The Dangote Group is legendary for acquiring, developing and unleashing capabilities across many domains in markets. Through those capabilities, it has won markets and territories. Interestingly, anyone can replicate those playbooks.

In this piece,  I explain how the makers of Indomie noodles used the same strategy the Dangote Group has been using for decades to win. And at the end of the day, they defeated Dangote Noodles.

When Dangote Noodles came and unleashed its competitive high-voltage playbooks, Dufil Prima Foods (makers of Indomie) did not blink.

Why? Those things Dangote Group does, from internal electricity generation to logistics, have been done in the noodles business by Prima, making it nearly impossible for more efficiencies to be extracted.

With no left inefficiency which Dangote could exploit to improve quality and reduce price, Indomie Noodles held its ground when the competition came. Yes, Indomie won – and Dangote Group later sold its noodle business to the makers of Indomie.

Big lesson: accumulating and compounding capabilities will not just help you unlock new markets but will also help to defend your territories. It is irrelevant if the new competitor is Dangote Group.

Most in the business world talk of first-mover advantage;  a company’s capacity to assume better competitive advantages as a result of simply being the first company to introduce a new product within a specific sector or category. First-mover advantage offers temporary monopoly – the blue ocean – since as a pioneer, you are simply alone in that category at the early stage.

But note this: the greatest companies in the world are known for one thing: great products. Interestingly, all great products are known by customers. That typically comes because they are well scaled. Extrapolate, you’re talking of  first-scaler advantage, a leverageable compounding competitive advantage which comes with economies of scale as a result of being the first company to achieve scale in that category and improve marginal cost, offering products at highest value and best optimized cost.

If you have a first-mover advantage and fail to scale, you will lose the competitive positioning to another company which comes and scales first. So, first-mover advantage is temporary because sustainable and durable monopoly requires enduring scale in product categories. If you cannot deliver that scale, forget your first-mover advantage.

While first-mover advantage is treasured (a clear sign of innovation), becoming a great company requires first-scaler advantage. In our class note in Tekedia Mini-MBA, I provided many cases on how Apple pursues a business model of first-scaler over first-mover advantage.

Before the iPhone, there was Blackberry. Before the iPod, there was the Walkman. Before the Apple Watch, there was Pebble. The list goes on. Largely, Apple does not pioneer many categories but it has an enviable way of coming later through superior product engineering to scale really fast and take over.

In this 2022, do not just be in the habit of looking for new categories to pioneer. Consider if you can massively scale a known promising category! 

Yes, Usain Bolt does not usually have great kickoffs, but most times, he is always the guy who takes the medals. He has a great ability to scale-first on speed during the race, outperforming those who started first.

One of the features of living things is irritability which biologists explain as the ability to respond to stimuli. In animals, it could be recoiling into a shell during the dry season to conserve moisture. In humans, it could be the opening of the sweat pores during the hot season to let sweat out. In business, this feature is called adaptability.

Every founder, every entrepreneur, every business owner starts out with an assumption or group of assumptions. You assume the customer has a problem. You assume that you have a solution that will address the problem. You assume that the customer would be willing to pay a certain price for that solution. You assume that you will break even in a year. You assume that you will become profitable in two years. You assume that your idea is novel enough to get investors to break their safes and give you all their monies.

Assumptions! Assumptions! Assumptions!

Often the service you go in thinking you are going to render is not the service you end up doing. It will change based on customer needs.

As soon as you get started, the scales will begin to fall off one after the other and you will come face to face with the reality. How ready or prepared are you to adapt to whatever reality the business reveals to you? What if you don’t break even in a year? What if it takes 10 years before you get any form of funding? What if the market rejects your product? Are you ready to change strategy but remain focused on the goal? Or will you close shop at the first sign of reality?

This is what we call adaptability. It is the reason we always emphasize that your business plan is not cast in stone. A lot of things could and probably would change. This does not mean that you should completely change your business direction at any and every sign of a divergence in the reality. It means that you should stay flexible.

If you get to the market and discover that although the customer needs your solution, he is not ready to pay your market price, what would you do? Will you stick to that price and start retargeting a high-income section of the market? Or would you go back to the production room and find a way to beat down the cost of production to get a better price? Or would you go for more aggressive marketing?

What if the customers’ reality shows that what you thought to be a problem worth solving, is something the customer does not even see as a problem? What if the customer/market has another problem that requires immediate solving? Are you ready or able to change your strategy?

To be fair, it is easier for service-based businesses to be flexible and make modifications as they go. For product-based businesses, a lot has often gone into production already and this makes it more difficult to make a sudden change. Even then, the product-based business has to remain flexible and adaptable, changing to suit changes in the market needs and preferences.

Be ready to close up your sweat pores when the business weather gets chilly, and open them up when it gets hot. If you will remain in business, you should be prepared to make modifications and adapt at every stage of the business.