Branding In Contemporary Times

Brand

A company’s most valued asset are said to be its employees, according to Anne M. Mulcahy. They provide a company with a competitive edge in defining their organizational culture. This ultimately defines the company’s brand. In essence, therefore, it means that the brand forms a company’s core. Any business serious about creating sustained market dominance would invest heavily in defining their brand and increasing awareness among its target audience.

Take for instance Apple, the world’s most valued brand. The business has invested heavily to create products that resonate with convenience and simplicity. The euphoria that follows the release of their gadgets enables them to capture the moment and hence, evokes prestige among Apple users. This explains why any Apple product user would openly flaunt the bitten apple for all to see! Through heavy investment in research and analyzing client feedback, Apple has been able to capture the imagination of its potential and existing users.

How then can a company brand elements so as to have sustained brand experience among our users? The most essential thing to put in mind is to understand the times – we are in the information age, the digital age. It is characterized by heavy influence of digital media on human behaviour and connections. But then, as times change, as surely as they do, how best can one keep up with the dynamics?

Nevertheless, there are some fundamental realities that an enterprise needs to put into consideration as it undertakes implementation of a branding strategy.

First, they need to appreciate that consumers are endowed with information. Clients and potential clients continually research and try to get information about companies and their associated entities. They are always in search of perspectives, assessments and opinions on products before and after the purchase process. Characteristic of the contemporary times, social connections have become the focal point of decision making. The bulk of these fact finding processes and information sourcing occur on digital platforms. This requires brands to forge a way of converging with consumer interests on these platforms rather than seeking them out. Enhanced interactivity and engagement between a brand and its audience on social media is just a must in this age!

Secondly, it must be acknowledged that the traditional channels of corporate authority have lost a considerable level of confidence in the eyes of the public. This is the reason why the public believes more what a blogger posts than the official account from a company. It is worthy to note that employees have become more trustworthy than their seniors as information sources. To compound this, these peripheral voices of opinion have the potential to reach a wider audience than the traditional structured channels of company communication. For that reason, it would be indispensable for companies to leverage their employees and these fora to disseminate information about their brands.

It is interesting to note that business firms are losing grasp on monopoly of information. Through widespread information sharing on digital platforms, the public can get wind of facts about a product or a company without the involvement of the official communication structure of a company. And this is where Public Relations come in, to attempt to correct any defective image whenever destructive information leaks. Third party sources e.g. websites, social media channels, and other channels that exist outside of the structured communication channels must be considered when crafting a brand strategy in this age. This is the main reason why pundits argue that a company that lacks a social media presence commits suicide.

Nevertheless, the most basic fact that a company should consider is the fact that human needs, as much as they are varied, remain the same over time. Necessities, desires and their stimulation have remained the same from time immemorial. For instance, a good taste and appeal of water would always make one who has not taken any for some time, thirsty. What changes, nonetheless, is human mannerisms. A firm would therefore need to study demographic changes to keep abreast with the dynamics of the society. If they fail to adjust accordingly, they become be less marketable. Consider Kodak, the once hailed camera manufacturer. In 1975, it invented the digital camera. Instead of marketing the new invention, it held back in fear of disrupting its market. Sony and Canon saw the opportunity and went full throttle, and took over the market by storm. It is said that dinosaurs did not get extinct because they were weak, but die to their inflexibility to ecological changes. What are you doing as a brand to keep abreast with dynamics in the market?

The digital age, too, has enhanced transparency as far as sharing information is concerned. A visit to any digital platform would reveal plenty of reviews for companies and products. Any individual can review a product and broadcast the information to millions who have accessed to their platform. This therefore forces companies to be transparent as the only way to survive.

How then can a company effectively brand in these dynamic times? Several means exist but depend on the target audience and the available resources. However, it is imperative to note that there are specific essential concerns a firm must address to ensure prosper and effective communication of a brand identity and experience.

The basic requirement is the brand should have a story. I usually refer to it as the “why” of the firm. What is the motivation behind your product development, for example? For Apple, it is simplicity and convenience. Because of this, clients buy their products to be seen. Apple therefore sells prestige by availing convenience and simplicity!  Your story has to be consistent, easy to relate to and provide a sense of direction. Through this, you ensure you have firm control of your brand or some other business will, like Kodak’s case!

Another way to build your brand effectively is utilize your employees. It has been observed that the public has waning confidence in formal company communication structures but tend to believe third party sources. As a brand keen on building your brand, leverage on your employees. For example, it pays to portray the unique abilities of your employees on public media as a way of showing confidence in the talent you have in delivery of value to consumers. Give motivation to employees to think and act as experts to make the brand values come alive in their interaction with stakeholders. Employees are better brand advocates since they have a wider scope of effect.

Another worthy factor to consider is to resolve to build your brand on ideas worth sharing. For instance, what values does your brand stand for? Do your brand elements (identity, experience, etc.) only serve as channels of product promotion or do they stand for something? A brand that is built on values can utilize these as the foundation of spreading influence among its target audience. It carries the possibility of creating a culture upon which branding content is created and built for a sustained market presence. Coca cola has used this tactic to last through generations with their emotive brand. This explains why, whenever one sights the Coke logo, they instantly feel thirsty. The brand is also associated with family times during Christmas celebrations (Coke Caravan idea). It therefore is synonymous with family values.

Furthermore, one should always think of the ultimate customer experience beforehand. Channels should be integrated their product delivery. Before the digital age, the sales pipeline was heavily used to facilitate the purchase process. It was wearisome and lacked the human touch.  In the digital age, tangible aspects of a brand are integrated with digital channels to impact the target audience. Therefore, before a purchase is made, the client would involve themselves with fact finding about the product or company. After purchase, the buyer experiences that brand. This interaction would determine if the buyer would place a positive word of mouth through their associations or not. It also influences repeat purchases. Hence, a firm should create a mechanism of integrating physical aspects of branding (product, visuals, etc.) with leverage their digital aspects for effective branding strategy (social media influence, reviews, etc.).

Lastly, most businesses anchor their brand experience on technology. Have you ever noticed that many banks have ticketing systems yet clients still complain about long queues? This is an indication of over reliance on systems. It would be imperative for firms to marry systems with the brand story to have an influential brand experience. Having a strong technological system without a story results into a mechanical, out of touch shell of a brand. It evokes no feeling. In as much as technology is a must have, it should serve as a brand enabler of the main brand infrastructure – the brand story. To have a firm brand experience, technology should complement the brand story.

Building a brand in this day and age would require effort, diligence and heavy investment of time resources. All dominant brands have their ear on the ground to monitor any changes on the ground and shift their strategy accordingly. With digitization of the world, the dynamics are even more fluid than ever before and hence the need for brands to be versatile in keeping with these changes.

Otherwise, like the dinosaurs of old, they risk extinction and their places being taken over by more adaptive and flexible ones! If you do not take care of your brand, some other entity will surely come and take it over!

 

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The BLACK Dot

The Professor stood in front of the classroom holding a white sheet of paper with a black circle at the centre.

“What do you see?” he asked his class

All the students raised their hands. Most of them answered that they saw a black dot.

You know the story and its moral – despite the bulk of what he held being white, they focused on the black circle.

This famous story speaks volumes about our lives. 

Let me twist the plot a bit: If the Professor started with informing his students that he was holding the white sheet of paper and eventually asked them what he was holding, they would have provided the correct answer  a white paper!

How does the difference come in? In the second is in the Professor enlightens the students about what he held in his hand!

Corporations all over the world invest billions of dollars to build their visibility to sustain the demand of their products over time. 

Coca Cola was established in 1896. In its nascent years, it sold an average of nine servings daily. As we speak, it does 9.6 billion bottles on average, thanks to heavy investment into marketing! Apple, the most valuable brand in the world is another case. Every new release is usually met with long queues of people in front of their stores even before they hit the market. Mark you, they buy at a premium price yet IOS system they run on is not the best Operating System! What do they buy? The simplicity and prestige associated with the Apple brand. 

In Kenya, the most profitable company is Safaricom Kenya Limited. In 2017, it announced profits that contributed to 54% of its parent companys, Vodacom Plc. The funds, if availed to the Kenyan Government, would finance its Ministry of Health for a year (as per 2017 Budget) and it would have remained with Kes. 2.1 B as change! Their game changer was in investing in brand visibility. Let us keep note that it was Airtel Kenya Limited (then known as Kencell) that started mobile telephony services in Kenya. 

As an entrepreneur, you will certainly not have a market if your products personality does not ring in the mind of your target audience. I always advice my mentees to invest in being known for something. People will never buy the product per se, but the #WHY behind your product. Invest in making it known why you exist and this will always pull people to make a purchase.  People would not know your product exists if they are not aware of what value it can add into their lives. This is why, when you see the Coke logo, you feel thirsty. Your mind has been programmed so!

I tell students alike: as you study, develop you unique abilities. Exhibit them to the world and be known for something. Those who know me associate me with perfect execution. Similarly, when I started my banking career, I known as the “perfectionist. I believe this is what enabled me to grow in my career against expectations. I made it into management from graduate entry in a record two years! Employers do not recruit for qualifications. They do for competence to enable them create value that pass on to their clients. The paper qualifications are therefore a plus. The world has no shortage of employment opportunities, it is in shortage of the employable! 

The professor in our analogy failed to make the students aware of the existence of the paper. This is why his students noticed the black spot yet the primary background was all white! As an entrepreneur or job seeker, this year invest in enhancing your brand visibility. Unlike the professor, ensure your white background is visible to the world more than the obvious (dot).  With focussed effort and consistency, you will be able to curve out an identity that you will be associated with.

By the way, many never know I pursued a biomedical degree in college earned a first class honours. Nonetheless, I chose to pursue my passion and exhibit to the world my abilities. I ended up in banking and part time consulting. This is what I do even now as a part time author, speaker and business coach. You too, can purpose to exhibit your white rather than let the world choose to see the black dot! 

Can’t you?
#PersonalBranding

#Branding

#BusinessStrategy

Why Be An Entrepreneur & Not Self Employed? 


In my entrepreneurship mentorship sessions, I always float this question to my audience: why are you into business? In response, I receive an array of answers  some convincing, others not. That is normal with open forums.

In a study carried out by the Kenyan National Bureau of Statistics (KNBS) last year in Kenya, it was established that over 2.2 million businesses had collapsed over a five year period. Even more shocking, was the revelation that slightly over 400,000 start-ups never lasted beyond their second year of operation. 46% of these firms die off within their first year. 

Youth unemployment remains Kenyas biggest socio-economic challenge. So enormous it is that it shakes the core of the countrys dominance as an economic powerhouse. Statistics put it that one in every six young Kenyans is unemployed. In neighbouring Tanzania and Uganda, the rate stands at one in every twenty on average. 

Ask any Kenyan youth about their occupation and they would respond that they are either gainfully employed (in a job), or self-employed (taken to mean ‘business owners’). More often than not, they venture into self-employment as an option for lack of employment opportunities. They undertake business with neither the requisite skills nor passion for it.

Nonetheless, are these who are self-employed truly in entrepreneurship? Is there a line between self-employment and entrepreneurship? 

It has to be cherished that entrepreneurship is a philosophy of sorts, a lifestyle. Methinks entrepreneurship in being a vocation, one to add value to society. An entrepreneur would identify a challenge and consequently task himself to provide a solution. His main motivation is to fulfil a human need and alleviate a pain point. Despite the challenges they encounter, they keep on trudging on the path to their objective. 

Take Thomas Edison, he who invented the light bulb, for instance. Over 999 times, he failed and never gave up. He said that each time he failed, he discovered one way that he would not do it. His optimism paid off at last. Again, let us examine Jeff Bezos, he who for some days beat Bill Gates to be Forbes Richest Man alive. When he started Amazon, his dream was to provide a link between producers and the consumers and build the worlds largest online retailer! The business made money for the founder after six years of operation. Facebook, the worlds largest social media platform, took five years before it reported a profit. Alibaba took eight years while Tesla, the world acclaimed innovative automobile manufacturer, is yet to be profitable to date!

Coming closer home, Parapet, the regions leading cleaning company, took three to four years to stabilize and post profits. While it may seem business leadership translates to super profits, Business Daily too proves otherwise. The paper is the countrys leading business publication and yet, seven years after launch, it is yet to post a profit!

Did the founders of these businesses give up since they were unable to recoup their investments in the short term? Absolutely not. In fact, with the continued negative feedback on their financial positions, they persisted and got motivated by the need to fill their identified society gap until when their businesses broke even. Hence, entrepreneurship is a philosophy, a calling of sorts!

On the contrary, those who take entrepreneurship to be a profession (self-employment) look forward to financial rewards or compensation. As such, they would get into business to be free most of the time (or so they think), to express their bossiness around, and most popular of all, earn huge payoffs from the business! Some even start a business to be able to live a defined kind of lifestyle. To others, getting their hands into business is an express ticket to wealth generation. Nonetheless, this is getting it all wrong. 

Entrepreneurship is about value creation. The sanctity of undertaking business is to enrich the human race. Their mission in life is made complete by solving a human need. It therefore cannot be a short term affair as for the ‘self-employed’. Entrepreneurs go for the long haul. For instance, Coca Cola has outlived its founders, more than a century after its invention. When the firm started in 1896, it sold nine servings per day in Atlanta. The founder passed on two years after inventing the beverage. Currently, the firm sells an average of 1.9 billion bottles daily across the globe! 

In addition, entrepreneurs are risk takers and dare invest in a venture in pursuit of their objective. They would not fear failure. Failing is just but part of the process of success. Whenever they encounter failure, they keep on working their passion to fruition. A self-employed individual is risk averse, choosing to play safe with the intention of reaping big from their undertaking. Failure discourages them altogether.

However, even more interesting is the ability of an entrepreneur to flex with dynamics on the ground. He appreciates that there are constant shifts on the ground and as such, he/she is prepared to change in tandem to the shifts. This is the reason why those who take entrepreneurship as a calling do not give up. Their flexibility works to their advantage. For the self-employed fellow, their rigidity works against them. Like the dinosaurs of old, their rigidity causes them to fail due to their inadaptability. 

How else can we explain the findings of a study by CB Insights, who undertook a post mortem on 101 start-ups that failed recently? In this study, they found out that the major cause of start-up failure is lack of a human need (up to 42%). Lack of capital only came second with 29% of subjects alluding this to their failure. This is interesting since most business founders blame the lack of capital as the cause of business failure. 

The crux of the matter is the motivation for an individual to get into entrepreneurship. That is what determines whether a business will last or not. Of particular noting is the fact that all the mentioned businesses that have outlasted the times had one common denominator  their founders had the right mind set. To them, business was not a means to earn a living. It was a calling, a vocation. If we re-evaluated our motivation to get into business, we would reverse this failure rate of businesses in our country and region and reap big from the ripple effect in terms of economic growth and sustainability. 

So then, would you rather be self-employed in business or choose to be an entrepreneur? The better choice is quite explicit!

-Ends-

This article was first done for publishing in the Cytonn Investments Plc Blog by Michael Okinda,  the author.  

He is an acclaimed personal branding & business coach under his PBL Africa initiative. 

Still, I have Faith in the Kenyan Enterprise Story

This week I have had mixed feelings about a subject I love most  entrepreneurship. And more so, about Kenyan startups and enterprises.

After a short period of mourning one of the major brands I have celebrated over and over because of their ingenuity, I got some really glad news about three of our brands, two of them home grown that won major awards at the World Tourism Awards. Kenya Airways, our national flag carrier, was voted as the top airline brand in Africa for the second straight year. It beat South Africa Airlines, Rwanda Air and the likes. Maasai Mara Game Reserve, the eighth wonder of the world, was voted the best in the national parks category beating Kruger National Park (South Africa) and the Namibian National Park. Sarova Hotels and Lodges, our premier tourist hotel chain, also won top awards in the hotels category in the continent.

But that is not news. Nakumatt was the biggest surprise of them all. After a prolonged period of negative publicity due to dwindling business fortunes, there was some good news  they have started restocking their stores again! To those who are not up to speed with the goings on in Nakumatt, the retail mart chain has been having it rough in the last 24 or so months. Faced with growing debt and a strain on their working capital reserves, the supermarket chose to start rolling out of the markets they had entered. They first closed the Ugandan store and later on, followed up with their Thika Road Mall (TRM), NextGen Mall and Westgate Mall stores. Last week, their landlords, the Junction Mall in Nairobi threatened to close their shop due to reduced traffic. One more in Nairobis Industrial Are and another in Mombasa too have gone down too. People have been avoiding going to their stores for lack of sufficient supplies despite their we need it, we’ve got it brand tagline.

 It was therefore a sad thing to see the mighty bronze elephant statues being dismounted from the entrances of their stores as the giant slowly fell. 

But the story of Nakumatt is reminiscent of the Kenyan entrepreneurship story. An entrepreneur comes up with a great concept, works his way to make it established like a colossus. But the problem starts to arise when the firm reaches its maturity stage and the growth either stagnates and declines or continues to rise and forms its Achilles heel. The latter is what happened to Nakumatt. Nakumatts rise has been anything but phenomenal. In a few years from being a small backstreet store, it established its footprint all across the region. As at the beginning of the year, it has slightly more than 60 stores across Kenya and Uganda. With increased stores and pressure to deliver to its clients, Nakumatt relied heavily on suppliers credit to meet the demand. With no cash to pay for its supplies, it resorted to extend its debtor days from the standard 60 days to more than twice that number 120. But what even made things worse was a strategic decision by the Nakumatt management to start producing their products under the famous Blue Label brand. In this case, it approached producers of various products and bought in bulk to resell to its customers, undercutting its suppliers. The Blue Label products were even more popular with consumers as they were cheaper than the conventional ones. 

However, we have to appreciate  that the Nakumatt enterprise is a wholly owned family outfit. Atul Shah, the current heir, is the son of its founder. Many suitors have approached the family to invest into the firm but they have continued to hold on. As such, the working capital has been provided through external borrowing and sources from within the family, which limited its operations. With a restricted cash inflow to finance operations, suppliers refused to provide more suppliers on credit since the delivered goods were not being paid for. And that is how the firm was pushed into a corner since human traffic was reduced significantly. Stories of stores with empty shelves were abound on social media and the print media, further eroding its brand position and equity. They remained with no option but roll out of the markets they had entered, further deteriorating the situation.

This therefore means the cookie started crumbling when the owners of the firm refused to adjust to the demands of the business in terms of capital. A business that grows demands a huge outlay of capital and when the owners are restricted, it ultimately collapses. Most startups are started with an all- mine mindset by the owners. They start businesses with an intention of being the sole beneficiaries of returns and hence choke it up in the fullness of time since growth is stifled for lack of capital. What we need to appreciate is the fact that a business is like an asset. No asset is held for good. There must be an exit strategy sooner or later in the course of time. The owners must be ready to cede part of the shareholding and ownership in exchange of additional resources (financial or knowledge) to help their vision advance to even bigger proportions. 

As the founder, you will still remain the originator of the business idea and the vision carrier. But moving the business from its nascent stages to maturity would demand that you leverage networks and resources. And this is where the call for additional shareholding is most welcome. It is time we learnt from firms founded in the West. Facebook, Google, Apple and the likes, were started off by one or two people who came together. With time, they needed additional resources to grow and as such, they had to cede control of their firms in exchange for additional resources that have made them the conglomerates we know them to be, today. It pays to know when the time is ripe for an exit in any undertaking.

Nakumatt was approached by investors interested in injecting additional cash but they chose to cling onto their baby. Now they are struggling. It is my hope that they would indeed heed to the needs of the business and give in, for the preservation of this important national success story. And I do believe that other startups would learn this lesson and follow suit. This is why I still have hope for the Kenyan Enterprise, that indeed we will thrive!This week I have had mixed feelings about a subject I love most  entrepreneurship. And more so, about Kenyan startups and enterprises.

After a short period of mourning one of the major brands I have celebrated over and over because of their ingenuity, I got some really glad news about three of our brands, two of them home grown that won major awards at the World Tourism Awards. Kenya Airways, our national flag carrier, was voted as the top airline brand in Africa for the second straight year. It beat South Africa Airlines, Rwanda Air and the likes. Maasai Mara Game Reserve, the eighth wonder of the world, was voted the best in the national parks category beating Kruger National Park (South Africa) and the Namibian National Park. Sarova Hotels and Lodges, our premier tourist hotel chain, also won top awards in the hotels category in the continent.

But that is not news. Nakumatt was the surprise of them all. After a prolonged period of negative publicity due to dwindling business fortunes, there was some good news  they have started restocking their stores again! To those who are not up to speed with the goings on in Nakumatt, the retail mart chain has been having it rough in the last 24 or so months. Faced with growing debt and a strain on their working capital reserves, the supermarket chose to start rolling out of the markets they had entered. They first closed the Ugandan store and later on, followed up with their Thika Road Mall (TRM), NextGen Mall and Westgate Mall stores. Last week, their landlords, the Junction Mall in Nairobi threatened to close their shop due to reduced traffic. One more in Nairobis Industrial Are and another in Mombasa too have gone down too. People have been avoiding going to their stores for lack of sufficient supplies despite their we need it, weve got it brand tagline. It was therefore a sad thing to see the mighty bronze elephant statues being dismounted from the entrances of their stores as the giant slowly fell. 

But the story of Nakumatt is reminiscent of the Kenyan entrepreneurship story. An entrepreneur comes up with a great concept, works his way to make it established like a colossus. But the problem starts to arise when the firm reaches its maturity stage and the growth either stagnates and declines or continues to rise and forms its Achilles heel. The latter is what happened to Nakumatt. Nakumatts rise has been anything but phenomenal. In a few years from being a small backstreet store, it established its footprint all across the region. As at the beginning of the year, it has slightly more than 60 stores across Kenya and Uganda. With increased stores and pressure to deliver to its clients, Nakumatt relied heavily on suppliers credit to meet the demand. With no cash to pay for its supplies, it resorted to extend its debtor days from the standard 60 days to more than twice that number 120. But what even made things worse was a strategic decision by the Nakumatt management to start producing their products under the famous Blue Label brand. In this case, it approached producers of various products and bought in bulk to resell to its customers, undercutting its suppliers. The Blue Label products were even more popular with consumers as they were cheaper than the conventional ones. 

However, cognizance has to be taken into consideration that the Nakumatt enterprise is a wholly owned family outfit. Atul Shah, the current heir, is the son of its founder. Many suitors have approached the family to invest into the firm but they have continued to hold on. As such, the working capital has been provided through external borrowing and sources from within the family, which limited its operations. With a restricted cash inflow to finance operations, suppliers refused to provide more suppliers on credit since the delivered goods were not being paid for. And that is how the firm was pushed into a corner since human traffic was reduced significantly. Stories of stores with empty shelves were abound on social media and the print media, further eroding its brand position and equity. They remained with no option but roll out of the markets they had entered, further deteriorating the situation.

This therefore means the cookie started crumbling when the owners of the firm refused to adjust to the demands of the business in terms of capital. A business that grows demands a huge outlay of capital and when the owners are restricted, it ultimately collapses. Most startups are started with an all- mine mindset by the owners. They start businesses with an intention of being the sole beneficiaries of returns and hence choke it up in the fullness of time since growth is stifled for lack of capital. What we need to appreciate is the fact that a business is like an asset. No asset is held for good. There must be an exit strategy sooner or later in the course of time. The owners must be ready to cede part of the shareholding and ownership in exchange of additional resources (financial or knowledge) to help their vision advance to even bigger proportions. 

As the founder, you will still remain the originator of the business idea and the vision carrier. But moving the business from its nascent stages to maturity would demand that you leverage networks and resources. And this is where the call for additional shareholding is most welcome. It is time we learnt from firms founded in the West. Facebook, Google, Apple and the likes, were started off by one or two people who came together. With time, they needed additional resources to grow and as such, they had to cede control of their firms in exchange for additional resources that have made them the conglomerates we know them to be, today. It pays to know when the time is ripe for an exit in any undertaking.

Nakumatt was approached by investors interested in injecting additional cash but they chose to cling onto their baby. Now they are struggling. It is my hope that they would indeed heed to the needs of the business and give in, for the preservation of this important national success story. And I do believe that other startups would learn this lesson and follow suit. This is why I still have hope for the Kenyan Enterprise, that indeed we will thrive!

             ***** Ends******

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 Speaker with PBL Africa and a Cytonn eHub Mentor. 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

Telegram:             @Mokinda

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

 

DOMINANCE BY STANDING OUT: LESSONS FROM KENYA’S CBA BANK

Dominance

Interesting times these are – after the enactment of the Banking (Amendment) Bill 2016 late last year, most of the Kenyan banks’ profits went southwards. Actually, for the financial year closing June this year, a bank known to have zero loans at risk of loss (PAR), Victoria Commercial Bank, recorded a loan on default, to underscore the dire situation facing the industry.

But even more amazing is one bank that went against the tide – Commercial Bank of Africa (CBA) which posted improved profits where even its more heavily capitalized bedfellows failed. Last week the bank reported a net profit of Kes. 2.7 Billion up 14.1% from the previous year.  It would be interesting to study their business model to find out why.

The underlying reason for this resilience is their association with another powerful brand – Safaricom’s Mpesa product. Safaricom is East and Central Africa’s most profitable blue chip entity; with a valuation that ranks it as the fourth most valuable brand in Africa. Mpesa is a mobile phone based wallet that enables the public to do financial transactions at their convenience.

By linking up with Mpesa, CBA developed a mobile based banking service called Mshwari that has become a hit with the unbanked. As such, anyone, as long as they are subscribers of Mpesa, can borrow and repay funds through their mobile phones. Additionally, subscribers are able to save their funds at a fixed rate of return to be withdrawn later with some interest. It is literally a bank without a physical vault. As at the end of last year, Mpesa had on boarded slightly more than half of Kenya’s population – over 47 million customers.

By compensating for the fall on revenues due to regulatory restrictions through enhanced revenues from Mshwari, the bank was cushioned adequately. It is observed that revenues rose by 16.3 percent year to year to close at Kes. 5.5 Billion.

Dominance

The Hint

According to the World Giving Index published this year, it was observed that Kenyans are the third most generous people in the world. It underscores the social cohesion that exists amongst Kenyans and their sharing habit. It is this social value that the developers of Mpesa chose to ride on and develop their product, thereby aligning their product with a truly Kenyan value. This is the main reason why Safaricom and Mpesa to be specific have enjoyed dominance for the last ten years of its existence.

And this brings out two very important lesson most of us entrepreneurs purposely ignore: synergy and values.

Robert Kiyosaki said that networking is the business of the 21st Century. Networking is about leveraging relationships, within and without the firm. Smart firms, like CBA as explained above, chose to take advantage of the readily available market by Mpesa subscribers to offer their services – banking. As an entrepreneur, ensure you create linkages with other players in the sector and related sectors to ride on their associations and operations. Be it supply chain management, production, knowledge exchange, etc. ensure you find a suitable partner to establish a mutually beneficial relationship. For CBA, Safaricom Mpesa provides them with an already established market. In turn, Safricom earns from the lending expertise from the banking partner. The days when a firm would exist on its own are gone and synergistic interactions are the way to go.

Values, I say, are the most important element in a business. I always ask people- what does their business stand for?  I opine that any great business is built on the foundation of their organizational beliefs. Its product offerings are only accepted once their value system is in tandem with the societal belief systems of their target markets. Considering this example, Safaricom realized Kenyans like sharing. Our national philosophy is Harambee, literally meaning to pull together. Whenever someone has an enormous project, people would come together and contribute towards helping in the realization of the project. These gatherings are called Harambees. In the west, it is known as crowd funding. It is an embodiment of our giving spirit.

A Kenyan who lives away from home would always send home some cash to help his kin back at home. Mpesa’s launch, coincidentally, was done at the onset of the infamous 2007/2008 Kenya Post Election Violence (PEV) period when banks and other financial systems ground to a halt. With the service, stranded populations were able to send and receive cash at the convenience of their homes. Additionally, as opposed to banks which had locations majorly in urban centres, Mpesa had a huge network of agents that permeated all the areas of the country. The footprint covers more than 70% of the nation, with a huge concentration in the rural areas. Add that to the convenience of only requiring an ID to be registered, Mpesa became an instant hit with users all over the country.

Much more can be said about this success story of Safaricom but one thing stands out: values. This is what made them to be acceptable and build a loyal client base that has proven hard to break. Airtel Kenya Limited, then known as Zain, launched a competing service nicknamed Zap. It waived its fees altogether but the population could not accept it since it did not resonate with its ideals and values. To many, Zain was for the urban rich and elite. It was also not used by the majority as almost all phone owners had Safaricom lines.  Safaricom hence passed off as an authentic Kenyan brand that was deemed cheap (even when it was not).

Well, there you go: what will you do as an entrepreneur to replicate a success story like CBA’s? It is not too hard to go against the grain and disrupt the ideal and become dominant. It just needs a little tweaking of the obvious to stand out.

And indeed, you can!

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

Telegram:                       @Mokinda

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

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

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

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

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