Tuesday 06 March 2018 C002D5556 IDEAS THAT POWER HIGH PERFORMANCE BUSINESS DAY BUSINESSINSIGHTS 19 ADVISOR BRIAN REUBEN KEYNOTE SPEAKER AUTHOR Maintaining a competitive advantage takes more than great timing or a single solution. Sustainable advantage requires a well-designed and wellexecuted strategy. This sounds very simple, but most executives don’t do it. The concept of strategy is still generally a misconceived idea irrespective of the wide popularity it enjoys in business literature. When executives fail the clarity test in their concept of strategy there cannot be a superior performance. So you find companies competing without a strategy. Take the case of the extinct HiTV which set out to build a competitive ad- Key drivers of competitive advantage vantage on EPL rights. EPL rights was tactical and has nothing to do with strategy and tactics cannot give you an enduring competitive advantage. That was why the company could not survive beyond their inability to sustain the rights to that premiership. A strategy is not a particular action you take, it is more than a goal, it is a wholistic approach to competition involving every aspect of the business. That’s why its difficult to be copied. For example, it took US car manufacturers many years to get good at Toyota’s lean manufacturing methods, even though Toyota willingly gave factory tours to its rivals’ executives. More recently, traditional companies continue to struggle to adopt the digitally powered methods of online leaders like Amazon.com and Google, although the outlines of these methods are well known. Strategy is fundamentally about making choices. It is the company’s unique approach to competing and the competitive advantages on which this unique approach will be based. It is the positioning of a firm in its competitive environ- ment. There are five key drivers of strategic effectiveness. The first is a clearly defined value proposition. ‘Me too’ competition rarely works if it does work at all. If you’re planning to have superior results you must have a clearly defined value you are bringing on the table. There are already several businesses in the world and I’m not sure there’s a need for more except there is some unique value you are bringing on the table. In defining the value proposition you find yourself wrestling with three important questions: which customers should we focus on? This question is very important because one of the most expensive mistakes you can make in strategy is to try to serve everyone. You’re going to be prepared to make some customers unhappy if you are considering building a competitive advantage. So you decide the customers you want to serve and the channels through which you intend to reach them. Next you will have to ask yourself what specific needs of these customers are you going to meet. What kind of products or services are you bringing on the table and what distinctive features will they have? This will then translate to the pricing policy you will adopt. With that you have a clear value you will propose to your customers. That’s the first step. It is very important to understand that your competitive advantage derives from the individual things you do in the business in your process of creating value. A business is a set of various activities summing up to create value. This is called value chain. The second key driver of competitive advantage is designing a distinctive value chain. If your value creation process is an exact replica of your competitors you can’t reasonable expect any competitive advantage. Your advantage comes from what you do differently from others that lowers your cost or gives you a superior quality. It is your job to configure your value chain in a way that is different from others. Your value chain delivers the most advantage for you when the advantages you gain from one activity reinforces another activity and another and another. This way they create a fit that will be very difficult to be replicated by your competitors. Brian Reuben(@brianoreuben) is an advisor on strategy and leadership. He regularly conducts keynote presentations and senior executive workshops with companies around the world on strategy and leadership. He heads BusinessDay Training was this article helpful? Share your thoughts with us on Facebook @bdtraininglive or email us on firstname.lastname@example.org Please follow updates on this article on Facebook.com/ bdtraininglive. To get the full article FREE kindly email email@example.com Brian Reuben(@brianoreuben) is an advisor on strategy and leadership. He regularly conducts keynote presentations and senior executive workshops with companies around the world on strategy and leadership. He heads BusinessDay Training This Page Is Open For Sponsorship, for details call 0808 726 4420.
20 BUSINESS DAY C002D5556 Monday 05 March 2018 CEO INTERVIEW Interview with Private Sector Leaders Govt should replicate Azura power financial arrang ANDREAS PISTAUER is the head of Siemens operations in sub-Saharan-Africa for Power and Gas. In this interview with Olusola Bello, Energy Editor, Pistauer threw more lights on the activities of his company in Nigeria in terms of providing technologies and finance projects that would help fast track power generations in Nigeria. Excerpts: Please can I meet? I am Andreas Pistauer. I am heading our Siemens activity in sub-Saharan- Africa for Power and Gas. Our job is to bring electricity to people. So how far have you gone on the project, that is, bringing electricity to people? I think we are doing very well. We are currently involved with Azura project, which is one of the largest power stations in the country. It is the first large scale Independent Power plant in Nigeria. We are working on another project as well in Delta State, and ours is to make sure that electricity comes to Nigeria as soon as possible. We are very proud because we have always had fantastic history; Nigerians and Siemens are in a very strong collaboration. We are trading on energy and everything that has to do with technologies. For me, it’s a great privilege to be here in Nigeria. My favourite place in Africa. Are you sure? Yes I’m sure. You went to Sapele for a ground breaking of a 150 megawatts power project being proposed by Pronton Energy. How involved is Siemens in that project? It is a very deep involvement and commitment to the project. One could say it is the technology that is driving the commitment. But what is really behind this is the people. What does 150 megawatts means to Nigeria and its people. Another 150 megawatts is roughly about 3.7% of the current production. So, a project like this with150 megawatts brings electricity to 7.5million people in Nigeria. It is an enormous change to the good trends of electricity supply. It will enable kids to study, it will enable fathers and mothers to do their business, and even enable companies to grow. A project like this has a lot of benefit to the country and it’s a privilege to work on such a project as this. It is not always easy, so it really requires the best brains, skilled and capable hands to handle. We have been very good partners in Nigeria. We are proud of the project and hope that the project will materialize in a way that construction will start very soon. Your company is supplying some of the turbines? Yes, the key technology is the turbines. It’s a highly efficient turbine, very reliable. It is the most suitable for the project, it is flexible, and you can stop it, and start it easily. It takes care of the low changes that exist in Nigeria energy sector, which is a very good reliable mission. What gives your company the confidence to be engaged in such project, given the economic scenario Nigeria? In Nigeria, I always hear different numbers, about 4000megawatts, most times with generation going up and down; sometimes it goes to about 5000 megawatts. Sometimes 3000 megawatts and I think there was one time it went as low as about 1,500 megawatts. So electricity is the backbone of modern economy. I mean nothing runs without electricity. If you don’t have light in the evening, kids cannot learn; if we don’t have electricity we cannot run computers, we cannot run new technologies, maybe production has to stop. So, currently you look at how difficult it is sometimes to get electricity, people are paying fortunes in this country to get electricity. In order to have electricity 24/7, the average cost is close to 5 cents per kilo hour including the back-up generators for instance. There may be two back-up generators in case one fails, the second one has to operate, including the high cost for diesel, the maintenance cost, capital cost and the bills from the utility. So the electricity in Nigeria may be three times more expensive than in New York, and it shouldn’t be like that, particularly with Nigeria, a country rich in oil and gas. So, a project like the one being put in place by Pronton Energy offers an opportunity to improve this. Coming back to your question; ‘why is Siemens involved?’ We are involved because we want to provide service, we don’t see ourselves just as supplier of technologies and then say okay; the thing is sold, we don’t care anymore. We care throughout the lifetime of the project; we want a power plant that is working. So, we do everything possible to enable projects like this work as we support developers to make the scheme work, and ensure the equipment is reliable. There is a long time servicing agreement, there is abundance training provided to develop the staff and also ensure that engineering capabilities are transferred. How many of such project are you thinking of, in the immediate future in Nigeria? From my own point of view, Nigeria needs two things; one, it is better for her to advance with the ambitious power programme the government has set forth for the sector, which is a very good concept to start with. However, it is important to maintain the tracking and demands that things really happen, particularly a head of the elections. The second point is that the government should look at not only the large projects but she also looks at the smaller ones. So, today in the industry, every commercial business has an urgent need for electricity and they also have the capacity to pay for it. So, if it is just a regulatory change that would enable smaller businesses to purchase their own power from independent producers, and not necessarily always going over to the state grid, they could make a tremendous change in the landscape. For example, we have particular technology developed for Africa, the most modern advanced mobile gas turbine generation unit. This unit was designed particular for Africa to fast track power generation. Fast track power that can be easily installed within just a few weeks. It’s very efficient, it doesn’t need much fuel as previous technologies and it’s very reliable and can be provided in any location possible. It runs on both natural gas and liquid flow. So, this unit is called XTDA 45. It provides 40 megawatts within 40 days. So we can put this unit in anywhere in Africa within 40 days and generate 40 megawatts. If the cluster is on10 units, it means generating 400 megawatts in few months. Nigeria currently has about 4000 megawatts operating power plants. So within a few months one could increase the capacity by over 10 percent. How will you access your level of involvement in the Nigerian power sector compared to previous years? It’s hard to judge from the inside. Its better you judge it from outside. I hope that Siemens will be more visible than it used to be. It should be building many of the power stations in Nigeria. It’s a very robust technology that we are providing. Many of these units run on gas turbine which is one of the most reliable machines that exists in the markets right now. I remembered during the Obasanjo’s regime, Siemens signed an MoU to provide 10000 megawatts for Nigeria. What is the state of that MoU; are you still pursuing it or what has happened to it? Any MoU requires two parties to advance it. I mean the principle of the MoU; if you look at the Federal side, it is definitely providing a guaranty mechanism for power projects agreement. Ultimately, it requires just a commitment from the government to say it will stand behind this project and ensure that the payments for the financial obligation are going to be paid. There have been great achievements like the Azura projects where another mechanism was found in order to compensate for that which is a perfect financial arrangement that should be repeated in other projects, even though it took years for other international financial institutions and political stakeholders to key-in into the concept. From my own prospective, the ministry of Power could say it has worked successfully and it should be a bench mark for other projects. There are many potential international investments capital that would love to invest in projects in Nigeria. But it requires a strong sustainability and skills. The Azura financial arrangement will be perfect model to follow. What has happened to the MoU you signed with government to generate 10,000mw? Mind you the MoU was signed to support the establishment of power plant of up to 10,000 megawatts and we are still committed to it. Like I said, once we have the right incentive from the government side we shall be ready to roll out. We are still committed to what we said we are going to do. If we have the