My last visit to Nairobi was right after Brexit. As everywhere else, this was a major topic of conversation. In a casual chat with a group of CEOs, we talked about the uncertainty that the British move has created, and we went on discussing other factors that create uncertainty.
I ventured that African companies may be at advantage relative to Western ones. Being used to compete in instable environments with sudden regulatory changes, they develop strategic agility, and are better at adapting to sudden change.
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One example: Computer Warehouse Group (CWG) started in 1991 as a reseller of computer equipment. The business grew to sell hardware, software, and communication systems. In 2010, the Central Bank of Nigeria banned the use of ATMs outside bank branches. CWG’s ATM sales fell off a cliff: from $35 million down to $0. The company was at the brink of disappearing. However, CGW was able to shift their strategy and corresponding business model from an IT provider to an enabler of IT operating in the world of cloud computing. By 2013, the company was listed in the Nigerian Stock Exchange.
Environmental change is a constant in business. Adaptation should be in our radar screen permanently. But it’s in the presence of sudden change that strategic agility – to use a term coined by Yves Doz from INSEAD – proves critical. It’s on the basis of agility that companies that operate in instable environments can outcompete established companies that move slowly.
The CEO of a Nigerian real estate company told me once: “They call us cheetahs.” He referred to how quickly they are in making business deals. But he could as well have referred to how quickly they adjust to changing circumstances, like the CWG story illustrates.
How can companies develop strategic agility?
Thanks Africa for this exciting message on your blog message … the critical role of “contextualizing theory” and how firms can respond to strategic agility!
Believe me or not, I actually joined last month a conversation on the issue of the (1) Brexit and its implications to the East African Community (EAC) with some East African University Professors and research scholars, (2) On … why the EAC has severed its partnerships with the Economic Partnership Agreement (EPA) with Europe in early July, and how will this impact local businesses which have been exporting raw materials to the European market?
After a long and thorough discussion, we came to agree that strategic agility can only be managed successfully when both context and theory have elements of “fit”. The Brexit is a European issue happening in a European context, and that it may and will have affected other Eurozone countries. However, the context of the EAC seemed very different, still decentralized (unlike the EU) in making key Union/bloc issues. The EAC will now pay close attention to what has happened in the EU, and perhaps draw some lessons going forward, but it will remain contextually focused in the region.
The EPA issue resonated with one of your previous call for African countries to industrialize! The reason why EPA has been rejected by the 6 EAC countries is simply because it has been seen not promoting a space for industrial take-off in the region despite the incentive it offers … e.g. duty-free access to the EU markets. Certainly, horticulture business firms in Kenya and Tanzania, for example, will be affected by this decision! However, these firms (horticulture or agricultural products) can now respond to a new market … the EAC one, where industrial initiatives are currently been promoted across the EAC region. This is what brings us again to your blog message Africa …. contextualizing theory so as to respond well to strategic agility 🙂
Aloys, thanks for illustrating us about EAC and EPA. It will be great if East Africa companies focus more and more on the “internal” market and this helps boost industrialization efforts.