As life returns to normal after Facebook’s rather stimulating $19 billion acquisition of WhatsApp Inc., only one question struck me: ”why the reluctance towards embracing innovation…if it pays off this much?”
A number of African business leaders and entrepreneurs are reluctant and lack conviction towards the pusuit of bold innovative ideas in today’s fast-paced, dynamic business environment. They’d rather cling to ‘buying and selling’. Seldom do they take cognizance of the need for fresh ideas as a fundamental ingredient to obtaining a competitive advantage.
Most business executives are victims of the scary shadow of investor demands hovering slightly over their heads, which ultimately lead to them settling for short-term profitability at the expense of playing for a sustainable competitive advantage, by developing an organizational culture where innovation can flourish.
In the century, industry boundaries remained intact, and the competitors were well known and on most occasions, came from within one’s own industry, more or less, rarely did they overlap from other industries, because the business environment was more tranquil as compared to today’s turbulent one.
Furthermore, market leaders set the rules, and used their accumulated unfair advantage to ward off, or even destroy, the competition because product innovation was an advantage that took years for any competitor to emulate. Unfortunately, the golden years when we could milk the cash cow product for years are now far behind us, and it’s now time to embrace the reality that innovation is taking hold in any other industry.
So, just how susceptible are our business models to innovation? Very, actually, and only bold and creative action on our part can avoid it, and make our businesses remain relevant. Most of our businesses are confined to having the simple game plans of being replicators: either sticking with the familiar core business, asking customers what they want, and then make requested improvements or simply keeping pace with their competition’s emerging innovations and the resultant reality in both cases is that neither is doing any thinking for themselves. Most of these businesses create a future that merely amounts to bringing the past forward.
In most instances, African business people fail to design strategies that depend on original thinking, thereby ensuring that their businesses pursue a goal to capitalize on the sales growth, profitability and brand equity benefits created by being first to the market. Trendsetters normally create new marketplace demand, and accelerate the emergence of an unprecedented future. Sustainable competitive advantage goes to companies that discover opportunities no-one else-neither their customers nor their competitors- can ever imagine.
Back to the Facebook purchase of messaging giant WhatsApp, which to an ordinary naked eye makes the figures involved appear like Facebook paid top dollar for an overpriced company. However, what most of us are missing is simply that, Mark Zuckerberg realized the threat that WhatsApp poses for his company, and has decided to swallow the messaging giant, just like he did to Instagram, before it becomes a fierce competitor. WhatsApp is an expensive threat that Facebook couldn’t let go into the open arms of anyone else, especially Google. The threat to any organization is not just from industry peers nowadays, but is posed from any direction.
For example, Zimbabwean banks were ignorant to the threat posed by mobile phone operators offering mobile money transfer platforms-a move that would up the ante, and create another revenue stream for the mobile phone operators. A few years ago when Econet Zimbabwe then created the hugely successful EcoCash product, banks wasted valuable time fighting the mobile operator, with so much desperation of seeking to be included in the share of the windfall from the money transfer platform.
Modern innovation is simplifying banking, and therefore, banks should have been the first to jump onto the opportunity of creating mobile money transfer platforms, nevertheless, they weren’t interested in expanding their consumer business. In an ironic twist, the prospects of another lucrative revenue stream then suddenly attracted banks.
Even though, there are always reservations about the steep costs of using EcoCash, from a personal perspective, i strongly believe Econet Zimbabwe made the correct decision by not being arm-twisted into accepting the demands of the banks, and going it all alone without connecting to their ZIMSWITCH facility.
Yes, constant accusations will always be made about Econet Zimbabwe not being the original pioneers of mobile money transfer platforms since in Kenya’s M-Pesa arguably leads Africa in mobile money innovation. However, for the Zimbabwe market they introduced the first serious mobile money transfer platform that hasn’t needed to be rebranded.
Moreover, WhatsApp didn’t create the messaging service that has made them popular, BlackBerry already had a similar product- BBM, which unfortunately was a closed system meant just for BlackBerry phone users only. WhatsApp simply improved the product and opened the messaging service system such that it became flexible and easy to use on many mobile phone models.
What Econet Zimbabwe, Safaricom, Vodacom etc., just did was to radically transform the way people transfer money using a mobile phone, without needing to travel long distances to visit banks or other money transfer agents.
The question for African business is whether they believe that innovation provides them – and the entire business ecosystem -with a real safety net or merely a false sense of security.
