In Bahrain’s SME boardrooms, transformation is a true constant
Small and mid-sized companies in Bahrain are buckling up for a period of continued transformation, according to a new report by Roland Berger commissioned by the National Bank of Bahrain, as their leaders seek to navigate a ‘perfect storm’ of internal and external changes.
The report, which surveyed leaders of companies with less than €50 million in revenues (typically less than 500 employees), found that despite major black swan events such as Covid-19 and the Russia-Ukraine conflict (and broader geopolitical struggles), a high number of 77% of companies managed to ink black results over the past three years.
“Surprisingly, only 46% of firms flagged Covid-19 as having adversely affected their business and operations, and the majority (65%) of all firms say they have now successfully overcome pandemic-related challenges,” states the report.
Looking ahead, a little more than 8 out of 10 firms anticipate economic growth in the region, although only about 3 out of 10 anticipate strong growth.
Roland Berger’s survey took a broad look at the SME economy, surveying leaders from sectors including banking, trade, manufacturing, construction, and real estate, among others.
Transform or risk losing ground
Along with growth, transformation emerges as the top boardroom priority. While major transformation programs are known to be part of daily life at major corporates, the report demonstrates that in the tier below life is not much different.
The authors found that a staggering 83% of all companies have recently gone through a transformation program or are currently executing one. But it doesn’t stop there – 4 out of 5 firms already have a transformation agenda for the remainder of 2022 and 2023.
Asked why they are transforming, leaders mostly point at external factors such as changes to market dynamics, disruption from competitors or tech-driven new kids on the block, overall business uncertainty, black swan events, and changes in government policy.
“Without a doubt, the need for transformation is here to stay, and businesses have recognised this,” said Bruce Wade, Chief Executive – Group Financial Restructuring at the National Bank of Bahrain. “The ability to quickly adapt to changing business contexts and priorities is the one constant that should matter to any firm.”
So what are companies exactly transforming? It turns out that transformation is happening across the board, impacting strategic topics, but also operations, finance and more.
Operational transformation was part of 65% of all recent/ongoing transformation programs, followed by strategic revamp (53%). Transformation programs expected for 2022/2023 seem to prioritise strategic topics over operational excellence, with both ranking ahead of financial transformation geared towards debt and equity position.
From a functional perspective, customer growth is the number one business priority, and hence a key focus of transformation efforts. Rounding off the top five are financial growth, cost cutting, operational excellence and service/product optimisation.
Transformation initiatives are likely to be part of a broader portfolio (as many areas can be interlinked), with nearly 8 out of 10 leaders listing 3 priorities, and almost 4 out of 10 listing 5 priorities.
Bahrain the implementation champion?
Notably, the report by Roland Berger and the National Bank of Bahrain found that “about 8 out of 10 firms that have recently gone through a transformation program (or are currently executing one) consider this transformation program a success.”
For anyone in the world of transformation, this will undoubtedly raise some eyebrows. Sassan Hatam, a partner at Roland Berger who has advised on dozens of transformations, places the survey result into context. “This number might come as a surprise, as making change happen is difficult.”
“We haven’t explored the measure of success behind these numbers. In any case, in our experience a holistic transformation mindset often yields the best results. And an approach of continuous focus and improvement – transformation is a never-ending journey. It is a marathon with sprints in between.”
About the report authors
Established in 1957, the National Bank of Bahrain is the Kingdom’s first locally owned bank. Founded in 1967, Roland Berger is one of the world’s leading strategic consulting firms.
Reflecting on the collaboration with Roland Berger, Wade said: “We are pleased to be collaborating with Roland Berger, a pioneer in management consulting.”