How can a Kenyan business survive fierce competition? What is the value of value? What business are you really in?
Why is it that platform business models dominate, over traditional bricks and mortar enterprises? In a business of hectic hooting matatu-like constant change, is the way to move forward, to push the pause button?
“It is not the strongest of the species that survives, not the most intelligent that survives. It is the one that is the most adaptable to change,” wrote the biologist Charles Darwin, almost 200 years ago.
Having attempted studies in medicine and as an Anglican clergyman, at age 23, he put to use his observation powers on a five-year voyage, setting sail in 1831, with an outcome that changed our worldview.
Winners in the East African business ecosystem constantly adapt. They have the present-moment awareness to see what others miss. They recognise we see the world not as it is, but as we are.
What business are you in?
The key question is what business is one in? One of the most quoted classic examples from a century ago is the large railroads in the US, which saw themselves using trains to move goods and people from point A to point B.
Their business declined because they did not see themselves in the transport business. They focused on their product ‘rail transport’, and not the needs of their customer.
“Every major industry was once a growth industry. But some that are now riding a wave of growth enthusiasm are very much in the shadow of decline. Others that are thought as seasoned growth industries have actually stopped growing. In every case, the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure in management,” wrote Theodore Levitt.
Ultimately, a business is there to solve a problem a customer has. And, ideally solve the problem more effectively, simpler, and at less cost.
“The view that an industry is a customer-satisfying process, not a goods-producing process, is vital for all business people to understand. An industry begins with the customers and his or her needs, not with a patent, a raw material, or a selling skill,” stated Levitt, the Harvard professor and author of the classic 1960 Harvard Business Review article, Marketing Myopia.
Platform business model rules
Business models rule. Today almost 60 percent of the largest companies globally are based on a platform business model.
Thanks to technology, a platform has none of the traditional brick-and-mortar presence that businesses used to require, plus the expensive inventory is not theirs.
A platform simply brings the buyer and seller together, thanks to a digital footprint.
“Besides huge market capitalisation Alibaba, Alphabet (Google), Amazon, Apple, Facebook, Microsoft, and Tencent all have another thing in common: heavily populated platform business models. Platforms are the favoured operating model for seven of the world's 12 largest corporations,” notes McKinsey.
These world-beating platforms have a number of things in common.
They are all software-based digital environments with open infrastructures, matchmakers linking people, organisations, and resources, orchestrators of ecosystems extending across sectors and national borders, reducers of marginal costs to near zero, and harnessers of network effects. In a word: innovative.
So the question for the rest of us minnows must be, How can one take advantage of a platform business model?
Stop to move forward
Business can be one big frantic headache. Paradoxically, perhaps the way to move forward is to stop. To push the pause button and look inward?
Long before it was cool, Ray Dalio credited his financial success to a simple practice: a daily meditation. Over the following five decades, Dalio built Bridgewater into the world’s largest hedge fund before stepping down as co-CEO in 2017. Today, Bridgewater manages more than $150 billion in assets.
“Twice a day, the 73-year-old billionaire closes his eyes and repeats a short mantra in his head for 20 minutes at a time, It’s a practice known as Transcendental Meditation which Dalio says he adopted in 1969 — six years before he founded Westport, Connecticut-based hedge fund Bridgewater Associates” reports CNBC. Interesting, so how do you turn the words of the page into profitable action? Experiment with small steps.
