This is a conversation with a subscriber on my new book – Africa’s Sankofa Innovation (subscribe here). This book is helping many people to think critically on how they execute their African business strategies. This is our reader’s conclusion: “Sankofa is deep. It’s worth the charge. Thank you”
This is an exchange on LinkedIn few hours ago with one of the subscribers (I have his permission to share). I formatted it to make it readable.
Reader: Good day Sir. I am confused trying to understande what you mean, when you stated on the 12.1 of Sankofo “How to Compete Against Conglomerates to Win” That is ” Accumulation Of Capabilities ” How did Dulfil Prima Foods accumulate these capabilities.
Ndubuisi Ekekwe: Greetings. Did you watch the video? Let me know. But if you check the video, the typical things say Dangote could have done like power plants, training school, etc are things Dufil did. It took the firm many years. So with those capabilities, there are no other way Dangote for example could be more efficient than Dufil in noodle making. Watch the video and let me know if there is any further confusion. We can skype and I will explain. The deal is to operate at the upper level of the competition pyramid
Ok. Let me watch the video, would let you know if any more issues. Have finished the text. Waiting for the next. Sankofa is deep. It’s worth the charge. Thank you.
Thanks. Cheers
Have watched the video and couple of others. Wow. I have had sleepless night on how to play at the upstream, even with the mobile cinema project that we are about to launch its 1st phase, the plans and challenges has been how to contend with potential challengers, how to dominate the sector over a short period and how when we get to the top. I never knew what we have been working on is Accumulation of Capabilities. And you so made it clear. What more can I say.
Thanks Eloka. Check Chapter 12.3 also to get the frameworks as you plan a cinema business. Those frameworks will help you in managing your cost. Can I share your comment on Linkedin? This last one. I want people to see the value on how this book can help people find insights on business. Thanks
Yes. The Open Model. It’s basically Aggregation Construct. By the 1st phase is building the network effect, where we expand the user base within a short period before the cinema presence.
I am a fan of Amazon.com because Amazon works. I see how Amazon simplifies commerce through superior distribution system and efficient pricing mechanism. Amazon makes freelancers business people and supports people to earn income for things they enjoy doing on their spare time. Writers, craft-people and indeed anyone can find an opportunity to monetize a skill via the Amazon ecosystem.
(I have chosen Amazon because so far it is the only digital company that enters an emerging nation with loads of cash. In India, it is going with $5 billion. Contrast that with others that only come with enough money for sales offices.)
But I have not even thought about this particular experience captured by a Tekedia commenter:
… Africa and Nigeria in particular needs Amazon. Its not only in connecting small businesses with buyers, the Internet space will also thrive. Think about lots of bloggers like me that are struggling. On my website, I recommend books but I can’t find a good affiliate program to sell and earn commission on those books.
There are bloggers that writes about phones, laptops, fashion, ceramics, arts, but they are not thriving because they cannot really make money from what they do.
With Amazon and it’s Affiliate Program, a lot of value will be created both for the original sellers and the people writing about them.
Yes, Amazon can unlock value in the blogging community. The Amazon we have today is the spending Amazon, we need to have the making-money Amazon where Nigerians can operate shops on Amazon and make money. I have noted many ways Amazon will support and improve the African economy if it makes here with the same bravado it unleashes in U.S.
Amazon, if it comes to Africa, will invest in logistics which small businesses can use to improve e-commerce. Amazon will become the modern postal systems in Africa. In Nigeria, where none practically exists, Amazon will build one, for itself as first customer, and then open it up to enterprises to use in order to support its business. Most of the Amazon fulfillment centers in America are used by Amazon sellers. Africa needs that.
Amazon, if its makes it into Africa, will bring efficiency in the food delivery system. It will invest in preservation and storage of food, making sure that waste is reduced. Amazon is vertically and horizontally integrated and understands the meatspace more than any of the present operating peers in Africa. It will find a way to source local food items in local farms and will touch the lives of farmers. The vision of Whole Foods will be the one for Africa.
A content creator, unlike Facebook, Google and others that aggregate and feed on others, Amazon will invest in local contents for Amazon. You will see it build up Amazon Prime Africa with local contents that will give jobs to artistes and others. Instead of asking you to do it, Amazon will do it with you, providing the money.
Amazon will massively put money in local carpenters, apparel makers, etc to make sure they can produce enough to meet the demand in its ecosystem. It will lend money as it does in U.S. to those doing well.
Above all, Amazon will make sure that Africa intra-trade works. We rarely trade among ourselves because our trade routes are still linked to the colonial masters that built them. Amazon will provide a digital trade route that will decouple us from those colonial routes and offer a true emancipation.
The question is this – who can get Amazon, an evolving important company in the 21st century with increasing deflationary power in the U.S. economy to think Africa. It is the real deal because of its mantra of big and bold vision. Amazon may even build new airports across African cities to make sure its businesses work. Sure, you may say Amazon will dominate but the good news is that with its ecosystem business, it can only succeed when the locals are succeeding. That is why it is different.
I see a future, if Amazon makes it into Africa, for Amazon Africa virtual wallet to become the single African currency, because if everyone trades on Amazon, we can simply use its wallet to settle obligations across borders. This will work because Amazon is both a meatspace and cyberspace business, unlike any other.
The Aba Shoe Industry
Today, I want to note that Amazon will solve the Aba Shoe sector mess. We have not been able to grow that sector for decades. Amazon could help to unlock it, by taking it global. The same can be said of the leather industry in Kano, arts in Osogho, and other crafts across the nation. Specifically, these are some things Amazon can do to fix Aba shoe industry mess:
Support some shoe designers and get them to produce under a unique label. You can call it the Amazon NG label
Amazon will provide a shared infrastructure at scale to make it easier for makers and designers to have access to tools and equipment they need to design and make shoes
If Amazon NG controls some of the brand rights, it will support the shoe makers to expand capacity in production. The firm will invest to boost capacity for the designers so that they can produce more shoes and leather materials
Amazon will help the shoe makers improve quality so that the shoes can be sold internationally
Amazon will lead a globally structured advertising, using the Aba Innovations (Aba needs a city brand which has to be nurtured)
Amazon is international with experience in the luxury and non-luxury leather materials. It will market the shoes globally
Amazon will hire global anchors that can help make the message of Aba Innovations powerful around the world.
Aba shoes (source: Business Day)
All Together
As I noted earlier this week that Amazon has a global ambition. Nigeria can be part of that global expansion plan: we have the population and we love to shop. Now is the time for the Nigerian government to send a letter of invitation to Jeff Bezos, the CEO of Amazon, and tell him that we are waiting for the firm. Jeff may consider that request and make it to Nigeria. Amazon is as important as Shell, Mobil, and GE in the future Nigerian economy, if not more catalytic. Now that we are transitioning our economy, through diversification out of minerals and hydrocarbon, to a knowledge-based one, Amazon can play a critical role through commerce.
Yes, Amazon will unlock the value in ecommerce and make multitudes of merchants in Nigeria by fixing the weakest link we have today in ecommerce: logistics. Nigeria has no strategy to fix this weak point, and without the resolution through a functioning postal service, the promise of ecommerce will not be possible. A company with capacity can support our ecommerce with capital and take our merchants global. Amazon has that pedigree.
Bottomline: In this piece, I explain the secret winning formula of GTBank. Any bank can mimic that formula for similar results. An eminent banking institution in Nigeria, GTBank leads the industry with 40.2% cost-to-income ratio. Across many industry metrics, GTBank is leading or among the top three in the nation. But GTBank did not start […]
The future of autonomous vehicles is still evolving. No one has locked it up yet. But if you ask me for a company that has a chance to rule and dominate, I will tell you that Baidu is ahead through its Apollo platform. Forget Google which is one of the industry pioneers. Forget Uber also. Both belong to the same class of companies as I explained early in the week. Baidu is doing to the autonomous vehicle industry what Android did to the mobile device sector: liberate the sector by providing the core operating system upon which self driving vehicles will run.
Baidu is putting some serious cash behind its self-driving car push after it announced a $1.5 billion fund that’s focused on backing autonomous driving tech companies.
The Chinese giant, best known for its internet search service and AI technology, has prioritized autonomous vehicles in a major way in recent years, so this comes as little surprise. Baidu made its Apollo self-driving car platform freely available to the auto industry earlier this year. That quickly picked up partners and it currently claims around 70, including Hyundai, Bosch, Continental, Nvidia, Microsoft Cloud, Velodyne, TomTom, UCAR and Grab.
Now Baidu — which is testing autonomous vehicles in both China and the U.S. — is doubling down with capital via this new fund, which it said will aim to support around 100 companies over the next three years.
Simply, if Baidu succeeds, it will assume the position of Android in the business of making self driving cars. That means car companies have to build the hardware while they depend on the operating system offered by Baidu to operate. That operating system goes beyond software to sensors and hardware devices which are very critical for self-driving vehicles. The company has a grand vision to become the leader in this sector.
Baidu is opening its self-driving vehicle platform in a bid to help drive the development of autonomous cars.
The Chinese internet giant today announced its Apollo project that will see its platform, including vehicle platform, hardware platform, software platform and cloud data services, opened to help others in the industry, particularly car manufacturers, to develop autonomous vehicles.
The initial target is to open the technologies up for vehicles in restricted environments this July. Baidu said it then plans to share technology for simple urban road conditions before the end of the year, with the ultimate goal of opening its full tech stack — covering fully autonomous driving capabilities on highways and open city roads — by 2020.
What Is Apollo?
By looking at the Apollo manifesto, you can see why this is a strong project for Baidu and why it is raising huge funds to support it.
Apollo is an open platform whose primary purpose is to become a vibrant autonomous driving ecosystem by providing a comprehensive, safe, secure, and reliable solution that supports all major features and functions of an autonomous vehicle.
Apollo’s ambition is no less than to revolutionize the auto and transportation industries, and there will be challenges of unprecedented scale and complexity along the way. Given Apollo’s enormous potential to change the world, this historic opportunity requires a unique governance model that must support a highly effective leadership which is as inclusive and open as possible in order to swiftly achieve Apollo’s vision.
In order to safeguard the architectural integrity, system reliability, and rapid evolution of Apollo, Baidu is willing to step up and exercise its leadership in driving important decisions whenever needed while preserving active participation of the wider community.
“Apollo” will provide an open, complete and reliable software platform for its partners in the automotive and autonomous driving industry to develop their own autonomous driving systems with reference vehicles and hardware platform.
In Apollo open platform, you will get the world’s leading HD map service, the only open Autonomous Driving simulation engine with huge amount of data, and End-to-End, a deep learning Autonomous Driving algorithm.
The Apollo open platform enables you to develop, test and reply Autonomous Vehicles faster. With more participants, more data will be collected. Compare to a closed ecosystem, Apollo can evolve faster, bring benefits to every participant, and become more and more mature with the contribution of everyone.
Apollo has already onboard major global firms as partners, far ahead of any other company. If it builds critical mass with great technology results, you will see it as the platform technology of choice for any firm that wants to invest in self-driving vehicles. When they tell you that China does not innovate, remind them that a possible Android of autonomous vehicles is being created in China.
In future, you will be assured that an entrepreneur in Lagos can start a self-driving car company easily with Baidu technology than anything out there. That is the advantage it will enjoy if it solidifies its position.
Amazon plans to deploy $5 billion to win the Indian e-commerce sector. That is a lot of money and it will help it incur losses while taking market shares from competitors. With this strategy, it becomes increasingly obvious that Amazon may not really care about acquisition. It could have used that money to buy itself pieces of companies to get its market share number up. But it does not want to do that. With just 41 warehouses in India, Amazon is running a startup operation, at growth phase, in India.
Within miles of the new Hyderabad storage hub, is one of Amazon’s largest global customer service centers as well as one of its biggest software development facilities in the world. All of these are hidden from public view – except on rare occasions like this warehouse visit. They are all testimony to Chief Executive Officer Jeff Bezos’s aggressive Indian expansion that is backed by a $5 billion budgetary allocation.
Amazon’s 41 warehouses in India are vital in a country where the largest online retailers are marketplaces without any inventory of their own in accordance with foreign investment rules for e-commerce. Their locations are crucial because the nation’s logistics networks can be unreliable. They have to be close to sellers and with easy access to a density of buyers.
But Amazon has no choice. It needs to deploy this capital to compete as its competitors are well funded. The money Amazon has budgeted for India may not buy a sizable market share, through acquisition, since Flipkart, an industry leader in India, has a valuation of $11.6 billion after a recent funding round, where it raised $1.4 billion from Microsoft, eBay and Tencent. So, it has to go the infantry way, instead of dropping competitive ammunition from the air: Amazon has to compete and earn market share organically in India.
Following months of rumors, Indian e-commerce giant Flipkart has confirmed that it has raised $1.4 billion in new funding at a post-money valuation of $11.6 billion to battle Amazon and Alibaba. The deal includes some big-name strategic investors: China’s Tencent, eBay and Microsoft, which join existing Flipkart backers that include Tiger Global, Naspers, Accel and DST Global.
I have noted the Indian issue to illustrate how Amazon is thinking. Its strategy goes beyond India. It recently bought Souq, a Middle East ecommerce company. Where it has not done a big ecommerce deal is in Africa. We know nothing of its budget for the continent. But that does not mean that Amazon is not coming on board. I do think Amazon is just studying the continent at the moment. And it is doing so by working to get better insights through technology and business communities. It just signed a partnership to make it easier for Zambian startups to use Amazon Web Services. It is already running a light ecommerce operation in South Africa, possibly for other reasons and not necessarily to make money through shopping boxes.
Zambia’s technology and digital startups will now receive free hosting services courtesy of a partnership between BongoHive and Amazon Web Services (AWS). The offer is available to startups that have completed the BongoHive Launch Accelerator programme.
Startups from BongoHive’s Launch Accelerator programme will get free hosting services on the AWS platform.
Amazon does not have sizable market share in South Africa
I expect the type of partnership Amazon has with BonjoHive to mushroom. Microsoft has a similar thing through its 4Afrika Initiatives on Azure and Google has always been local. Amazon is just getting here. This implies that everyone wants to come. But for Amazon, it needs to come with its best product, which is the ecommerce business. Until it does that, not many people will know that Amazon is in Africa.
What I expect to happen in the next few months will be for Amazon to have four locations to serve East, West, North and Central Africa. It already operates in South Africa and that takes care of the Southern Africa. With these strategically located offices, it will map its strategy to move into Africa and bring ecommerce. Amazon will not make any acquisition. What it is doing in Africa has convinced me that Amazon will just come and compete for market share. With local players still at infancy in places like Nigeria, Kenya and Ghana, there is no need to acquire. The spending on ecommerce in Africa is less than 5% of total consumer spending. So, nothing has really happened to warrant acquisition.
Besides, Amazon’s name recognition and operational experience can generate enough buzz to get it on top. Sure, that did not happen in South Africa, but I have noted that Amazon operates in South Africa not necessarily to win ecommerce market share. It will have its moments for that.
Amazon needs Africa, and Africa will be similar to the feeling when it pioneered ecommerce in U.S. You cannot become one of the largest digital technology companies on earth without an African blueprint. It is irrelevant whether you are making money or not; the key is that you are there to defend the turf against competition. Just being in the continent will give it a favorable response from Wall Street, exactly the type it received when it bought Souq.
Amazon supports many U.S. merchants who now run businesses exclusively on its platform. African makers will surely benefit because Amazon can provide logistical support to local merchants to sell and ship continent-wide. Through this, it will unlock opportunities for many African entrepreneurs. Enticing Amazon to invest in Africa could be a wise decision for any African government.
