ICT provided productivity gains across different industrial sectors in Africa as governments and firms adopted technology to modernize their processes few decades ago. That adoption provided the platforms for new basis of competition as ICT cushioned efficiency in customer service and superior product offering, giving the early adopters opportunities to win market shares. In banking, for example, new banking institutions used technology to compete against the older dominant ones, and in the process redesigned Africa’s banking landscape.
Without IT, we would not have GTBank, Zenith Bank, Diamond Bank and the other new generation banks in Nigeria. These institutions used technology to improve service and in the process brought new customers in the sector. Who needs a mat to his bank, as legendary Lomaji Ugorji would say in an Equatorial Trust Bank advertisement? You do not need one because from 6 hours, the new banks gave us 30 minutes for most transactions. And today, we need only 4 seconds for some of the same transactions via our mobile devices. IT has advanced industries, and the world is better through the productivity gains it unleashed, enabling improved human welfare globally.
I have written extensively on the need for the Nigerian insurance industry to use technology to redesign the industry. Everyone knows that technology brings productivity gains and our banks have done great works in the use of technology to redesign their businesses. People used to complain about our banks with the legendary comedian Lomaji Ugorji taking a sleeping mat to a shadow bank, just to illustrate how long it could take to get cash. The bank he was advertising for, now defunct, unfortunately, could allow you to get out within an hour. We have made real progress in that sector. Today, the queue is practically zero second as you do not need to wait for anyone on your mobile app to bank.
But with the advent of the Internet, many things are changing, owing to the unbounded and unconstrained nature of the web. The companies that relied on ICT to change their sectors are also now vulnerable. Indeed, ICT brought huge productivity gains, Internet is delivering disruption at scale.
The implication is that the way we run Internet companies must be different from the way we ran businesses pre-Internet and when ICT was the vehicle for productivity gain. There are key things to note:
First, nothing is more important in a startup than having the capacity to acquire new customers, easily. A startup must grow because without growth, the alternative is bankruptcy. So, over the last few years, we have seen companies introduce new roles like Head of Growth, and Vice President of Growth. In a network effect business, the most important product is “many users” because the more the users, the more useful the product becomes. That is the positive continuum that delivers a virtuoso circle.
But knowing that growth is important is certainly obvious, for every founder. The challenge is executing the growth strategy. Companies like Google and Facebook which can acquire customers at ease, even at low or zero costs, have huge scalable advantages. It means they can scale without much burdens, financially. When a startup has a huge scalable advantage, it becomes very exciting to investors. Also, its valuation moves up because the path to huge returns is very clear. Such companies have defined trajectories for success because there is nothing that is more impactful in a digital business than growing customers, at scale, and then doing so easily at low cost.
As a digital entrepreneur, the path to glory is lower marginal cost as that drives scalability. I have listed key frameworks which make that happen.