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Lessons for businesses from PDP loss in the 2015 elections 24 Jun 2015

Let me put it out there first. This is not a political article. But the manner and scale of the loss of People’s Democratic Party – Nigeria’s ruling party for 16 years – at the 2015 general election have many valuable lessons for businesses. This strategy of using major events and anecdotes to bring out valuable management concepts and principles is in keeping with some of my other recent articles. Examples are the article about what business could learn from the FIFA World Cup (Published in August 2014 Edition of Financial Nigeria) and the article about what Nigeria’s economic managers could learn from the collapse of Greece’s economy (Published in June 2013 Edition of the magazine).
    
Nigeria’s general election has come and gone, but the lessons and stories of the loss of Africa’s self-styled largest party will continue to linger. It is on record that a key member of the PDP had said that the party would rule Nigeria for at least 60 years; and who could bet against him? The party boasted of having in its fold most of Nigeria’s political heavyweights; they were well funded and they seemed to have an even spread across the country. They were dominating the local political landscape until a number of things started happening which the party didn’t pay adequate attention to or downplayed their significance. This is true for the PDP as it is for businesses. Below are some four business lessons to learn from the PDP loss.
    
1.    Failure to spot trends: In a review of general elections held over the globe in the last two years, you would realise that incumbent governments either lost out or the opposition parties were gaining considerable ground. The reason is not farfetched. The world we are living in is changing at a rapid pace. Citizens are grappling with a wave of terrorism, loss of savings, financial meltdowns, natural disasters and the likes. Every country seems to be grappling with problems that past generations did not have to deal with. Quite naturally, the citizens want to lash out and hold someone accountable. Who else, but the incumbent, ruling party?
    
A business (or political party) that fails to spot trends in its industry, country or the world at large and respond appropriately will sooner rather than later become extinct. It’s imperative that businesses have a structure that identifies threats to their industry or existence even before they manifest.

2.    Voice of the Customer (VOC): This brings me to another pertinent point about the Voice of the Customer. As we all know, businesses exist for the customer and not the other way round. In the same way, governments exist for its citizens and not the other way round. A business can get away with fleecing customers, lousy customer service, defective products and the likes, if it is a monopoly. However, the moment a second, third or fourth credible player comes into that industry, then customer sentiments suddenly begin to shift.

When businesses don’t constantly keep abreast of the pulse of their customers, they begin to die slowly. All it takes is another party that offers something that looks like a better alternative. Businesses must, therefore, always be open to genuine feedback from current and future customers. One hallmark of companies that are built to last is direct feedback from its customers to the top leadership of the company. Businesses need to have a feedback mechanism that ensures that the highest level of management receives direct feedback from their customers and not just reports from the management team, who might sometimes leave out any negative feedback because of the need to impress the leadership team. Whilst the PDP had a lot of town-hall meetings, rallies and forums, most of these were paid for, using rented crowds who just turned up to receive their promised ‘’attendance fee.’’ These sets of people were definitely not going to give truthful feedback which is needed for any entity that seeks constant improvement.

3.    Underestimating your opponent: There are many theories on what brought about the fall of Nokia, the erstwhile mobile phone giant. These range from pervasive bureaucracy, weakness in some key markets and faulty organizational structure. One undisputed reason however, is that Nokia underestimated new entrants into its industry. Nokia was the undisputed pioneer and leader in the wireless space. At the heights of its prowess, Nokia accounted for a whopping 4 in 10 mobile handsets globally. The same is true of Kodak, the undisputed former leader in the photography and film industry. As at 1976, Kodak sold 90% of the photographic film in the United States and 85% of the cameras. The PDP was no different. They strode the country like a colossus. As at the 2011 general elections, the PDP controlled 23 states out of the 36 states in the country – a 64% ‘’market share.’’ They also garnered 58.8% of the popular votes. They were the clear market leader.

With each of these behemoths, there were new entities entering their industries, but they were too comfortable with their past successes and their market shares that they failed to recognize the threat of these new entrants. Nokia’s handset business was bought over by Microsoft and the name Nokia will be gradually phased out from mobile phone business, with Microsoft choosing to use the Lumia brand. This was virtually unthinkable fifteen years ago.

Kodak, on the other hand, filed for bankruptcy in 2012, while the PDP is facing internal battles of its own. Perhaps if these entities had taken these new entrants a little more seriously; if they had bothered to adopt some painful internal restructuring, the story would have been different today. The lesson for established businesses is always to ask, “What could go wrong; what are the potential threats to our existence; who are we losing market share to, and why?” The chairman of one multinational often voiced his concern about always hearing good news. He said he wanted to hear about potential threats to the business and how the company could cover its flank. Every business, organization or indeed political party should be concerned about this.

4.    The demography question: Nigeria’s largest demographic group can be found between the ages of 15 and 35. It therefore stands to reason that any business or political party that will succeed in Nigeria, must actively court this group. This group is social media savvy; the youth want their views to be heard, and they are creative and opinionated. Whilst some will argue that the PDP did a lot in engaging this group, it was probably a case of too little, too late. Their mode of engagement was also questionable. The major influencers in this group were not going to be swayed with financial inducement, but rather they wanted an intellectual engagement that made them feel they were equal partners in the Nigeria story. These are some of the key characteristics of millennials, who account for majority of Nigeria’s population.

In terms of strategy, some corporate thought leaders believe that no strategy session is optimal unless it has some under 30-year-olds in active attendance. These sets of people offer fresh perspectives, a bold outlook to the future and some creativity. For businesses and political parties, the takeaway here is to begin to populate their boards, management teams and strategy sessions with the younger folks who would challenge traditional forms of thinking and offer alternative forms of reasoning. Imagine the difference it would have made if Nokia for instance, had a number of 20+ individuals as part of their strategy team. Those individuals were the ones who were being targeted by Apple phones and Android-powered phones, which eventually became the Nemesis of Nokia. This is however, not advocating the lowering of standards, but a call to embrace diversity right from the production line, the board rooms and indeed the campaign offices.

Granted, we may not have captured all the reasons why Nigeria’s former ruling party lost the recently concluded elections. Indeed, we can only analyse the outwardly observed symptoms, and there might have been other reasons not known to the general public, but we have at least been able to help business, political parties and other organisations who find themselves in a position of leadership to be careful of the upstart competitor. They must always seek direct customer feedback, to embrace diversity as a way of life and to always cover their flanks, so that they don’t end up in the history books.