African Entrepreneurs, Besides Technology, Innovation Lives on Business Model

African Entrepreneurs, Besides Technology, Innovation Lives on Business Model

Most times we simply think we can only do innovation via technology. Interestingly, where R&D is very limited, because of limited funding, we do not need to spend limited resources to pioneer new technological and scientific breakthroughs. There are many opportunities to build great firms, in Africa, by innovating on business models. Yes, you just apply new business models on existing matured technologies from the Western and Asian worlds in Africa.

As you work hard to make your products better and improve your processes, do not forget that business model could be as catalytic. Yes, business model innovation is one of the most overlooked areas by startups in Nigeria despite the fact that the right model could help you thrive.

I did note in this Harvard Business Review article that thriving in business goes beyond engineering and technical superiority. Yes, there are many other elements like branding and marketing which must work in a symphonic way to deliver value at scale. This follows my point that business is not just about who can create the most sophisticated technology in the world: “Rather, it is about fixing the frictions which exist in markets.”

In the tech startup world, technology is important for success, but it does not disproportionately determine winners and losers. Two companies can invent similar technologies; one will win and the other will lose. Focusing on technology supremacy alone is a model for failure. Over the years, I have consistently seen what I call “latent factors” — business features that are generally outside the scope of the core tech team — to be real factors in a company’s success.

Writing in Quartz, Andrew Alli made a similar point: we can innovate not just from technology but via business models. He used the mobile telephony innovation in Africa to explain his points. The African telecom entrepreneurs did not invent GSM and CDMA technologies; they simply built new business models which used those technologies to deliver better values to customers.

These entrepreneurs didn’t invent cellular technology. Rather they combined their understanding of the market and the African consumer, with Western cellular technology and improvements in computing processing power and software to develop and adopt the “prepaid telecom business model” turning mobile technology from the preserve of the rich who could afford to be billed for their usage after the fact into a mass market product accessible by anyone with some amount of buying power. Massive wealth generation in non-rent extractive industries generally indicates that massive positive economic value is being created, and this was, and is, the case with the mobile telecoms industry in Africa. Business model innovation is perhaps the most important but unsung type of innovation available to Africans. It allows us to borrow innovation that might have cost hundreds of millions of dollars over long time spans to develop, and combine and adapt them to solve uniquely African problems in a way that achieves what Silicon Valley investors call product market fit. This is corporate nirvana if you can achieve it.

This paradigm thinking of inventing at business model is very important in Africa as we continue to struggle on creating systems which can engineer solid R&D in science and technology.


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