Remarks made by Farooq Kathwari at the American Committees on Foreign Relations (ACFR) National Conference on May 11, 2007 in Washington D.C.

Good Morning.  I am very pleased to have the opportunity to share my thoughts on the Consequences of Globalization. The subject of globalization has always been relevant and more so today with communication and information accessible to millions, if not billions, of people.  The accessibility of information and a major increase in global trade have created great opportunities and also possibilities of major conflicts.  Expectations are being raised and major migrations of people are taking place.  Environmental concerns, global health concerns and regional conflicts are on the rise.  More than ever the leadership of the world has to come together to address these issues.

In this regard, I also believe that despite the current challenges faced by the United States, we are in a unique position to take the lead.  Not only are we a major economic and military power, but we also increasingly reflect the diversity of the world and in fact, the United States is a microcosm of the world community.

I would like to start by listing my own ‘wish-list’ of the role of the United States in these challenging times:

• I would like to see a reversal of the collective resistance to American leadership in the world.
• I would like to see the majority of the world admire and, to a lesser extent, fear the U.S.
• I would like the United States to be seen as a positive influence by the majority of the citizens of the world;
• I would like the U.S. to assume a major leadership role in many international institutions such as NATO, the United Nations, the World Trade Organization and institutions involved with global security, global environmental issues, bio-diversity and energy related challenges.

I refer to the above wish list as I strongly believe they will enhance the well-being and security of the citizens of this great country and also help the interests of peoples around the world. More than ever our well-being is going to be directly linked to the security and well-being of all the peoples of the world.

While reflecting on this subject, my own journey from the mountains and valleys of Kashmir is part of the globalization story.  It feels like yesterday when I arrived 41 years back – a period that was tumultuous.  I left for New York the day after India and Pakistan announced a cease-fire to end the 1965 war over Kashmir.  Being in Kashmir was a difficult period and coming to New York was a relief, a new life and an opportunity.  I worked during the days in a printing company in downtown Manhattan, and went to evening school at the Graduate School of Business at New York University, majoring in International Marketing.  The school near Wall Street led me to get a job with Bear Stearns and later Rothschild Inc.  I was fortunate to learn about finance and management from these great institutions.

In Kashmir my main preoccupation at school was playing and captaining a cricket team and other sports and I took easier subjects like English Literature and Political Science.  Growing up in Kashmir was unique in many ways.  We were living in an area of major conflict.  Many families got separated, including ours.  My mother did not see two of her children for 10 years and my father was away from home for 17 years.  Yet with all these difficulties we were taught principles of patience, kindness, charity, discipline, honesty, justice, moderation and reason – all attributes associated with Prophet Mohammed (PBUH) and repeatedly mentioned in the Koran.  For us the Prophet was like a captain of the team, he led the team, he was a political leader, a general, a teacher and he believed in justice and action.  He married his boss, a woman who was older than him, and in fact she proposed the marriage to him.  Prophet Mohammed (PBUH) preached and practiced that the main responsibility of leadership is to improve the welfare of their citizens.  His example was followed by many leaders and merchants who went to far away places like Indonesia, Malaysia and North Africa to govern and to develop trade and also to help spread the message of justice and fair dealing.  The merchants were followed by many great teachers including many who are referred to as Sufis.

It is interesting that the poetry of the 13th century Muslim poet Rumi is today the best selling poetry in the U.S.   Rumi’s ancestry was from Western Afghanistan and later his family traveled through Iran to Turkey.

When I arrived at NYU 41 years back, I lived in Brooklyn, New York, and after adjusting to the shock of the underground subway and its deafening noise, I observed my new home.  What impressed me about America was that people worked hard, they were honest, and if you showed promise you got an opportunity to go forward.  People treated each other with more dignity and equality than I had encountered in Kashmir – known for these attributes.  I came to realize the principles of good ethics are universal and in America, a country of immigrants, its diversity was its strength and created a unique culture in the world.   But America was not without major faults.  I could not understand the treatment of African Americans or Native Americans and that women had limited rights until recently.  Yet America had hope because of her principles derived from the Declaration of Independence, the Constitution and particularly the Bill of Rights.  And for the first time in my life I was not living under the constant shadow of pain that a conflict inflicts.

I have had the privilege of leading Ethan Allen, a classic American brand, for the last twenty years.  Ethan Allen is celebrating its 75th Anniversary this year.  The company started as a manufacturer of furniture supplying its products to independent dealers.  When I took charge in the mid 1980’s, Ethan Allen needed major re-invention.  The product designs 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 90% brand recognition.  And as often happens, the management at the company was comfortable with their status and felt there was no need to change.

Ethan Allen was a well known brand.  However, to have continued success and remain a leader, we also had to become relevant for the changed environment and take steps to become a preferred brand.  Reinvention means taking a fresh look at the problems and challenging assumptions of the past.  In going through any major reinvention one must understand and expect that generally, ideas are first rejected, and then tolerated, and finally there is a chance of acceptance.  Reinvention is key to continued vitality of any institution or nation and takes place either unconsciously, which is most of the time, or consciously which obviously is the preferred method. I also believe it is the responsibility of leadership to establish the overall environment and guidelines under which the enterprise will operate.  Every institution or nation is defined by the culture that the leadership creates.  Debates and priorities are shaped by leadership and if the leadership fails to take the opportunity and responsibility, the vacuum gets filled by people with louder voices and often with extreme agendas.

Today Ethan Allen is a changed enterprise and a global enterprise.  As you know, much has been written about management and leadership principles.  I have been impressed by the Universal Principles of Ethics that are part of all religions of the world and also enshrined in the principles that founded this great country.  These shared principles inspired me to establish our own set of “instructions” which we call the Leadership Principles and can be found on our website www.ethanallen.com.  The Ethan Allen Leadership principles have helped us to create a unique culture which has developed a team of 10,000 highly motivated associates.

During the last 20 years, we have made it a point that these principles are discussed in large and small meetings and most of our senior management is asked to write about the implementations of these principles as part of self-evaluation.  A major portion of our incentive compensation of senior managers is based on their adherence to these principles.

I would like to particularly focus on three leadership principles that have guided us.  First, the word justice is not often used in business enterprises.  We know that injustice results in conflicts and dis-motivation causing lack of growth for an enterprise or a nation.   The second principle to keep in mind is that arrogance is often the cause of failure.  We believe that leadership has to set an example by working hard, being innovative and most importantly, conducting themselves with humility.  The third principle is managing change.  We emphasize that change creates opportunity and needs to be managed.  Having lived in the mountains in my childhood, and still hiking as a hobby, the mountains taught me that reaching the summit needs an appropriate pace.  Going up too fast often results in altitude sickness, which can be fatal.  The solution most of the time is to come down, stabilize and then climb again.  Unfortunately most people do not like to come down and often end with a disaster.  

I also believe good governance is good for profitability.  At Ethan Allen, during the last fifteen years, we have consistently performed at the highest profitability levels in our industry and, in fact, in most industries.

That brings me to the issue of the importance of good governance and the need for partnerships at a global level. The world is small and getting smaller. Communication and information are raising expectations and if these expectations are not reasonably met, will cause major issues and conflicts. We know the universal principle that our performance is judged by the expectations which we create or are created for us. Those of us who are running public companies or are working in the public domain, know that quite well. We must understand that our long term welfare in the United States will increasingly depend on helping raise the standards of living around the world. We are already confronted by issues due to migrations of people. These migrations are taking place due to many factors including political conflicts, rising expectations, lack of economic opportunities and, in my view, lack of good leadership. We must reject the notion that globalization means that we would do well to not pay attention to the welfare of the citizens of this global village. Migrations are taking place from South to North America, from Asia and Africa to Europe and from rural areas to urban areas. The migrations from rural to urban areas in many faster developing countries are creating major social conflicts, health issues and challenges to the environment.

One such conflict is displacement.  I am privileged to chair the Board of Refugees International, an advocacy organization based here in Washington DC. It is a tragedy that over thirty million people are today displaced from their homes and the number is rapidly growing.  The latest tragedy is in Iraq where millions have been displaced from their homes.  Also we are just comprehending the potential impact that global warming can have on populations living in major coastal cities around the world.  If the global warming continues at the levels we are experiencing, there are estimates that millions could be displaced around the world.  

In addition to the environmental and other issues relating to globalization, we have another major issue to contend with: the perceived conflict between the U.S. and the religion of Islam. This perceived conflict theory is largely based on the assumption by some that the Judeo-Christian and Islamic value systems are violently opposed to each other. It is important to note that this belief is held by a vocal section of the populations of non-Muslims and Muslims. This assumption of inherent conflict is misleading and inaccurate for several reasons. First of all, the religion of Islam is a continuation of the messages that came from Judaism and Christianity. It is the third Western religion in the Abrahamic tradition, and it is based on the same fundamental principles as Judaism and Christianity. Secondly, we cannot ignore the role that vested interests play in pitting of “us vs. them”. Throughout history, various religions have been used to justify all sorts of violent actions – including slavery, genocide, and colonialism. Let us not forget that promoting “Islam” as opposed to the “West” is a political tool that is all too easily manipulated. We must reject the view that Islam, as a religion, is not compatible with democracy and rule of law. The fact remains that the underlying ethical principles of Islam are in conformity with the principles on which this great nation was based. I again refer to the common values of mercy, charity, social justice, living peacefully with the various peoples of the world and the use of reason. I would further argue that people all over the world want to improve their economic conditions and to live with better governance. With access to information these demands will increase.

Furthermore, I am deeply concerned at the increasingly confrontational and the narrow attitude of the leadership in many parts of the world. In most instances ego, arrogance and lack of common sense is determining the course of action causing great harm to millions of innocent people. The main responsibility of leadership is to shape the debate and priorities and that while safeguarding national security they do not create an environment of fear. No individual or society, in my opinion, can prosper and grow while living in fear or reacting in anger.

The world is getting smaller and to confront the major issues we are faced with, there is an urgent need to create partnerships of world leaders, community leaders, business leaders and of political and religious leaders.

• In this regard, let me give my perspective on the important role that Western Muslims, particularly American Muslims, can and must play in facilitating dialogue on the common ethical values we all share. We must help to form networks that encourage meaningful involvement in the political process. In this regard I am co-chairing, together with former Secretary of Labor and former member of Congress Lynn Martin, a task force called the American Muslim Task force organized by the Chicago Council for Global Affairs. After about eighteen months of deliberations, the Task force report is due this June. This report will outline a number of initiatives that can be taken for and by American Muslims to get more involved in the domestic political process and also to be a bridge in projecting common ethical values.
• There is an immediate need for the world’s important leaders, representing different regions and religions to meet. These leaders should include those we agree with and also those we disagree with. These leaders must clearly state that challenges faced by our global village should be resolved under the umbrella of our shared ethical principles.  I believe this group should meet regularly and the process institutionalized.
• Similarly, there needs for a special meeting of the senior-most religious leaders of various faiths. They must also work together to help shape the debate towards reconciliation and focus their energies on areas that unite us.

I would like to add here that for fruitful discussions, dialogue must be characterized by three features. One is the absence of coercion, with all parties agreeing to treat others as equal. 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 peoples’ deep-rooted assumptions in order to overcome  misunderstandings. There must be genuine desire to work together in partnership.

Thank you once again for the opportunity to share my thoughts with you this morning.

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