Sheikh Mohammed and the Making of Dubai Inc - Essay Example

? Case study: “Sheikh Mohammed and the Making of "Dubai, Inc."” Means In the last three decades, Dubai under the patronage of His Highness Sheikh Mohammed has transformed from a small desert town located in the coastal regions, to becoming a city with high international standards, in terms of facilities for the tourists along with a strong economic growth. He founded the Emirates airlines that now covers over 100 destinations, and developed the thriving real estate market of Dubai. Such rapid development was primarily achieved by adopting capitalist market values, and despite the unfavorable conditions in the surrounding countries Sheikh Mohammed with his strong leadership qualities managed to turn Dubai into a story of success. However the success story of Dubai were not without its pitfalls, and there were claims of violation of human rights of thousands of laborers that had migrated from other countries in search of jobs, while there were claims by local inhabitants of the place losing its own cultural values. Besides these, the real estate business which had been one of the major driving forces behind Dubai’s astronomical economic growth was showing signs of falling apart during the global economic crises that started in 2007-2008. In order to counteract these negative aspects and maintain a stable socio-economic growth of Dubai, HH Sheikh Mohammed had to adopt tactics that integrated his skills as a business entrepreneur and a skillful business leader, with that of an effective political head of a country. Sheikh Mohammed’s leadership style and approach shows traits of a visionary leader with traits of transformational leadership qualities. However, coming from the country’s ruling house (in an authoritarian state), instead of focusing on good leader-follower relationship (as leaders in private organizations aim to achieve), Sheikh Mohammed’s success as an effective leader can be attributed more to his personal characteristics, which include sharp business acumen, strategic planning and a clear foresight of market trends, besides displaying charisma, confidence, self-monitoring, and originality, amongst various other characteristics seen in an effective leader. Amongst the various qualities of an effective leader, one of the most important characteristics is the ability to influence individual people or those in groups. This quality is evident in Sheikh Mohammed where it is seen that while serving as Head of Police and Security, and Director of the Department of Oil, he successfully collaborated with Conoco and many other foreign companies, while concurrently dealing effectively with a large number foreign consultants, laborers, and field workers from countries across the world, residing in Dubai. An effective leader is generally motivated to seek one of the two types of power, personalized (where one looks for personal power and sense of authority) or socialized (seeks collaboration). From the aforementioned style of working, it is clear that Sheikh Mohammed looked for socialized power where he sought collaboration from firms, experts and workers worldwide. Sheikh Mohammed, through various interviews can effectively communicate and pass his messages regarding his visions and strategy, as regards growth and development of his country, and he uses it successfully to convince his own countrymen and other powerful leaders and businessmen all across the world. Effective leaders also must possess self-confidence, in order to create a sense of self-esteem in others working around him or her, while still preserving a high level of personal integrity. Along with this ability the leader must possess the ability to affect an organization horizontally, vertically, externally and internally. Here the leader must gain acceptance of others involved, if he or she wishes to see a particular idea come true. The capability to forge collaborative relationships and to form an atmosphere that is conducive in nature for team work, are typical characteristics of an effective leader. This characteristic is evident in Sheikh Mohammed when he started Emirates Airlines, which was Dubai’s own airline. After receiving threats from Gulf Air where they asked for special favors (asking Dubai to stop implementing open skies policy) failing which they would decrease their number of flights, Sheikh Mohammed decided to retaliate by forming Dubai’s very own national airline. Here he displayed supreme self-confidence and faith on his team members when he went against all expert advice (where he was strongly advised to stop implementing open skies policies and safeguard the newly formed Emirates Airlines) and instead relied on the Emirates Airlines’ executives to turn his vision and objectives into reality. Emirates airlines, which started in 1985 with two flights every day to Pakistan, soon started earning large profits, a position which it maintained for nearly two decades (its profitability did not fall below 20% during these years), and by 2006 Emirates airlines was listed second amongst all other airlines in the world (it stood just after Singapore Airlines, which ranked first). Even after the US terror attacks, when many of its competitor airlines started making heavy financial losses, Emirates Airlines continued making profits, which led to charges that since the airline was controlled by Sheikh Mohammed, it was subsidized and accorded special treatment by the government of Dubai. However subsequent audits revealed such charges to be baseless, thus reaffirming the fact that Emirates airlines made profit primarily owing to Sheikh Mohammed’s able leadership. Besides, coming from UAE’s foremost family, hence having the authority to yield maximum power within his country, with the oil being one of the primary sources of finances for the family (making them one of the wealthiest in UAE), Sheikh Mohammed’s main strength lies in being trained adequately right from childhood, under guidance of his father, a well-known leader of UAE, who helped to create a strong framework for the country during its formative years after oil was discovered, and the country turned rich almost overnight. He was made to study various subjects which included Arabic and Islamic studies along with English. This prepared him to deal later with local problems (like Islamic financial rules) while at the same time handle foreign investments that did not wish to abide by Islamic guidelines. This is evident when we view the manner in which Sheikh Mohammed handled the problem of FDI within UAE, an Islamic country. As per Islamic laws any form of mortgage, saving accounts, loans or any form of financial transactions that are involved in bearing interests are prohibited. Charging interest is viewed as an autocratic process where wealth is shifted from poor to those who are already rich, which violates Islamic notions of social equality. However, the Islamic rules also provide for alternative methods for such transactions, and one must have an in-depth knowledge of Islamic laws to locate these alternatives and help forge a connection between Islamic laws and Western financial practices. Here Sheikh Mohammed’s training helped him to cross this hurdle and he established specific free areas within Dubai which were kept under the state law, where Islamic law was not applicable. These free zones were areas where the firms were allowed to set up their operations enjoyed lax labor laws, 100% tax exemption for a period of 50 years with complete ownership (as against only 49% ownership in the non-free areas of Dubai). The most famous free areas for commercial activities were the Dubai Internet City (DIC), Jebel Ali Free Zone Authority (JAFZA) for manufacturing, the Dubai International Finance Center (DIFC) and the Dubai Media City (DMC), and all these provisions attracted foreign firms, which found a strong incentive in setting up business centers in Dubai. The success of these special zones led to other neighboring countries look for similar options and soon there were many free zones operating in the area. Thus, here it is evident that Sheikh Mohammed with a firm knowledge and experience in local Islamic laws had a good sense or feel of his environment, which allowed him to adjust his own way of working, seek a solution to the problem accordingly, and achieve success in his project, thus establishing an expert power of leadership. His interests in being involved in governance from childhood gave him a prolonged exposure while providing him with a greater deal of experience than his brothers had. It clearly shows that his motivation was internal, born out of personal interest and a great passion to develop his own country and improve the standards of living of his own countrymen. According to the theory of situational leadership, effective leadership has no fixed style or format, and is more task-oriented. Successful leaders tend to integrate their leadership approach with maturity, where they set high goals but which are achievable; take responsibility and willing to be answerable for their work, while having relevant experience and education necessary to lead a group. Effective leadership is also dependent on the nature of work that has to be accomplished. In this context, it is quite evident that Sheikh Mohammed was educated, had adequate experience and he set targets, which were high but achievable. He desired to make UAE less dependent on oil, as he realized oil being a form of natural resource was limited in its availability and once the resources were depleted, UAE would turn into an economically weak nation, without any other natural resources to support the livelihood of its citizens. It is for this reason he started the project of building up an intensive Dubai-based real estate market that would focus on creating spectacular buildings and recreating new, almost fairy-tale like islands from reclaimed lands. This idea was based on Sheikh Mohammed’s vision of making Dubai a well-known tourist destination which would keep on attracting foreign tourists and investors, long after revenues from the oil resources dry up. Thus, here it is obvious that Sheikh Mohammed while possessing adequate experience, education and motivation, is also a visionary leader, and he made optimal use of the thriving global economy during early and mid-2000s, by implementing well organized and strategic planning, to transform Dubai into what it is today. In the context of examining personality traits using the OCEAN method, and analyzing Sheikh Mohammed’s leadership skills from the case study, it can be derived as: Openness – people who score highly under openness show traits in individual who are open to imbibe new knowledge and acquire new experiences. Openness factor also comprise of characteristics like being visionary and creative, having originality with wide scale interests. Analyses of the Sheikh Mohammed’s leadership skills show all the aforementioned traits, thus, scoring high in Openness. Conscientiousness – leaders or individuals scoring in conscientiousness are prompt and reliable while being logical and organized, in their way of working. Sheikh Mohammed transformed Dubai from being a village to a world class city in just two decades, which shows his power to act fast and his dedication in working towards achieving his set targets, thus creating an aura of reliability around him. Extraversion - Extraversion which includes characteristics of being assertive and energetic is clearly evident in the manner in which Sheikh Mohammed handled the creation and development of Emirates Airlines, thus giving him a high score in extraversion. Agreeableness – this relates to being collaborative, friendly, and empathetic in nature. Sheikh Mohammed shows sympathetic nature and a correct political feel, when he started bringing in changes in labor laws to help assist foreign laborers being forced to work under harsh working conditions with minimal wages). His collaborative style of working of seen when he worked as Director of the Department of Oil, and successfully collaborated with many foreign oil companies, and dealing effectively with various foreign consultants, laborers, and field workers, thus scoring in the factor of agreeableness. Neuroticism - Sheikh Mohammed scores low on neuroticism as he lacks any form of emotional instability and does not show any negative emotions, within the provided case study. Initially Sheikh Mohammed started as a business leader, whereupon he was focused on developing Dubai and UAE as global business center and hence emphasized more the economic growth and development of Dubai. However, focus only on economic aspects which led to positive development in terms of education, medical facilities and general standard of living, came at a cost, where there were gross human rights violation of foreign laborers, weak and unorganized infrastructural development owing to the unprecedented rapid growth, and loss of cultural identity of the local people. To meet these rising challenges, Sheikh Mohammed had to change his leadership approach and create a balance between being a business leader along with a political ruler. Owing to the thriving real estate industry in Dubai many construction laborers came from neighboring countries like Pakistan, India and Sri Lanka. These laborers faced gross rights abuse, where they were forced to live in large groups in very small rooms, had to start work before dawn, worked in conditions where temperatures crossed 110 degrees, while being away from their families for many years and still earning a pittance ($1 per hour). With passports taken away they were more like bonded slaves instead of construction workers. Besides this, there were no guarantee of continual work and denial of wages was common. To address these challenges (owing to pressure from various international rights bodies and the Indian embassy) Sheikh Mohammed had to shift from being a mere business head to becoming a political leader, and change laws where the workers are allowed to change jobs easily and levy fine on employers for denial of wages to their workers. Legislations were made to allow the formation of labor unions, as obligatory under International Labor Organizations rules (the UAE at this time was looking towards becoming a member of the World Trade Organization). Besides these measures, the UAE government under Sheikh Mohammed drew up many strategies to allow for social development, frame training programs that would equip the local emirates to take part in the labor market (instead of bringing in foreign laborers), and focus more on the education of children. As a political leader Sheikh Mohammed also emphasized on the need to bring in development that is more eco-friendly and sustainable in nature. Outcomes Both as business leader and a political head Sheikh Mohammed has achieved success, even though the country is currently going through a rough phase owing to global economic crisis. He managed to achieve his objectives of making UAE less dependent on its oil earnings, and started other forms of revenue earners like the real estate market, airlines and tourism. A large part of his intent matches the outcomes primarily owing to his leadership skills, and is evident in Dubai have a large scale real estate market and tourism based industry. A transformational leader, he acts as a mentor, provides intellectual motivation (willing to take risks and encourage creativity/ originality), is an inspiration to others (where other Middle East nations simulate his ideas) while strongly influencing those around him. However all these successes came at a cost where foreign laborers received harsh treatment, infrastructural development which could not match the economic growth lagged behind and remained weak and there was a loss of cultural values owing to Dubai turning into a cosmopolitan city. Despite many positive aspects, the negative parts within Dubai story cannot be wholly disregarded, and while Sheikh Mohammed is an effective business and political leader, he could have adopted the same measures, albeit in a slower manner. This would have given scope for Dubai’s infrastructural growth and legal systems to develop and remain at par with the country’s economic growth, thus disallowing many of the labor issues. Besides this, while not denying Sheikh Mohammed’s role in Dubai’s growth, relationships with his followers still remain obscure due to UAE’s media laws that prohibit any criticism of the ruling house and governing members. Thus, while we are aware that Sheikh Mohammed opened up Dubai and turned it into a hub of global trading activities, we are not aware as to the actual nature of his relationship with his juniors and followers with whom he works in the capacity of a business head and political leader. Read More