BrazilBCG CEO Rich Lesser warns that Middle East companies face immense change
Boston Consulting Group CEO Rich Lesser has told businesses based in the Middle East that they face a period of major disruption over the coming years. The consulting leader also explained that management consultancies can play a key role in helping to shape the region’s restructuring efforts, as the Gulf nations particularly work to wean themselves from their oil-dependency.
The past few years have seen the arrival of an army of consultants arrive in the Gulf region. Such is the scale of the new uptake last year, that management consultants were expected to collect around $1.3 billion in fees from Saudi Arabia alone for their assistance in planning for a post-oil future.
Governments in the Gulf have begun the pursuit of sweeping economic and social reforms – thanks in large part to massive fluctuations in the price of oil over the past few years. Mid-2014 saw a massive glut in global oil which wiped out almost 60% of its price – something the resource continues to struggle to recover from. In Saudi Arabia, ‘black gold’ accounts for 90% of government revenues.
By 2015, the Kingdom’s usually healthy government budget surplus, of around 15% of GDP in 2012, fell by a total of 30% to around -15%. As a result, under the new leadership of the state, spearheaded by Deputy Crown Prince Mohammed bin Salman, Saudi Arabia has established a long term strategy that seeks to diversify the country’s government funding away from oil.
One of the major hubs where planning for the country’s economic transformation is taking place is at the Al Khozama Center, located in the heart of Riyadh. The hub hosts state officials and a large cohort of top tier consulting firms such as McKinsey & Company – who, in order to meet growing demand in the region, have begun an aggressive acquisition campaign, taking in local firms like Elixir to bolster their presence there.
Rival firms such as The Boston Consulting Group (BCG) are also taking an active role in developing plans for the country’s transformation, as well as taking on a notable workload in the neighbouring Gulf nation of the United Arab Emirates (UAE), with government clients, and companies in the financial services, energy, technology, and health care sectors among their clients.
According to BCG Chief Executive Officer Rich Lesser, BCG’s clients in the Middle East, and globally, are facing a “challenging” operating environment, and a world of “immense change.” In an interview with Gulf News, the CEO said that his clients were up against, “a faster change, [and a] bigger disruption, than ever before.”
Lesser said that the Gulf’s leaders faced significant challenges in getting the strategy and direction right amid a turbulent, ever evolving global market. While planning is essential when considering the next steps of the state-owned apparatus of the region, setting the right priorities and the right agenda could prove extremely difficult without the consultation of external experts, he warned. Lesser contended that management consultants were essential to such plans, “helping to make hard change really happen at scale and at speed and doing it in a way that enables the organisation to have sustained success.”
Whilst Lesser acknowledged that most organisations in the Gulf remained extremely effective in their daily operations, he stressed that the kinds of changes that are required now would have substantial impacts on the long-term future of those organisations and the economy at large. The BCG boss said that as a result of these substantial changes being undertaken, the consulting industry could expect a continuation of “a vibrant few years,” for the firms who have enabled clients to prepare for the future.
Establishing the fact that Saudi Arabia, the UAE, Kuwait and Qatar made up the bulk of BCG’s business in the Middle East, Lesser said the key goal for the firm in the region remained helping both private and public sector organisations to deal with disruptive change. Specifically, in the case of governments, Lesser was keen to point to the need for civic change, as a new generation, and with them new aspirations and expectations, rises to the fore.
“It’s certainly a time when governments are trying to step up in terms of, what’s the next generation of the way they engage with their citizens, the way they bring public services to them, [the] aspirations for how they’re going to operate in a world where funding levels are lower because oil prices are much lower,” he concluded.
