being led by family members, the Kanoo Group has managed to survive generations without cannibalizing profits. And the move to bring in non-family members might be timely, experts say.
“Having a board room dominated by family members could be a risky practice, and it is,” says Basco Rodrigo, Associate Professor and Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in Family Business at the American University of Sharjah. He adds that the Kanoo family business has successfully survived over the years because of “an entrepreneurial vision across each generation.” But future leaders of the group will have to find the best structure to balance family and business.
Within the Kanoo Group, the hunt for such a model is already underway, with the chairman actively seeking ways to innovate. Bringing in non-family members has also helped improve the level of corporate governance. While Kanoo admits that the transition to welcoming non-family members on board has not been easy, he is gradually seeing an acceptance within the family. “The more receptive the family and the board is to change, the easier it is to trickle down,” notes Kanoo, who is thought to be the architect behind the reformation of his family’s business.
Youngest of all his siblings, Kanoo first joined the family business in 1991 as an assistant shipping manager. He had only just left college, where he studied comparative theology and philosophy along with economics, followed by an MBA in the
U.S. A few years after entering the family business, a cousin suggested that Kanoo work elsewhere to gain experience outside the firm. “I can’t thank him enough for it,” says the father of four.
The scion joined the now defunct American audit firm, Arthur Andersen, and worked there until 1997. There he learned some key lessons about management and how other businesses were run. These came in handy to young Kanoo when he was eventually called back by his uncle Abdulla, who was then the chairman of the group, to become his deputy.
Upon rejoining the business and armed with new knowledge, Kanoo remembers he first concealed his identity among the staff during his orientation so that he could receive genuine feedback. “The hardest thing to hear is something negative about yourself,” says the executive. “But if you never hear anything negative about yourself, you can’t fix it.”
Over the years, Kanoo continued to show a keen desire to always learn more. Halfway through his career, he returned to school for a second MBA at the American University of Sharjah. “I needed to expand my horizons again, I needed to see what’s out there, I needed to see what are the benefits, what are the new thoughts, what are the new ideas, and also to continue to test myself,” he elaborates. Kanoo did not stop there. He soon accepted a position to teach a course on family business at the same university in the early 2000s.
“Professors can teach you what is in a book but they can’tell you what is happening in the region,” says Mahmood Ahmad Mian, Head of Business Development at Kanoo Group and one of the students who took Kanoo’s class. Mian, who also had a family business, remembers clearly how his then professor stood out among the other teachers on campus. None of the others owned a business and Kanoo’s classes were often transformed into hours of healthy debates. “He was quite candid,” says Mian.
Kanoo’s teaching stint did not continue for long—it proved to be too taxing to be both the head of a business and a university professor—but his habit of experimenting has remained. To diversify their operations, Kanoo and his family have created a new arm, called KAAF Investments, which invests their private wealth into businesses that have a purpose. He is loath to brand his new venture as impact investing or CSR.
“This is not a charity, it has to be a sustainable business but not a business that breaks your back,” says Kanoo. One of the companies under its radar is Dubai-based solar power company, Enerwhere, while other fields being explored include healthcare and education.
“At the end of the day, everything has a purpose—a seed has a purpose, its purpose is to break and grow— businesses are like that,” Kanoo insists. “If you think you are going to be the seed or the trunk forever, that’s not going to happen.”