Anderson Uvie-Emegbo, Executive Vice President, Business Development and Distance Education, Chicago Institute of Business

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Subjects of Interest

  • Africa
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  • SMEs

Market leadership in an era of disruption 11 Aug 2015

Two important developments happened in July 2015. First came the announcement that Nikkei of Japan had bought Financial Times from Pearson Plc for £844M ($1.32 billion). Then on 23rd July, 2015, news emerged that in its 20th year of operation, Amazon finally overtook Wal-Mart to become the largest US retailer by market capitalization. Amazon declared $92 million profit for the three months to 30 June, 2015. Sales rose by 20% to almost $23.2billion.
    
For long, Amazon, the online e-commerce platform for everything, was the undisputed leader in the online space. A year ago, few would have predicted that an online retailer would overtake a physical retailer. What makes the story more compelling is that as at June 2015, Wal-Mart had about 11,000 stores in 28 countries.

As many companies grapple with the challenges of a disruptive era, there is something about Amazon's achievement that is instructive.

Never miss a transition

While it is almost impossible to keep up with every transition in business, we must never stop making an effort to move with the waves of innovation sweeping across our industries. It takes time to develop an organisation's capacity to harness the opportunities in any given innovation. You cannot start your preparation too early.

Market leaders like Amazon would often first recognize that a transition is about to occur. They have the sixth sense to make an unpopular move at a time others remain stuck in business-as-usual. Disruptive organisations have the courage to take the lesser-traveled road. Even though Amazon started off as an online retailer of books, it quickly diversified into retailing products such as DVDs, CDs, furniture, toys, food and jewelry. Soon after, its consumer electronics business followed with sales of Amazon Kindle e-readers, Fire Tablets and Fire TV.

However, its entry into the cloud computing and online storage market (through Amazon Web Services) at a time when the concept was still a buzzword was a crucial game-changer. These services are offered through Amazon Web Services (AWS). AWS is good value for money. Its web hosting services uses a pay-as-you-use model. There is no set-up cost or expensive upfront fee.

As someone who manages complex websites, having a reliable web hosting service that is scalable, flexible and pocket friendly is a gem. And apparently I am not the only one who sees things this way. According to Financial Times, “AWS was a strong contributor to Amazon's $92 million net income. AWS had an 81 per cent increase in second quarter (Q2 2015) sales to $1.8 billion, with its operating income up more than fivefold to $391 million”.


Your current business model may be holding up, but would it be relevant in the next 12-24 months? Are you preparing for the future needs of your current and prospective customers? Is it time to reevaluate your positioning? Is there a particular segment of your customer base whose needs you are insufficiently meeting? Are you researching the next market opportunity and aggressively addressing it?

Some years ago, there was an organisation in Nigeria with a well-established recruitment division. Let's call the firm XML Inc. To consolidate its position in the market, it launched a recruitment website. Three months after the website went live, over 70% of its users were jobseekers with less than two years work experience. But there was a snag – over 80% of the jobs on the job portal were at middle and senior management levels. You can imagine how dissatisfied 80% of its users were. Due to the XML Inc.'s premium pricing, smaller businesses that typically accounted for a significant number of entry-level jobs could not afford to upload their vacancies on the site.

Despite several entreaties, XML Inc.'s management did not see the need to design a product/service that could address the dual needs of entry-level jobseekers and small businesses. One of the reasons it gave was that it could not afford to dilute its premium brand status.

Barely a year later, Jobberman.com, an online jobsite, was launched by three young, dynamic entrepreneurs; it was specifically focused at addressing the employment needs of entry-level jobseekers as well as those of small businesses looking for pocket-friendly recruitment solutions. As at June 2015, Jobberman.com claims to have over 1.5 million professionals on its website. Jobberman.com has jobs covering the entire employment spectrum. It offers head hunting services for executive hires as well as career advisory services. With the take-off of Jobberman Learning, an online marketplace for online and offline training courses, Jobberman.com continues to create complimentary offerings which it upsells and cross-sells to its users. Industry watchers now regard Jobberman as an evolving educational firm.

XML Inc. was seemingly fixated on its premium brand approach. It missed the transition in the job/recruitment market. Today, its market share has been seriously eroded by the likes of Jobberman. As part of the One Africa Media group, it is very likely that Jobberman is a much bigger organization today than XML Inc. was even in its heydays.

Amazon's Jeff Bezos was quoted as saying, “There are two ways to extend a business. Take inventory of what you're good at and extend out from your skills. Or determine what your customers need and work backward, even if it requires learning new skills. Kindle is an example of working backward”.

Are you prepared for the disruption that is around the corner? You cannot afford to miss the next transition! Today is a good day to make a fresh start.

Create a creative organization

The seeds of groundbreaking ideas are all around a firm and not just in the boardroom. More than ever before, there is a need to create a work culture that challenges, encourages and rewards innovation. We must focus on building organisations that compete on value and not just on price. Great firms promote innovation from down up and not just a top-down, consultant-driven approach.

Are your employees fired up for your firm's vision? Is there a breakdown of trust? Is your organisation just another company on your employees' Linkedin profiles?

A culture of creativity assumes that every aspect of the recruitment process focuses on hiring employees who demonstrate tangible and verifiable creative problem-solving, critical-thinking and leadership abilities. The strategies, techniques and approaches that work for your firm today might fail tomorrow. Like XML Inc., the strengths of today might be the inherent weaknesses of tomorrow. Going forward, organisations seeking to lead must stop paying lip service to capacity building! You cannot grow a multinational firm with employees whose visions do not go beyond the next bus-stop or salary alert.

To build a more agile and nimble organization, middle managers need to undertake experiential training in areas such as, but not limited to, strategic management, customer experience marketing, sales leadership and winning culture. Middle managers must be prepared for disruptions in technology, regulation and consumer behaviour. Investing in a credible employee engagement programme will only serve to improve employee morale, motivation and productivity, while reducing employee attrition. An organisation can only be as creative as its workforce. “Life's too short to hang out with people who aren't resourceful,” said Jeff Bezos

Is your workforce creative enough for the business challenges that might arise over the next 12-24 months?

Stay One Step Ahead

"The iPad basically didn't exist before April 2010, and now it's a core platform. Digital delivery of content to the cell phone didn't exist a few years ago, and now it's everywhere. You go six months, and it's two generations?” ~ Adapted

People commonly ask, “How do we win?” Charles Darwin was spot on when he said, “It is not the strongest of the species that survive, nor the most important or the most intelligent, but the one most responsive to change”.

There are too many business leaders who foretell trends but do not commit the resources required to make change happen. Business leaders should have the humility to admit when they are wrong. More importantly, they need the courage to move the organisation towards the new normal.

Firms that focus on playing catch-up are setting up themselves to be laggards. In 2007, as traditional media brands struggled to monetize their online assets, Financial Times became one of the first print media brands to introduce a pay wall on its website (FT.com). It allowed its website visitors to read a limited number of free articles during any one month before asking them to pay. There was no guarantee that this untested business model would not boomerang.

By 2012, its digital subscriptions surpassed print circulation. In 2015, digital subscriptions now account for 70% of its total print and digital circulation of 720,000. Make no mistake; FT's valuation of $1.32 billion would have been much less without a strong digital business model.

One constant criticism of Amazon's Jeff Bezos centred on his unconventional style of reinvesting profits into massive acquisitions of potential competitors (and upstarts), new product development and improvements to its delivery infrastructure rather than return same to shareholders. As its user base grows, Amazon has been very unrelenting in creating more services and products it can upsell and cross-sell to its massive user base. This may be the reason why for many years, Amazon did not often report a profit. Analysts were, therefore, stunned by the profit the online retailer declared in July 2015. It appears Team Amazon is having the last laugh after all.

Complaining isn't a Strategy

The Amazon founder also said, “What we need to do is always lean into the future; when the world changes around you and when it changes against you - what used to be a tail wind is now a head wind - you have to lean into that and figure out what to do because complaining isn't a strategy”

Yesterday was the best time to innovate. The next best time to innovate is today. Get on with it.