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African Entrepreneurs, Do Not Herd By Following Other Ideas – Innovate And Lead

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As a young banker in Lagos, I wrote a report that one of the reasons responsible for collapse of many small businesses in eastern Nigeria was communal mutual poverty. I have observed that many of the entrepreneurs started well, but as soon as they become fairly successful, family and extended family system would cripple them. As more people depend on their supports, they would eat into their capitals and will eventually collapse.

It happens very often as most of the men, unemployed in many villages, have managed growth companies at one time in their lives. They were sent by their parents for apprenticeships in the cities and after serving their masters, they were assisted to start their own companies. As soon as they begin, the communal power of African family system will come upon them.

More family members will move to their houses and unintentional activities that will destroy their businesses and eventually bring them back to poverty accelerated. It seems that you cannot have these rich men in a system where many are poor. They are dragged down into communal mutual poverty until the day the businesses collapse and they return poor to the village.

I concluded that report by noting that entrepreneurs from stable and supporting families succeed in average over those whose families would depend on them disproportionally. My motivation was to help banks understand the risk profiles of business loan applicants.

The same analogy above applies in many modern industries. Companies increasingly congregate in their competitive strategies. They tend to do similar things in order to self preserve themselves. In the era of Yahoo and AOL, they provided similar services. Cell phone companies provide services and pricing models that are largely the same.

Even the network televisions are not spared this effect. From casinos to airline industry, we can see an ordered communality across industries. They mutually agreed, though never admitting it, to move in features, services and prices alike. The airline industry was notorious for it about fifteen years ago. In most developing markets where Internet has not penetrated, the media empires move in tandem on their stories, prices and distribution networks.

I call this communal mutual competitive strategy because it simply means that these firms in their respective industries form communal ties and agree to provide services that will preserve them with lesser disruption to their industries. Many have called this win-win strategy. It has also been seen as co-opetition where, especially in banks, they cooperate though competing against each other in other to keep the industry healthy.

Unfortunately, just as communal mutual poverty ends up badly; communal mutual competitive strategy (CMCS) is doomed in this age. The 21st century is not the one where industries can drive the consumers. Technology disrupts our needs a lot faster and makes it possible that trends arrive and fade quicker. This is in line with my argument that focusing on customer needs is a recipe for disaster; rather, firms must focus on meeting the perception of customers. That means going to offer services and products you envision they need and not asking at the moment. The idea is that very soon, the trends will make them to need them. It is like developing iPod or iPhone when few thought they were unnecessary, but when they arrived, we all liked them.

As social media, technology and globalization make consumers more informed, firms must resist the urge to follow competitors into CMCS. I understand how difficult it would be to be unique or possibly a loner when something is working for everyone in the industry, and someone is asking you to follow a different plan. Banks destroyed their industry when most of the big ones got into subprime mortgage loans. In most cases, the defense from these banks was making those loans was an industry norm.

The old Ford Motors, Chrysler and GM followed a pattern- making big gas-hungry vehicles. They were all herding one another and the competition was defined on pushing more SUVs in the market. The 360-degree understanding of your market and the need of seeing the perception of consumers based on the environments which included climate movement, oil price projections and other factors played minor roles in their strategies. They were happy to communally compete, it was working, and none was ready to become a loner, even when data proved the necessity.

So what must firms do to avoid the trap of CMCS? They must move away from the competitive mutuality, where necessary. Google disrupted the industry when it emerged because Yahoo, MSN and AOL were basically doing the same. I recalled that the highest email storage one could get those days was 8MG; Google provided 1GB. In airline industry, we have seen Raynair and other budget carriers in Europe disrupted the industry by offering competitive prices and taking market shares from the national carriers. We all know what happened to the US big auto companies when the Asia companies built models that appealed to customers.

In summary, I am not saying that competitive herding is totally bad. However, if an organization relies on that it will not survive for long. Most new entrants usually focus on attacking those models and when they do, you will be affected. This means you must have a strategy that is different from your competitors. You have to become like McDonald that invested in Chipotle Mexican Grill. While the model of Big Mac was under attack by policies, they covered themselves with Chipotle. Similarly, Pepsi has since evolved from purely a soda firm. If you focus on attacking the soda business, you will not get Pepsi. They got out of the soda war with Coke and reinvented.

Avoid the CMCS trap and when everyone in the competition is giving customers more, you may go sole and refuse to give. And in cases where they are taking, give the customers more. Herding with your competitors is not a guarantee that you will survive. It simply means that your industry is vulnerable because your singular model can easily be attached by an outsider.

[Exclusive] Tekedia Interviews CEO of Pawaak Technologies

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Monday, 6am Nigerian time, you will read a lengthy interview we had with the CEO of Pawaak Technologies. Pawaak is a Lagos based technology company that offers innovative services in ICT, embedded systems, security solutions, among others. It is one of those companies that have mastered the business of biometrics.

 

Felix Akubueze Onyema,  the dynamic leader of this company, is actually a good lecturer. He will help you understand biometrics and what the opportunities are for Nigeria. Tekedia is very excited that on Monday, you will read from this expert who is doing cool stuffs. He has insights from leadership, technology and oh yes politics.

 

A graduate of the prestigious Federal University of Technology, Owerri, his views are broad. He is presently the President of Semiconductor Industry Association of Nigeria which is presently being incorporated in our nation.

 

Just a small except. When we asked him  how he has been mitigating  the challenges of doing business in Nigeria, this is what he said.


 

Well we are mitigating these challenges with a lion’s heart. Taking the bull by the horn. We already know that most of these challenges are inherent in our system, they call it Nigeria factor! So sad, but we keep going and like in our core values customers’ satisfaction. Doing whatever we say we can do and by delivering according to the terms of agreement. We believe as our work is speaking for us, we have come to stay to help our people and we are not looking back in excelling whenever we have the opportunity. Now that we have a new Government that has promised to use Technocrats to help Nigeria to develop like other developing and developed Nations, we are optimistic that we shall be involved in one way or the other. That is our hope and confidence any way. We really want to see Nigeria be like other advanced or developing countries.

 

Pawaak is ready and ready to help propel the nation to greatness.  Check out on Monday for the full interview.

 

Tekedia – waves of technology

What Nigeria Must Do After The Hacking Incidence of Yesterday

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Our nation was embarrassed yesterday when a group of  hackers showed how insecure federal digital infrastructure in Nigeria are. It was just unfortunate that even after the incidence the nation did not react well – some of the sites were compromised for more than 10 hours.  It is shameful and we must learn from this experience. As we connect our hospitals, utilities and other key aspects of our economy  to the Internet, it is very important that we understand the implications and vulnerabilities insecure systems could pose to our continued competitiveness as a nation.

 

The boys have woken us up and we hope we learn from this. We need to know that  cyberwar is not a war of choice. It will come to you even if you do not want it. Just as computer virus attacks our computers, this warfare is waged at national level with consequences that can shut down a military control, financial systems, health informatics, and telecommunication networks. It is something that the nation cannot afford to waste time to develop a coherent strategy for.

 

The nation must call immediately security experts and think through the processes that enabled the boys to break  into the systems and find immediate solutions to avoid such in the future.

 

It is important to understand that this is not an ICT problem. This is a serious engineering problem that goes beyond the digital bits to the transistors that power the microchips upon which the ICT depends. Nothing is safe; a light bulb in the Presidency can be a listening device, and that Flash USB key our soldiers use on their laptops while connected to our military networks could be the source of intrusion. Linking those power systems to the web for remote monitoring by German vendors could open them to cyber-threats.

 

People, it is a new world and we must understand these challenges and convene meetings of stakeholders to develop plans immediately. It could be a workshop where we bring our brightest minds on engineering and security and connect them to work with our military. Iran has boasted of having the world’s second-largest cyber-army while China is determined of “winning informationised wars by the mid-21st century”. And Nigeria must prepare and push African Union to develop a Cyber Control Command for Africa or better still develop its own.

 

We have delivered this message in multiple forms and hope the government will do what is needful. Let us call a national stakeholders meeting of industry, policy and public security experts to ensure our digital presence is secured.

 

 

 

Yes, G-Cameroon Is June 15/16. That Is All We Can Get From The Site. No French Writer in Tekedia

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From Google Africa.

 

Like Google, Nigerians showed excitement about the vast array of opportunities that the Internet provides, and are eager to participate more fully in the global technological revolution. Google continues on the path to building local capacity to improve the web. Next stop? Cameroon! On June 15-16th, G-Cameroon lands in Douala. We look forward to share our passion with Cameroon and watch as West Africans take up the challenge of changing the face of the web for Africa and beyond.

 

Now that you clicked the G-Cameroon link, what did you get? French. All We can say is that the event is scheduled June 15-16. Nothing else. Any French in the house, help us make sense of those that are coming.

New CBN Rule to Open Opportunities for e-Commerce

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On Thursday, April 28, 2011, Central Bank of Nigeria issued a circular titled “Industry Policy on Retail Cash Collection and Lodgement”. According to the Central Bank of Nigeria (CBN), there is no going back on “Industry Policy on Retail Cash Collection and Lodgement” which imposes restrictions on daily cash deposits and withdrawals either by individuals or corporate entities. This is to discourage the use of raw cash in economic transactions in the country; the CBN is taking steps to promote the use of e-payment systems.

 

 

The CBN in this circular to all banks, Cash-in-Transit (CIT) operating firms, payments system service providers, as well as money card acquirers, issuers and processors, said that the new policies, including payment of increased penalties for cash transactions by individual and corporate bank account holders, are to help reduce the high usage of cash as well as moderate the cost of cash management among operators in the country’s financial system.

 

Effective from June 1, 2012, daily cumulative free cash withdrawals and lodgements by individual and corporate customers must not exceed a maximum of N150,000 and N1 million respectively.

 

The CBN has imposed a penalty of N100 per N1000 on all individual cash transactions in excess of the limit, while corporate customers that go contrary to the new policy are to pay a fee of N200 per N1000 withdrawn above the stipulated cumulative limit.

 

The circular stated that, “Contravention of this policy shall attract a fine of five (5) times the amount that the bank waives as a first offender, while the bank shall, subsequently, pay ten (10) times the charges waived.”

 

With effect from June 1,this year, operators of card payment schemes, processors, switching companies, service providers, and banks risk being suspended for a month or licence revoked by the CBN, for not acquiring approved operational agreements/contracts for local currency Point of Sale (POS) card scheme.

 

The CBN warned that “All financial institutions, including Deposit Money Banks (DMBs), Savings and Loans, Mortgage and Microfinance Banks shall comply accordingly. Compliance with the policy shall be monitored by the Banking Supervision Department and the Other Financial Institutions Supervision Department with appropriate sanction applied to erring institutions,”

 

This move is expected to reduce the amount of currency outside the banking system  and many believe, would help curb incidents of violent robberies which have become common because people move huge volume of cash around.

 

This new cash withdrawal limit, I think it is a great idea for this country to grow. If faithfully implemented, It is going to enhance transparency and accountability in the banking industry as well as check corruption and money laundry. Government taxation system would be effective and individual income can be verified easily. It will save cost of handling cash and this monetary policy will also promote wider use of alternate payment systems such as electronic money payment system, electronic money transfer, mobile payment system and so on. This new policy would open up a new phase of business culture in Nigeria and this will give a big boost to the software industry in Nigeria as new e-payment systems will emerge.