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The Spark | Ignite / Connect / Achieve www.thesparkng.com CORPORATE CODE Generational Dynamics The future at this point isn’t technology anymore as a concept Eizu Uwaoma Scientifically, a generation is an average of 25.5 years. So in a century of a 100 years, the world is known to resets itself, and the direct effect of that is a shift in business models, career paths and the human capital pattern. In just one century, we’ve moved from the mechanicals to electrical and electronics again, with the last 25 years seeing more of internet and programming being the major career paths for young people. Locally, no one saw Interswitch, Flutterwave, IrokoTV, Jobberman or even Andela revolutionise their industries. Globally, who ever thought the biggest companies in the world would come out of nowhere in just ten years and take over companies that have been in existence for centuries. The Likes of Apple, Amazon, Google and Facebook are already amongst the first trillion-dollar companies the world has ever seen. Other than politics, individuals who control every generation economically usually come from those who leverage on the industrial dynamics of that generation. This is directly reflective on the current Forbes list as we have more tech billionaires in it than ever. It’s just the days we are in. According to the Pareto’s 80:20 Principles, 80 percent of the wealth and power of any generation will always be owned by less than 20 percent of that generation. The remaining 80 percent will work for and be controlled by the minority 20 percent. The good news is, the people and trend are reshuffled every 25.5 years. Now more than ever, Nigeria hasn’t been left out of that trend. From CcHUB to Flutterwave, to Interswitch to Andela, we see how these fast rising firms all come from the same trend. But, as that rush comes, just like every other rush and torrent, it bursts its channel. It’s sort of a quadratic curve of the law of diminishing returns. The need rises, and then there is a supply, then an oversupply that crashes the market almost suddenly too. The most practical example of this is what is leading to the shrinking of the Andela workforce in recently. The market seems to, all of a sudden, be going through an oversupply of tech talents, both locally and internationally. A direct manifestation of this law of diminishing returns on skill oversupply has been seen in the past weeks through the draw back on the Andela Business Model. In the five years since it was founded, Andela’s business model of training and outsourcing junior developers to global companies around the world saw it become a champion for local computer engineering talent across. And now they are laying off staff as they cant find enough placement for all of them. In the words of the chief executive Jeremy Johnson. “We haven’t been able to scale remote, junior placements, in part because boot camps and CS programs have grown rapidly over the past years”. My advice is that they ask how can they satisfy the taste for efficiency on those that they supply talents to. Now to the students and professionals of the tech space mainly made up of millennials, there is something that the current millennial, learning how to code as a buzz career path, is missing out. And that is the ability to solve problems in isolation with the skills they have. This current generation mainly of centennials and millennials are the ones that took a deep dive into the Internet. They literally live there. But they really don’t understand systems, thinking enough to apply that skill of programming or even social media engagements, to solving social problems without a big organisational based framework. If there is anything missing right now in our local ecosystems, it will be that. What the market is asking for are not just those with programming skills, but social disruption and revolutionary application of that skill. The future at this point isn’t technology anymore as a concept. It belongs only to businesses set up to revolutionise their industry using technology as an application. In a world where most basic inventions have been achieved, Disruptive Innovation is the concept to study, especially in relation to technology. The future isn’t for sophisticated technology, so simplify yours. In this emerging generation, people don’t have time and don’t want to be bothered to do critical thinking, especially millennials and digital natives. Use data to know where your market and data will be. The two drawbacks to technology-driven career paths would be its over supply. Another would be it not being efficient enough for small businesses (which make up a large chunk of Africa and even Nigeria) to hire. Also simplicity is another challenge. Technology, user experiences and information immunity from the syndrome of information overload is a side effect of this generation’s consumption of technology and data. Naturally, every customer gets edgier, lazier and more price conscious with time. The antidote will be convenience and cost saving for him. Andela hasn’t been able to crack that code with how they supply the market. The market needs a cheaper alternative to tech labour. And they’d get it. Whoever can’t supply that will be on a decline. This concept is in the heart of Disruptive Innovation. Staying relevant means being disruptively innovative. There are different types of innovations, but there is one that cuts cycle time and cost for the customer. That’s what Prof Clayton of the Harvard Business School defines as Disruptive Innovation. Disruptive Innovation is when a company (most times startups) produces and eventually masters the marketing of products that seems to be simpler, superior and more affordable than the prior products in the marketplace, thereby creating a new value network. It’s mostly by the newcomers. At this point, this underdogs take a neglected marketplace that the incumbent leader isn’t interested in because its focus is to make better products at a better price for profit. While they are it, the underdog sneaks up and takes them out. Disruptive Innovation is a strategy game of the underdog. And the current tech space market is in hunger for this. Disruptive Innovation is a strategy game of the underdog. And the current tech space market is in hunger for this. 36 fli @thesparkng
The Spark | Ignite / Connect / Achieve www.thesparkng.com Enabling small and growing businesses in Lagos State is an essential pivot for local and national economic transformation. According to the recently released 2017 survey by the Nigerian Bureau of Statistics (NBS) and the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), Lagos State is home to 11% of Nigeria’s small and medium scale enterprises. Aspiring entrepreneurs require deep and practical exposure to entrepreneurship and business management skills. Since our founding in 2000, FATE Foundation has provided pre-incubation, incubation and accelerator support to over 5,300 aspiring and emerging Nigerian entrepreneurs. About 70% of these entrepreneurs are Lagos State based, and they lead start-ups mainly in growth sectors such as agri-business, creatives, food and drinks, manufacturing, education and technology. The increasing growth in incubators, work spaces and start-up programmes from local and international enterprise support providers show the potential that is seen in the state. The Global Start-up Ecosystem Reporting and Ranking for 2017 released by Start-up Genome noted Lagos State to be “the most valuable start-up ecosystem” on the African continent worth US$2billion and second after Cape Town with respect to the number of start-ups. Conducting business in Lagos State as with any part of Nigeria undoubtedly comes with its set of unique challenges such as lack of power, poor infrastructure, limited funding and a business environment that is often lacking the right policy framework to effectively enable and harness our entrepreneurship potential. As with Nigerian entrepreneurs, Lagos State founders continue to prove their resilience, focus and perseverance to the world, despite the odds. In this Spark Magazine edition, I share the following 5 strategies to further enable the state’s entrepreneurship potential. The Knowledge Foundation: One thing Lagos State (unlike most other states) does not lack is start-up capacity-building programmes and initiatives. On any given week, a number of incubation programmes, start-up competitions, hackathons and enterprise training programmes are being conducted. Despite the availability of these programmes, there are significant gaps in the depth of enterprise and business management knowledge really required to grow a business. As a result, many entrepreneurs often acquire the barest minimum level of knowledge to run a business at the detriment of building deep skills that will empower them to develop innovative solutions. One of the ways to address this is at the foundational stage in secondary and tertiary institutions through the educational curriculum. It is important to note that this is different from technical and vocational skills that are usually taught as entrepreneurship programmes. Aspiring entrepreneurs require deep and practical exposure to entrepreneurship and business management skills particularly, financial literacy and market strategy through project based learning and practical/experiential learning. FEATURES Start-up Support Indeed, Lagos is a large market but, are you taking up this opportunity? Industry-Academia Linkages: The second way to address the knowledge foundation highlighted in the first point above is by creating effective linkages between academia and industry. As the commercial nerve center of Nigeria, Lagos State is home to a number of the country’s leading private sector institutions. There are apparent dissociations between the academia and the private sector, thereby impacting the provision of innovative solutions that are economically valuable and viable and will lead to the development of high impact enterprises. For example, it would be great to see endeavours between Yaba College of Technology and private sector companies in the creative space that lead to product solutions in the state using technology and design. This approach is feasible if on the academia/tertiary institution side, the curriculum is market aligned; focused on nurturing talent pipeline with the required technical skills and competencies; and clearly understands the market gap. Private sector will also need to provide support in terms of infrastructure and funding; have win-win strategies that enable Intellectual Property and technology transfer; and also provide placement opportunities for both students and researchers. Sector focused Infrastructural Support: Apart from general infrastructural challenges around energy and internet, most infrastructural challenges are usually sector related. Creating infrastructural plug and play platforms will help to enhance economies of scale, pool in relevant resources, enhance access to market and aggregate sectoral policy interventions which will help improve overall conditions for doing business. A few of these platforms exist through technology incubation centers and industrial parks, however capacity is significantly limited to address the demand and the design of the locations and operating processes require significant optimisation and technology adaptation. Enablers for Access to Capital: The Lagos State Employment Trust Fund (LSETF) has Adenike Adeyemi shown what can be possible with a focused attempt at providing financing for entrepreneurs. The LSETF initially established with a $25 billion fund by the Lagos State Government provides up to about N5 million funding of 5% interest per annum for Lagos based entrepreneurs. The LSETF model has shown what is possible with private and public sector support for start-up funding and is a model that can be adapted to address the significant funding gap for growth focused funding. Data is critical: Without data, we will not be able to have a view on entrepreneurship growth and impact in the state. Just as we tell entrepreneurs the importance of understanding and making decisions with data, so should those interested in fostering entrepreneurship be clear about their use of data in programme design, monitoring, evaluation and outcome assessment. Transitioning from Startups to Scale-Ups: While start-up support is very important, scaleup support should be the key driver of entrepreneurial focus in the state. The NBS SMEDAN survey earlier mentioned indicates that over 99% of enterprises in Nigeria are micro businesses. These are not the type of businesses that will grow the economy in the long term. There are negative socio-economic effects of focusing on just creating start-ups/new businesses without the commitment to initiatives that focus on growing and scaling the high potential/impact ventures. To create viable entrepreneurship ecosystems, policy programmes and initiatives should support the creation of an enabling environment which fosters the sustainability of businesses that grow and scale. These enterprises will be the ones that can drive demand across their value chains, create employment, spur innovation, improve competition and positively impacting income distribution. References: SMEDAN/NBS MSME Survey Summary Report – 2013/2017 | EFINA Access to Financial Services Survey – 2018 | CGAP Smaller Household Survey - 2017 | Gems4 Rice Cluster Mapping Report - 2016 fli @thesparkng 37
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