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Innovation in Action at Dubai-based Tejari

By Rafi-uddin Shikoh,
Posted Sep 20, 2007

Innovation is not a fancy buzz-word. It is a repeatable process that enables superior and sustained financial returns for companies.

The 2006 Global Innovation survey of executives by the Boston Consulting Group (BCG) which deemed global companies such as Apple Computer, Google, 3M, Toyota Motor, and Microsoft as the world's most innovative companies, also acknowledged their superior financial performance.

Looking at the Muslim world, most of the established companies are struggling to even acknowledge the value of Innovation let alone adopting it in a sustainable, financially viable fashion. Otherwise, wouldn't we be seeing, for example, companies from the DS100 - Top 100 Companies in the Muslim World mixed in with top global brands, leading global innovators, etc.

However, positive signs are emerging from some entrepreneurial start-ups. One trailblazer is Dubai based Tejari, a relatively new, government-owned venture started in 2000 which has become the regions largest Business-to-Business (B2B) online marketplace.

Tejari has created a new market-space that did not exist in this form before it. It is providing a huge value add to the corporate purchasing function by offering more competitive and far reaching access to suppliers and the ability to efficiently transact online.

Inspired by the innovative spirit of Dubai 's leadership, and led by innovation minded leaders - Shaikha Lubna Al Qasimi, Former CEO and current Board Member, and the current CEO, Mr. Omar Hijazi, an industry expert - Tejari has identified 4 key planks to its innovation strategy and highlighting barriers to innovation in the region.

Tejari Profile

Tejari was founded in June 2000 to be a pioneer in promoting e-procurement and e-commerce in the region. Its Business-to-Business (B2B) marketplace allows companies to buy and sell goods and services online. Through the tejari.com website, buyers can find, compare and procure products and services from the familiarity and convenience of their desktop Internet browser. Suppliers can list their products and services and sell them through online catalogs or auctions.

Last year Tejari had more than $1.3 billion worth of business transacted through it, marking a 33% rise in trading volume. They are now in twelve nations across the Middle East , South Asia , and North Africa (having opened recent operation in Pakistan in partnership with the local Kanoo Group). To date more than 77,000 deals have been conducted online and there are over 80,000 member companies.

Tejari also helps manage and place complex, high-value tenders online. For example, in July 2007, the Dubai Roads & Transport Authority (RTA) transacted the largest ever online Tender in the MENA region, with an AED 1.9 billion auction to buy 620 buses. The tender was published online through Tejari.

Tejari's expertise and reach helped RTA get the best value out of their procurement. H.E Mattar Al Tayer, Chairman of the Board and Executive Director of the RTA said: "By placing this tender through Tejari, the RTA was able to greatly enhance the choices we had to fulfill our requirements, giving us greater efficiency in our procurement and enabling us to make the best use of government funds."

Vision from the top

In the 2006 Global Innovation survey of executives by the BCG the person who was voted as the biggest driving force behind innovation at their company was the CEO. Indeed, at Tejari, Innovation has been led by an inspired and experienced executive leadership.

Prior to joining Tejari, she was senior manager of the information systems department at the Dubai Ports Authority (DPA), a position she held for more than seven years and has also headed the Dubai e-government executive team responsible for instituting e-government initiatives throughout the public sector.

Her inspired leadership also has a mission of broader social impact to the region. She has stated that, "I see myself as a change agent for youth to seek technology as a vehicle for development, for women to aspire to serve our society to grow & prosper. For the world to seek better understanding of Muslim & Arab culture"

Since becoming the Minister of Economy of the UAE, she passed the helm of Tejari's CEO role to Mr. Omar Hijazi who has taken its innovation agenda to new heights. Mr. Hijazi brings to Tejari a Silicon Valley flair with his experience gained during a highly successful career primarily in the high-tech community.

Prior to joining Tejari, Mr. Hijazi was Senior Principal at A.T. Kearney, Inc., a global management consultancy, providing thought leadership to the high-tech practice and e-commerce groups. It is in this role that Mr. Hijazi consulted with Tejari on launching new services and building a five-year business plan that led to his involvement with the startup venture.

'Four Key Planks' of Tejari's Innovation strategy & Key Barriers

Mr. Omar Hijazi recently articulated a well defined innovation strategy for Tejari at two major global forums, the OECD Council at Ministerial Level in Paris and the Middle East Asia Leadership Forum which was held in Dubai.

At these sessions, Mr. Hijazi expressed that, "Tejari's growth has been based on an Innovation Strategy that has helped us to overcome many of the issues that are endemic to the entire Middle East . We have harnessed the e-business model to innovate and create a vast range of services that go beyond our online marketplace, and this is a model that has successfully been exported to markets all over the MENA region."

Mr Hijazi laid out the following 4 key planks to Tejari's strategy and pursuit of innovation while identifying some of the key barriers to success the region faces.

1.  Purposeful decision to bundle Tejari's Intellectual Property and export it to other countries in the region

• We used a franchising business model to make this happen. In fact this is how we were able to quickly expand to 12 countries across the region. It was a challenge to create salable IP.
• Trust me it is a lot easier to buy! And this is exactly what is happening. The Middle East is the most active franchising sector in the World, with the abundance of capital, established franchise licenses from QSRs (such as KFC, Burger King, McD's), retail formats (such as Starbucks and Harvey Nichols), office services (such as Kinko's) and many others are being snapped up left and right.
• The key issue we need to overcome is that right now "It is easier to buy than to build"

2.  Creation of a "Corporate Venturing" division within Tejari.

• The mission of our New Ventures division is to identify opportunities in the market and then incubate and launch new businesses with innovative e-commerce offerings. In fact, we are looking to create "the Idealab" for the Middle East
• Last year we launched our first, an online real estate portal by the name of Simsari where investors and consumers can find, finance, and buy Middle East properties over the Internet
• We have 3 more projects planned for this year
• However, as we solicit investors, we are fighting a mentality and investment decision of low risk/quick returns vs. high risk/long term returns.people are far more interested in making a quick buck in real estate vs. patient capital to watch a company grow into a global brand.

3.  We are shifting our compensation model away from traditional cash & benefits to a long term incentive program based on equity through the vehicles such stock grants and stock options.

• We believe that the opportunity for wealth building drives the desire to innovate beyond the competition and the market to create growth and higher rates of returns
• Creating an "owner-mentality" will create incentives to create above market returns which in turn demands constant innovation
• To illustrate how limited this practices is in the Middle East , none of the five to ten companies we sourced to develop our Equity Program could list a Middle East reference, all their experience is outside of the region.

4.  A commitment to R&D with Academic Institutions

• Tejari seeks out and engages Academia to identify collaboration opportunities for scientific research in the field of advanced electronic commerce technologies. We see this as our opportunity to play a role in stimulating a knowledge-based economy in the UAE. These joint projects will be unique collaborations between industry and academia.
• However, the key to its success is in finding additional partners who can provide matching contributions, also take a long-term view and can exercise patience with the R&D process. The sources of funds will need to come from Government funds and the private sector.

Mr. Hijazi's Message - If the private sector aggressively adopts these principles, we will see much greater levels of innovation in the Middle East . We sure wish Tejari the best and hope its innovation strategy will lead it to become a global brand.