The Great Recession provides insights into the preferences and behaviors of Generation Y in the workplace, says Adam Kingl.

Sceptics of generational theory believe we’re all the same fundamentally – that generational differences are just a matter of life stage. The quickest retort is to point out that if every generation is the same, then patterns of education, work and retirement should be identical at corresponding ages. But if those patterns are different, then there must be something more going on.

It’s clear that Generation Y is, indeed, different. Motivating, engaging and retaining this oft-misunderstood generation is a challenge for many organizations, especially in the face of fundamental challenges to the psychological contract created by pay and pension provision. Understanding this complex demographic starts with a look back at the crisis that rocked the global economy a decade ago.

Defining a generation

The differences between any generation and another are of course those of nurture rather than nature – of social context, not biology or genetic code. Any generation, with all its strengths and maddening quirks, is shaped by the epoch or context in which it is raised – a point made by Karl Mannheim in his essay on “The Problem of Generations” as long ago as 1952. I would define an epoch as the political situation, economic state, dominant parenting style, national and world attitudes that dominate each generation’s developmental years. This explains why the number of birth years used to define one generation is not the same as another: rather, it is when the dominant paradigms change significantly that we draw a line and begin to define a new generation, raised in different circumstances.

A common word of caution about generations – with which I entirely agree – is that one cannot make sweeping statements that apply fully and equally to every individual within a generation. Inevitably, in characterizing huge populations, we must make generalizations: for any given example, I have no doubt that you could think of one, several, or many people for whom the common claims do not apply. The point is that if these claims are broadly true, then they are helpful for decision-making and planning for the future, whether looking at generational issues through the lens of a company, government, family or community. A little more clarity about trends can only help us to be confident in navigating the future.

Generation Y

Clarity is much in demand when it comes to Generation Y. By Gen Y, I mean those in their mid-teens to mid-thirties today. I intentionally avoid the term ‘Millennials’, which is sometimes misunderstood to mean people born in the new millennium – rather than its usual meaning of those who came of age around, or soon after, the year 2000.

One of the epoch-defining events with which Gen Y grew up was the most traumatic economic convulsion of the past 80 years, the Great Recession of 2007-2009. While the crash and downturn that followed weren’t as severe as the Great Depression of 1929-1939, its impact on Gen Y’s sense of security and trust was fundamental.

Observing their parents losing their jobs, overhearing hushed conversations behind half-closed doors about money, seeing banks closing their doors, pension plans decimated, and houses foreclosed, Gen Y’s attitude toward economic security was formed by some tough life experiences in these years. The lessons they learned? You must be self-reliant. Companies will not look after you for life, so as soon as you have acquired what you sought from one employer, you move on somewhere else.

What sometimes looks like impatience with employers can also be seen as seizing the present, since we may not be here tomorrow. After all, Gen Y also watched as terrorism became more prevalent, both in the West – not least on 9/11 – and globally. This contributed to a carpe diem philosophy.

Bluntly, it became apparent to many of Gen Y in the late noughties that betting on the long-term was for suckers. The Great Recession was what academic Warren Bennis would call a “crucible of experience” or “a transformative experience through which an individual comes to a new or altered sense of identity” (Bennis and Thomas, Crucibles of Leadership, Harvard Business Review, September 2002).

Gen Y’s world of work

Against the backdrop of upheaval and change in Gen Y’s formative years, we can also see two related macro-trends that make the world of work fundamentally different for younger employees.

1
Significantly longer forecasted life-spans offer young people an uncertain retirement, but more opportunity to explore and experience different jobs, and even different careers.

2
Today’s typical pension plans contribute to an uncertain retirement and are dramatically less attractive in their ability to retain employees.

Today’s youngest employees know that they will live much longer and will enjoy a higher quality of life for more of their old age. As Lynda Gratton and Andrew Scott pointed out in their influential 2016 book, The 100-Year Life, people born today in developed countries have a better than 50% chance of living beyond
100 years.

As the reality of their likely longevity becomes apparent to Gen Y, they will take a much more flexible, evolutionary and personal approach to their careers than that of generations past. This means that the classic retirement age of 65 is quickly becoming anomalous. If graduates expect that they can and will work from, say, the ages of 22-82, they have huge scope to reinvent themselves professionally several times over. One could earn a degree, train and work as a doctor for 30 years, then earn a degree, train and work as a lawyer for another 30 years. Forget loyalty to a single company: Generation Y, with the luxury of time, doesn’t even have to be loyal to a single career.

Retirement risk

The second macro-trend is related to the first. Companies started to break the psychological contract with employees in the 1990s, when contract terms moved from ‘employment for life’ to ‘employability for life’ – that is, the opportunity to update skills and stay employable, though not always with the same company. The golden handcuffs were off.

The pension crisis that followed only exacerbated this trend. Because of longer life spans, companies have had to radically change their pension plans over the last 25 years, in order for both pension funds and corporate balance sheets to be sustainable.

The most significant change has been the switch from Defined Benefit (DB) to Defined Contribution (DC) pensions. A DB pension is correlated to one’s final salary on retirement. The retiree earns a fraction of their final year’s salary – the fraction being a function of the number of years of service – which is guaranteed for every year of their retirement until death, after which any surviving spouse often earns a fraction too. While the annual payment is usually adjusted for inflation, it is fixed, hence a ‘defined’ benefit. Obviously, this is hugely desirable, because it is a guaranteed income, regardless of how long one lives. It is essentially an annuity, without the exorbitant cost that a bank usually charges for an annuity off the shelf.

Like all pensions and public schemes, such as social security, the plan only funds itself if the revenue put into the pot by current employees exceeds the outgoing costs. Today, with life expectancy in the developed world over ten years longer than it was in the 1980s (and rising), the DB pension plan doesn’t balance.

This imbalance has been the source of a full-blown crisis over recent decades. In response, many companies have turned their plans into DC schemes.

Under these, employees pay into investment funds, portfolios of assets which operate like mutual funds, often with some employer-matching payments. In this manner, companies have insulated themselves from the risk of not knowing how long retirees will live. But employees now assume the risk that the value of the DC retirement pot might decline if investments don’t perform well.

While DC pensions offer retirees flexibility about how much to withdraw at any one time, the total value of an individual’s fund is finite. If the retiree withdraws all their money, and they’re still alive, they had better have another source of income. It is typically estimated that a middle-aged person needs to invest at least 20-25% of their income to finance their retirement. The conclusion most of us reach: we will simply have to delay retirement.

We’re facing a perfect storm of longevity, disintegrating pensions and social security (or ‘national insurance’ in some countries). This storm will force Gen Y to consider the unpalatable truth that their old age will be more uncertain and difficult than that of any previous generation in almost a century.

Rebuilding loyalty

DB plans rewarded employees for staying with their company for as long as possible, but most of today’s DC plans allow the employee to carry their pension anywhere – known in the US as the 401(k) – so employers have lost what was historically their most powerful tool for retaining talent. Is it any wonder that businesses now find it difficult to keep their young employees?

Pension problems have been compounded by the fact that average salaries have failed to keep pace with inflation, especially since the Great Recession. For example, adjusted for inflation, the US federal minimum wage has slipped from $10.90/hour in 1960 to $7.25 in 2015, a drop of a third.

There’s no point in blaming Gen Y for their lack of loyalty. They’re only responding to the world of work that older generations created.

What, then, can managers do to engage and retain their Gen Y employees? As tangible benefits like salary and pension are watered down, companies must turn to the intangible yet hugely powerful levers of personal and professional development, creating a strong culture, and helping their employees articulate their purpose and how it relates to the company purpose. It means changing the classic job interview question, “Why do you want to work here?” A better question for understanding applicants is, “Why do you work in this function, in this industry, in this country, or for these customers or clients?”

This human-centric approach, versus a traditional KPI-centric approach to success, will help companies navigate turbulence in the employment market – and begin to demystify Gen Y.

The question of how to attract and retain generation Y (or millennials – popularly identified as those born between 1982 and 2004) has dominated our thinking over the past decade; after all, this group has represented our graduate-level employees for about 14 years.

The emerging challenge is that the oldest millennials are now in their 30s and count managers, executives, seasoned specialists and professionals among their number, including Facebook CEO Mark Zuckerberg (34) and airbnb co-founder Brian Chesky (37).

While we have already put substantial effort into identifying how to lead generation Y, gen Ys are now starting to lead themselves… and us.

Team value proposition

To provide insights into both challenges, I surveyed an executive education open enrolment programme for emerging leaders, over five-years, asking about their attitudes to work and leadership. This course was a training ground for global managers of the future; participants were all gen Y, from 44 different countries, with an average age of 29.

When asked whether they felt greater loyalty to their team or to their organisation, it is notable that more than half (54%) of participants said that their loyalty lay with the team rather than the company. This turns the classic idea of employer value proposition on its head. Perhaps we should instead be asking ourselves “what is the ‘team value proposition”?

Leaders and managers have a growing responsibility to develop team cohesion – a tangible community – consciously and proactively.  After all, millennials grew up with social media, in the age of connection. Institutional influence has less sway over this generation than at any time since the 1960s rebellion against incumbent authority.

Today, long-term company benefits provide nowhere near the security they used to. As almost all UK pensions shift from defined benefit (final salary) to defined contribution (a pot of investments whose value fluctuates with the market), companies have lost their ‘golden handcuffs’. The reward for longevity and loyalty is meagre. Many corporations used to promise promotion based on tenure over decades. This too means less to the millennial employee than immediate opportunities for professional development and meaning.

If development is so important, and most of our younger employees value their team above all, a powerful tool for employee engagement is team development. Rather than rewarding individuals with executive training and development, there may be more impact in developing the intact team, building a common vocabulary, a collective call to action, a stronger culture, and a renewed and sharpened focus.

What is your purpose? 

According to a study by Princeton University, more than 85% of young people claim their top criterion in selecting an employer is meaning and a strong sense of purpose. The articulation and cultivation of purpose is therefore critical: the power of ‘why we are here and what it means to work here’ has never been more important to employees. That higher order of meaning surely needs to be owned by team leaders and present within the everyday dialogue of the team.

Research by Bain & Company discovered that employees working for purpose-driven companies are more than three times more productive than their dissatisfied counterparts. Different sources are concluding that purpose delivers manifold benefits from attraction and engagement to effectiveness outcomes.

The older segment of generation Y, those who have attained leadership, understand this dynamic better than anyone. As more millennials emerge into leadership, not only will the ‘team value proposition’ come to the fore, but the paradigms of this generation of community will start to influence the corporation’s priorities, the way it organises internally, creates incentives and defines what success means.

We are quickly approaching a meridian, and once it is crossed, the fundamental questions of company life that we have answered from the perspective and experience of the 20th century will be transparently anachronistic.

Adam is manging director for Europe at Duke Corporate Education. To hear more from Adam, listen to episode 44 of the Future Talent Podcast. 

We’ve all woken up to the exponential rate of change that Gary Hamel, Visiting Professor of Strategy and Entrepreneurship at London Business School (LBS), talked about at last year’s HR Strategy Forum. That event was future-focused: what’s just over the horizon? This time, we’re going a step further and challenging the 100+ learning and development executives who attend to ask themselves: so what can we do about it? How do we prepare for this volatile, uncertain future? Because the time to act is now.

No one can spot every change that’s coming – the next opportunity or threat. Companies need to build a capability, a habit, throughout the organisation so that as many people as possible have a chance to identify and respond. For leaders, that’s about enabling your team to experiment and get in front of ‘what’s next’ – which involves agility at scale.

We need to make change an autonomic process, as simple and reflexive as blinking. Too often it’s a painful cycle of breaking what you have, refreezing it and hoping you’re good to go for another five years. What if we all got in the habit of trying a new principle, making a change that’s within our power to make, every month or even every week? What if we made change a habit, instead of a miserable thing we do once a year or once every five years?

At the Forum on 27 February we will be suggesting principles for action and inviting HR leaders to consider which applies most pertinently to their context – either for the whole company or for a particular team or department. Meanwhile, here are four suggestions from LBS faculty speakers to spark your thinking in advance.

1. Be clear about the intangible assets you’re offering

Most organisations are still operating along the old paradigm of offering people tangible assets – salary or pension – as they key factors to attract and retain talent. But people’s expectations have changed. Today’s employees want purpose, meaning and development – and they want all that now and continually, not as a reward after 10 years of service. Lynda Gratton, Professor of Management Practice at LBS and co-author of The 100-Year Life: Living and Working in an Age of Longevity, argues that we should refocus on intangible assets such as relationships, flexibility and wellbeing. From an HR perspective, if we make the intangible assets that we offer as an organisation much more explicit, then it must over time be easier to win the talent war.

2. Help your people become world-class at something they enjoy

Organisations often make the mistake of continuing to assess talent from a deficit perspective: ‘What don’t you do well? Let’s apply all our energies towards working on that.’ Problem is, if it’s something the person is poor at, chances are you can apply endless amounts of energy and they’ll end up being merely mediocre at it. Why not instead find the thing they are good at and make them world-class at that? Wouldn’t that be better, more powerful and beneficial for your organisation? Dan Cable, Professor of Organisational Behaviour at LBS, believes so. In his pending book, Alive at Work, he cites examples of companies that have done just that and are actually higher-performing as a result. Beyond that, when you let people enjoy doing what they’re good at, they stay longer and get better customer feedback.

3. Rethink how the work your company does is structured

The way we work is changing, whether it’s organising around projects instead of around roles or flexible organisational design instead of fossilised architectures and pyramids. Tammy Erickson, Adjunct Professor of Organisational Behaviour at LBS, challenges leaders to be clear about purpose, promise and experience. What is your purpose, what do customers expect when they hear that purpose and how do they experience it? It’s not about fancy-sounding summaries of what we represent to shareholders or financial reports, probably written by consultants who don’t even work for the company. Leadership is around coordination and facilitating relationships rather than telling you what to do. What if you gave your people a lot more freedom to instantly respond to customers? Take Haier, the white-goods company, where semi-autonomous teams have their own P&L and can offer what they like in response to what customers need. If those services get scaled up, so much the better.

4. Explore how technology can transform your business

Businesses must start experimenting with technology right now to be ready for the future, says Michael Davies, who teaches strategy and entrepreneurship at LBS. Change is happening at the speed of light. When it comes to artificial intelligence we haven’t seen anything yet. He claims a seismic shift is needed towards reskilling and lifelong learning. No repetitively routine and narrow work is safe, and automation is going to be continual – not a one-off event. People will need to get used to mastering new skills over and over again. Technology can also get you closer to customers because it enables them to tell you what they want directly. And it enables organisations to become ecosystems for their industry. Twenty years ago Amazon was just an online bookseller. No-one would have thought that it would one day be the largest and fastest-growing B2B web services company in the world. Organisations need to think about how they can harness technologies to add value and transform their business to survive and thrive in the future.

Adam Kingl is Director of Learning Solutions at LBS

Book your place at the 2018 HR Strategy Forum

Something is stirring in the GCC. The flatlining oil price and the newfound maturity of many local economies are forcing organisations to think afresh about their business models, and to call time on the era of short-term, expat-reliant workforces in search of something more sustainable. But what does that mean for HR professionals and business leaders planning for the future? People Management speaks to a range of experts to build a comprehensive picture of the challenges organisations face in a reset GCC economy – and the innovative ways they are finding to flourish.

1 Find and develop talented nationals

The GCC workforce faces profound challenges if it is to match the productivity levels of G20 economies: local businesses must be at the forefront of a drive to work both smarter and harder. But if their endeavours are to result in the widest possible and most sustainable prosperity, they must harness local talent at a time when the Emirates, Saudi Arabia and others are desperately trying to rebalance their economies away from oil and an over-reliance on the public sector.

Dr Kai Chan, distinguished fellow at INSEAD’s Innovation and Policy Initiative in Abu Dhabi, says the current experience of the UAE offers a wider set of lessons for the region’s policymakers. “Around 95 per cent of Emiratis in the labour force work for a government entity, whereas less than 1 per cent of private sector employees are locals,” he says. There is an entrenched antipathy by locals towards the private sector, and major hurdles must be overcome if these figures are to change. The background isn’t hard to understand: generally, government jobs pay more, have shorter working hours and the national pension scheme for UAE nationals is non-transferable to the private sector.

Chan says a major challenge is creating skills among Emiratis that are attractive to the private sector. Few currently graduate with degrees in STEM subjects. He suggests governments must align their policies with tactical goals. The UAE’s ‘National Agenda (Vision 2021)’ sets clear aspirations for more sustainable Emiratisation, and there is every indication the government is solidly behind the plan. But Chan highlights the aims to increase the proportion of Emiratis in the private sector to 6 per cent, even though they only account for 11 per cent of the population and historically have lower labour force participation rates.

The way forward, says Chan, is to continue blending the immediate need to increase participation of nationals in the private sector with the longer-term objective of relying less on expatriate talent. There have been tentative steps among private sector firms to support this objective, such as the recent HSBC Leadership Programme, which identified high-potential Emiratis from organisations including Etisalat, Etihad and the Department of Finance, and offered them a course in leadership skills and innovation.

Indeed, the finance sector – where participation rates stand at more than 30 per cent – is a shining example of how greater nationalisation can work hand in hand with economic prosperity. A slowdown in public sector recruitment, driven by plummeting oil prices, may act as a lubricant for such ideas to become more widespread. But members of the UAE’s Federal National Council have become increasingly vocal in demanding quotas for the integration of Emiratis into the private sector workforce, and Chan sees them as inevitable: “Ideally, the government sets a target for a given industry and firms are either incentivised or obligated to have a certain number of nationals on payroll.”

2 Make workplace learning really work

Gulf governments have invested substantially in educating today’s cohort of graduates. But when they reach the workplace, are they getting the learning opportunities they need to flourish? Many L&D experts suggest the quality and frequency of workplace learning in the Middle East lags behind Asia or Europe, and economic uncertainty often means training budgets are among the first to take a battering.

But Adam Kingl, executive director of learning solutions, executive education at London Business School, says organisations realise things need to change – if only because the status quo is simply unsustainable. “Organisations across the GCC are telling us they need to undergo fundamental changes,” he says. “It might be due to increased nationalisation and they want a joined-up leadership culture, or they might want to create a common vocabulary, toolkits and combined skills.” Many companies, he adds, are considering new business ventures as they prepare for a downturn precipitated by the fall in oil prices.

Surviving challenging times demands leadership, strong strategic objectives and the ability to execute, Kingl says. These areas can only be addressed by building a culture of continuous learning, which means the perception of learning interventions must change if there is to be a lasting impression on an organisation. “Too often, organisations evaluate success or failure based on the level of response of the participants,” says Kingl. “More often, it’s about how much fun the participant has had. But learning can be a wake-up call – it might not always be fun.”

Organisations that are still at a relatively nascent stage of L&D development have the opportunity to bypass the attitudes of their peers and leap straight into the fast-evolving field of social learning. This abandons the didactic model of trainer-led learning and encourages employees to learn from each other. It connects them through enterprise social networks to talk about what they’re learning, and uses videos, ‘lunch and learn’ workplace talks and internal wikis to capture knowledge, supplemented by access to external experts and industry peers through social media. As Kingl puts it: “A single download of content isn’t effective… a learning journey is built across years.” Companies such as Oman Oil and UAE-based Aldar Properties have both used learning interventions to encourage cross-functional collaboration, he adds.

There is also a place for structured internships, an area where GCC organisations have traditionally been found lacking. Companies are beginning to see the value in offering young employees a concerted learning programme, which broadens their exposure to different areas of the business and ensures they have the support they require to develop. “We are seeing a trend, particularly in the technology sector, for which internships can create a strong pipeline of talent,” says Ali Matar, head of talent solutions at LinkedIn MENA. “Another approach is offering UAE nationals structured and quality internships to strengthen their competitive positioning in the job market. Some combine these, like the SAP Academy in Dubai, which trains both UAE nationals and other interns on ERP solutions.”

3 Understand the importance of good HR

As companies vie for talent, and CEOs become increasingly aware of the value of people to their future prosperity – not to mention the detrimental cost of bad hires or rotten cultures – HR is becoming more mature, and more involved in business strategy. Alexandros Kopitsas, HR director at Johnson & Johnson in Dubai, says this is an inevitable byproduct of a wider business maturity: “Companies are realising the importance of better quality people management, owing to the fact employees have choices and are no longer loyal to one company.” Kopitsas says the main reason for leaving an organisation is usually poor management skills or poor leadership. That has translated into enhanced investment in leadership development through a combination of assessments, training and coaching. In-house coaching has surged as companies try to ensure managers lead and involve their teams more effectively. Better talent management, succession planning and internal communication are next on the agenda, says Kopitsas.

But a drive towards more effective HR must be matched by a similar appetite for professional standards, says Alan Ovens, international director for the CIPD. “There is an increasing demand from HR leaders, HR practitioners and business leaders to become a licensed profession,” he says. “Recent market research in Asia and the Middle East showed more than 70 per cent of HR leaders think it’s important for employees in HR and L&D to hold professional membership, and they believe HR should become a licensed profession. Yet it is estimated that less than 20 per cent of HR practitioners internationally have an HR qualification. Is this OK? If we asked the finance director this question of finance, the answer would be no.” Professional designation and membership are “incredibly important,” adds Ovens. “For the individual, it is recognition that they have achieved a level of professional standing. For the organisation, it is a benchmark and reassurance that HR has attained a level of professional recognition.”

HR teams will, over time, need to develop a broader combination of skills to reflect the diversity of the company, says Nairouz Bader, Middle East chair of the Association of Executive Search Consultants, who helps place HR professionals in senior roles across the region. “HR professionals need to seek wider business responsibilities and roles, especially commercial ones that enable them to prepare for more strategic roles [later].”

Standards have risen, but there is some way to go. Bader is hopeful the recent anti-discrimination law passed in the UAE will force companies to drive out poor practices. But she warns: “Without HR best practice, corporate growth, sustainability and the whole economy will suffer.”

4 Make wellbeing a corporate priority

“One of the best assets employers have on their balance sheet is their employees,” says Markus Giebel, the CEO of Eternity Medicine, a corporate healthcare provider in Dubai. “If you have healthy, productive and happy employees, you have a healthy balance sheet. The region is suffering critical health issues, and companies need to be the main driver promoting health.”

For too many organisations, wellbeing remains a woolly concept. Kopitsas says this is partly due to corporate cultures that encourage hard work and a focus on the job, rather than a work-life balance. As Bader puts it: “GCC countries do not offer citizenship, and resident talent looks at working in the region as a temporary stage.” As a consequence, there is insufficient emphasis on ensuring employees are both physically and mentally fit for the job, and that problems – whether underlying illness or stress-related conditions – are not properly diagnosed, let alone actively incentivising employees to maintain their personal health.

This may change as a move to mandate comprehensive insurance for all employees gathers pace, particularly in the UAE. Active management of personal wellbeing decreases insurance costs, and encourages organisational loyalty. “HR departments in the region are not given much leeway to be as creative and innovative as they would like around wellbeing,” says Bader. “But this is a growing region, and HR practices in this area will grow with it.”

DHL Express is one company taking the lead. Its Dubai office includes a fitness centre, a café offering healthy food, health check-ups and sports activities. Other businesses are beginning to introduce enhanced healthcare benefits. As nationalisation programmes emphasise the importance of long-term planning over opportunism, the era of seeing people as a natural resource rather than an investment looks over. Will employers grasp the wellbeing challenge?

5 Get to grips with a post-oil economy

An overarching narrative, particularly from outside the GCC, is that oil remains the engine of the economy, and that fluctuations in price are a death knell for local businesses. But dig deeper into the figures and something more intriguing emerges. The contribution of the non-oil sector to the national economy of the UAE, for example, reached 68 per cent in 2015, and there is every reason to believe a government-mandated target of 80 per cent by 2021 is far from unrealistic. The service industry already accounts for more than 70 per cent of total GDP and is buoyant: the number of hotels in the UAE grew by almost eight per cent in the first quarter of 2015, and retail profitability is reaching record levels.

Such returns cannot be accounted for by the shrinking of national income alone: there is a determined diversification in place across both public and private sectors. There is also a very obvious reason to increase the pace of change even further. The era of $100 per barrel already seems a distant memory and, with several GCC economies facing deficits, the pressure is on. Chan says lower oil prices are already having an economic impact that may ultimately affect competitiveness: “Low oil prices hamper the ability of governments to hire foreign experts. Given a tighter budget, governments are more likely to skimp on hiring foreigners rather than absorb fewer nationals. So the oil shock is a double whammy – it makes it harder to bring in foreign talent and at the same time makes it difficult for governments to employ locals or push them onto the private market.”

To manage in a period of economic uncertainty, Chan says GCC governments must push through further labour market reforms, before it becomes financially unsustainable to subsidise them. The IMF has already urged governments to roll back subsidies that underpin all Gulf economies. The UAE has taken the lead by recently deregulating fuel prices, but it is not yet clear whether these savings will be used to accelerate labour market reforms. It is almost a cliché to say the GCC is at a crossroads, but reduced hydrocarbon income could offer the impetus it sorely needs.

6 Innovate properly – without trying too hard

The societal convention of not wanting to be seen to lose face – common across Gulf countries – is viewed by many experts as a euphemism for not wanting to be seen to fail. Yet ‘failure’ in economies such as the US is seen as a positive, and is often cited as an essential route to long-term success. It is this paradox that stifles the ability of organisations across the Gulf to go toe-to-toe with international competitors in terms of innovation. Overcoming such deep-rooted conventions is going to be a challenge, according to Kingl: “It is important within organisations, and especially among leaders, that it is recognised that those first 99 attempts were roots to success, not failure.”

Adversity is a common cultural norm that can hold back innovation just about anywhere, but in the GCC it is going to require a change of mindset. Part of the solution, Kingl says, is separating the idea of saving face from the inevitable and necessary failures that are part of business experimentation and are necessary in order to innovate.

“As an organisation, you cannot just tell people ‘I am incentivising you to be innovative – go forth and be innovative’ – you have to help people to understand what that means,” Kingl says. Businesses should consider separating out entrepreneurial units, particularly when trying to introduce a new product, business model or unit within a larger company. “People then feel they have more freedom to be agile, have their own P&L, their own organisational structure and their own management.”

This is an extension of the ‘Skunkworks’ idea pioneered by aircraft maker Lockheed Martin, in which small teams are hived off to solve business challenges under top-secret conditions. Steve Jobs housed Apple employees working on Mac projects in separate buildings and encouraged them to develop their own culture. Nike develops many of its most celebrated trainers in a lab so secret no outsider has ever visited it.

But innovation isn’t always about brainstorming great ideas, or even coming up with new ones. Incremental innovation (improving by degrees), reverse innovation (taking products back to basics to introduce them to the mass market) or even plain replication can, in their own way, be just as important.

Fast-growing tech businesses such as Spotify have embedded innovation into their culture, not through huge R&D investment, but by reorganising teams to separate hierarchical line management from technical expertise. Management ideas such as the currently-in-vogue ‘holacracy’ (a system populated by small, nimble teams) offer similar aims. And in a gleaming waterfront property in Abu Dhabi stands a very visible testament to the fact the UAE is determined to make innovation part of its own national culture: the UAE Space Agency stands ready to boldly go, even as NASA has said it will remain earthbound for the foreseeable future.