UNWITTINGLY so, innovation is often thought of as a nexus of value-added processes continuously built upon existing services or products, contrary to conventional perspective, this could not be further from the truth. As a result, many business executives easily fall into the trap of over-emphasizing the necessity of ‘value addition’ as a key ingredient for creating new lines of business as opposed to focusing on the pertinence of ‘value creation’ as the essence of the innovation in founding new markets and developing new business to stimulate organisational growth and durable business sustainability.
Value addition can simply be described as process improvement, a practice that does not involve the inherent creation of new sources of value that are completely disconnected from a business’ existing services or operations in order to position a business for longevity. Paradoxically, it is plainly adding value to existing processes that, at times, may not even be working well, or have outlived their relevance in the market place. Without prejudice, the creation of new sources of value may involve harnessing present organisational assets such as brand, infrastructure and distribution channels to create new businesses that replace existing ones which must inevitably die. The minimal process of value addition, therefore, cannot be applied to the process of exploiting disruptive markets to create futurist business ventures.
In light of the above, I have spent the last few weeks trying to figure out how I could best raise awareness on the importance of ‘value creation’ for our African and any other businesses for that matter, that are vested to remain relevant for at least 100 plus lifespans, as we have seen with the likes of IBM, Xerox, Dupont, Nokia etc as opposed to simply running fly-by-night short-term outfits. It is only last week, that I got the inspiration to validate my assertions on value creation, following a week spent in Zimbabwe as a guest at Econet Services, primarily surveying the state of innovation in the country.
The path to creating futurist innovation, which disrupts the business status quo of the day in order to solve for the unmet needs and wants of customers within an addressable market requires a different competitive mindset and a systematic way of looking at opportunities. While history repeats itself, and many a time the trends in business life-cycle processes are there for all to see, there are many businesses that have failed to execute the necessary logic required in remaining relevant with each cycle in product, technological and market evolution. One simply has to look at a onetime notable business such as Kodak, as good example of a business that failed to reinvent itself in the wake of digital evolution and found itself disrupted.Advertisement
TheEconet Services group, is a good barometer upon which to assess what it means for an organisation to create value, and if done right, disruptive value for that matter. Completely independent from the parent company Econet Wireless, Econet Services has been set up to pursue new lines of business. Technology lifecycle and its historic trends have shown that disruptive innovation does not follow the traditional business models of matured markets, hence, to sequester the firm is the appropriate thing to do. Econet Services has implemented EcoCash, the country’s leading mobile money product and a world class innovation by any measure. The product is evidence of a firm’s capability to create real value innovation. EcoCash cannot be compared to anything Econet has done before, or the country has ever seen, it is by no means value addition, it is completely new, different and beyond conventional thinking in terms of what a financial services model should be. The EcoCash service is miles apart from how the rest of the telecoms and financial services industry is faring, it is a quantum leap in value, focused on creating value for the ordinary man and woman on the street who, by the way, make up 74% of Zimbabwe’s standard working class population.
During my week at Econet, I was taken on a field trip to Mbare, to assess for myself if the product truly lives up to its claims of value innovation. I was privileged to meet a man whose sole livelihood was selling airtime vouchers. But the launching of EcoCash has transformed his life; Econet has empowered him with a green kiosk, where he not only sells airtime, but also diversifies his portfolio as a registered EcoCash agent, earning handsome commissions and selling EcoSolar laterns. Add to it, he has employed his own assistant to help with his new business. With 4,700 of these agents, EcoCash has not only empowered the ordinary individual by providing the practicality and convenience in moving money around, EcoCash has in the process created 4,700 businesses that did not exist and potentially over 10,000 jobs in less than two years as a ripple effect of agents themselves becoming employers. The company is looking to double the number of new businesses it has created by year end.
In Chitungwiza, I met with a shop owner, who has now diversified his business by becoming an EcoCash agent and receives over USD$1000 plus in monthly commissions, from a new line of business that did not exist before. As if that was not enough, I wanted to get a true customer perspective, so I asked a customer at an agent shop in Chitungwiza to describe what he likes about this product, and his response validated my quest ‘Amai, mari yako inosvika ipapo ipapo, neEcoCash, hatichamboende kumabhangi isu’, otherwise value innovation can’t be validated if it fails to generate word of mouth praise. The superior value created by EcoCash is shrewdly the ability to address what I often describe as ‘anytime, anyplace and anywhere demands’ by both rural and urban customers alike, which for a long time have been underserved by existing businesses across the diverse industry verticals. It is therefore not surprising, that EcoCash sees transactions of up to USD$8 million a day and sometimes beyond USD$45 million a week and these numbers can only improve as the market is further developed.
Contrary to the generic assumption that Econet, the parent group, is a monopoly and leverages from such a position in the market in order to attain its success, I discovered for myself that customer needs are the centre of gravity at this organisation. At the crux of this strategy, is to ensure that superior value is delivered from all the factors that industry competes on and not primarily from the telecoms sector alone. As a result, EcoCash CEO, Cuthbert Tembedza, spends at the very least an hour a week, responding directly to customer queries, and it is not unusual that even from the very top, CEO of the Econet Services group, Darlington Mandivenga, often picks up the phone to directly address customer anomalies. In accordance, value creation is about ensuring that customers continue to find relevance in a product. In comparison, I am yet to find one monopoly banker or competing telco in Zimbabwe that is at the heart of its customers as Econet demonstrated. I don’t believe that the ideology behind Econet has ever been monopolised by profit taking, but as is true for value innovators, they do not set out to build advantages over competition, but often end up achieving the greatest competitive advantage. Profit making becomes the by product of delivering sought after value.
Value innovation creates value by solving people’s major problems across the entire industry spectrum if required, even if it replaces existing business without being limited by the industry’s definition of what should and should not be done. This is exactly what visionary founder Strive Masiyiwa did when he introduced the cellphone to Zimbabwe. It is what this visionary mindset and exceptional leadership team is set to do with Econet Services by introducing new sources of value across any fitting industry verticals. But this time around, it will be an aggressive lifespan plan, launching Econet into an organisation that will exist 100 years from now. Econet Services is poised to deliver new sources of value that Zimbabwe and the world, for that matter, have never seen before. Having already launched the mobile debit card, a world first, the future can only be green.
The ethos of value creation is leaps apart from the philosophy of value addition that many businesses on the ground seem to be pursuing. A case in point would be Barclays bank’s recently launched money transfer service, simply an add-on service to the ATM, and still requires the hassle of queuing up, lacks the anytime convenience and without offering a completely new source of value.
The manner in which Econet runs its business operations is surgical, if described at best. To take Econet to its next level as a globally competitive company, it is no longer business as usual at the firm. At Econet Services, high performance teams that are a mixture of international and local skill set have been formed. Amongst these are a hire from Google in the US, a sector expert from the United Nations, a former M-PESA executive and a PHD candidate in energy efficiency and wireless comms from Stellenbosch. Likewise, at the acquired bank, financial expert hires such as the UK-based Dr Lance Mambondiani and others have come in.
But it’s not even the profiles of the exceptional talent that distinguishes the world class personnel Econet Services is bringing in from across the world; it is the emphasis on discipline, attitude and values. The importance of these attributes cannot be an understated requirement in qualifying as a fit in this new firm. Across the team, there is talk about “changing the world”. Meeting the amazing men and women at the core of the services group, one cannot help but understand exactly what Econet is about – “Inspired to change your world”. From the CEO to team members, I was highly impressed by the drive, energy and, surprisingly, the extreme sports and physical discipline regime that is characteristic of these individuals, ranging from marathon runners, mountain climbers to karate experts. A great insight into the attitude and value system required to execute Econet’s next generation firm.
For the pundits, who might be quick to assume that Econet has lost focus, there is need to understand the intricate business lifecycle processes associated with lasting reinvention and sustainability. In order to understand the matchless vision that Masiyiwa is set upon, we only have to look at businesses such as Nokia, who, at inception over hundred years ago, specialised in timber and now mobile handsets enterprising, or NCR whose founder started out with coal processing before going into cash registers; similarly Dupont, initially a gunpowder manufacturing firm, but now a premier in energy, biotechnology and digital enterprise. Today, thriving business models are those that are diversified, the likes of Virgin group and Tesco that is a bank, retailer and telco all in one.
Econet is a case that local businesses and government alike in Zimbabwe and beyond our borders might want to take a few lessons from, as we take seriously the responsibility of building globally competitive businesses as well as country. The success of Econet thus far, can only be summed up in the words of one of my favourite authors, Norman Vincent ‘When you do things right, they always turn out right’.
Natalie Paida Jabangwe holds an MBA from the Imperial College London’s Business School. She recently developed NCR Corporation’s digital strategy and is an innovator of mobile wallet value proposition. Email: firstname.lastname@example.org