By ROLA TASSABEHJI
From INSEAD Knowledge (http://knowledge.insead.edu)
The Aramex story -- that of a small player in the Middle East rising to compete against the biggest companies in the global transportation and logistics market -- has been heralded by Thomas L. Friedman in his book "The World is Flat" as a model for companies benefiting from the flattening of the world through globalization -- the leveling of the economic field and the destruction of barriers to entry, opening the door wide for individuals or companies anywhere in the world to collaborate or compete globally.
Fadi Ghandour established Aramex in 1982, acting as an express courier wholesaler to North American courier companies, including FedEx and Airborne Express, consequently becoming DHL's first real competitor in the Middle East. Today, with a network of 40 independent express companies that make up the Aramex-led Global Distribution alliance -- each company specializing in its own region -- Aramex offers its customers around the world services ranging from international and domestic express delivery, freight forwarding, logistics and warehousing to publication distribution and specialized international shopping services.
Aramex has also become well known in the Middle East for its focus on sustainability. In 2006, Aramex released its first annual sustainability report, becoming the first company in the region to do so. It has also expressed a commitment to being the first express and logistics company to go carbon-neutral. Last year, the company joined the United Nations Global Compact, the world's largest global corporate citizenship initiative, which provides a framework for businesses wishing to ensure that their operations and strategies are sustainable, particularly with respect to human rights, labor, the environment, and anti-corruption initiatives.
INSEAD KNOWLEDGE: What have been the key ingredients to your success?
GHANDOUR: We recognized early on an interesting niche for us. Post offices in the Arab world were inefficient and the big players in the industry, besides DHL, were not present. So we were able to build on our regional competitive advantage based on a simple idea: to create a courier company of courier companies for the region.
INSEAD KNOWLEDGE: Innovation is not something the region is famous for, but one that Aramex has built its success on.
GHANDOUR: Innovation is a product of Aramex corporate culture and we have tens of innovations every year. One of our extremely successful world-class innovations is the "Shop and Ship" service, which we are now considering taking global. "Shop and Ship" was originally a product of the Lebanese civil war -- when the security situations closed travel routes. For Aramex this turned into a tremendous opportunity.
It was a simple formula. Consumers can go online to get a U.S.- or U.K.-based address assigned by Aramex, do their shopping and get their packages delivered to that domestic address in the U.S. or U.K. Aramex picks up (the shopping) and brings it over to the region. So again we recognized a niche. ... Today it is growing at 50 to 60 percent year-on-year. There was little advertising or marketing and, largely through word of mouth, it caught on.
INSEAD KNOWLEDGE: Among regional companies, Aramex is also known to have a unique corporate culture. How did you build this culture?
GHANDOUR: Purposefully. The corporate culture is a reflection of our values and from the beginning we were firm believers in nurturing and building a corporate culture based on certain values and ensuring everyone lives these values every day. Instilling these values was a process of continuous education, training and reinforcement at every opportunity. Values of empowerment, respect, and innovation took a lot of effort and time to install and internalize. For years, I personally ran workshops across the organization to hundreds of people to ensure these values are spread and trickle down across the organization.
Corporate culture becomes particularly important to attract and retain talent, as well as to manage the talent pool. Most of our leaders at Aramex have 10 to 15 years in the company and all own stock. They feel this is their company.
INSEAD KNOWLEDGE: At a personal level, you are known as someone who is in touch with the region and community. This is also reflected in the social and environmental track record of Aramex.
GHANDOUR: Corporate responsibility has been the signature of Aramex corporate culture and goes back to the formative years in the early 1990s when we shaped the Jordanian basketball team. So, historically, we were always interested in impacting the community which we operated in and, at the beginning, although we could not have a big impact because of our size, we were still able to make a difference and reshape sports in Jordan. So that was the origin.
We have since expanded into other areas including education, youth, and empowerment, and today are committed to managing our growing CSR (corporate social responsibility) initiatives according to global standards. In addition, we are the first company in the Arab world to issue a sustainability report according to international standards, a reflection of the commitment and transparency of how we manage our projects.
These activities are driven by the belief that the company is committed to delivering, in addition to financial returns on its stakeholders, social returns at the same time. Our focus on marginalized communities in education and empowerment of youth is not only about giving money, but involving our people, using our entrepreneurial skills and bringing in other business partners to take part in these initiatives.
At a personal level, community service has been part of my upbringing. I was brought up in a family that was socially engaged. I was always aware of the social issues and realized early on the need to make an impact and touch people's lives. As the company grew, I realized we were able to touch more and more lives, and although we can't solve these problems alone, building private/public partnerships can make a difference and create value, both financial and social value to our stakeholders.
