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Are you building next generation business?

Monday, May 18, 2020 — updated on September 18, 2020 - 6 min read

Competition is not anymore defined by traditional boundaries. FILE PHOTO | NMG

Which business are you really in? This was a question that was posed in 1960 by Harvard Business School professor Theodore Levitt in a seminal paper titled Marketing Myopia.

In the paper, Prof Levitt (now late) argued that sustained growth for any business depended on how broadly the business defined its scope as well as how carefully it assessed and attended to customer needs.

Let me shine the spotlight on the media industry (oh, there we go, again!) in Kenya (and by extension the East Africa region) where I have worked for a considerable period of time. If you assess the enterprises, you will note that they mainly operate from the same rulebook: a media house will ideally have a newspaper or two, a few radio and TV stations as well as the some versions of the same products online (wrongly called digital assets). It is true that some have tried to shore up their fortunes by investing in certain areas like sports betting but such efforts have been feeble at best and disjointed at worst. So the firms have largely defined themselves around three product offerings- radio, TV broadcasting and newspaper. And the business model has majorly been reliant on adverting revenue.

Let’s now pick the example of the so-called Telco industry and specifically zero in on a company like Safaricom in Kenya. Among the services that Safaricom offers to customers today include mobile telephony, mobile money transfer (MPesa), consumer electronics, ecommerce, cloud computing, data, music streaming, and fibre optic services. More offerings are definitely in the pipeline. Notice that unlike the enterprises in media - okay, Safaricom is also media company- Safaricom has leveraged its core capabilities to extend and expand its offering to customers. These services do not fit the narrow definition of the offering of a telecommunications firm. The one thing they do is that they increase switching costs for customers. While announcing the Safaricom results for the financial year ended March 2020, immediate former CEO Michael Joseph said, “we have stayed the course, given consumers more value and put the customer first by delivering relevant products and services.” Safaricom announced a profit of Sh 74 billion, a record profit for a local company. It is all about the customer and what they need to transact life events; that is what a next generation enterprise does.

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