In 2004 Guler Sabanci took over the reins at the huge $12 billion Sabanci Holding, which includes 64 companies in a diverse range of industries ranging from banking, automotive and tyre materials to food and retailing, cement, chemicals and textiles.
Sabanci's career has spanned 27 years, culminating in her appointment as chairperson of the group following the death of her uncle, Sakip Sabanci. Chief executive Ahmet Dorduncu expects continued growth and has estimated that sales will rise about 19% in 2006.
The company is also set to take advantage of Turkey's power privatisation programme to build a power generation business. Sabanci faces the challenge of managing a sprawling conglomerate founded by her grandfather in the 1940s, and deciding when and to what extent to streamline the organisation as it develops its future plans.
She is not averse to consolidating parts of the business and tightening up central influence where necessary. In 2004, the group had nine joint ventures with companies including Toyota, Carrefour and Philip Morris. Recently, however, the company has bought out partners DuPont and IBM in two of their businesses, DuPontsa and I-Bimsa.
Turker Celik: Sabanci Holding is a huge organisation spread across 64 companies. What must you do to ensure that everything holds together, with a clear strategy maintained in the company's operations?
Guler Sabanci: At first sight, 64 companies does seem a lot and, of course, a big organisation constitutes a problem for good management. However, this has resulted from a requirement of the commercial code; we had to form separate legal entities for each business under our holding structure.
Sabanci has six business groups, which we call strategic business units (SBUs). Each group has a president and there is an executive committee that consists of the six SBU presidents and the CEO, and which convenes under my presidency. The SBU presidents represent the holding in their affiliated companies. They structure strategies parallel to the main strategy of Sabanci Holding. They manage their companies in accordance with these strategies.
How did you prepare for taking over the chairmanship?
Sakip Sabanci had prepared me for this job, and I had already had a lot of responsibility. Before, I was the chairperson of one of the five groups under our holding.
What has been the greatest influence on your life and most helped you in your role as a global business leader?
I became the general manager of Kordsa in 1985 (a Sabanci company that makes nylon and polyester industrial yarn), when I was 29 and stayed there for 14 years. Later, I was responsible for the Bekaert and DuPont merger projects, which were the first foreign joint ventures that we did on a 50-50 basis (Belgian steel wire manufacturer Bekaert joined Sabanci to form a new company in 1987, and DuPont bought into Sabanci's yarn manufacturer Kordsa in 1999). This structure was the first in the Turkish business world.
Who was in charge of these joint ventures?
There was a question of who would be the chairperson of these businesses. I said that the business itself would be the chairman. This was a new way of thinking, but they were successful associations and it was a change for Turkish business.
What skills did you develop in this period?
I acquired new abilities such as establishing a foreign association, making M&A agreements, enforcing these agreements, establishing investments and managing projects. Then I had the chance of making Kordsa a global company: it is a company that has its own technology, transfers and sells technologies, and in terms of these features, it is one of the first companies in Turkey. I worked on two global investment projects in the early 1990s.
We invested in Egypt, but we could not convince the board to invest in Thailand. Eventually, I worked through every phase of transforming a national company into an international one. This was a great experience for me.
What was the greatest challenge you faced in your first 100 days and how did you cope with it?
That I became the group chairperson was an important turning point for the Sabanci family. I am indebted to my uncles who were on the board at the time. They said: "The Sabanci group will get younger; the new generation will be responsible for business." As you know, family companies are important in the Turkish business world. The leader of the family also has presidency over the company. I could not be leader of the family because of my age.
However, when I became chairperson of the group, for the first time the eldest person in the family was not the president of the company. The wider public and many other family companies could not understand this.
However, foreign investors understood it. For this reason, companies in the group have become the most valuable companies on the Istanbul Stock Exchange. This was a paradigm change for both Turkish public opinion and the business world. I said: "I am not Sakip Sabanci. Do not expect me to become Sakip Sabanci." During the first 100 days, I was supported by board members and family members.
Sabanci Holding has acquired DuPont's 50% of DuPontsa and IBM's 50% of I-Bimsa (Bimsa was originally formed in 1975 to supply the group with IT services, and changed to I-Bimsa in 1992 after a joint venture with IBM Turk). What drives your acquisitions strategy?
Business life is dynamic, not static. Strategies and targets change over the course of time; we make the necessary practices for business strategy.
You establish a partnership with a company and it lasts for 10 to 15 years.
During this period, your targets and those of your partnership could change.
In order to adapt to these changes, it might be necessary to bring the partnership to an end. For example, our joint venture with IBM was very successful and had lasted for 15 years. However, this industry has experienced great changes; as a result, there were changes in our targets and strategies, and those of IBM, and in the end we had a friendly divorce. We have had two associations with DuPont: we created a new company, Advansa, from DuPontsa, following our buy-out of DuPont.
What are the advantages of going it alone?
We integrated our polyester business after owning all of Kordsa. If we had been still in partnership with DuPont, we would not have been able to achieve that because it did not have these plans in its strategies.
What kinds of issues do you face in integrating new companies from other countries and cultures into Sabanci?
We integrate the financial systems of the foreign companies that we have bought into our group. We arrange the structure of companies in accordance with our management processes and we manage in a local way. Our philosophy is: think global, act local. If you manage diversity in the group in a successful way, you should determine the policies in a global and local way. For this reason, we don't have any integration problems.
You've recently been involved in the management of organisational change.
Why did you need such a fundamental restructuring?
We had a series of fact-finding conferences in which we discussed the upcoming 15 years and the future of the group. We established the strategies of the group with the SBU chairmen and 250 senior colleagues. In the end, we shared our vision and mission with all our employees, and defined our vision as follows: 'creating sustainable advantages through differentiation'.
Why did you consult so many?
We had as much consultation as possible because this is a process of transformation. The more people, teams and groups that are part of these decisions and the more they participate, the easier it will be for them to contribute to the process. We needed a cultural transformation. I wanted managers and employees to contribute to these changes.
What did that mean in management terms?
Since the 1990s, when Turkey had economic problems, the corporate culture of the group had been one of crisis management. But if that lasts too long, it affects management mentality. Coercive management mentality replaces cooperative management mentality. Under these circumstances, there is no creativity. All the teams in the group knew this and they wanted to change it. It's an important advantage if everyone thinks that they could form a more creative, cooperative, transparent and forward-thinking group.
We have shown how the higher levels of the company now attach much more importance to innovation and have made it an integrated part of our culture.
Is this applied overall or does each company within the group make its own plans?
We met with and listened to people such as lecturers from INSEAD and leading experts. We felt that each company had to decide how it would adopt innovation into its culture. For this reason, we selected the appropriate methods and processes for each business. Now, the general director of each company executes these methods and processes in their companies.
What was the hardest thing you faced in driving through the changes?
The most difficult part of change is how it affects people. We talk about altering our administration style in this changing procedure; thus, we will change the climate within the company. We define our expectations and we also define new capabilities and direct our administrators to be more democratic. The main point, we explain, is human resources, which must be the essence of our work. The profiles and capabilities within the group are changing because the workers are the main factor that will create the difference; they will allow the change and allow us to reach our vision.
How is the Turkish economy changing?
All the data shows that Turkey is emerging from its economic difficulties. We have completed various strategies and plans for a 10-year period, and the European Union process is an important anchor; it defines the path of the country. Turkey is now one of the four emerging countries in the world. We have a great opportunity and if this period is managed successfully, the country can make good progress.
How can management encourage more innovation?
A climate of creativity is lost if the old coercive style becomes too dominant. Thus we see companies that have managed to reduce their costs, their efficiency is increased and their profits are reserved, but their creativity, their capacity for global thinking and their long-term thinking abilities have not been good enough. Turkish companies say that they can't create the technology, they can't create a brand, they were left behind in innovation and so on. These are the results of the economic crisis and we ignore them most of the time.
Are there any international business figures or companies you particularly admire?
I like General Electric; it has carried out a successful business as a huge conglomerate. It has done difficult work that is really hard to implement. I also like HSBC - it is carrying out a global banking process in a successful way. You have announced that you plan to triple group income in this period.
What is driving your growth strategy?
People focus on the concept of growth too much - the most important thing is a profitable and sustainable growth. You must have your own brand, technology and a priority for sustainable growth. We are not a top line-oriented group; we also consider the bottom line. We will also examine our portfolio; it is impossible to create a long-term perspective without doing this. The plans for our six business units are all different; they each have different dynamics and the targets have been defined for each of them. We have done this by staying true to our principle of being different and creating permanent advantages.
What is Sabanci's corporate brand and how would you like to see it develop on a global basis?
We have researched the standing of our corporate brand. Sabanci is a well-respected company with original ideas that other companies imitate. We will add creativity to these properties and bring the attributes of being a pioneer. The corporate brand of Sabanci - SA - is extremely valuable and we are positioning the sub-brands under this umbrella.
How would you like foreigners to think of the group?
The perception of foreign investors is that if you want to work in Turkey, work with Sabanci because it is reliable. France Telecom Orange, which had planned a partnership with us, carried out a survey that showed that foreign companies want to be associated with the brand of SA; for example, Carrefour is working with the label of CarrefourSA. Our foreign shareholders know us as 'Sabanci of Turkey'.
What is your strategy for cross-border expansion?
This is about the structure and nature of the businesses. Some of our businesses have to be global. It is important to follow the client; for example, Kordsa's client is global. Our cement business is local, but we have enlarged it within the Mediterranean region. You cannot be global just because you want it; it must fit with the logic of your business.
- On family businesses
When I became chairperson of the group, for the first time the eldest person in the family was not the president of the company
- On joint ventures
Our joint venture with IBM had been very successful, but there were changes in our targets and strategies, and those of IBM, and in the end we had a friendly divorce
- On implementing change
The main point is human resources, which must be the essence of our work. The workers will allow the change and allow us to reach our vision
- On the Turkish economy
All the data shows that Turkey is emerging from its economic difficulties. We have a great opportunity and if successful, the country can make good progress
- On growth
People focus on the concept of growth too much - the most important thing is profitable growth. You must have your own brand, technology and a priority for sustainable growth
- On foreign investors
The perception of foreign investors is that if you want to work in Turkey, work with Sabanci because it is reliable. They want to be associated with the brand
- Turker Celik is news coordinator of Platin, Turkey's leading monthly business publication.