Beyond Technology In African Startups, “Latent Factors” For Success

Beyond Technology In African Startups, “Latent Factors” For Success

In the contemporary African technology scene, one of the key elements is the supremacy of technical capabilities. Technology is the pivot that drives innovation, and remains the most critical enabler in the competitiveness of firms. Business is technology, and markets are increasingly won and lost largely based on innovations, anchored on technologies. This modern truism permeates sectors and geographical boundaries. Why? There is nothing that technology has not redesigned in our world. So it goes – have the best technology, you will be assured success.

Yes, while technology is very important, the fact remains that technology alone cannot drive success. It matters but without the other elements, technology-enabled startups fail.

Two startups can create similar technologies; one wins, the other loses, in a scenario where only one winner can emerge. The competitive edge here is no more technology, but the fact that the other competitor has done something beyond technology, to have an advantage. This illustrates why the quest to define all competitions as technology problems is a recipe for failure.

As a founder, I have come to understand that success does not just come from technology, alone. In short, the most important element in our business is not really the technology component. It is our ability to have product vision and communicate it in ways that clients and partners can connect. In some projects, you win and lose by the ability to demonstrate competence during presentations even before your solution technical capabilities are evident.

In my works in Harvard Business Review, I have called these factors which are very critical for founders to succeed, the Latest Factors. These are factors which are often neglected and usually outside the domain of the core founders, in technology-enabled startups, but which turn out to be catalytic to success.

The Illusion of Dropout Icons

For African founders especially in technology-enabled businesses, it is very strategic at the formation phase to look for other people that can provide these latent factors. In Africa, we do not have a lot of venture capitalists and mentors are scarce. That creates real challenges especially during the early years of building companies. The dearth of these professionals with expertise to provide the latent factors is one of the key reasons we have problems in building successful startups in the continent.

We enjoy reading about dropouts from MIT and Harvard, who became legends, and then extrapolate that technology capabilities have taken them to where they are. But behind these founders, there are iconic investors providing insights and directions. The founders are the faces of the businesses because the press likes to write about atypical things. If they are common in their achievements, it will not make headlines. But scratch the founders, you will see mentors and coaches helping them improve on those areas they do not have abilities. It goes beyond technology.

There investors provide them leadership on pricing, branding, marketing and other areas. Today, companies like Y Combinator and Techstars have institutionalized that system which can happen over a certain period of time.The construct of incubation is simply to nurture the business, not really the technology underpinning it. It is not likely you will learn much on the technical hard element in the incubators but rather, you will be exposed to latent factors for success.The people that teach you may not even understand the underlining technology driving your startup.

Some latent factors have helped to create legendary companies and reshaped industries. Some cases:

Windows Licensed Pricing

Microsoft is one of the finest technology companies in the world. It has IPs and it is a respected innovator in the technology world. But for me, I respect Microsoft, not just for Windows, but for perfecting Licensed Pricing of its products. When it scaled the constructs that buying a piece of Windows does not mean absolute ownership, it shaped the software industry.That singular vision was one of the most consequential factors that transformed Microsoft into a global icon, and rewarded the founders with tickets into the billionaire club. Not many people like paying licensing fees; unfortunately, that is the default strategy of modern software pricing. Another company that played a role was Oracle. Largely, the problem is not that you cannot just use it after the expiration of license, the big one is that you cannot even resell the software, because you never actually owned it. Yes, you pay for a product and never own it. That is the legacy of the pioneers of software licensing.

People do argue that the nature of software is unique, requiring the licensing arrangement for support. That is so because that was what we were told. If Ford Motors, General Motors and Toyota had at inceptions said that one of the key components in cars will require a regular maintenance in their shops, and to deliver that support, you will never own your car, though you may be licensed to use it provided you pay a maintenance fee yearly and come for the check as planned. If you miss the payment and check-up, the right to use the car is lost. If they had proposed that model, it is very possible, that will be the way cars are bought. It means you cannot resell your car because you never owned it! But they did not think that way.

HP LaserJet’s Laser Printing Speed

For those that used dot matrix printer (DMP) with its noisy and slow characteristics,it was a clear aha moment when they heard that a printer has a name “laser” in it. LaserJet from HP was iconic as it provided immediate brand equity to people frustrated with the then-popular DMP. People went for that fast printer called Laser and the rest is history as HP matched that claim with technology quality to dominate the sector

“Intel Inside” Microprocessors

Microsoft pioneered its pricing latent factor, Intel took the world to care what was inside the computer. Before then, all we cared was whether the box had HP, Dell etc logos on them. But Intel realized that it was not getting credit and therefore it could not compete and knock out perennial tormentor AMD in the game. It went for the killer reminding people that seeing HP or Dell logo was not enough. It has to be Intel inside. There, it was born, in 1991, “Intel Inside”. Intel because synonymous with Windows PC and took over the sector. AMD lagged for years, if not decades.

Rounding Up

Founders of technology-enabled companies must seek for people that can help them with these latent factors. The factors are critical for success. These tangential components of company building, especially in the eyes of techies, are really vital for startup success. Just as you invent technology, someone needs to redesign the market and produce new insights for success. Markets can be invented. The non-techies in pricing and branding can be the key reason for success. Startup founders must look out for non-techies as they form teams. And this does not just apply in startups, I tell my bank clients that even in their IT Organizations, they must embed non-techies to help bring perspectives on how technology can run and also transform their organizations. Those non-techies become IT Organization residents and provide critical components that help IT innovates, organically and in real time.


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