Does Past Accomplishments Guarantee Future Success?

vision

The past two months have been a depressing time for me, being a celebrator of local ingenuity in business. Indeed, nothing is as depressing as seeing a business entity, you have literally grown with it since childhood and now, when you are almost in your midlife, you see it gradually go down.

Nakumatt is one instance. I first encountered Nakumatt, then known as Nakuru Mattresses as a small store in Thika in Pilot Estate while still a pupil at Thika’s Kiboko Primary School.  Then, we would sneak from school during lunch hours to go and wander in between the shelves just to awe at the marvelous displays of commodities. It even made Pilot based pupils to puff up their pride since there was no other supermarket nearby that equaled Nakuru Mattresses.

As we aged further, the outfit grew in leaps and bounds to be East Africa’s biggest retail outlet by branch footprint. It opened over sixty outlets in number across virtually all of East Africa’s countries with a workforce of over five thousand employees with most of their branch outlets operating 24 hours daily.

success

Indeed, the conglomerate that grew from a tiny shop in Nakuru with a few sales calls, had gross revenues of almost US D 500 Million. Conservative estimates put their market share five years ago at 20% in Kenya with their Brand Equity Index hitting a high of 55%. With it came many accolades and awards. These include the Price WaterhouseCoopers East Africa Most Respected Service provider for the year 2006 and 2007, Planet Retail ranking as top retailer outside of South Africa for 2008, Planet Retail Award as Second Most Innovative Retailer in the World for 2009, East African Super Brand for 2007 and 2010, recognition by the East African Community as a pioneer East Africa Investor in 2011 and its CEO recognized in the Financial Times Top 50 Emerging Market Business Leaders for 2010.

With all these accolades lining their cabinets, it was expected that the enterprise would be much more stable and vibrant. However, beginning over two or three years ago, cracks started to emerge. Suppliers were paid late, eroding the creditor confidence of the firm. In a flash, stores in the home country and away started closing up as most stores within the domestic market and beyond, further eroding the public confidence that was celebrated before.

But then when did the rain start beating Nakumatt? Many theories have been put through and deliberated. From their strategy to compete their suppliers through their ‘Blue Label’ strategy to their ambitious expansion plans which choked their working capital outlays.

But I beg to differ. I guess the management realized like the iconic Titanic, the firm was too big to sink. And they became lax with time. Internal weaknesses in controls went haywire and losses started building up. Corruption, inefficiency and lack of corporate governance ideals took over. In a way, it is not external factors that brought down this beloved retail giant – internal ones did.

Which brings me to what I needed to communicate – we most of the times take pride in our past achievements to the detriment of forging ahead and firming up our strengths.  Do past milestones surmounted give us a guarantee that our future would be rosy and good? Not at all. The past belongs to where it should be – the past.

Past vs future

This is the main problem most of us have – looking back and taking pride in past achievements and forgetting that we have a life to live ahead. We most of the times blame the external environment – the economic situation, the government, etc. for our own-caused failures.

To avert this, we need to always focus ahead and be mindful of the red flags raised as we trudge along this journey of living. And as I said, ignore what is past. Let it remain where it should be – in the past. Future success is only guaranteed when there are solid plans and commitment to realize the future vision. For whatever achievements you made back then is not significant in the present times. It is history! So do not make the mistake, either as an organization or at the individual level, to glory in past achievements.

 

The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. Both books are available on Amazon. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or profession a jump-start, he can be reached via the following contacts:

Email:                              pblogix@gmail.com

LinkedIn:                         https://www.linkedin.com/in/mike-okinda-9652b210a

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SECRETS OF DOMINANT ENTERPRISES

This week, Facebook announced that they had hit 2 billion subscribers. Facebook is urguably the world’s biggest media content provider inasmuch as it does not create any content of its own! 

Uber, the world’s largest taxi hailing company, also does not own a single cab of its own. Neither is Alibaba, the biggest online retailer as far as business inventory is concerned. Airbnb follows the same fashion, with no real estate of its own, despite being the world’s largest accommodation provider. 

Coming closer home, Safaricom Kenya Limited is the biggest telco in East and Central Africa. With its profitability hitting Kes. 45 Billion ($ 442 Million) this year, the amount alone is enough to finance Kenya’s Health Ministry for an entire year, going by the country’s 2016/2017 budget. 

However, Safaricom is not known for being a communication company alone. Its flagship product is MPesa, a mobile wallet value addition which enables subscribers to undertake financial transactions. Banks have in effect, rode on the platform to offer lending products. So far, it is estimated that over 27 million Kenyans are subscribers of this mobile money service making Safaricom to be Kenya’s and East Africa’s biggest bank, quite literally! Mark you it does not own a single brick and mortar vault! 

Peter Drucker, the infamous management guru, said that the main function of business is marketing and innovation. This therefore implies that the main purpose of enterprise is to create customers. And hence, it follows that a successful business is only one if it creates and builds its customer base. It is therefore be logical to conclude that a business’ growth is only measured by the number of its clientele. 
This is the secret that has alluded many  businesses that exist in this day and age. Most startups are established to churn out revenues and monetary payouts to their owners. But then, it also explains why a huge percentage of startups fail – due to lack of focus on growing customers. Jim Collins, another guru in management, postulated the Hedgehog concept in which passion, ability to perform and cash cows are factored to create dominance by a firm in a sector. A firm can never generate sustainable cash flows unless it has the numbers in terms of customer numbers. If you study all dominating firms, they have invested heavily on acquiring and maintaining their customers to realise the returns they have.

It therefore calls for the entrepreneur to study his intended clientele well enough to keep up with their tastes and preferences and in addition, changes if any. Firms that withstand the test of time are those that are able to mutate in tandem with the changes in their market niches. This is exactly what cost Kodak and Nokia brands  – rigidity in their product innovation in conformity to customer tastes. New entities came, adopted to the client preferences and took over their markets. 

It again demands that the core corporate values of a business entity have to be in tandem with values of the populations they target. Safaricom Kenya Limited, as mentioned, was not the pioneer telco in Kenya. Kencell was. It later changed ownership and became Zain and currently is branded Airtel. However, despite being the pioneer mobile telecommunications company in the country, it is still struggling to capture the majority share of the available market. Safaricom commands slightly more than 70% market share thanks to its Mpesa value addition on its service. Mark you it is not the cheapest hence the price factor is out of question!

Now for one to understand Mpesa, one has to appreciate the culture of the Kenyan people. Kenyans are a closely knit society which values sharing and blood relationships. As such, more able members of the family travel out in search of job opportunities and whenever they land a job, they would remit some of their earnings to their homes as a way to assist others. This sharing philosophy is what Mpesa was built on – to remit funds, albeit in small quantities. At the time of its launch, most banks had locked out most of the population by their stringent account opening conditions. For one to subscribe to Mpesa, one just needed an ID and a Safaricom line. And that is how the revolution started in 2007 with the launch of the service. Through MPesa, Kenyans could send cash, buy airtime, pay for goods, even borrow on short term basis through the click of their button. And that is how Safaricom wormed its way into the hearts of Kenyans, and assured its place into the Kenyan culture. Its value tag was “Get connected”, in consonance with the social connectedness of the Kenyan people.

Well, do you desire your business to live beyond you and post better returns? Then you have to think about your value system and match it to your clients’. That way, like Safaricom, Facebook and all the others mentioned, you will be assured of longevity of business. 

Customers feel their needs are met by firms whose values fulfil their needs. It is upon the business to craft its strategies around values that will give the potential clients assurance that their needs and preferences would be fully met. That way, one is guaranteed long term loyalty and growth. 
The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or profession a jump-start, he can be reached via the following contacts:

Email:                             pblogix@gmail.com

LinkedIn:                        https://www.linkedin.com/in/mike-okinda-9652b210a

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Why That Business Plan May Prove Useless for Your Startup.

It is the norm for any business advisor speaking to newbies starting on the journey of entrepreneurship, to suggest that they start their business by doing a business plan. In fact, for many financial institutions, this is a core requirement for financing. But then, do business plans really work?
We have to accept that natural law of success: failing to plan is automatically the recipe to fail. Hence, failing to plan is planning to fail, so goes the adage. It therefore goes that planning in itself is a critical component in starting out as a business. It just cannot be wished away. Studies done to evaluate the relationship of business planning and success rate of the same give a direct correlation between the success of business and planning. This has been the theory that has been peddled all along by conservative business trainers, coaches and tutors.

But doing a business plan in itself is tedious. It requires input of many hours and abstract thinking, of where the entrepreneur needs to see his business in the foreseeable future. in actual sense, for one to do a practically applicable business plan, it would require technical expertise and this is not only discouraging, but expensive in the course of time. Its implementation too is another issue altogether. Business plans are rigid and structured that are almost always not flexible to the constantly changing conditions on the ground. This in effect implies that the conditions at the time of formulation of the entire plan are not guaranteed to be similar at the time of implementation. 

Business markets change almost on an hourly basis and hence, relying on a plan drawn up in the past for the present situation would almost always result into failure. Hence a fluid, more adaptable system of business planning especially for startups is needed. Its implementation is even hampered by its cumbersomeness. No plan is less than a page and hence it requires that one has to ruffle through the numerous sheets of paper to get a point. 

Faced with these challenges, Alexander Oxerwalder developed a simpler, fluid and highly adaptable business planning tool, which he aptly named the business model canvas. The model was planar and hence visualization of the business was simpler and less tasking as opposed to the conventional business plan. 

The model has nine critical components: value proposition, key activities, channels, customer segments, customer relationships, revenue streams, key resources, key partnerships and cost structures. It defines clearly and in a diagrammatic, planar form, how a business is going to create value for its target clients, what activities it will involve itself in in achieving this, how it will deliver this value and through which means, what strategic partners it would create linkages with, cost factors associated with its activities for maximum revenues, in a simple structure. 

It is aptly called a model because it is fashioned to adapt to the conditions on the ground. Hence, if the cost factors change, or the taste and preferences of the target market niche change, the model is adjusted to ensure that the maximum returns are obtained at the tail end. It therefore ensures the concerns of the business stakeholders are taken care of at all times.

The Business Model Canvas (Picture: Courtesy)

On the contrary, a business plan cannot adapt to conditions on the ground. Therefore, any shift destabilizes the entire plan and hence, it is considered rigid. The business model canvas is based on experiential operationalization and hence, concepts and theories are tested before full implementation. Ideas are tested using the model. For the plan, this is not possible. The input to output process flow is fixated on the process major, with the theorized output quality and quantity realized at the terminal end of the entire process chain. The thought process is also exclusively applied on paper rather than testing on the ground.

The business model canvas also is more result oriented with a special emphasis on the how to component of achieving results and returns to the shareholder. The business plan is deficient on this. It only dwells on the final result or outcomes rather on the techniques and strategies to attain that. On another front, the business model canvas is more visual. As said before, it is planar as opposed to the business plan which is voluminous and made of several pages.  It is more of hypothesis and theory than being practical. Hence, it is nearly impossible to visualize the business from the initial stage of idea conceptualization, through to implementation and finally, delivery of the final product to the desired market. The business plan therefore falls short in representing the business as a vision which the business model perfectly does.

Startups in their humble beginnings require fluid and agile tools that would perfectly fit into the business system and enable the outfit adopt to the ever changing business external environment. A business plan would not be able. It is a known fact  most who draw up business plans eventually discard them since their implementation is near improbable. If you are currently operating a young enterprise, or in the threshold of starting one, it is time you change with the times and draw up a business model canvas. That is assured to work out fine!
The writer is an acclaimed business author of Passionpreneurship Demystified and Business Networking: How To maximize on your contacts for Business and Professional Growth. He is also a Personal Branding and Business Coach with PBL Africa. In case you need assistance to give your business or professional a jump-start, he can be reached via the following contacts:

Email:                             pblogix@gmail.com

LinkedIn:                        https://www.linkedin.com/in/mike-okinda-9652b210a

Telegram Community: https://t.me/joinchat/EkprBT6zCKCRUmQUaDD9cQ

Facebook:                       https://www.facebook.com/maikol.okinda