Are you a strategic or wishful thinker?/or why you should guard against visioning!

By Patrick Mayoh

There is so much to read nowadays; even more to write about. I am just about to finish a newly released master piece by Richard Rumelt, Havard Doctor and Chair at the Anderson School of Management UCLA, on “Good and Bad Strategy[1]”. The book as the titles suggests initiates managers to the art of successful strategising.

Richard Rumelt himself has been dubbed the “Strategy’s strategist” by the Mc Kinsey Quarterly. He has consulted with the big names in the world and his book is actually very deep and deals with key questions on strategic building for organization. Much could actually be said about strategy but for this post I will just focus on visioning and why this is bad for your organization when it is done recklessly. Here I am going to share what I learned about the dangers of visioning.

Pop unto the website of any organization and go to the “about us” section where you are almost always likely to find:

• · A Vision
• · The Mission statement and
• · Values

While there is nothing wrong with those concepts, do you not actually feel that sometimes they can be devoid of meaning? Not just for outsiders but even more for insiders. Most of the time what people call “strategy” is usually a combination of those three elements. Visioning has nothing to do with strategy.

Visioning is actually a brainchild of the “new thought movement” advocated by such managers as Jack Wech with quotes such as “ reaching for what appears to be the impossible”, or more recently with people like Peter Senge with his concept of “shared vision”. In a nutshell mobilizing people around a common goal unleashes tremendous potentials that will likely propel the organization to success in its industry. There is actually nothing with that; this can be confusing, unspecific and fluffy.

Confusing because making grand statements like “we will be the best company in the world” is actually useless, virtually everyone thinks the same. Those statements will never tell your workforce what you are aiming at. The big picture is actually a series of details that build up to give an organization a concrete image of where the company is headed. When you cannot as a manager or a leader offer a clearer path than visioning, you run the danger of making it difficult for your employees to understand your philosophy.

Unspecific because visioning does not actually tell your employees what you are trying to do, how you plan to beat your competitors, what avenue you want to follow to be the best or how you plan to achieve profit. Visioning only states goals or intentions without actually demonstrating how your organizations will meet the targets. Visioning is often as well a list of things to do but this does not amount to strategy either. Presenting a bullet point series of slides on a nicely designed power point document will not clarify what you plan to do as a business.

Lastly visioning can be quite fluffy. By that I mean those organizations that usually state the obvious as strategies. Take the example of this bank whose strategy is” our fundamental strategy is one of customer-centric intermediation”. Ok let us stop there a moment. Intermediation actually means receiving deposits from customers to lend them to borrowers; do you not think this is pretty much what all banks do? Fancy words on a document do not amount to a strategy. In a nutshell according to Richard Rumelt bad strategy is either one of those following:

• · Fluff
• · Failure to face the challenge
• · Mistaking goals for strategy
• · Bad strategic objectives

Which brings us to the next question; what is good strategy or how can you lay down a successful one? See you next week for that. I cannot wait to read your comments.

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[1] http://www.amazon.co.uk/Good-Strategy-Bad-difference-matters/dp/1846684803/ref=sr_1_1?ie=UTF8&qid=1320246419&sr=8-1

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Aurevoir L’artiste: A tribute to Steve Jobs

By Patrick Mayoh

On my table next to the laptop sits a copy of Richard Rumelt’s acclaimed Good strategy/bad strategy[1]. The book embarks on a journey to explain readers what a good strategy is and is not. It was just released this year but I can tell it has all the potential of a classics in Business and strategy literature. Ok back to my table! I read the first case study about successful turn-around strategies and unsurprisingly Steve Jobs’ turnaround of Apple is the first case. Ominous!

Tributes keep pouring in on my facebook page, I click on one link from HBR[2] (havard Business review) and there is a PDF file on sales about him. Oh my! I just cannot keep from reading pages after pages of tributes from major publications and other great world changers like Bill gates. And I wonder how a few lines from this blog can actually capture what this unique person means to the world today. But I want this to be a personal but open letter to the world about what Steve Jobs represents to an MBA and a potential entrepreneur.

Thanks for showing me how being successful in business is all about:

• · Being Unique
• · Being Resilient
• · Seeing the big picture
• · Pursuing excellence
• · Great design

Unique

When you made your come back into Apple in the late 1990s the world held a breath, wondering how you could turn around a company on the brink of collapsing. But you actually performed one of your magic tricks that was quite obvious on second thought but to which the corporate board was inexplicably oblivious to. You chose to ditch all underperforming apple products and focussed on just a few ones creating. You were a true Blue Ocean thinkers not satisfied with more but little and simple. I wish your Apple remains true to that philosophy. Simplicity is better than variety. I got that.

Being Resilient

It is not just the way you fought your battle with cancer or how even after being evicted of your own company you still went on to create the most successful animation company in the world and ended up racking 7 billion in sales to Walt Disney and sit on their corporate board (talk about a rebirth). “I am going to wait for the next big thing”. This is actually what you told Richard Rumelt[3] eager to know about your strategy to upset the WINTEL[4] monster. And true to your word you fought a fierce battle to convince the music industry to help them combat piracy and revolutionize the way we access music nowadays.

Seeing the big picture

Michael Porter rightly lamented the fact that American corporate board were too much focussed on quarterly and annual profits. It is annoying how a nonsensical market fluctuation can send CEOs scrambling for small gimmicks to try and re-establish their images. But you were never drawn into that kind of silliness always choosing to pursue your dreams of what the world should be like and you succeeded. The IPHONES and IPADS have changed forever the way we interact with technology. No wonder people would run to buy your latest gadgets at unbelievably high prices and in the worst recession in human history. Thanks to you I know that focussing on the big picture is the recipe to changing the world and achieving greatness.

Excellence

People like you taught me that excellence is not just a goal but a culture. Is it any wonder that you were a hand-on manager always assessing all the details of your product designing process to make sure people like us get the most amazing gadgets? How you would carefully prepare each of your slides, how you would cultivate respect from your colleagues how you would oversee just about everything on your Apple planet should be a benchmark for any CEO or Entrepreneur.

Design

You once famously said that design “is a funny word. Some people think design means how it looks. But, of course, if you dig deeper, it's how it really works. You have to grok what it is all about”. AMEN.

I have to meet a friend tonight. I wonder if I should wear a turtleneck polo and a pair of blue jeans, where are my snickers? Thank you Steve and good bye.

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[1] http://www.amazon.co.uk/Good-Strategy-Bad-difference-matters/dp/1846684803/ref=sr_1_1?ie=UTF8&qid=1317914884&sr=8-1

[2] http://hbr.org/product/decoding-steve-jobs-select-commentary-from-hbr-org/an/10973-PDF-ENG

[3] Remember the book i told you about in the beginning

[4] Windows and Intel in the mid-late 1990s

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Crisis management made easy

By Patrick Mayoh

Whatever the title suggests to you, a crisis is never easy to resolve, actually mishandling one could prove to be fatal to your team and your career as a manager. Recently read through an article from the Wall Street Journal about handling corporate crisis, and although the tips seem to apply only to senior executives, I reckon they could be useful for any manager or team leader.

You will surely go through a crisis, no matter how prepared you are or in spite of all the precautions you take as a manager, you will have to deal with one. Some are quite minor, like all staff turning up late at work or major like a 50% profit loss due to hefty competition. As a manager I think the guidelines provided by the WSJ might well apply to you; this is nothing new by the way, the tips contained here are surely contained in countless management books and journals around the world but this is still worth a read they include:

· Resisting the temptation to resign

· Coping with anxiety and scant sleep

· Building esprit de corps within your team

· Seeking outside help (from your informal network for example)

· Always keeping records of what goes on

Do not resign yet

The circumstances never determine the end of a story. Just because it starts catastrophically never means it is going to finish this way. Even a dive in your market value or the loss of your major customer need not mean you are doomed to fold up as a company. There should always be a solution to ANY type of problem; therefore a crisis might actually be the opportunity you need to show your senior manager your unique problem-solving abilities while on a personal level reveal qualities you were unaware of as a manager or a person. Great leader usually emerge in times of crisis, they (crises) provide the ideal opportunity to actually showcase all what you are worth as a manager.

Anxiety and sleep management

Do not neglect your sleeping time WSJ suggests. Anxiety usually precludes insomnia and a sleep deficiency could have tremendous consequences on your productivity as a manager during a crisis. So it is well worth making sure you actually take time to rest. A study carried out by Harvard[1] Education actually shows the negative effects of sleep including how it (helps) consolidate learning and memory; “Sleep helps the brain commit new information to memory through a process called memory consolidation. In studies, people who’d slept after learning a task did better on tests later.” So the best way to actually find the “waouh” idea or solution is to get some sleep. People usually suggest to “sleep” on problems that could probably be the only way to make things happen.

Esprit de corps is the key

Isolation is suicidal. The last thing to do in a crisis is to hibernate to your own world to try and find solution there. That is surely the reason we have teams. As a manager your team’s unity might be the only difference between success and failure. Isolation is equally contagious and usually breeds suspicion, gossip and fear (you get the picture right?); by bringing your staff together you can actually share the burden and find the solutions you need to make things happen for your team. John Wooden once famously said that “the main ingredient to stardom is the rest of the team”. The danger when solving the crisis is to put too much focus on who get the credit rather than who gets the job done, individual might get the credit but team always get the job done.

Outside-in help

You probably have an informal network of colleagues and alumni, if not friends and family could actually provide the vital equilibrium you need between work and life. Of course you do not want everyone in your network to know about what you are facing. But it is still worthwhile to open to two or more friends that will listen and say one or two kind words to boost your morale. Did someone say there was wisdom in many counsellors[2]?

Records make all the difference

Ethan M. Rasiel and Paul N. Friga in the Mc Kinsey[3] mind actually recommend writing a note at the end of each working day to record anything new you learned in a particular day. The key to crisis management in this sense is to chart the progress while keeping notes of the things you are learning and how they are changing you as a manager. This will serve as future references for yourself but your team as well. Memos, minutes and decision-making processes have to be carefully documented and serve as reminder of what should not happen or what needs to be done in the future.

I will be writing something on perceptual mapping next week, let me know what you think about this one in the meantime.

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[1] http://www.health.harvard.edu/press_releases/importance_of_sleep_and_health

[2] Solomon in the book of proverbs in the bible

[3] http://ebookee.org/The-McKinsey-Mind_102118.html

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Africa needs many Muhammad Yunuses: The need for social entrepreneurs

By Patrick Mayoh

I had an epiphany! It sounds a bit strange to begin my post like this, but this is actually how I felt when I turned the last page of Muhammad Yunuses’ book on “creating a world without poverty: social business and the future of Capitalism”. It was undoubtedly a great summer read and I totally espouse the vision of Muhammad Yunus on a world without poverty and on rethinking capitalism. Before we get into that, let me say a quick word about Muhammad Yunus.

Muhammad Yunus is generally considered the father of microfinance[1]; he founded Grameen bank a giant microcredit organization in Bangladesh, offering financial products (loans, insurances, and pension savings) to the poor. This all started when Yunus realised how the financial system of his country had no regard for the poor in the society, he came across some ladies who actually sold themselves into slavery just to borrow the equivalent of $1 to make products they had to sell at a price fixed by the borrowers. This prompted him to donate $27 to get these ladies out of the vicious circle. Today the Grameen foundation has gone beyond banking to other industries like healthcare, telecommunications, education and recycling to name just a few[2]. Muhammud Yunus and the Grameen bank in 2006 were awarded the prestigious Nobel Peace Prize for their work in combating poverty. Most importantly Muhammad Yunus (like me) believes social businesses could revolutionize the world and create an era without poverty. The concept itself (social business) is fairly new but I hope to briefly explain 1) what it is 2) how it works 3) how Africa and the whole world in general could fit into the picture.

What is Social Entrepreneurship?

Let us be honest! Capitalism, as we know it today is a failure. There is nothing wrong with the idea of free and open markets all over the world. But the basic assumption that profit maximization is/should be the raison d’être of every business is totally untrue. Like Muhammad Yunus advocates we are “multi-dimensional” beings and have therefore different needs. The logic of uncontrolled growth pursued by organization is detrimental to the Environment and responsible for the over-utilization of resources the world over. The recent/current financial turmoils are just the tip of the iceberg. In reality our way of life articulated around excessive consumerism is unsustainable. If development is all about making underdeveloped nations like Western ones then we might need five planets earth to sustain our way of life[3].

Muhammud Yunus far from discouraging economic activities or entrepreneurship proposes a different approach: “Social-consciousness driven enterprise aims for full cost recovery, or even more, even as it concentrates on creating products or services that provide a social benefit. It pursues this goal by charging a price or fee for the products or services it creates”. The Skoll foundation in Oxford University goes further to define Social Entrepreneurship as business ventures that “exploit a range of organizational forms – often unique hybrids- from charity to not-for-profit to commercial venture to maximise social value creation”.

In a nutshell the goal of a social business is not just profit maximization but social value creation through products (services) that tackle specific social problems ranging from access to healthcare, nutrition (food and water), recycling (environmental degradation), to discrimination, unemployment and access to new technologies. The possibilities are endless, and the Skoll foundation seems to suggest we are just scratching the surface of this new phenomenon.

The Grameen foundation’s portfolio of businesses is a good example with more than 25 ventures in Bangladesh, spawning healthcare, telecommunications, fisheries and livestock, Internet access, Agriculture and management consulting to name a few. The Grameen foundation actually entered into a partnership with DANONE to develop Yoghurt to aid the nutrition of children from poor areas in Bangladesh[4]. Now you know the basic fact, let us see how it works.

Social entrepreneurship: Modus Operandi

Multi pricing is the way for social businesses. The idea is to sell a product at the normal rate for say customers who can afford it and at a cheaper one (rate) to customers that cannot afford it. This is the success story behind Grameen foundation’s many business ventures. Products are sold at a premium say in the city but then are offered at a very symbolic price and sometimes for free in rural areas. The companies are still able to make a profit and extend their operations to other locations. The Grameen’s eye care hospitals for example provide eye care services at a regular market price to patients who have no difficulty in paying the fee while offering the same service to the poor at a token fee.

Also a social business is scalable not only in terms of new locations but especially in terms of social value creation. The Youth Industries Inc. In the USA specialises in food production, recycling and fashion. The project builds a series of shops that train and employ homeless people with the profits reinvested for mentoring and reinsertion programmes for homeless back into society. Likewise the furniture resource centre in Liverpool began as a furniture removal and employment training social business and later diversified to waste collection and recycling, retailing and then into a social business management consultancy.

The premise is to reinvest profits into other social ventures and gradually tackle the problems faced by a community. Investors will not focus on profit maximization but will assess the success of a business first in terms of the social impact created and then in terms of efficiency (use of resources) and profitability.

While charity and other not-for-profit organizations have to continuously rely on donations to survive and achieve their social impact, a social business is self-sustainable and does not have to depend on donors to achieve its impact. It can move from a stage where it depends on donations to a stage where it makes a profit and steady revenues therefore removing the need for continuous donations. Think of it, would you rather commit to £15 a month to Action Aid or invest say £300 in a social business that makes sweet that are priced according to locations to provide healthcare to children in Africa. Not only that, but the social business promises to give your money back after 5 years (like a bond). Don’t you think this could be an attractive idea for philanthropists? The possibility of investing and getting back money that actually change lives somewhere in the world? This is why I so believe Social Businesses/Entrepreneurs could be the solution to the world’s problems. Let us talk about Africa.

How does Africa fit into the picture

Not just Africa but the whole world, even the US with one of the worst healthcare system in the world[5]. By nature we are creative beings. We have created planes, we have gone to the moon, and we have created Internet, I phones, and Facebook to name just the most common. We can create a system that eradicates poverty in Africa through sound revolutionary business and entrepreneurial thinking. Because at the heart of the whole notion of social entrepreneurships is not the eradication of conventional business principle, it is instead the application of these to solve social problems thereby creating social impacts for the stakeholders upstream and downstream.

What if the money allocated every year by the UN and its agencies, Governments and other NGOs; what if part of the money could be allocated for the creation of an investment fund serving as a pool for social entrepreneurs?

The Investment fund will also serve as a rating agency, will standardize terminologies, definitions, impact measurement tools, reporting formats and yardsticks along which social entrepreneurs will have to perform. Success will be measured in terms of the social impact within a particular location.

Financial aid as we know it could be more dynamic with budding African Social Entrepreneurs implementing business principles within a social framework and tackling key problems ranging from healthcare to nutrition and education to name just a few. What if this was one of the ways to get Africa out of poverty like Muhammad Yunus did for Bangladesh, gradually and steadily on the road to achieving a middle income status country.

Although Africa does not have many social ventures, there are a few stories like the one of Veronica Khosa in South Africa which should inspire and drive us to do the same. She started Nguni (affection) to react to the insufficiency of support of victims to HIV by creating a home care service to complement the existing support system while offering an alternative through community based training and action in healthcare provision. The project made 200,000 home visits between 1995 and 1999 and trained 1000 home carers.[6]

We need more Ngunis in Africa and the world I believe.

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[1] See social entrepreneurship: new models of sustainable social change published by Oxford University

[2] More details in Muhammad Yunuses’ Creating a world without poverty: social business and the future of capitalism

[3] See Jane Goodall’s reason for hope

[4] You should definitely get a copy of the book.

[5] 1/6^th of the population lacks basic access to healthcare

[6] See social entrepreneurship: new models of sustainable social change published by Oxford University

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N.O.W saga: four things Businesses should never fail to learn about customers

By Patrick Mayoh

I have had to take a break from writing and I was thinking about posting again from August. But then everyone is talking about what I call the News of the World saga. To the point that one of my friends actually suggested I should write a post about this. Once I studied Journalism and needless to say from an ethical point of view that the hacking scandal is indeed well...a scandal.

It really never got my attention to be honest. I was wondering what the media and the public furore about N.O.W was all about. After all, phone hacking allegations have been around for well over 2 years. But then it began (the scandal) to get my attention when I read about SKY, Virgin and other big giants withdrawing commercials from the paper. And then there were shocking revelations about 7/7 victims’ families’ phone conversations listened to. I read with great dismay how Miley Dowler’s phone was also hacked and how even her parents’ private conversations with friends were monitored by N.O.W staff. From then on the phone hacking scandal just got uglier every single headline. Her majesty, Gordon Brown (other victims) and then the death of the whistleblower Sean hoare just a few days ago.

I believe this is what happens when an organization fails to adopt an outside-in perspective. Reflecting on the unfolding of this catastrophe I cannot help but draw lessons for all businesses in light of what we are witnessing in N.O.W. Organizations when it comes to the public (customers) should never fail to:

· Lose touch with reality

· Listen

· Fulfil expectations

· Realise people are in charge not CEOs

Organizations should never lose touch with the reality

I think what has happened is clearly a case of that. A paper that can go as far as listening to people’s private conversations just to get the big scoops has lost a sense of reality. Likewise organizations have to operate within clearly defined frameworks that protect them and the people they serve is that why we have codes of ethics? I honestly believe people should go into business because they want to help others meet their specific needs. I do not believe in the “profit first” culture. I genuinely believe you have to achieve a margin if you sell a product but when this is done at the expense of others reality always catches up and the N.O.W should serve as a stark warning. Like Muhammad Yunus I believe businesses’ goal to make profit is only one part of the story; much more has to be paid attention to.

Organisations should never fail to listen

N.O.W should have proactively reacted in 2009 when rumours about phone hacking of celebrities began to emerge. Foresight would have dictated the editors and the management to adopt a more ethical approach. Businesses will inevitably make mistakes sometimes big ones. But before mistakes move from minor to major ones there is always an opportunity to repair, amend and improve those aspects the public is not happy about. Actually the customers will always be useful in terms of reminding you as a business of what you need to be wary about before things get too ugly. When in 2005 Dell noticed that many of its customers were furious about the quality of their products; the CEO reacted by creating a blog: Direct2DellBlog entirely dedicated to answer queries customers had as well notifying them of all the measures being taken to provide an outstanding service to users. Dell even allowed like Amazon, customers to directly rate products on their website. According to Dick Hunter head of Customer service at Dell, measurements show satisfaction among customers at about 77%[1].

Fulfil expectations

Customers want good products; full stop. Meeting this need in a meaningful way is what companies should strive to do. A customer wants to buy a paper that reads well but also that excels on accuracy of facts, equilibrium and respect of privacy especially those that infringe on vulnerable sources’ basic rights for tranquillity like victims or distressed parents. In the same vein, organizations have a crucial responsibility to meet our needs without resorting to indecent means.

People are in charge not CEOs

This is probably the biggest lesson from the N.O.W saga. People are always in charge. It was not Rupert Murdoch who decided to close the paper. The advertisers did because they knew people would not buy the paper. What company would genuinely desire to be associated with a media outlet people resent?

No doubt Rupert Murdoch is a genius and a revolutionary in the true sense of the terms. However he is what he is because somehow people like what he brings to the media world and approves of his style and management. But the recent reactions to the hacking scandal have sent a clear message. People make and unmake, therefore organizations should be mindful of that and always adapt to changes outside the organizations.

I have always been a big proponent of the outside-in perspective. Although the inside-out approach can be best suited for some companies like Apple, the majority of organizations cannot afford to function without ascertaining what people outside think, what their concerns and interests are and how they can be met adequately. This is what we expect of media outlets and businesses in general

See you next week!

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[1] See Understanding digital marketing by Damian Ryan and Calvin Jones

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Time to create your blue ocean: a quick guide to strategic rethinking

By Patrick Mayoh

It has been a quite while, I am fully aware of it. I recently went on a shopping spree on my best market place (Amazon) to order books with big hypes in the business community. One of those is “Blue ocean Strategy » of INSEAD BUSINESS SCHOOL’s professors W.Chan Ki and Renee Mauborgne. The book was so applauded that the two authors were duly rewarded with an academic unit within the prestigious business school bearing of course the same name as the title of the book: the Blue Ocean Strategy Institute”.

Well I read the book as well and I tell you what, this is probably the best one I have read on strategic thinking. Mostly because the authors espouse my idea that strategic thinking should adopt a reconstructionist rather than a structuralist approach to markets, industries and the competition, more on that a bit later.

Blue oceans make competitors useless

What is your perspective when it comes to your business environment? Are you and your strategic team always thinking about better ways to beat competitors, slice markets shares, differentiate, and focus? Sounds a bit like the Potter idea of competition doesn’t it?

There is nothing wrong with thinking about the competition and about ways to beat your competitors. But as long as your focus remains on them, you end up losing sight of what really matters to customers and how you could actually reinvent your industry or business sector.

This has been termed a “red ocean” where a “market gets crowded” because “prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody”. The book pontificates that no industry or company is permanent, there is always a way to turn your business environment around and the best way to do that is to make the competition useless or irrelevant by going around it.

The strategy canvas

This is what the book all comes down to. Creating a blue ocean will require you to four activities:

· Identify the key common factors of your industry/sector

· Eliminating those that do not really matter to customers

· Raising those that do matter to customers but are downplayed by your industry

· Create new ones (factors) to enhance your value proposition to an unprecedented level within your industry

1) Identify

Individual organizations might differ from one another but industries are usually associated with key commonalities. It is therefore your responsibility to find out which factors most characterize your industry and its relationship with customers. Such factors obviously will vary from one industry to another. Also most industries are usually very complex in their structures and although you might deliver the same products or services to customer, it is worthwhile to know where you stand in your industry. Take the automobile industry for example, a huge sector; you have those who compete for luxury like BMW, Mercedes and Chrysler to name just those few. And then you have those that compete on affordability like Ford, Honda and to some extent Toyota. So although these organizations belong to the same industry, they still operate in different strata. It is therefore critical to identify first your stratum within your industry and then list the factors that are common in that particular stratum before you embark on your blue ocean creation.

2) Eliminate

Once you know for sure the key factors that characterize your industry or the stratum along which you operate in your business sector it is important to spot the factors that do not matter to customers. Business leaders that are not willing to challenge existing boundaries within their industry are more likely to fail than those who question status quo.

This is how Ford became the leader in the Automobile industry in the early 1900s. While other hundreds automakers thought cars were meant to be luxuries and inaccessible to the common masses, Henry Ford built a car that was easy to drive, reliable and durable. As it indicated in a 1909 brochure “Watch the Ford go by. High priced quality in a Low priced car”. So it is time for you to challenge the existing boundaries within your sector and proceed to eliminate those that do not matter. Henry Ford eliminated the fact that cars were meant to be luxuries for the elite. What do you need to eliminate? What are those things or factors your customers do not really care about?

3) Raise

Once you have eliminated the factors that do not matter at all to your customers it is time find those that really matter. As the authors rightly suggest, innovation is not always linked to technology but to those elements your customers “value”. Once you raise the factors that really matter to them you win! This is what Dell actually did. True customers value impressive features and software applications on newly bought computers. But many even value more computers that are delivered faster to individuals’ specifications and wishes. So the purchasing and delivering experiences although greatly neglected by other manufacturers actually mattered to customers and Dell was quick to spot that, reducing the purchasing and delivery time to 4 days as opposed to 10 weeks for competitors.

4) Create

This is probably the gist of the blue ocean school of thought. Once you have identified, eliminated and raised factors that do not or do matter in your industry stratum, you can think of introducing factors that will make your competitors irrelevant and set you apart from the rest.

A word of caution, innovation is not only or always about technology but about introducing factors that add value to your overall customer satisfaction. Enhancing your value proposition will very much depend on those factors you add to your customers’ experience of your products/services and organisation.

Kinepolis just did that by adding a childcare service to its value proposition. Most people enjoy a good night out to the cinema but many parents find it difficult especially when the last minute baby-sitter is not available. So Kinepolis a chain of movie theaters in Belgium added childcare facilities to its cinemas allowing parents not to worry about children on a good night out, and was able to make competitors irrelevant.

Something of relevance here is also the fact that a blue ocean strategic thinking provides your organization with Focus, Divergence and a powerful Tagline. In a red ocean, companies compete along the same factors making it difficult for your organization to make profit/margins. With the creation of a blue ocean, the company sets itself apart by simultaneously eliminating/reducing, raising and creating new factors.

References

W. Chan Kim and Renee Mauborgne (2005) Blue Ocean Strategy: how to create uncontested market space and make the competition irrelevant Havard Business Review Press Boston Massachussetts

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Africa Agriculture’s potential-enough is enough (PART 2)

By Patrick Mayoh

Frankly, I was delighted to have so many feedbacks on PART 1 of this post. And I am humbled by the many remarks and criticisms I received from this article. Some feedbacks came as very challenging questions that required very deep and tough answers[1].

Having said that, I would equally like to talk about a video link a friend sent me on Facebook. This was a documentary (je mange donc je suis[2] is the title) about the difficulties faced by Africans trying to practice Agriculture as a trade. It is a shame the content is in FRENCH but for those who can understand the language I have put the link below[3].

But the bottom-line of the documentary is that as long as Africans are disfavoured by the stock markets in favour of other countries like Brazil, they will never be able to fully reap the economic benefits of doing Agriculture[4]. So how is it possible to ensure that Africans fully benefit from their trade is a very tough question and I hope you can start providing some answers that will hopefully benefit us all. This article is just beginning to scratch the surface about this and probably in its own way help shape our discussion on this crucial topic for the African Continent.

Meanwhile I strongly believe that Agriculture should be the main focus for Economic Development and prosperity for Africans despite all the present hurdles. Last week I suggested this could be done through the following four ways:

1) Technology to boost productivity and optimise information among key stakeholders

2) Benchmarking of China’s agricultural revolution

3) Perceiving the big picture

4) Adopting a market-based approach

The first two were discussed in part 1[5] of this post and I will set about discussing the remaining two in this last post.

Perceiving the big Picture

Maybe African leaders would be more enthused about heavily investing in Agriculture if they were informed about the enormous benefits at hand. Figures from MC KINSEY actually provide a very strong case for making agriculture a priority on the African continent.

Research by MC KINSEY shows that:

v A green revolution in Africa means the continent’s economies could raise their collective output to $500 billion in 2020 and $880 billion by 2030 from $280 billion now

v Sub-Saharan Africa alone could increase the value of its agricultural production by $235 billion annually if it could increase its yield of major crops

v Brazil between the late 1980s and mid 1960s expanded its land under cultivation by 1 million annually. MC KINSEY predicts that if Africa could increase its Agricultural Production by $225 billion annually by 2030 if it could expand its area of cultivable areas by half the same portion as Brazil

Those three facts in themselves are compelling enough to get African Leaders thinking about the prospects of stimulating growth on the continent through stronger regulatory (economic, legal) frameworks that will boost the Agricultural productivity of the continent.

Not only that but real investments in Agriculture through the building infrastructure will surely provide jobs for millions of unemployed young Africans (see my article entitled: Africa could be the next economic success story[6]).

Adopting a market-based approach

Lastly because we live in a globalised economy, products and services are no more produced from a local perspective only. From the outset a business of the 21^st century usually thinks in terms of a region, a continent or the world. Bananas from Africa are consumed virtually everywhere in the world and British rely on the flowers from Kenya on Mother’s day to cite just a few examples.

My point is, instead of producing low value crops like beans or soya for example, Africa’s vast areas of uncultivated lands should be dedicated to producing high value crops (fruits and vegetables[7]) meaning those that easily sell globally especially in the developed world.

Kenya just mentioned earlier tripled its exports in horticulture to 700 million annually by focussing more on market rather than local needs. MC KINSEY posits that if high value crops replaced low value ones in Africa, the Agricultural output could rise by $140 billion a year from 2030.

The “breadbasket approach” for example is a good example of how to encourage the production of high value crops only. A given country for example decides to concentrate investment for a particular high value crops within a specific region/province. Mali is for example considering a similar approach in the Sikasso region which will hopefully raise cereal production by 60% in the country. In the 1970s for example Brazil concentrated investment in the Cerrado region around Infrastructure development, Agricultural research and soil recuperation. Such a system would mean that a country that has highly areas like Cameroon (Central Africa) could identify 5 key regions where investment could be concentrated for the development of highly value crops like fruits and other delicacies enjoyed in the developed world.

In a nutshell the focus should be on the demand rather than the supply side of the spectrum. Crops should be produced to reflect the real needs of the market or what people actually want to buy. Unless this approach is adopted Africans will continue to waste its vast agricultural potentials to the detriment of farmers and the population at large.

Interestingly nearly three quarters of the increase in Agricultural output could come from 11 countries which include: Angola, Cameroon, Cote dIvoire, Ethiopia, Ghana, Kenya, Madagascar, Mozambique, Nigeria, Sudan and Tanzania.

Conclusively because so much has already been said about the vast potentials of the African continent; the Continent will need a combination of visionary leadership, strategic and creative decision-making regarding investment (in physical infrastructure especially) and strong regulatory frameworks to create the necessary conditions for reaping the full benefits of its large uncultivated lands.

References

Acha Leke, Jens Riese and Sunil Sanghvi (2011) Sizing Africa’s Agricultural Opportunity MC KINSEY Quarterly

Steve Davis and Jonathan Woetzel (2011) Chinese Agriculture: a model for Africa MC KINSEY Quarterly

https://www.mckinseyquarterly.com/Public_Sector/Management/Four_lessons_for_transforming_African_agriculture_2785

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[1] One reader from Nigeria for example, asked me: “No doubt this is very educative and revealing. You have really opened up the reason why agriculture should be the number one priority of the African governments. My question is how best can we make funding available to the real farmers (Bearing in mind the level of corruption)? {...} Lastly, how do we ensure a price control in an unstable economy like ours?”

Or what about another reader that observed that: “What feeds Agricultural development is investment. Like everything you absolutely reap what you sow If you invest in seed improvement, access to credit facilities for real farmers, supply chain to get crops to market and processing of those crops to a finished good, then by all means hunger will be a figment of our imagination in Africa. Until that happens, let's keep donating our $20 to Oxfam to solve Africa's problem.” Regarding China the same reader observed that: “China is united!!! This means you have no idea about China. China is a vast country with many races and different languages. The China that many people see, The Hans, oppress most other Chinese such as the Uiygurs, Mongols and the Tibetans. “I fully agree with this last observation. By no means is China a fully integrated society. Much still has to be done in terms of bringing all the different groups together, but one has to recognize that China’s rise to economic prosperity is in a sense down to the commitment by the Central Government to unite and organize the nation towards the same goal which: economic prosperity through a more productive agricultural system.

[2] I eat so I am

[3] http://vimeo.com/7893617

[4] The WTO (World Trade Organization) determines the rules of the game and in principle demands that all countries sell their crops at the market price which is usually the lowest. How low the price is much depends on individual countries and the cost associated with production in those. So an American Corporation that bought very cheap land in Brazil spends $30 producing a ton of corn using strong “Economy of Scale” techniques while a farmer in Africa spends about $230 to produce the same amount of corn. So in the end not only does the market buy from the American corporation in Brazil but it also demands that Africans sell their tons of maize or corn at the same price. So what happens is many Africans (50 million each year) give up farming as a trade and flock to cities in search of more lucrative trades.

[5] http://patrickmayoh.blogspot.com/2011/05/africa-agricultures-potential-enough-is.html?spref=fb

[6] http://patrickmayoh.blogspot.com/2010/10/africa-might-just-be-next-economic.html

[7] From MC KINSEY ARTICLE

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