They taught us in economics that companies have to specialize and build core competencies. They need to do things really well and be the best possible in the specific domains. But today, things go a little more. For technology companies, everyone is doing everything, even at a top-level. Alphabet, Google parent company, is a car company, a search company, a medical company, an advertising juggernaut, etc. Amazon is an e-commerce firm, a publisher, a movie producer, a drone maker, and a car maker (with expected closure on Zoox acquisition).
What is happening is the efficiencies in technology firms: you have this massive fixed cost investment, and once that is done, you can keep adding things on top of it. So, unlike in the old industrial age empires, one core technology can be re-used across many sectors. Due to that possibility, most times, it does not make sense outsourcing those extra services.
The big news is that Apple will make its Mac chips, taking the business from Intel. You may wonder why do that? Technically, Apple has been making chips for the iPhone and it has done the core investments in chip making. Those investments include CAD, testing, FA/QA systems, etc. So, bringing the chip design for Mac in-house is never going to be the same as someone who is just starting a chip business.
Of course, this is not to say that Apple will start growing carrots to supply restaurants. My point is that vertical integration – “the combination in one company of two or more stages of production normally operated by separate companies”- has become easy in markets and anytime you are serving customers, there is a possibility you can be disintermediated. So, be prepared to avoid surprises in your company.
On Saturday, I will deliver the Opening Remarks at the Founders Institute Lagos 2020 Graduation (Velocity Mini) for Cohort II. I want to congratulate all the young men and women who have gone through FI programs, and would now be going into the Nigerian markets to fix market frictions.
The Founder Institute is an early-stage startup accelerator and global launch network that helps entrepreneurs create meaningful and enduring technology companies.
My theme is Winning in Uncertain Times
Date: Saturday, 4th of July 2020 by 12.00pm (GMT +1)
Gentlemen and Ladies, go and build a BETTER Nigeria. See you on Saturday, virtually.
Nigeria continues to innovate on how to collect fees and taxes from citizens and corporations. I wish we are that aggressive on improving business systems, environments and expanding the economy. The technologies to help on revenue collections have advanced well ahead than those needed by firms to innovate and improve productivity.
The processes involved in land deeds, Certificate of Occupancy, etc have not seen dramatic improvements in years. But daily, we are advancing how to “COLLECT process”. Yes, Stamp Duty has its own website!
Just imagine if land owners in villages can do land sales on lands.gov.ng, improving velocity on land exchange, and in the process accelerate the mobility of that factor of production. If Nigeria does that, many will leave the poverty bracket, since most Nigerians share/own communal or family lands, with those lands having $0 in family balance sheets because they have no velocity.
With simple innovation, we can move that $0 to $5,000 and magically improve credit worthiness of people, enabling them to access finance to improve their lives.
Can the government innovate on that even as we do on stamp duty, fees & taxes?
The Week 2 of Tekedia Mini-MBA is live on the Board. The focus this week is Business Systems & Processes, and three faculty members are leading the session:
I begin by looking at what it takes to start and build a company, and how the processes work. My premise is that all members are starting something, as project champions in existing (matured) companies or entrepreneurs in startups. Yes, every person is either an intrapreneur or an entrepreneur.
Then Rasheed picks from there, looking at how to improve those processes and advance operations in his fascinating videos. He shared some experiments on how to avoid traps of operational paralysis. As you build, you need to ensure quality and have clarity on factors of production; Michael explains how we can build with quality excellence. Go to the Board for Week 2.