Design

How it looks vs. how it works

by Joe Ayoub
written by Joe Ayoub

My first encounter with the term “design thinking” was five years ago, while researching a project for a client. At the time we were facing a “wicked problem,” a problem with multiple and inter-connected sources. The client’s team had tried all the traditional methods and tools and failed, so we were tasked with looking at how we could find unconventional ways of solving the issue.

What I discovered about design thinking was beyond my expectations, and it was one of those big “aha!” moments. What struck me was the realization that design is actually not how things look—as we have been accustomed to describe the design of, for instance,  flower vases—but it is about how things work; in the case of a vase, is it easy to handle, fill with water, put on a shelf? As the late Steve Jobs said, “Most people make the mistake of thinking design is what it looks like. People think it’s this veneer—that the designers are handed this box and told, ‘Make it look good!’ That’s not what we think design is. It’s not just what it looks like and feels like. Design is how it works.”

Since this epiphany, at Brandcell we took a deep dive into this discipline and now use design to solve key business challenges, designing growth strategies for major clients.

So what is design thinking? According to Tim Brown of global design company IDEO, “Design thinking can be described as a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.”

Basically, design thinking is a methodology that we use to solve complex problems, and it is a way of using analytics with empathy, and using user-research to trigger and envision future innovations that lead to sustainable growth.

The design thinking process, or what is now called human-centered design, starts with understanding user needs and the job to be done. This is achieved by walking in the customer’s shoes with a large dose of empathy to discover the world through the lens of the customer’s declared and undeclared needs and aspirations. This leads to identifying key insights, which are translated into opportunities for innovation and problem solving, or what is called “framing the challenge.” This is followed by an ideation stage to design solutions that are: 1. desirable (for customers), 2. viable (for the company) and 3. technologically feasible (doable and differentiating). The third stage entails zooming in on a key solution and creating rapid prototypes for testing before roll-out. The last stage involves implementing and monitoring results.

It is worth noting that in a lot of situations we are surrounded by bad design. Bad design is easy to achieve as it does not require high skills, and people do it all the time without much effort. It does not need much concentration to think about the best way to integrate the form and function of the object. However, the most worrying and insidious effect of badly-designed products or services is its impact on our well-being. Some examples include: complicated public administration processes that cause people to suffer because of a poorly thought-out service design; a frustrating call-center where no answers are given; bad product displays; difficult to read packaging; a back-breaking chair; a website with 100 steps to process one request; a one hour queue at a hospital. These bad designs make people’s lives more difficult and stressful. Design is therefore about moving things toward more desirable outcomes and more enjoyable experiences.

Design thinking is today a core capability adopted by major companies around the world. Companies have embedded design labs and applied design thinking to solve issues, producing both incremental and radical innovations. Large management consulting firms have embedded or acquired design studios and designers to complement their traditional tools and provide more holistic solutions to problems that cannot be tackled by analytics alone. The fields in which one can apply design thinking are extremely wide, from designing business strategies, to organizational development, customer experience, new product development, social design, and more. One particular field of importance nowadays is “experience design.” As the world economy shifts toward customers spending more on experiences and less on goods, designing a good customer experience is key. If you’re a strategist or CEO, and you are thinking about how to differentiate your company and services without attempting to understand and improve how your customers experience your brand at every touch-point, you are probably missing out on a very, very important lever.

Another application of design is digital transformation. Too often we meet clients who want to integrate digital channels but start at the wrong end, building a lavish website and spending on social media to attract potential customers, with limited success. First you need to understand which part of the journey customers would like to see digitized and in which part they prefer to keep interacting with a human, which is more reassuring (insurance and banking works best with a mix, for example). This is what we call designing an omni-channel strategy. Design then permeates the back-end, to redesign more efficient functions and processes, removing silos to ensure best delivery of a customer experience that will delight and create loyalty. We have been helping local organizations adopt design as a core skill for innovation, rapid prototyping solutions, and new initiatives in situ, before committing heavy resources and spending on expensive launches that might fail in the real world.

While not everyone is a designer, to design is to liberate the creative confidence and advance with an open, curious mind. With this approach, we can achieve better solutions, amazing innovations, and aspire to the best there is, and even to heights that have not yet been scaled. Better designing what we need is also a good discriminator to limit what we produce to what is of real value in improving human lives, and dropping the clutter that pollutes our senses and affects the quality of the environment.

It is important to realize the greater sense of design that lies beyond the shape and look of things, and to understand and practice how human-centered design actually improves life.

Brilliant design is holistic beauty, and as they say, beauty is a promise of happiness—in Lebanon, we all need it badly.

Joe Ayoub is the founder of Brandcell Consulting.

0 comments
0 FacebookTwitterPinterestEmail
Design

Mapping the future

by Tania Anaissie
written by Tania Anaissie

Design thinking” is a powerful agent for social innovation, and since its emergence in 2002, when David Kelley of IDEO coined the term, practitioners have been applying it to drive social innovation. Design thinking is being used to address healthcare, education, and environmental challenges across the world. However, as designers engage in this work, they are finding gaps in the process, and as true designers, they are adapting and iterating the design thinking process itself to meet these new challenges.

As a design practitioner and instructor, I feel there has never been a more exciting moment in the design field than now. It is a time of experimentation and growth. So what are social innovation designers doing to adapt the process? What are we changing and why?

When I left my post at the Hasso Plattner Institute of Design at Stanford (known as Stanford d.school) in 2016 and launched a social impact design studio, I found working on social challenges required adapting the design process. I started to question: Why are we only asking for community members’ input on a challenge at the beginning and end of the cycle? What if they were part of our design team and present for all decision making? Why are community members viewed as unaware of their own needs, when many of these communities are organized and actively asking for what they need? What are the ethics of starting a design project when there is not a clear implementation plan or budget? How am I challenging my own biases around how I view this challenge and how I collaborate? How can I create an intervention with confidence that it will create positive behavior change?

I quickly started building tools to help navigate these queries. I started practicing co-design “with” communities instead of “for” them. I met many designers who were asking the same questions and developing their own tools to address them. We spent a year learning from each other’s work and then founded the Equity Design Collaborative, a group formed to share this work and build a movement in the design sector.

“Equity design” is a design thinking process that acknowledges historical context and power dynamics. For example, when I did work in Cape Town, South Africa while a lecturer at the Stanford d.school, I had to understand how I was perceived as an international lecturer coming from an American university to a country that has a complex relationship with colonialism and a history of abuse from outside researchers. That was an important factor to understand before I did any design work there. Equity design also helps us manage our biases of people, ourselves, the challenge framing, and the outcomes. It involves a practice of building deep self-awareness, which is critical for being able to work effectively with communities on difficult social challenges.

I developed a form of equity design called “liberatory design” with colleagues from the Stanford d.school and the National Equity Project. We pooled our expertise from the design thinking, systems thinking, and equity change fields. Equity change helps us build deep relationships with communities, talk honestly about power dynamics, navigate difficult conversations, and practice co-design in a way that uplifts all. Systems thinking tools help us see the social challenge in a wider context—a context that includes multiple stakeholders who are intricately interconnected. For example, I am working with a government agency to help them reduce the rate of recidivism in their county. They want to help formerly incarcerated residents thrive in their city and stay out of jail. In this project, behavioral health, security, data, medical, and program teams across the county have to collaborate to address this social challenge. To do this work demands systems thinking tools. Systems thinking helps us design an intervention that works across departments and systems. Without systems thinking tools, we risk oversimplifying the challenge and either creating ineffective solutions or even harmful ones with unintended consequences.

Equity design has immense potential to drive impactful social change in Lebanon. Design thinking helps identify meaningful challenges to explore, develops creative solutions, and generates rapid learning through prototyping and testing. In addition, using systems thinking we can unpack the complexity and interrelatedness of these challenges. For example, if we are trying to address the trash crisis in Lebanon, we need to interview community members in different cities to understand how it is impacting them. We also need to use systems tools to map out everyone connected to this issue: manufacturers, trash collectors, restaurants, government officials, recycling plants, and more. We cannot address this challenge by focusing on changing human behavior in one group alone; we need to identify the interconnectedness of the groups and how that affects the outcome. We might decide that the way to address the crisis is to reduce the amount of plastic packaging that people purchase at the grocery store. Or we might find that the most powerful leverage point is to change a national policy. By mapping the complexity of the system and designing a solution with communities, we can identify ways to most powerfully intervene to drive social innovation.

Lebanon is rich in driven, compassion, and intelligent change-makers. By leveraging equity design practices, these actors can add a powerful resource to their toolkit in their mission to drive social innovation. I encourage you to start building your own equity design tools and join our movement. The need for social innovation will continue to adapt, and so must our design practices.

 

Tania Anaissie is the founder and CEO of Beytna Design Studio, and lecturer at the Hasso Plattner Institute of Design at Stanford University.

0 comments
0 FacebookTwitterPinterestEmail
Design

Capturing the digital

by Loubna Ibrahim
written by Loubna Ibrahim

Businesses spent over $3.5 trillion worldwide on technology last year, according to research company Gartner. A large part of these investments is due to digital transformation strategies. Harvard Business Review defines “digital transformation” as an ongoing process of changing the way you do business. It requires foundational investments in skills, projects, infrastructure, and, often, in cleaning up IT systems. It requires mixing people, machines, and business processes, with all of the messiness that entails. The question is: How can a company initiate that digital transformation? The short answer is: design thinking.

In recent years the term “design thinking” has built up a lot of momentum across different fields. The world’s leading brands, agencies, and consulting firms have incorporated the design thinking process into their business. So, what is design thinking, anyway? And why is it so important for you to know about today?

Design thinking is a creative approach to problem solving, using five main action steps: empathize,  define, ideate, prototype, and test. The methodology goes back to the early 90s, when IDEO, an international design and consulting firm, was founded in California and started applying a human-centered design (HCD) process in various fields—from designing a computer mouse for Apple to solving complex challenges related to healthcare, government, education, and more. Today, bluechip companies and consultancies (such as IBM, Accenture, Microsoft, and Google) have adopted and adapted the methodology.  A March 2018 study by Forrester Research found that teams employing IBM’s design thinking practices doubled design and execution speed, shortening initial design time by 75 percent and development and testing time by 33 percent. Picture that on a multimillion-dollar investment.

People, not technology

There is a reason all of these successful companies are now using this methodology: Building a product that no one would use is a waste of time. HCD methodologies, which the design thinking process belongs to, are tailored in a way to solve people’s troubles first, by having designers metaphorically walk in the shoes of their end-clientele. In this formulation, people, not technology, are the key to digital business solutions. Back in 1997, Apple Computer Company (as it was then known) transformed its business from the bottom up, by putting the customer first, and designing its products accordingly. Steve Jobs famously said, “You‘ve got to start with the customer experience and work backwards to the technology.” Often there are many customers, not just one, ranging from external consumers and stakeholders to internal customers, otherwise known as employees. In the latter situation, internal departments and team members take on a larger role in finding and establishing intra-corporate, innovative solutions.

Co-designing: A multidisciplinary approach

It might seem slow or counterproductive to some, but a solution that focuses on people first requires that one listen and engage with a wide array of participants. Hiring only a pastry chef will not, after all, help a restaurateur create a complete menu. By the same token, companies need to involve several specialists with multidisciplinary backgrounds to develop the right solution, especially when it comes to technology solutions.

The design thinking process emphasizes collaboration, not only to make sure that the right product is being built for the right audience, but also to unleash creativity throughout the organization while solving complex challenges. In fact, the co-design process involves customers, business owners, designers, researchers, engineers, and all other stakeholders to ensure that the end result is practical and meets the existing needs. When Ideatolife answered the call to find a technology solution for an oil and gas firm, they made sure to involve all the stakeholders from the different departments, from IT to the sourcing department, and bottom-up, from the field and rig teams to the VP’s office.

Rinse and repeat: 

Test, learn, iterate

While some companies already adopt a lean and agile approach to finding solutions, most of them find themselves ending the process at the first iteration. Technically, this limits the opportunities for the corporation. In fact, the process should continue on for several iterations, which would be tested among the different teams, but mostly from the different points of view of the relevant audiences.

Iterations can become products, with every new model emerging after a design thinking process cycle is complete. Mark Zuckerberg reportedly said that he never knew the full potential of Facebook until after he and his team had tried several versions of the site, applying different ideas over the years.

Zuckerberg’s 2012 letter to potential investors that laid out “the hacker way” highlighted this critical culture: “The hacker way is an approach to building that involves continuous improvement and iteration. Hackers believe that something can always be better, and that nothing is ever complete.”

Parting words

Each person and organization faces challenges in their own way. The design thinking process aligns your efforts and helps you focus on what is truly the most important thing: people. We are all trying to find solutions for problems that people are facing, whether in their companies or in everyday life. Technology helps streamline those solutions for people, and not the other way around.

How are you using technology to solve your problems? Are you ready to use the power of design thinking to rocket into your next iteration?

Loubna Ibrahim is a product and innovation manager at Ideatolife, a creative software development company based in Beirut that adopts design thinking for digital innovation.

0 comments
0 FacebookTwitterPinterestEmail
Last wordOpinion

Talking saves lives

by Mia Atoui
written by Mia Atoui

The conversation around mental health in Lebanon has been ignited. While some believe we are still at the beginning of this journey, it is safe to say that the past five years—and in particular the past six months—have witnessed a dramatic change in the state of mental health awareness and resources in Lebanon. This change has come off the back of years of academic research, lobbying, awareness campaigns, and a national mental health strategy launched by the Ministry of Public Health in 2014.

The concepts of mental illness and mental wellbeing are not new to Lebanon. The wars and turmoil the country has suffered have left a clear impact on the generations who lived through them, as well as those they raised. Lebanese have been using mental health services for many years, though these have been restricted to the affluent segment of the population, who can afford them and have the knowledge to recognize their need for them.

The cost of mental health care, lack of awareness of the symptoms of mental illness, and deeply entrenched societal stigma are the main barriers preventing Lebanese citizens from accessing mental health services. These barriers continue to create a gap in our system—one that disadvantages a large section of the population when it comes to seeking health care services that many consider a fundamental human need.

Good mental health and access to healthcare services in the event of a mental illness are as basic and fundamental as good physical health and access to a doctor when sick—a fact that remains difficult for far too many to comprehend. One reason for this is that in Lebanese society mental illness has long been stigmatized. The misconception that a person’s mental health is a reflection of their character or personality—something within their own control—is still rife in this country. Those who do suffer from a mental illness are then judged, off the back of these ill-informed opinions, as being weak, or lacking some kind of discipline or will power. Mental illness is not appreciated for what it is, an illness. The alternative is simply to “pull yourself together.”

The impact of stigma

These misconceptions mean that those who do suffer from a mental illness are especially cautious about raising the topic of mental health with even close friends or family, as it often leads to feelings of embarrassment, doubt, or shame, thanks to being exposed to these flawed ideas. The most commonly raised feelings behind the closed doors of a psychologist or psychiatrist’s clinic in Lebanon is a reflection of this guilt and shame: “My feelings are too silly, my problem is just too insignificant to be discussed in here. I should just keep them to myself and just pull it together.”

Here, I must assert that this attitude is dangerous, as it deprives its owner of the basic need to be seen as a normal human being, and to be validated for their own pain, struggles, and vulnerabilities.   

What is positive here in Lebanon is that these misconceptions around mental illness are slowly changing. Families and individuals are coming to terms with the scientific facts; although the exact cause of most mental illnesses is unknown, it is becoming clear through research that many of these conditions are caused by a combination of biological, psychological, and environmental factors. National campaigns, as well as social media, allow these messages to spread faster and more effectively than they used to. Mental health professionals, NGOs, and academic and governmental institutions in Lebanon, each in their own way, have been educating the public on mental health by opening up the conversation and pushing for more resources and increased access to treatment.

Talking is treatment

Talking saves lives: having an open and honest conversation about mental health can help those suffering and this open dialogue is gaining momentum. Forcing a nuanced and healthy dialogue about mental health into the public’s awareness is what Embrace has been doing these past five years. Through campaigns like “Fekko el-e’ede” (Untie the knot) and “Akid rah fee’” (Of course I will wake) alongside the annual commemorative “Into the Dawn” walks in support of suicide victims and their families, and culminating with Embrace Lifeline, the first suicide prevention helpline in Lebanon and the Middle East, we have unlocked the doors of stigma. As a society, we are ready to embrace mental illness and take on the responsibility of seeking change and improved quality of life.

0 comments
0 FacebookTwitterPinterestEmail
Economics & PolicyHuman rights

The Brussels II conference

by Francisca Ankrah
written by Francisca Ankrah

Despite the government’s substantial commitments to improve the refugee situation in Lebanon, shortfalls such as continued gaps in funding and the lack of concrete commitments on resettlement, livelihood, and the accountability of funds still persist. These gaps were reflected in the outcomes of the Brussels II Conference on “Supporting the future of Syria and the region” held in April 2018. More specifically, the Lebanon Partnership Paper, issued after the conference, was disappointing in its lack of detailed focus on the aforementioned areas.

Lebanon hosts the highest number of refugees per capita worldwide, significantly straining its already weak, costly, and fragmented public sector. However, the international community has shown its preference for sharing the financial, rather than demographic, burden of the Syrian refugee crisis. According to the UNHCR, a total of $559.3 million is currently available to implement activities under the Lebanon Crisis Response Plan, despite an appeal for $2.68 billion. It is therefore apparent that financial assistance alone is insufficient to fix a crisis exacerbated by inadequate or otherwise non-existent national refugee policies, and further aggravated by an overstrained demographic reality.

Part of the responsibility for alleviating the demographic burden falls on the international community, but with limited and constantly decreasing resettlement options, other legal pathways for resettlement are necessary. If designed properly, these pathways may, for example, facilitate labor mobility and help ease labor shortages in the EU.

Even if Lebanon is provided with sufficient financial assistance, and more refugees are resettled elsewhere, the situation will continue to deteriorate unless the Lebanese government initiates adequate policies. However, politicians and policy makers in Lebanon have demonstrated a strict unwillingness to address the crisis, unless the response focuses specifically on the repatriation of Syrian refugees. Historically, refugee return has proven to be the most sustainable solution to refugee crises, but only if refugees are returned voluntarily, in safety, and in dignity. In reality, the humanitarian and security situation in Syria continues to deteriorate, especially in former key economic areas of the country such as Raqqa and Deir Ezzor. By promoting returns at this stage, and making it ever more difficult for Syrians to seek protection outside of their country, Lebanon is effectively pushing refugees back to Syria, where they may face a renewed risk of persecution, and potentially future displacement.

Instead of proposing plans for refugee return to Syria, diverting the discussion away from Lebanon’s responsibilities toward refugees, the government should focus on strengthening local policies—by for example, creating livelihood opportunities that may bring vulnerable populations, including refugees, out of poverty in the long term. However, the Lebanon Partnership Paper fails to put forward concrete commitments on whether and how access to livelihoods for Syrian refugees will be addressed. Instead, it focuses on achievements made at CEDRE, the international donor conference to support Lebanon’s economic development. What is more worrying is the absence of a protection-centric approach. For example, the paper fails to address access to decent working conditions, and proper safeguards against risks such as exploitation. For resettlement, return, and access to livelihoods to be possible, Syrians must also be able to obtain legal residency documents to access their rights, not only as refugees, but as individuals. The promises made in Brussels will not be beneficial unless Lebanon recognizes the weight of its commitments. This means engaging all perinent officials across all levels of government in a protection-centered approach designed to achieve real and recognizable change. Seeing the multiplicity of donor conferences and commitments without any attendant visible progress will increase frustration among the general population, especially among individuals living in poor conditions, and this may lessen faith in humanitarianism as well. There need to be stricter regulations monitoring commitments, as these are responsibilities that both Lebanon and the international community have taken on as duty-bearers toward host and refugee communities. Already halfway through the year, and with most of the country’s attention focused on changes in Parliament and the government, it is difficult to predict, at least for the foreseeable future, when and how commitments made at Brussels will translate into clear, forward-looking policies.

0 comments
0 FacebookTwitterPinterestEmail
LeadersOpinion

Healthcare sector in Lebanon carrying its own, but still in need of coordined development

by Executive Editors
written by Executive Editors

If Lebanon were to visit a doctor for a head-to-toe physical, she might leave the appointment with a few prescriptions in hand. A check up on the overall robustness of the nation’s health infrastructure would show the vital signs of the country’s health sector as generally good, albeit with some lingering concerns, such as reports of malpractice and medical insurance fraud. This examination is in the context of Lebanon’s impromptu multi-year stress test—the unplanned influx of Syrian refugees that began accelerating in 2013, placing strain on its medical centers, hospitals, and primary health facilities—during which the country has not buckled.

The overall diagnosis is that the healthcare sector requires coordinated development between the public and the for-profit and non-profit private sectors (see overview story, page 16). The private sector needs to learn and develop on the basis of the experiences of public health institutions and the Ministry of Public Health (MoPH) in the last few years, adopting lessons learned and best practices.

Required remedies

On the public sector side, there are any number of improvements that still need to be made. This should begin with a restructuring of the MoPH, where manpower seems to be overstretched and has thus far not been reorganized due to political interference. Developing the issues that the ministry has not addressed—in terms of closing coverage gaps and eliminating structures that are producing inequalities in these areas—must also be prioritized. The ministry must also hone its ability to regulate and supervise, and it has made progress on that front. But more must still be done, especially in the provision capability of financial resources to cover real needs.

Both public and private health institutions need to create a better popular understanding amongst the population of the connections between their work and mutual collaboration, and the benefits to overall public health. The public relations in this regard seem to have not been coordinated between stakeholders, and private stakeholders are stuck in a sort of family business mentality when it comes to communication, or the lack thereof, with the media. Awareness building within the general population must become a greater priority, necessitating clear communication strategies and greater transparency from the private sector, the MoPH, and public health institutions.

Looking ahead toward the demands of the future, the health sector overall needs to upgrade and streamline its structures and mechanisms used to access financing (see story on healthcare financing). Whether that is best done through a compulsory scheme, or through accessing capital markets, or through institutionalizing more of the private sector providers, is still a question that must be answered. But the general impression is that what has been achieved so far was not on institutional terms in compliance with institutional planning, but more opportunistic and based on the strength of personal relationships. In the future, improvements in the Lebanese healthcare system need to be institutionalized, whether at the National Social Security Fund, or at the MoPH by granting it more autonomy from its role as regulator and the insurance payer of last resort.

0 comments
0 FacebookTwitterPinterestEmail
Hospitality & TourismQ&A

7 Management’s journey to success

by Nabila Rahhal
written by Nabila Rahhal

The road to success is not easy. It is even harder when working in the nightlife industry in a country like Lebanon, where the bad years of political instability—which typically lead to economic downturn and low purchasing power—far outweigh the good years of thriving tourism. But this is exactly the road that Rabih Fakhreddine chose, opening his first bar, Faces, in Hamra in 2011, a year before war began in neighboring Syria.

Although the road remains difficult, Fakhreddine today, at the age of 31, has found success in the food and beverage (F&B) business, as the CEO of hospitality management company 7 Management, which he founded in 2014. 7 Management, which employs 270 people and has an annual turnover of $13 million, owns and operates three nightlife venues—Antika Bar, Seven Sisters, and February 30—and one café, Kahwet Beirut. The company has already expanded into Dubai with Seven Sisters, and has its eyes on further regional and international growth, not to mention introducing new concepts to the local market.

The early days

Fakhreddine says he was always passionate about the hospitality and food industry, having experimented with cooking since he was five years old. After high school, Fakhreddine even thought of majoring in hospitality management, but at that time no universities in Lebanon offered the program, so he chose to study business marketing at the American University of Beirut (AUB). Fakhreddine’s interest in hospitality continued; during his university days, he was active in student societies and clubs, organizing events such as Ramadan suhoors or World Cup and European Championship viewings.

Upon his graduation in 2006, Fakhreddine worked for a few months at advertising agency Leo Burnett Dubai until the July War stirred his nationalistic sentiments, and he decided to come back to work and invest in his country. He started at British American Tobacco (BAT), handling the HORECA accounts for Lebanon and the Levant, before getting promoted to marketing manager of Lebanon. “Through my position with BAT, I familiarized myself more with the F&B industry and developed a strong network of hospitality stakeholders, since I had a big budget to spend on all the nightclubs and bars in Lebanon and the Levant,” Fakhreddine says, adding that in parallel to his job with BAT he was also a silent investor in several bars in Lebanon. Both his position with BAT and his silent investments led him to realize that he had solid potential to operate his own nightlife outlets.

In late 2010, Fakhreddine and two of his BAT colleagues created Concepts in Motion, a hospitality management company, and, in early 2011, launched Faces in Hamra, which was then at its nightlife peak. This was followed almost immediately with the launch of two more Hamra venues: Big Shot, a bar known for its R&B music, and then February 30, in 2012. In 2013, the group ventured into Uruguay Street with the opening of Checkpoint Charlie, while further investing in Hamra with the opening of Walkman.

[/media-credit] Kahwet Beirut in Downtown Waterfront

Lucky number 7

In 2014, Fakhreddine left BAT to focus on his hospitality and nightlife ventures. Along with three partners, he developed 7 Management and merged all of Concepts in Motion’s venues into the new venture (with the exception of Big Shot, which had closed before the merger). Other than February 30—which was reopened early this year in Downtown’s waterfront area—all of Concept in Motion’s venues have since shut down thanks to the decrease in activity in both Hamra and Uruguay Streeet, which is due largely to the transient nature of Lebanon’s nightlife hotspots.

There are four shareholders behind 7 Management: General Manager Hani Hachem, and managing partners Karim Mohamadieh and Ralph Boustany, in addition to Fakhreddine as CEO and majority shareholder, with 52 percent of the company shares. Speaking of his partners, Fakhreddine says: “We are one team, with each bringing his own unique talents to reach this great result.”

7 Management is a holding company and owns majority shares in—and all of the trademarks of—the venues it creates and manages. It has managerial contracts with the venues, which exist as separate legal entities, and takes a standard 7 percent management fee from each one.

In addition to 7 Management, each venue has some silent investors, with a total of 20 partners across the group. “We decided to have this structure where we have many shareholders per venue because we wanted to have a higher outreach with more PR coming from each partner—so we have five to ten partners with small shares for each outlet,” Fakhreddine explains. “We choose them for their strong PR and not for their financial capabilities, because in the end we can take a loan from the bank if we are only after the money.”

[/media-credit] Sayf Feb30, 7 Management’s pop-up venue

Investing in success

Since its development, 7 Management has been expanding aggressively, with a new venue every year. In 2015, 7 Management’s first outlet, Seven Sisters, was launched, followed by Antika Bar in Blueberry Square Dbayeh in 2016. In 2017, the company opened a café concept called Kahwet Beirut and a summer only venue called Sayf Feb30, in Mar Mikhael’s old train station. In 2018, they relaunched February 30 in its new Downtown location, and still in the pipelines is the opening of a snack concept called El-Kbeer, set for late September, as well as an oriental-nightlife-with-a-twist concept in collaboration with Grand Factory Group set to open at the end of the year. In 2019, 7 Management plans to open a Japanese restaurant in Lebanon.

Investment in these venues comes from silent partners and 7 Management, which secures funds mainly from the central bank’s subsidized loans and Kafalat. “It is better to take loans because of the interest rate and the grace period you get the first year through Kafalat,” Fakhreddine says.

Average investment for 7 Management’s outlets in Lebanon ranges from $500,000 to $1 million. Fakhreddine says they have learned to think of their venues as pop-ups, minimizing their initial investment and then adding to it the following year in order to guarantee a fast return on investment and minimize risk. “That’s what we did in Sayf Feb30: We put in a $400,000 investment, and we made $600,000 the first season. We also moved Antika Bar from Dbayeh to the waterfront this summer with a minimal investment. You have to think smart in a country like Lebanon,” he says.

Nightlife versus food

So far, the majority of 7 Management’s concepts have been in nightlife, which Fakhreddine says served them better at first. “Since we were still at the beginning of our careers, we wanted something that would generate money fast. F&B is a long-term and consistent investment that generates money but is definitely not like nightlife in terms of the speed of making money. We were at a time in our business where we wanted to make profits and be able to reinvest in the market and in new concepts and brands,” he explains.

Another reason the group chose to invest in nightlife is that, back then, it was the booming business in Lebanon, attracting both foreigners and locals. “In my opinion, the key advantage that Lebanon has when it comes to nightlife is that you can’t imitate the vibe, the people, or the positive energy that exists only in Lebanon, no matter how big your investment is or how lovely your design is. It’s the people that make the difference at the end,” Fakhreddine says.

But he acknowledges that nightlife is not what it used to be in Lebanon, due to the lack of tourists and the dwindling purchasing power of locals. He also says that while nightlife does generate more money than F&B, its lifespan is short, while a successful F&B concept could last for many years, thereby generating a steady profit. As such, 7 Management took the strategic decision to expand their business into F&B with the opening of Kahwet Beirut, and with the future opening of El-Kbeer and the Japanese restaurant. With only Kahwet Beirut operational to date, Fakhreddine says F&B constitutes 20 percent of their total revenues, but he hopes to reach a 50-50 split in a few years.

Another reason that 7 Management is diversifying into F&B is that the move will give them access to a much larger regional franchise market than nightlife does. “For franchising opportunities, nightlife is restricted to Dubai and Egypt in the region, because of the restriction on alcohol in most of the other countries. So, from a strategic perspective, expanding in the region requires F&B concepts that could work in KSA or Kuwait,” Fakhreddine says.

[/media-credit] The new February 30 at the waterfront

Going beyond Lebanon

Lebanon being an unstable market, it is no wonder that most hospitality operators look outwards for diversification opportunities, and 7 Management is no exception. The company began by scoping out the market in Dubai through the Antika Night events they held frequently in various hotels in the city over a period of two years. This helped them to understand the market and gather a huge database of mainly Arab clientele, Fakhreddine says, which they utilized when launching Seven Sisters earlier this year in Dubai’s JW Marriott. In Dubai, 7 Management has developed a partnership with Bulldozer Group, a hospitality management company founded by Russians with an arm in Dubai, which owns and operates dining brands such as Novikov, Cipriani, Downtown Toko, and Sass’ Café. Together, the two companies will be launching Antika Bar Dubai in early 2019, having already launched Seven Sisters Dubai. This strategic partnership allows 7 Management to tap into international—mainly European—clientele, which is a demographic that may have been difficult to access otherwise.

Speaking of operating in Dubai, Fakhreddine says that although their profit margin is higher there than in Lebanon, the cost of operation is also a lot higher. “Our margins in Lebanon are much higher if we were under normal circumstances. We do make more money in Dubai, but we also spend more, as cost of alcohol is high and so is the salary of employees, rent, and taxes,” he says. “But Dubai is strategic in terms of the exposure you get, and in terms of diversification, because we know that Beirut is not a stable market.”

7 Management plans to take the Lebanese snack brand El-Kbeer not only to the region—starting with Saudi Arabia, a year after its launch in Beirut—but also internationally, to London and New York. Fakhreddine says it has the potential to do well in these further flung markets since Lebanese snack food is a growing trend.

Fakhreddine has achieved a lot in just seven years. Starting with one small bar in Hamra, the company he founded today runs four successful brands, one of which already has a regional presence. 7 Management does not plan to stop here, and with its major partners boasting an average age of 32, it seems we will be hearing about the company for some time to come. 

0 comments
0 FacebookTwitterPinterestEmail
HealthcareQ&ASpecial Report

Acting head of the ICC discusses the state of health insurance in Lebanon

by Thomas Schellen
written by Thomas Schellen

At the end of April, the imposition of rules on guaranteed renewability (GR) in health insurance was introduced to the public under ministerial decree 186, issued by the Ministry of Economy and Trade (MoET). Executive sat down with Nadine Habbal, who heads the MoET’s Insurance Control Commission (ICC), to explore the implications of GR for the insured and insurers of Lebanon.

E  What is your perception of the health insurance sector in Lebanon from a regulatory perspective and what is the rationale behind the decree that mandates insurance companies to adhere to guaranteed renewability, or GR, in underwriting health insurance contracts?

The decision behind the GR was to influence the appetite of the economic agents to take a decision on how to manage personal risk and be in a win-win situation. As long as there is an absence of compulsory universal health coverage, Lebanese individuals will always have to choose between medical insurance contracts underwritten by an authorized insurance company or expose themselves to financial losses from out-of-pocket expenditures in case their health deteriorates. Thus, it is up to the individual to take the decision whether to put money into a savings account in a bank to finance medical expenditure or to opt for risk management and buy an insurance contract.

E  What does GR mean for the Lebanese citizen?

As an insured person, you will be insured for your lifetime if you don’t make fraudulent claims or [provide] false information during the underwriting stage [of your health insurance contract]. It also means that the insurance company cannot amend the conditions of the policy after the policy agreement is in place following the underwriting stage, even if the health condition of the individual deteriorates. 

E  Is it correct that the underwriting stage, or period during which the insurance company can monitor the agreement, is fixed at six months?

In the underwriting stage it is the right of the insurance company to do the appropriate [medical] examinations and undertake procedures to make sure that the applicant provides true information. The insurance company has the right to set the conditions under which the client is accepted and provided with a policy. We also allowed the company to take six months as [an] observation period, because [insurers] told me that it is so expensive to do a whole battery of tests and that there is a possibility of facing fraudulent information. We wanted to provide the six-month observation period to make sure that the agreement would not be abused by either side, insurers or insured. We are controlling this process.

E  When was the decision made? Did it come suddenly?

The GR decision is not a new decision. It is something that we have been telling the sector for a long time: apply basic insurance core principles. We had also been telling the sector that the current practice in the [health insurance] market is not in line with insurance core principles. This is the first rationale behind the GR decree. The second rationale is to motivate people to practice better risk management. If we want to speak economics, we are talking [mathematician] John Nash versus [economic philosopher] Adam Smith. Adam Smith, in the absence of GR, [stands for] individual optimization. What you want to achieve from a regulatory and an economic perspective, is social optimization, which means that—in applying the theory of John Nash—everybody would be in a win-win situation. 

E  Is there a maximum age by which people must enroll?

Why would there be a maximum enrollment age? If at time of enrollment you are in a clean bill of health and do not have chronic diseases, you are fine. If you are in a group policy, which is the case of many Lebanese and foreigners living in Lebanon, and reach the retirement age, the insurance company is obliged to offer you an individual contract with the prevailing conditions for the segment that you belong to. It is not fair to lose your medical insurance when you retire or if you lose your employment for one reason or another. The insurer is in this case obliged to offer an individual contract with the conditions that apply to your age segment, but taking into consideration that there is no new underwriting stage because you are a policyholder. This is fair to the consumer and in line with insurance core principles. After all, we want to apply fair rules and the insurance core principles, not impose something that is harmful [to either side], taking into account our economic situation.

E  How is the state of the implementation process for companies in the sector to comply with the GR degree and present contract wordings to the ICC?

We gave the companies 20 days to send their policy wordings to us and we have received most of the policies. Some companies have pre-approval and can sell these policies that they have submitted. Others are still in the submission process. Companies who fail to comply with the [GR decree] will be prohibited from selling health insurance.

E  Is there an expectation that some companies will be prohibited from selling medical insurance in future?

We are not just checking if the companies comply with GR in one paragraph of their policy contract because we know that it is possible to have another sentence somewhere in a policy that will change the whole meaning of the contract. We want the companies to send us their policies and we do a comprehensive review. Some companies had to change their policies and did so, and some are still in the process. Those who fail to comply will not be allowed to sell.

E  Will the ICC at some point publish a list or white book of companies that are in compliance?

We can achieve transparency, [but] not through a public note because our current laws and regulations do not allow us to issue a public note of this type. However, in our annual report, which is accessible on our ICC website, you can see how the medical portfolios of insurance companies are developing and how the portfolio of one company or another changes.

E  If we cannot have a white book saying which companyies are good and performing according to core insurance principles, how can we evaluate companies in a sector where migrations of large medical portfolios are occurring for reasons such as corporate takeover or intense price competition to attract large group portfolios?

This is an interesting question that posits the challenge of how we can inform the public. This question is answered through our unit called ICC Care. Upon the launch of Circular 186, a new infographic has been created. It is “Amin min al-ta’mi”—which means security of the insured, or trustworthy insurance.

E  You are telling us that there will be a stronger public interface and public awareness campaign. How is this campaign designed and how long will it be running?

It will resume shortly and focus on a number of awareness pieces to introduce ICC Care and its role as consumer interlocutor. ICC Care receives the calls from the policy holders, their concerns and complaints, and exists to address issues that arise between policyholders and insurers. The main idea [of the awareness campaign] will be to convey what the policy holder will have to look for in dealing with insurance companies, and how people should read the sales brochures and policy contracts [of the insurers]. As to your question of the length of the media campaign, the campaign will be long term. We will be very aggressive in [conventional and social] media in presenting our infographics and conveying the message to the people that there is a regulator who will not take sides with any party, but is there in case of any concerns and to apply the conditions of the policy.

E  Insurance is all about management of risk, but risk transfers can be a thorny issue re-allocating risk from one party to another party. Under the stipulation of GR, is there risk transfer from the Ministry of Public Health (MoPH) to the insurance sector?

From a technical perspective, the ICC and the MoPH complement each other in medical insurance. The MoPH’s role is to establish protocols for diagnosis and treatment, and to manage chronic diseases. If we want to have a national insurance card, like in advanced economies, the MoPH should as soon as possible establish a protocol to determine for every disease whether I should have an x-ray, have an MRI, take a drug, or undergo surgery. If surgery is performed without a medical need for this procedure, this is abuse on both sides: the medical side and the insurance sector side. In Lebanon, one might undergo surgery where a simple medicine could be effective for treatment. The MoPH should establish protocols, and we should follow [them]. For each sickness there should be a protocol and there should be a network between insurers and the MoPH and the people.

E  This sounds like you are advocating for more collaboration between public and private actors in the field of health. Does this mean that you advocate also moving toward more centralization, in the sense of national compulsory health insurance for all Lebanese?

It is very important that we think of universal health coverage. Then we will all be in a win-win situation through a cooperation between public and private. A national insurance card cannot be implemented without cooperation between the public and the private sector. There should be many layers. There should be a layer [in universal coverage] that is financed by the public sector but as you know, the public sector cannot finance $1 billion [spent out of pocket annually by the people]. We need to have more people in the system and we need to have economies of scale and manage the risk of a big number [of policy holders]; this is insurance. I need to get everybody into the system, and in this way I can secure good medical benefits for [older] people [via contributions from] young people and where I have collaboration of public and private sector. This is my vision for the health insurance, [following what exists in many advanced countries]. We did a lot of research and meetings [with international experts] and concluded that this is very important for our people and our economy. Better health, better economy.

E  In your perception, how could our economy benefit from a universal healthcare system? 

In medical insurance, we had a total premiums portfolio in 2017 of $470 million. If we compare that to out of pocket, there was almost $700 or $750 million. People are telling us that they are financing their medical expenditure on an out-of-pocket basis. [For me, the answer is to] attract these people and have them [integrated] into the system. The entire insurance sector represents 3 percent of GDP [as insurance penetration] and this compares to 6-7 percent in OECD countries. How can we get there? Very simple. We need to create compulsory insurance and pension insurance; if we take the pension product under consideration, we can accumulate $10 billion in savings, with $1 billion per year with accumulated assets over 20 years. We can all [benefit] if we design the right products, and what we need are all basic insurance products, medical and pension.

But despite numerous proposals for the implementation of pensions, we are still operating the NSSF with a scheme of end-of-service indemnities, not pensions.

It is one of our projects [to introduce pensions instead of indemnities as well as compulsory health insurance] and we already have the analyses. We are waiting for the right time. These projects will be very good for the insurance sector, for the economy, and for the people. Everybody should be in a win-win situation. Social optimization for everybody is the spirit of our work.

E  In this context of social optimization, how do you plan to balance risk between the two existing subsectors of insurance, the mutual schemes and the commercial insurance schemes? How to supervise the compliance of mutual schemes with core insurance principles? There has been fear that mutual schemes, which offer lower benefits, have an unfair competitive advantage over commercial insurers and that this advantage might increase since mutual schemes are not supervised by the ICC and therefore are not obliged to apply the new GR.

Honestly, I do not see a correlation. It was a statement of many insurers that there would be an unfair competitive advantage for mutual schemes. From a regulatory perspective and from a policy holder perspective, I see no correlation. The activity of the cooperative funds is strictly regulated by Decree 35 from 1977: The cooperative fund can offer benefits of insurance only to its own members and cannot approach the public. Also, they need to offer the same benefits [to all members]; they cannot offer class A, B, or C benefits. This is not insurance. Because they don’t offer products and don’t approach the public, they are not under our supervision. If there is non-compliant behavior [by a mutual scheme], it should be monitored through the appropriate legal channels. My advice to insurers is that mutual schemes are not competitors.

E  As a last question relating to potential risk transfer problems, could an insurance contract provided with GR from an authorized insurer pose such problems, given that it establishes a certain range of premiums for certain ages and risk groups and so forth? Would this not reward risky behavior in insurance customers, under a form of moral hazard where people that conform to high standards in healthy behavior will get the same coverage for the same price as people who engage in high-risk behaviors? How do you want to counteract this moral hazard?

With this question, we move into the area of advanced analytics and predictive modeling. This is part of our agenda for the coming years. Let me share our general perspective on this agenda with you. Our aim is to enhance the insurance sector and for it to be a platform for regional and foreign investments. In order to do that, we need to create the right infrastructure. How can we establish this infrastructure? The first chapter we are starting with is risk-based capital, [which is the appropriate method] to measure and quantify the risk. Then, the second chapter is [imposition of better] governance. The third chapter is digitization and the fourth [in building this infrastructure] is what? It is your predictive modeling and advanced analytics.

From the behavior of consumers [we can learn with these tools of advanced analysis and reach] predictive analytics. For example, in the area of car insurance, what will be the pricing for insurance of a Toyota or a Kia? This is now our new way to monitor pricing which is fair to the consumer and the insurance company at the same time. And to understand the motor and the medical books: analyze detailed consumer behavior through big data.

E  Does this mean that you want to reimagine or restructure the whole soft infrastructure of insurance conduct in Lebanon?

Exactly.

E  Will actuaries and managers of the existing insurance system be able to cope with this type of revolution in insurance?

I can already sense that there is now more involvement by actuaries in insurance planning and I also felt that there has been more creativity and major changes in the thought processes of some major insurers. Some insurers have started to use technology and adhere to the right practices [to deregulate the markets] and have insurers achieve reasonable profits. But some other insurance companies need to work hard on this so that they can get the right experts on board. We will share with the companies in the insurance sector our initial analyses and how we see their business moving forward and what they need to change to achieve first to protect the interests of their policyholders and, [second], to achieve reasonable profits.

E You have been quoted as giving optimistic estimates on the growth of the insurance sector in the coming years. Medical insurance is at the top of insurance lines in terms of market share today, at about 34 percent, and has been increasing its market share in recent years. In this context of an overall expectation for expansion of insurance in Lebanon, do you see the medical insurance as stable, regressive, or as slated to go up as a share of the total insurance premiums?

In 2019, this share should grow, because we are building more confidence in the sector. We are telling the people who are financing their medical expenditure from their out-of-pocket money: ‘Come to the insurance sector for better management of your risk.’ We are expecting better growth [in medical insurance] and are expecting more products to come to the market, perhaps a compulsory product for medical insurance and pension plans. This is the way we can grow the sector, through creative products and as well through digitization. Companies [will have a greater] ability to invest in their IT as they [will] have the infrastructure prepared by the ICC, and thus more power and consolidation will be taking place in the coming period. 

0 comments
0 FacebookTwitterPinterestEmail
HealthcareSpecial ReportStartups

Health entrepreneurship in Lebanon

by Charlie Darwich-Houssami, Samir Sleem & Laya Jawad
written by Charlie Darwich-Houssami, Samir Sleem & Laya Jawad

When it comes to health, Lebanon is one of the leading countries in the Arab world in terms of the quality of healthcare provided and in testing new medical technologies. The country now has the opportunity to lead the way in entrepreneurship via healthcare startups. Executive spoke with entrepreneurs in this field to see what challenges they faced and what obstacles still need to be overcome to find success as a healthcare startup.

According to a 2016 Wamda Capital’s report on health startups, MENA is growing its first generation of health entrepreneurs, which means that the region is witnessing the first business and economic wave of an industry that is likely to expand and unveil a vast range of entrepreneurial opportunities.

Meanwhile, worldwide information technology solutions for healthcare are entering their third wave. As consulting firm McKinsey & Company pointed out in a 2014 paper on the digital future of healthcare, the first two waves of IT brought computation of data and statistics to healthcare institutions in the 1950s and helped with integrating processes among healthcare organizations in the 1970s. Compared with these advancements, the third wave of digitization is seen as having incomparably greater implications, from robotic surgery and remote diagnosis to mobile healthcare via digital apps.

Given the huge social and economic implications of the full digitization of healthcare and wellness, any entrepreneurial ecosystem should be priming itself to nurture startups related to healthcare. This applies in Lebanon as much as anywhere, but local healthcare startups who spoke to Executive report experiencing the same frustrations felt by other startups in the Lebanese ecosystem, such as the difficulty of attracting funding and the lack of local talent.   

Among local startups, diabetes digital monitor Weglo is still in its first development stage. Spike, a software application that helps and guides diabetes patients with their everyday treatments, and TrakMd, an online platform that helps patients find, book, and review doctors around Lebanon, have already progressed beyond the launch phase and are currently operating in a full commercial form.

While the entrepreneurs that spoke to Executive cite similar difficulties to those encountered by emerging healthcare startups worldwide, they also raised issues unique to the Lebanese market, and opined that the economic situation in Lebanon negatively affects startups due to the dearth of appropriate resources and professionals within the field.

barriers to the big-time

Lack of public reach—becoming recognized and showcasing services to the general public—can be a challenging initial hurdle for startups to conquer. Typically, online outreach has proven to be the most effective method for startup brand advertising. Search Engine Optimization (SEO)—the process of maximizing visitors to a website by ensuring it appears high in the list of search engine results—has reportedly been very effective for some startups, such as Spike, which is now in the process of planning a global app launch. Although SEO has proven effective at increasing a brand’s exposure, others in Lebanon still struggle to make themselves known, which in the long run could affect the profitability and net worth of the organization.

Healthcare startups in Lebanon report facing several obstacles in their early stage development, ranging from the scarcity and high cost of raw materials, and the lack of talent in the Lebanese market, to issues with funding. Given that the healthcare industry requires in-depth research by professionals in an area where the cost of mistakes is high, finding the appropriate staff and tools can be a very difficult challenge. According to Spike founder Ziad Alame, the lack of motivation in the workforce is holding back the healthcare startup industry in Lebanon. “There’s a mentality in Lebanon where people don’t really want to work, they just want to have a job where they go sit behind the desk and wait for the day to end,” Alame says. “[Employees] are selling their time without putting in the effort, which is one of the reasons why we are not seeing startups coming out of Lebanon that are really good.”

Another major issue is that of funding. While this barrier is faced by startups in all sectors, healthcare startups require relatively large amounts of funding in order to succeed. All the entrepreneurs interviewed by Executive agreed that obtaining funds in Lebanon is one of the most difficult tasks, due mainly to the low risk mentality of investors.

Spike reports obtaining an estimated $150,000 from different venture capital (VC) funds such as ZOUK, Kafalat, SeatBoost, and MIT, while Weglo and TrakMD say that the VC road was more difficult for them and instead they had to self-fund their ventures. “I started self-funding, first using my money to pay for people and acquiring parts for prototyping,” says Abed  el-Rahman el-Kaderi, co-founder of Weglo. Both Welgo and TrakMD say that the lack of local CV funding resulted in delays in developing their concepts and presenting their services.

In their 2016 report, Wamda Capital notes that health startups in MENA region often rely on more informal sources of financing—personal funds, family money, friends’ money, and grants—over any other funding sources, especially for early-stage capital.

After clearing development and funding hurdles, healthcare startups still face challenges related to their legal status within the wider healthcare sector, its potential client pool, and ensuring user privacy. “Legal credibility is a big challenge for startups since formal institutions are set within the traditional healthcare infrastructure,” according to Kevin Shoucair, business support manager at local accelerator Speed. Having a large portion of the population in poverty also makes it more difficult for startups to target clients with the means to use their products and realize their full potential. “Health startups also have a great cost coming from establishing security systems, which will ensure the user’s privacy and access,” Shoucair adds.

Local entrepreneurs also cite positive aspects of the current healthcare startup ecosystem, including low competition and non-saturation of the market. According to Alameh and Kaderi, since the healthcare startup market in Lebanon is still in its early stages, this makes it easier for new companies to break out and become noticed. “The only advantage we have in Lebanon is that it is easier for us to get recognized in the sector, as there are not a lot of competitors,” Kaderi argues.

While the future is unpredictable in a country as volatile as Lebanon, each of the healthcare startups Executive interviewed agreed that much depends on the approach adopted by the startup. Funding and marketing are not enough to guarantee the success of a healthcare startup: Ethics also play a major role. In this regard, mistakes cannot be made, as their effects will impact directly on the wellbeing of consumers. As a result, the research done into emerging healthcare startups needs to be extremely accurate and undertaken by experts in the field to avoid harmful consequences for the health of citizens.

To better understand how investors and funds make their decisions, Executive also spoke with funds and accelerators that previously invested in the healthcare ecosystem.

Helping hand

There is clear growth in the Lebanese startup market, with the sector thriving ever since Banque Du Liban launched Circular 331 in 2014, which provides support for emerging startups, private equity firms, and accelerators. To further expand the viability of the startup ecosystem, the Lebanese Venture Capital and Private Equity Association (LVCPEA) was launched at the start of 2018 with around $360 million in funding to dole out. Including major players like Berytech, Leap Ventures, and Middle East Venture Partners (MEVP), the core mission of the association is to help investors effectively engage in the creation of information and communication technology in Lebanon.

Based on the portfolio descriptions of Lebanese VC firms, on average, two health startups are invested in per fund, with most being software-based startups such as Spike, the application for diabetes assistance, and AlTibbi, a platform for healthcare-related knowledge. There is not a specific budget set for healthcare startups, which are sometimes included as a tech investment or software investment.

With most VCs prefering to invest in software-based startups, it is a real challenge for hardware-based startups to grow in Lebanon, especially if they require R&D investment. “There is a low to zero R&D environment, so there’s little homegrown innovation taking place which can be spun off into startups,” says Fadi Bizri, partner at B&Y venture partners, a VC fund for technology startups in the MENA region.

Given the great human capital residing in Lebanon, the potential for the healthcare sector is promising. According to research carried out by MEVP, an estimated $450 million per year is spent on general doctor consultations in the MENA region. Currently, the private healthcare market size in the GCC is around $62 billion, and is estimated to grow 8.7 percent per year to reach $94 billion in 2021, according to MENA Research Partners (MRP), a leading research company in the region. There are indeed, big investment opportunities in the entrepreneurial health sector, given the mentality shift from curative to preventive healthcare among an increasingly health conscious and tech savvy population.

“With current infrastructure adopting new innovative technological trends, healthcare startups will see greater adoption in Lebanon. [These technologies] will also be more accepted by the government, regulatory bodies, and eventually the country’s biggest hospitals,” says Walid Mansour, a managing partner at MEVP.

The challenges and drawbacks facing healthcare startups are severe, with the most common and recurrent challenge being funding, especially for non-software based startups that require heavy capital in order to build their prototypes. However, low competition works in the sector’s favor, allowing emerging startups to grow and be noticed in the Lebanese market. The future of the sector depends on how entrepreneurs, funds, the government, and the market act and react—in particular to address the challenges detailed above. In the meantime, Lebanon should support and embrace the development of a healthcare entrepreneurial ecosystem and work toward improving it for the sake of a healthy economy and a healthy populace.

0 comments
0 FacebookTwitterPinterestEmail
HealthcareSpecial ReportWellness

Wellness and health in Lebanon: current status and potential for growth

by Nabila Rahhal
written by Nabila Rahhal

Health and wellness have long been an integral part of Middle Eastern culture. The most common Arabic phrase used for greeting someone—keef el-sohat?—asks after a person’s health. Another common phrase used in Lebanon specifically is yatik el-afyeh (may God grant you wellness), used as a greeting but also for when someone is engaged in physical labor or has had a busy day.

While our language may emphasize the value we Lebanese place on health and wellness, our habits and activities have gradually shifted away over the years as a result of exposure to unhealthy trends in food and lifestyle. “The Lebanese basically have a very healthy diet, but it has been unfortunately transformed by imported American trends,” says Alice Edde, co-owner of Eddésands Hotel & Wellness Resort. “But the Lebanese are very beauty conscious, so anything that had to do with weight loss was always a big success. Although for us wellness is more than just weight loss, it is the trick to get people into it.”

The tendency towards unhealthy habits may be beginning to change, however, as part of a global movement toward encouraging a good quality of life. In Lebanon, interest in health and wellness practices is slowly increasing as more stakeholders realize the benefits of a healthy lifestyle—which can include activities such as yoga and meditation—in preventing illnesses and in achieving balance.

Wellness around the world

Wellness as a concept has existed since ancient times: the Indian Ayurveda system of medicine, based on the belief that good health depends on a delicate balance of mind, body, and spirit, has, for example, been around since 1500 BC. Worldwide, wellness as we now know it in the modern world began to gain ground on Western medicine  relatively recently, starting in the 1790s with the introduction of homeopathy by the German physician Christian Hahnemann.

It was not until the 1980s, however, that the wellness movement began to be taken more seriously in the medical, academic, and corporate worlds, with the introduction of more workplace wellness programs and with the boom of the fitness and spa industries, according to the Global Wellness Institute (GWI).

In 2015, wellness was a $3.7 trillion industry globally  according to the GWI, an admittedly partisan source,  and it is only growing further as more people become aware of the role that leading a healthy lifestyle plays in their general wellbeing and in the prevention of illnesses.

A healthy new Lebanon

Lebanon is just awakening to the wellness industry and while it still has a long way to go to reach global levels of economic output and prevalence, the seeds are surely being planted and the potential is there.

Maya Romani, assistant professor of clinical family medicine at the American University of Beirut Medical Center (AUBMC), says that when the American University of Beirut (AUB) first introduced its wellness program in 2006, “the idea of wellness was not very common among healthcare professionals in Lebanon, who mainly worked on treating diseases.”

Interest in wellness from the  AUB community and the public has been increasing, says Romani, noting that their first annual wellness fair in 2015 gathered only 200 attendees, while last year’s drew in 600.

In 2015, AUBMC established its Health and Wellness Center that includes integrative health services, the first of its kind in Lebanon and the Middle East. “There is a huge worldwide demand, with everyone talking about evidence-based complementary and alternative medicine. So we thought that AUB, being a leader in the fields of education and medicine in Lebanon, and taking in consideration the high demand for such non-conventional medical services, should have its own services that target those people that are seeking non-conventional medicine pathways, especially those [practices] that have a very strong evidence of success,” explains Romani.

Photo by: Greg Demarque/Executive

When Edde first arrived in Lebanon in 2003, she recalls that wellness was a brand new concept. Today, wellness has become more established, she says, although the focus is still mainly on its nutrition and diet aspects. “There is more of a desire among Lebanese to go into the global wellness approach: There is a lot more interest in yoga with yoga studios opening everywhere, you have a lot of ‘do it yourself’ healthy cooking classes or things to do with aromatherapy. So, there is definitely an interest, although so far they have their niche clientele,” explains Edde.

She has been organizing bi-annual wellness weeks since 2012, but says that Eddésands has found it easier to sell tailor-made packages or individual treatments for a short duration of time, as opposed to tickets to the wellness week in its entirety. “Wellness as a holistic package is still hard to sell because there is still a lack of awareness about it and because the term has been somehow misused in Lebanon. So when people call for our wellness services, they sometimes mean just a spa beauty treatment. When you explain that wellness is mind, body, and that our wellness week is a journey and a holistic experience where you eat well and participate in all physical activities with us and do the meditation, etc., it becomes more difficult to sell as a package,” Edde says.

 

Why invest in wellness?

A lot of the interest in wellness and health is caused by its direct relation to the prevention of illnesses and injury. Romani says that the main benefit of incorporating wellness into one’s life is its proven ability to decrease healthcare costs. She cites a 2010 Johnson and Johnson study that shows that for every $1 spent on the wellness of an employee, $5 are saved on the employee’s healthcare costs. “Most of the studies [on wellness] concentrate on the [reduction of] healthcare costs and there is good evidence that it works,” Romani says.  As such, the wellness center at AUBMC works with the employee unit and human resources at AUB to design obligatory wellness programs (such as anti-stress activities for high demands units, or how to properly carry heavy loads for housekeeping staff), which aim to target key reasons that employees might take sick leave from work.

Insurance companies have also realized that investing in wellness can reduce healthcare costs. Romani notes that some companies in Lebanon now cover acupuncture in certain cases. Meanwhile, Libano Suisse Insurance offers a wellness program with services that include wellness coach consultations, dietitian questionnaires, and physician consultations. The program also incentivizes clients to work on their health and wellness by offering them rewards such as discounts on its services and vouchers for healthy foods.

Christelle Bachi Gedeon, president of the Syndicate of Dietitians in Lebanon, says that the syndicate has been trying to work with the National Social Security Fund (NSSF) to promote healthy diets, by focusing on the reduced cost of healthcare to motivate the NSSF. “Countless studies have proven that a good diet can prevent diseases. The NSSF pays for people’s medications, so if they improve people’s wellness through a healthy diet, they will reduce the cost of medication on themselves,” Gedeon says.

Being healthy is also a means of increasing productivity in the workplace. “Stress is one of the biggest diseases of the century, so when we combat stress, we are actually preventing many of the illnesses that could develop from it,” Edde says. “Think about the productivity level increase that happens when you have such treatments: If you have one day a week for yourself, you can achieve more the rest of the week.”

 

Doctor’s orders

Despite the evidence that wellness has a direct effect in lowering the risk of injuries and illnesses, it is yet to be embraced fully by conventional medical practitioners. While worldwide wellness centers are integrated into healthcare centers and hospitals, this is still rare in Lebanon—with the exception of AUBMC’s Health and Wellness Center.

Doctors are also often reluctant to prescribe non-conventional treatments (such as yoga or acupuncture) alongside medications, although this is starting to change. “We are getting more people who say we are here because their doctor recommended [it],” says Hala Okeili, founder of Sarvam Yoga center in Gemmayzeh.  “This is usually in cases of high blood pressure, back pain, or osteoporosis. I don’t think this collaboration is very explicit in Lebanon yet, although it is very present outside of the country. I think there is a growing awareness of the relation between traditional medicine and wellness in Lebanon, and doctors who are open minded are currently recommending wellness practices, but it’s not an explicit and direct relation yet.” (For more on yoga in Lebanon, see box above.)

When it comes to nutrition, not all doctors feel that a dietitian is needed to prescribe a healthy regime for their patients. “The newly trained doctors are increasingly referring their patients to dietitians but previously it was a struggle as many old school doctors believed their education qualified them to prescribe diets if needed, when it doesn’t—just like my degree does not qualify me to give medical advice,” Gedeon says. “But thankfully, new doctors know the value of a good diet, so the change is happening and as long we are fighting, we will get there.”  She adds that the syndicate was invited to speak at the 21st Lebanese Congress of Surgery in June, indicating that nutrition is being taken more seriously in Lebanon.

Part of the work done by the Health and Wellness Center at AUBMC is academic, in that they provide a space for medical students to train in wellness and integrative health services, explains Romani. “Most of the time, students studying medicine are not exposed to wellness as part of their curriculum. At AUBMC we are planning an elective rotation on wellness and integrative health which will commence next academic year. Also, as part of the family medicine rotation, students are exposed to integrative health through two sessions. This is because medical students have an important role in referring their patients to the appropriate wellness specialty,” says Romani.

Health is wealth

One of the reasons why wellness activities are not very prevalent in Lebanon could be the perception among Lebanese consumers that these activities come with a high price tag. Edde does not believe wellness needs to be costly. “I think there is a misconception about wellness being expensive. There’s no need for it to be expensive. Wellness is a natural healthy way of living; it is a mindset. For example, instead of taking the car, you walk, or you have a homegrown garden on your balcony instead of buying expensive organic food. There are many healthy habits that you can introduce into your life which are free.”

Some wellness activities are priced so highly that they could hinder the industry’s growth. When it comes to life coaching, where a single session averages $100 and multiple sessions are often needed, money is certainly a hinderance, according to Grace Khleif, a certified life coach. “It is not for everybody, and this is the sad part because a lot of young women who are starting their career and come to me don’t earn much, so it is always a struggle to pay the fees,” says Khleif, explaining that this is one of the reasons why she introduced group life coaching sessions, for which the fees are lower, although the experience is not as personalized.

Photo by: Greg Demarque/Executive

Khleif says that those who have make the hefty investment into life coaching find that it is extremely valuable in terms of their personal growth and development. Indeed, all of those interviewed for this article agree that investing in wellness—despite the cost—is worthwhile, because investing in your health and wellbeing is ultimately more rewarding than spending money on temporary experiences or products. “I wouldn’t say yoga is expensive. At the end of the day, if you are doing something that would help you avoid taking pills and going to doctors, then I would say it’s a cheap investment for your health,” says yoga instructor Okeily.

To Edde, it’s all about priorities. “You have to take into account that the more you spend on your wellbeing, the less you spend on your illness or treatment later, so there is a balance there. To me, it is about priorities: Instead of spending money on going out, you can spend it on a spa treatment or yoga class. It is about knowing where and how to spend your money,” she says.

Consult a professional

In a country like Lebanon, where there are no regulations regarding non-conventional healthcare, it can be difficult for consumers to discern between qualified wellness instructors and snake oil salesmen. As such, many wellness instructors get certified from international bodies in their field (the American Yoga Alliance, for example, or the International Coach Federation [ICF] for life coaches) and urge potential clients to ask about credentials. “A lot of people here think coaching is sprouting anywhere and anyone can do it, but in ICF Lebanon we are trying to raise awareness on the need for clients to ask their coaches about their level of accreditation, certifications, and hours of experience before they hire them,” says Khleif.

Gedeon says that the dietitians’ syndicate urges customers to ask their dietitians not only about their medical degree but also about their work license, which is granted to them by the health ministry after they complete their training and pass the colloquium exam, an official test given by the Ministry of Public Health that grants healthcare providers a license to practice in Lebanon. “The good thing about Lebanese is that they are talkers: If a certain dietitian does not have a degree, they will be quick to let everyone know. Once they are aware of what to look for, they are very important agents of change. Therefore, we encourage all clients to ask for the dietitians’ university degree and work license. Some graduate from universities but fail the colloquium or don’t do their training and so can’t sit for a colloquium. Hence, asking a dietitian about her work permit is very important,” explains Gedeon.

When it comes to physical exercise activities such as yoga, credentials do not a good teacher make, and this is where word of mouth and customer experience comes into play. “You can have certificates but not be a good teacher, so it depends on many factors,” Sharon Ghanime, a local yoga instructor, says. “Lebanon is small, and the yoga community is smaller, so you can easily know who a good teacher is, or not. So, word of mouth is key until the market becomes really saturated and people have to bring their credentials into play.”

 

Wellness tourism

As wellness starts to take root in Lebanon, one cannot help but wonder if the country has the potential to develop a wellness tourism industry. Some, such as Edde, believe that Lebanon has great potential for such tourism. “If we can attract foreigners for medical tourism, it would contribute to the economy positively. We have so many sunny days a year that we can shift the trend toward this kind of tourism,” she says. “For example, if somebody has surgery in Lebanon, they can have a wellness treatment afterwards to recover from their surgery. There are small hotels or resorts and spas all over the country, or you could stay in a guesthouse and come for your treatments at a nearby spa. Once you get out of Beirut there are a lot of possibilities.”

But others, such as Sarvam Yoga’s Okeili, argue that if the current destruction of Lebanon’s natural resources continues, other parts of the world will provide a more serene backdrop for wellness.

Although Lebanon may not yet be ready for wellness tourism, there is still a lot of potential for the health and wellness industry to enhance the quality of life of the local population. The seeds are already planted, and the interest is there, but what is needed, as always, is a solid strategy and development plan. The Ministry of Public Health first needs to be convinced of the value of investing in wellness and health in order to ultimately reduce the curative healthcare cost on themselves. Once this happens, they can start working with various stakeholders, from syndicates to insurance companies, on awareness campaigns, activities, and actions that would make the notions of wellness and health more recognizable among the Lebanese. Until this happens, all we can do is to try and keep healthy as we wait.

0 comments
0 FacebookTwitterPinterestEmail