Businesses must adapt to realities
By Ken Gichinga | April 2nd 2021
The latest lockdown measures have undoubtedly introduced a new level of disruption to the economy and businesses are struggling to find some semblance of stability. And while this third covid wave might come and go, there is no guarantee that there won’t be further disruptions to the economy.
If anything, over the next 18 months, there is the possibility of two potentially disruptive political events – a referendum and a General Election. The prudent business leader must, therefore, take time to re-imagine the organisational business model and make it more resilient by embracing digitisation and preparing for the new economy. In many ways, technology has become the handmaid of modern business strategy.
So how does the new economy differ from the old one? In part, the use of technology provides a key distinction between the two. The old economy refers to industries that have not changed significantly despite advances in technology.
The centrality of manual labour and processes is a key characteristic of the old economy and often one which is commonplace in Kenya. In sharp contrast, the new economy broadly refers to the new horizons that result from the constant emerging of new parameters of new technology and innovations.
Restaurants provides a classic example of how to adopt to new realities. Prior to the covid pandemic in Kenya, restaurants relied on manual labour to handle daily operations. Once restrictions on movement were put in place, only those restaurants that had digital channels for ordering and delivery were able to adopt to the new environment.
The process of business transformation to the new economy can come with its own set of challenges; the most common being the natural tension between strategy and operations. While the strategic leader will wish to have deep thoughts about the long-term direction of the industry, the daily operational concerns of the business can prove to be equally demanding.
The only cure for this is in embracing a management style that frequently considers the short-term and long-term consequence of business decisions. The banker will, for example, need to balance between the short-term goal of setting up an additional branch to increase physical proximity to the clients and the long-term understanding that foot traffic will decline in future as more clients prefer the convenience of transacting from their mobile phones and computers.
Another common challenge that is often encountered during the business journey of transformation is in the misplaced notion that new ideas can only emerge from one person or one group. In such organisations, the work of strategy formulation is entirely conducted by the board of directors who at times might be unfamiliar with the daily issues that affect the business.
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The problem with this approach is that it ignores the basic truth that creativity is spontaneous and new ideas can arise from anyone including the CEO, the factory manager, the HR Manager or even the sales team. Chinese billionaire Jack Ma once recounted how he applied for a KFC job, alongside 23 other applicants who were all accepted while he was rejected.
Perhaps a little more interaction with this young man could have revealed the entrepreneurial genius that was in him, thereby setting off events in an entirely different direction. Such stories should not only embolden organisations to have an open mind, but should also inspire a new culture of wide consultation leveraging on all internal and external resources in search of the next big idea.
In many instances, companies easily overcome these first two challenges and get to the point where they can recognise opportunity that will transform the organisation. In his classic book Deep Work, Carl Newport writes “To remain valuable in our economy, therefore, you must master the art of quickly learning complicated things.
Mr Gichinga is Chief Economist at Mentoria Economics
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