Doing business in Africa is extremely challenging. Reasons for this complexity abound. Inadequate infrastructure, lousy leadership, destructive and unproductive entrepreneurship as well as poor access to finance and markets hamper the continent’s capacity to grow entrepreneurially as well as economically flourish. The rate at which Nigeria’s corporate sector diminishes is notoriously high. According to the 2016 report by the Manufacturer’s Association of Nigeria, at least 300 medium and large-sized firms collapse each year. Without a significant improvement in the economic circumstances that Nigerians have faced since 2016, it will not out of place to assume that this number would have increased by now. It is also true that an average of 200 micro-firms umbilically survives on the life of each of these medium-sized and large-sized firm. This factual scenario presents a scary picture of the prosperity prospects challenging us. Added to the concern is the recurrent failures of strategic high-performance interventions provided by many top-notch management consulting firms, commercial banks, investment banks, business incubation firms as well as several other vehicles serving the same purposes. More terrifying is the fact that a lot of these collapsed firms must have received some measures of strategic assistance to prevent their buckling. The question is, why is it that business support schemes which create tremendously positive impacts in the lives of many organisations in other continents and countries fail to do the same in our environment? Why are many business organisations insensitive to the many strategic interventions support provided them through several qualified channels?
The high default rates of many companies testify to the failure of bank credits to induce the expected level of performance that will guarantee a payback at the right time. The fact is that many organisations are wary of bank facilities. Banks, on the other hand, survive by successfully lending to organisations that will take maximum advantage of the credit offered to unleash high levels of performance in profit and turnover. But that rarely happens as exactly as purposed. Recently, the bank of industry organised several sessions with many of its business service providers to find out why many of the organisation that received their intervention are not performing at the level initially anticipated. Ideally, one would expect that the highly rated business service providers engaged by the bank of the industry will effectively support client firms to successfully deploy and utilise the funds made available by the bank to achieve the desired performance results. That has not happened in several instances and for many reasons. For the sake of simplicity, we are to assume that all business service providers adequately possess the right set of expertise to deliver on these interventions. Some independent consultants have also over the years gained some notoriety for recycling client ideas into fancy reports for which they walk away with enormous amounts of money and virtually no net value additions at all. In effect, therefore, many client organisations acting based on their previous experiences with many consultants do not consider them capable of delivering net value additions to their business prospects. The summary is that several veritable channels for the facilitation of corporate and country prosperity in Africa, namely the banks, and consultants are catastrophically failing.
One primary reason for this less than desirable results is the un-contextualised deployment of solutions that probably worked in other countries and organisations whose circumstances differ significantly from that of the candidate in consideration. All candidates, whether they are at the level of nations, multinational organisations or even micro-businesses, face different realities. The difference in the solution that will work will always depend on the ability of the solution provider to identify those unique challenges that are probably responsible for their below benchmark performances and work out efficient resolutions for them. For example, the use of a logistics and distribution optimisation solution that terrifically improved corporate results in the United States of America for a Kaduna state-based organisation without far-reaching modification will inevitably lead to less than desirable outcomes. In this instance, it will be useful to, first, decompose the logistics and distribution model to identify the US-specific elements embedded in it and find ways of substituting them with the Nigerian (Kaduna state-specific) ingredients. The substitution also must be carefully performed so as not to mess up the entire model. Unfortunately, many consulting firms in Nigeria rarely contextualise tens and hundreds of management models that they deploy to many of these firms. One solution to this problem is to jettison ready-made models and create appropriately tailored intervention schemes that carefully addresses each of the identified challenges facing a candidate firm, institution or country.
Additionally, many organisations in need of strategic interventions as well as many of the service providers helping them without– knowing–it holds to the notion that all problems are resolvable with money. Therefore, if an organisation either has money or the capacity to raise finance successfully, it can always resolve the challenges confronting it by throwing money on it. The underlying – often unwritten mantra is that money solves all problems. But business success and prosperity are still determined more by entrepreneurial sagacity than the availability of capital. Business success is beyond the possession of financial and fixed capital. The right set of entrepreneurial actions will always deliver more than 90% of the performance successes that any firm desires. And this has become increasingly more valid with technological disruptions. Unfortunately, it requires a lot to refocus a client organisation to and help it to build a culture where 80% of its members are involved in constant strategic thinking and entrepreneurial level execution. Elementary economics teaches us that the entrepreneur coordinates the factors of production and by doing so bears the risks of the firm. The entrepreneur, therefore, digs for opportunities in risks which he faces daily. The more of the employees that possess these characteristics in a business firm; the more entrepreneurially focused the organisation will be. It also means that the firm will maintain a more robust capacity to identify, confront and solve its problems rather than papering it away with the money. An excellent example of the papering of issues with finance is a hypothetical organisation threatened by gossip and resentment among the workforce. Upon detailed investigation into the matter, the consultants traced the source of the problem to about three members of staff who are notorious rumourmongers who nevertheless are powerful influencers in the organisation. Albeit that the consultants would have managed the challenge better by recommending the sack of these three members of the team, they merely approved a series of long-term capacity building programmes for all other members in addition to the hiring of a new culture change Manager.
Another reason for the insensitivity of candidate firms to several interventions are the absence of a shared journey mindset among service providers. Excellent solution providers should always visualise themselves in the shoes of the candidate firm. A doctor who reimagines the trauma of malaria fevers he experienced in the past while managing a malaria patient is likely to be more productive and result-oriented in dealing with the patient. Many service providers raise a very tall wall between them and the candidate firms which they manage. Two possible disadvantages arise from this. The first is that it becomes more onerous for the service provider to visualise himself in the shoes of the client firm. Such nigh-absence of empathy often results in the focus of service providers on fees to earn rather than on expected deliverables. Their interest consequently skews to the accomplishment of the methodology performance checklist rather than on the expected impacts. Shared journey mindset in solution provision challenges intervention managers to sit together with candidate firms to understand their issues better as well as co-create the solutions necessary for their resolutions. It also means that client firms and solution providers should seamlessly work together in driving the execution as well as in the disciplined monitoring of those co-created strategic initiatives.
Many African firms are also insensitive to strategic interventions because the potency of such efforts has already waned in the series of implementation siloes adopted. The differences in required expertise in every turn-around effort, for instance, justify the use of diverse professionals at its different phases of implementation. Often, it is not the management consultancy firm that conducted the corporate health diagnosis that also supports the client firm in the articulation of the strategic pathway that should govern the intervention execution. Again, more specialised licensed organisations such as banks and capital market operators manage the financing of the intervention strategies. At each phase in this kind of intervention which typically starts with the identification of the challenges that the client firm faces to the full execution of the schemes are different silos that permit the loss of relevant information as well as the injection of sometimes un-useful information. Let us take, for example, that the candidate firm approaches a hypothetical Accenture to determine the real sources of the challenges that they face as well as what they need to resolve the problem completely. As typical, the engaged consulting firm finishes the problem identification and comes up with a set of recommendations in volumes of reports which they handed over to the business firm. The client organisation consequently finds out that there are some of the proposals in the submitted recommendations that they would prefer to handle themselves. They also feel that another firm (not Accenture) should handle other aspects of the recommendations for many different reasons which include cost factors. The first silo is the firm that identified problems and based on their findings suggested that part of the solutions needs to be executed by them. The second silo is the firm that has little or no background knowledge of the problems faced by the client but now has to oversee some aspects of the solution. Veritable information losses inevitably occur when moving from the first silo to the second and the third silo, which could be the financing of the solution sets, and so on will always lead. A solution in this respect is to develop and work with full-featured end-to-end solutions that do not allow either such strategic information losses or the injection of information not intended for use by the primary intervention managers.
Frontpage October 3, 2019