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Farooq Kathwari
Lahore University of Management Sciences (LUMS) Convocation
Lahore, Pakistan
December 24, 2003

Mr. Babar Ali, Esteemed Guests and Graduating Students:

It is a great privilege and honor for me to be with you at this important event. I would like to congratulate all the graduates and their families on this momentous occasion.  Also, my congratulations to Mr. Babar Ali for his leadership in developing this institution and to all the faculty and staff in making this a world-class educational institution. 

Yesterday Mr. Babar Ali gave me a tour of your institution and later in the evening I participated in the Awards Ceremony.  It is very impressive what has been accomplished.

I am privileged to share my thoughts with present and future leaders who must play a great role in shaping the debate for the future.  I strongly believe that the responsibility of leadership is to shape the debate - to project the right attributes - whether in a business enterprise, in civil society and even in our religions. If the leadership does not take this initiative of setting the priorities and the debate the vacuum is filled often with dire consequences.

Lahore has a great history being on the crossroads of interacting with many civilizations and ideas from several thousands of years. There are few places in the world that can match the history and culture of Lahore.

For me personally coming back to Lahore is part of a cycle of a journey that began in 1950 when at the age of five with my mother and other siblings we crossed the Wagah border to Lahore coming from Srinagar, Kashmir where our family lived. We had left behind my seven year old brother and an eight year older sister as they were in school. We had come to join our father who a year earlier had come to Lahore for a two week permit and was not allowed to return to his home as the authorities in Srinagar canceled his permit. He decided to take a leadership role in Azad Kashmir. 

We thought we were here for a short visit and that Kashmir would be reunited. Those were challenging times. We lived for ten years in Murree, Muzzafarabad and Rawalpindi, often visiting Lahore in winters.

At age of fifteen we again from Lahore crossed the border and journeyed to Kashmir to be reunited after ten years with our siblings and our family.

I lived in Srinagar, Kashmir for the next five years going to college and participating as a student activist in many protests demanding dignity for the Kashmiri people.  I also spent a great deal of time playing cricket and being the captain of our team.  I learned a lot about teamwork, the issue of human rights and focus during those years. 

At the age of twenty I once again crossed into Lahore one week before the 1965 India-Pakistan war and on the fateful day of the start of the war I was here in Lahore and saw the perils this great city faced. Lahore welcomed me with its usual hospitality and after the end of the war I was given traveling documents to leave for the U.S. for the next part of my life journey. 

As you can see Lahore has been very much part of my life journey and it is with much affection that I return to this historic city and your well-respected institution.

I mentioned that I believe the main responsibility of leadership is to shape the debate for their enterprises and societies. Debates and priorities are always shaped by leadership and in case leadership fails to take this opportunity and responsibility the vacuum gets filled with by people with louder voices and the most extreme agendas, often with projection of hate, oppression, intolerance, injustice and maintaining the status quo.

I have the privilege of being the Chief Executive officer of one of America's well known and well respected business enterprises. Ethan Allen is a 72-year old vertically integrated company from design of product, to manufacturing in U.S. and other countries, of marketing and retailing of home furnishings throughout North America and in several other countries including China.

When I took charge in mid 1980's Ethan Allen needed a major reinvention. The products were no longer relevant, the marketing and manufacturing needed a major overhaul. The challenge was to change the image of this well established enterprise with over a 90% brand recognition.  And as often happens the management at the company were comfortable with their status and felt there was no need to change.

Reinvention means taking a fresh look at the problems and challenging assumptions of the past.  In going through any major reinvention or new ideas one has to understand and plan that ideas will generally be first rejected, than tolerated and finally there is a chance of acceptance.

Reinvention is key to continued vitality of any institution and reinvention takes place either unconsciously, which is most of the time, or consciously which is obviously the preferred method. I have also believed that relying only on hope is not a good method.  Another important factor to keep in mind that with the rapid changes in the world in every field the cycle of reinvention is becoming shorter. 

A first major step in reinvention is that a core leadership group needs to be formed which accepts and embraces the need for change and helps in shaping the agenda and the debate for the rest of the organization. In the case of Ethan Allen I established a 40 member Advisory group of our leaders known for their leadership quality, entrepreneurship and well respected by their peers. This group was key to helping transform Ethan Allen during the last fifteen years and has played a vital role in marketing the ideas and taking the leadership initiative for change.

I also believe it is the responsibility of leadership to establish the overall environment and guidelines under which the enterprise will operate. In other words every institution is defined by the culture that the leadership creates.

As you all know, much has been written about management and leadership principles. Early on I was very much impressed by a letter of instruction that Hazrat Ali, in the seventh century, had written to governor designate of Egypt. This letter of instruction inspired me to establish our own set of “instructions” which we call Leadership Principles at Ethan Allen and form today our most important guidelines in conducting our enterprise.

Among the important instructions and advice given to the governor designate by Hazrat Ali were that he must remain on constant guard against his most important enemy that was himself, he cautioned him not to get carried away  on his importance and to control his ego. Another piece of advice was that a Leader is known by the advisors he, and today also she, surrounds themselves with. For instance, if advisors are tyrants they will likely lead to tyranny, if they are just they will likely lead to justice and if cowards they will likely inhibit leaders from courage.

The Ethan Allen Leadership principles have helped us to create a unique culture which has developed a highly motivated 10,000 associates. Let me briefly describe these ten Leadership principles which you will recognize are all associated with common sense and good governance.  These principles are available on our website at:  www.ethanallen.com

1. Leadership: Provide Leadership by example.

2. Accessibility: Be accessible, supportive, and recognize the contributions of others.

3. Customer Focus: Understand that a leader's first responsibility is to the customer. Communicate this philosophy to all associates and encourage them to make customer service their first priority.

4. Excellence and Innovation: Have a passion for excellence and innovation.

5. Self-confidence: Have the self- confidence to empower others to do their best.

6. Change: Understand that change means opportunity and do not be afraid of it.

7. Speed: Maintain a competitive advantage by reacting to new opportunities with speed.

8. Hard Work: Establish a standard of hard work and practice it consistently.

9. Prioritize: Establish priorities by clearly differentiating between the big issues and the small ones.

10. Justice: Always make decisions fairly. Justice builds confidence and trust, which in turn, encourages motivation and teamwork.

Developing principles or instructions is only the first step.  Our challenge was to make it part of our culture.  During the last fifteen years we have made it a point that these principles are discussed in small and large meetings and many of our senior management are asked to write about the implementation of these principles as part of self-evaluation.  A major portion of our incentive compensation depends on following these principles.

Most enterprises spend a great deal of effort on external marketing.   We developed an intensive, internal marketing program to continuously sell our principles to our associates. Our credibility depends on practicing what we preach.  Many enterprises become victims of their own propaganda rather than the practitioner of it.  The last principle which is justice is rarely used in business terminology yet we know that most inefficiencies and conflict takes place in organizations when there is a feeling of unequal treatment.   Throughout history a small band of motivated people have accomplished wonders. 

Our philosophy is also that it is better to be good and strong rather than big for the sake of bigness.  We operate and focus on only one enterprise.  We have stayed away from the temptation to buy others as leading one enterprise and making it excel is a major commitment.  I also believe that good governance is also good for profits.  At Ethan Allen we have consistently outperformed our peers in profitability.  In addition, in 1989, I had the opportunity to form a group to purchase Ethan Allen, keeping it as a private company for five years and, in 1993, taking it back public.  In 1993 the Company had very high debt, almost no equity and today the Company produces annually close to $200 million in cash flow with a market capitalization of $1.5 billion and no debt.

Our success to a great degree is attributable to developing a great motivated team, the basic fundamentals of which I learned in Kashmir as a captain of our College cricket team.

I mentioned that Ethan Allen had a 90% brand recognition in the mid 1980's. It was a known brand but was losing the most important attribute of a brand, that is being a preferred brand. Being known is no guarantee of being preferred. The challenge for leadership in every aspect whether a business enterprise, a social institution, a nation or a religion is to create a preferred brand.

A preferred brand must have positive attributes and than on a proactive basis those attributes need to be projected repeatedly. This is where leadership comes in and establishes their main job to practice and project the positive attributes.

Let me turn on another subject that is important to me - the situation of Kashmir. I am pleased about the recently announced steps to normalize relations by India and Pakistan and offer a window of opportunity to move forward.

There is a greater realization in India and Pakistan that they need to settle the Kashmir dispute for their well being and that of the region. This sentiment has long been felt by Kashmiris on both sides of the Line of Control, never more so than now. 

The conflict over Kashmir has been the chief source of tension between the two great nations and has resulted in tremendous costs for the region - mounting death toll, impact on economic growth, military buildup, rise in extremism and psychological stress, especially in the Kashmir region itself.

Seven years back I helped found a group in the U.S. called the Kashmir Study Group.   I was deeply concerned over the tragic situation in Kashmir, and the three parties were engaged in a no-win situation.  The group consists of twenty five members with political, diplomatic and academic backgrounds with great deal of expertise in South Asia. The objective was to help shape debate by moving people away from the old rigid stated positions of the parties and to consider new ideas.

As it has done so, the Kashmir Study Group has won the attention and respect of Pakistanis, Indians, and Kashmiris alike as a serious, innovative and objective organization dedicated to finding ways to move forward to a Kashmir settlement.  I have had the opportunity during the last several years to interact with the leadership of Pakistan, India and leadership on both sides of Kashmir.

I am gratified that today there is a greater  opportunity to move forward and the realization that compromises will be required by all parties. The current initiatives are being taken by the leaders of the region and as I have stated it is the responsibility of the leadership to shape ideas that will help in the resolution of this problem in a manner that is peaceful, honorable and feasible.

I have conveyed to all the parties a principle that we try to apply to the conduct of our own discussions. To provide a basis for fruitful negotiations, dialogue must be characterized by three features. One is the absence of coercion, with all parties agreeing to treat the others as equals. A second requirement is for participants to respond with empathy, to think someone else's thoughts and feel someone else's feelings. The third requirement is that dialogue must be concerned with bringing forth people's most deep-rooted assumptions in order to overcome misunderstandings. There must be genuine desire for peace.

I would like to also briefly touch upon another subject that is of utmost importance to all of us.  Today, there is a great deal of focus on Islam and we know the major perception, especially in the west, is that Islam is a religion of violence and intolerance. There is great need and an opportunity to project the positive attributes of this great religion.   I do not think that Islam needs reform or that Islam is inconsistent with democracy and freedom or women's rights. In my view, the leadership in the Muslim world needs to focus on the attributes that are hallmarks of Islam - of mercy, graciousness, tolerance, innovation, education, moderation, justice, and most importantly that Islam is a religion of reason.

It is critically important that the leadership  realizes that the above attributes are attributes of success for an individual, a business enterprise, a nation and the world at large. The projection and the implementation of these attributes is the responsibility of leadership.

It has been a great privilege and pleasure to have been here today and to share with you many of the principles that have guided me in business and in life.  I firmly believe that they are as valid for the rising generation of Pakistani leaders as they are for leadership in the United States and elsewhere.

Thank you all once again.   I am delighted and touched to have had this opportunity to revisit a country and a city that played an important part in my young life and have so generously welcomed me back many years later.

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