In this edition of Author Talks, McKinsey Global Publishing’s Belinda Yu chats with Investcorp executive chairman Mohammed Alardhi about his new book, Connecting to the Future: A Blueprint for Dynamic Leadership (Simon Element/Simon & Schuster, October 2023). Since assuming the role of chairman in 2015, Alardhi has grown the wealth management company from a boutique investment firm to a global, diversified business with $50 billion in assets under management. A former chief of the Royal Air Force of Oman, Alardhi reveals how serving in the military shaped him as a leader, considers the advantages of “leading from behind,” and explains why executives don’t have to choose between doing good and doing well. An edited version of the conversation follows.
What are some of the biggest leadership lessons from your military service as a fighter pilot?
There’s really nothing like flying fighter jets. Situational awareness is probably the number one thing every fighter pilot thinks of and wants to achieve, because you really need to know where you are in the space that you’re in within your formation.
Where are you when you approach your target in your mission? How is your wingman doing? Who’s taking care of the threats? What are you going to do if you get bounced? Situational awareness connects very well with the world of investment and asset management, because today we are navigating a complex world in terms of geopolitics, macroeconomics, and headwinds of different kinds.
The second thing you get from serving in fighter squadrons is that it’s a team. No fighter pilot can do anything on their own. It is really as much about teamwork as it is about having good judgment. That also translates very well into the business world.
Serving in fighter squadrons is really as much about teamwork as it is about having good judgment. That translates very well into the business world.
Why did you write this book?
The story of Investcorp’s transformation is a great one that I wanted to share. It’s a firm that was founded in the Middle East, connected the Middle East with the US, and connected other markets with the US. After Investcorp took all of these amazing brands—such as Gucci and Tiffany & Co.—and built them out globally, I had the chance to actually take the company itself to the next level. From a leadership perspective, the dynamics of doing that over the last seven years are fascinating.
There are many lessons in how the team has navigated the COVID-19 pandemic, rising interest rates, and high inflation. These are not lessons from the past but are from what is happening now. What also makes Investcorp’s story so interesting is that our nearly 500 employees represent more than 50 nationalities. That’s a lot of different backgrounds, and everyone brings something to the table. We’re interested not just in their performance but also in where they come from and in the stories of their lives.
How did you establish your vision and road map for growth, while breaking down organizational silos?
Nostalgia is like a drug that you actually need to deal with because it makes people live in the past. It makes people live in their comfort zones and makes them think that their present situation is their destination.
I was so lucky to spend years on the Investcorp board before taking over as executive chairman and to really see, “Where are the opportunities? What is possible, and how can we grow?” Obviously, we changed the governance model by establishing the operating committee, creating the executive committee, starting town halls, holding off-site discussions, and questioning the status quo. We asked ourselves, “What can we do better for the future?”
[Breaking down silos] is all about communication. People need to feel comfortable communicating sideways, up, and down. In many organizations we say, “Oh, well this is something that we already do,” but we actually don’t. The situation requires someone to say, “Look, you don’t need to wait for the meeting. You don’t need to wait an entire year to send me a letter or to provide feedback. Here’s my email address.”
Obviously, some bureaucracies are very important for any organization. But when it becomes stifling, when it brings the fight from the outside to the inside, that’s really when it becomes dangerous and can stop growth.
How do you encourage a culture of risk taking?
It really starts from saying that you want an innovative culture; you want people to really think for themselves. You don’t want them to stop and wait for other people to think for them. When you really encourage innovation and creativity, that comes with mistakes. If you then kill it by saying, “Anybody that makes a mistake is a failure,” then you’re not doing anything. People should have the comfort that you trust them.
Creating this culture requires people to be able to think when there is nobody else around them. When they come back [from a challenging situation], they must know that they will find a safe place to land; a trusting firm behind them. This is what I truly believe is behind the successes of great organizations.
How has Investcorp’s commitment to ESG led to both doing good and doing well as a business?
From the beginning, Investcorp has always had investors wanting to have their values reflected in their investments. Because of where we come from, we had investors in the Gulf who did not want to participate in certain investments such as gambling or weapons. Socially responsible investing—using our investments to do good and to do the right thing—is in our DNA. Sustainability and ESG [environmental, social, and governance] has made it more formalized for us.
It’s really about building this [lens of ESG] into the culture everywhere. When our investment committees look at a company, a building, or a process, they ask themselves, “Is this going to be good for the planet? Is this going to cause harm? Is this going to withstand some of the challenges of the weather? Is this going to pollute?” You ask yourself, “Why would we not care about these things if we really want to leave a better world for our children and grandchildren?”
Recently we launched a platform to fund climate solutions, which we announced at COP28. The climate fund’s objective is to champion small to medium-size companies working with proven climate technologies. We will give them all the support that they need to continue to grow and develop technologies that will immediately impact decarbonization and [help to reduce greenhouse gas] emissions.
How have you positioned Investcorp to thrive throughout the COVID-19 pandemic and beyond?
Investcorp has been in existence now for over 40 years. We’ve gone through all kinds of cycles, all kind of crises, all kinds of challenges. Because we do invest for the long term, we’re able to deal with each situation.
The COVID-19 pandemic was a big test for everyone and, obviously, for Investcorp. We changed how we navigated this challenge in particular, because while a lot of past crises primarily involved a financial aspect, COVID-19 also concerned people’s physical health, their mental health, and their families.
It became really important to change our focus from wanting to just press on financial gains to actually say to our people, “You and your family are more important than making more profit.” Without our people, there’s nothing we can do. [Technology enabled us to] in a very short time, to be productive. And as in every crisis, we’ve probably done some of our best deals during COVID because we were able to adapt.
What investment trends are you excited about that might take Investcorp into the future?
We run an annual survey with major institutional investors in many areas in the world. We ask, “What are the themes that you’re thinking of?” Obviously, things like AI and aging are at the top of the list. Educating the workforce and migration are also key trends.
Rather than specializing in something, Investcorp has been looking at all opportunities that come our way. Whether it is in healthcare, education, technology, business services, or another field, we ask ourselves, “Is this something that we can bring value to and take to the next level?” We continue to focus on those areas where we feel that we can add value.
We spend a lot of time teaching and training people in particular areas of expertise. But leadership often gets left until the day you want people to lead. That’s too late, in my mind.
What does it mean to ‘lead from behind’?
In the culture of the fighter squadrons, leadership is shared. One day, it’s the squadron commander who leads the formation. The next day, it’s the young, new pilot who leads. Everyone learns from everyone. An exception would be in urgent or threatening situations, where, obviously, the most experienced leader needs to be out front.
It’s the same here, in our world of asset management and investment. Once you really set the vision—show the strategy—it’s important that you let people get on with it. It’s important that they feel that they own it. It’s important that they feel that they are supported to do things themselves.
Like I say in the book, it’s not always easy. It’s not always very efficient, because it takes time; it takes patience. You really need to have the attitude as a leader that you want others to succeed, and you want others to also be leaders. We spend a lot of time teaching and training people in particular areas of expertise. But leadership often gets left until the day you want people to lead. That’s too late, in my mind.
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