By Austin Okere
The popular saying used to be that big fish would
eat small fish. This has since changed significantly in the light of recent
happenings in the global economy; UBER, until recently a relatively unknown
company out of Silicon Valley in California employs 160,000 drivers today, and
is adding an average of 20,000 drivers every month.
This transport services disrupter is now valued at
$41b. Another previously obscure company with similar roots, AirBnB, has over
1.5m accommodation on her platform, and is now valued at $25b. Upwork, a
platform that connects businesses with freelancers have gone from zero to $1b
revenues in just five years and projects to reach $10b in the next 5 years.
The new disrupters are not confined to just North
America and Europe. China’s foremost e-commerce business, Alibaba’s recent
listing on the New York Stock Exchange broke all records with a valuation of
$170b. DiDi Kuaidi, a Chinese transport platform is pooling over 8m drivers and
serving 10m commuters every day, in a consumer to consumer model.
Africa leapfrogs the trend
Here in Nigeria, our own Company, CWG Plc
(www.cwlgroup.com), has seen a record uptake of 6m new Accounts on the Diamond
Y’ellow Account platform; a mobile banking product that she white labels, and
recently launched in conjunction with MTN (the largest Mobile Operator in
Africa)
and Diamond Bank, targeted at the 60m MTN subscribers in Nigeria.
The new saying today is that fast fish will eat slow
fish. Nimble, highly innovative companies are taking advantage of ubiquitous
broadband and smartphone penetration to push business models that ride on
providing virtual products over a virtual channel, thus pushing transaction
velocity to the limit, and securing a bigger slice of the pie in the process.
These companies, primarily in the technology
industry are rapidly disrupting long standing businesses in a model that would
not have been possible as early as a decade ago, and racking up huge valuations
in the process.
Welcome the Czars of the new sharing economy, also
sometimes referred to as the gig economy, or the on-demand economy. WhatsApp,
founded in 2009 already handles 10b more messages a day than the SMS global
text-messaging system, and was recently acquired by Facebook, another
technology behemoth for $19b.
Meeting a pent up demand
This new business model is simply meeting a pent up
demand of consumers. Today’s customers demand to have their products and
services delivered to them wherever and whenever, and do not necessarily want
to cut a cheque or reach for their wallets to pay. They usually bank online and
are less likely to have paid a visit to their banks in the past one month.
Disrupters such as Apple seem to have heard them very
clearly and is working round the clock to provide a seamless payment solution. ApplePay
currently serve users of IOS devices who have registered their credit or debit
cards. It is used to pay for goods at shops that have near field communication
(NFC) readers.
Apple is now developing a peer to peer option, which
puts it directly in competition with more established players such as PayPal.
It is not only Apple that is circling around PayPal’s lunch. SAMSUNG has a
similar product, and Google used to have Google wallet.
Cloud Computing is finally here
It seems that Cloud Computing has finally come of
age, as these disrupters typically deliver their platforms over the cloud. Oracle
has started offering cloud services including databases. Microsoft’s only
growing business is her cloud services. Amazon’s only profitable business is
her cloud services, which now includes online database as a service.
Our own company, CWG Plc, launched her new
subscription based business model christened CWG2.0 on the Cloud Platform. It enables
the business to seamlessly scale globally, without having to make any
investments in brick and mortar.
The global economy seems to be moving from getting
supply from companies, to a crowd sourcing model in a peer to peer way.
Regulation of this ‘new normal’ is quite a challenge because regulation is
backward looking while innovation is forward looking, so there is always a gap
which creates considerable tension. It takes quite some time for regulation to
catch up with technology, so there is a period of time where the disrupter seem
to be operating in “no man’s land” as far as the law is concerned.
Data security is a concern
Another major challenge in the new economy is data
security. The bigger problem is about governments getting interested wherever
there is large amount of data, and seeking to gain access to it, perhaps for
tax purposes, security or otherwise. How do the new digital businesses, which
typically generate tons of customer data handle this dilemma, given their
promise to customers to respect the privacy of their information?
A research by the Financial Times shows that the UK
government, which is seeking to extend its surveillance powers has paid
telecoms companies, including BT, Vodafone, EE and Virgin Media more than £37m
for data on customers and their activities since 2008. The recent celebrated
case between the FBI and Apple in the US regarding access to a shooter’s iPhone
is a further illustration of this point.
There is a lot of concern around the disruptive
force of digitalisation and the need for inclusive growth and job creation. The
impression is that digitalisation kills jobs through automation. The reality is
that for every job lost through digitization, 12 more are created, but you may
need retraining and retooling to benefit. In reality, digitization provided a whopping
$193b boost to world economic output and created 6m jobs globally in 2011, equivalent
to a 1.02% drop in the unemployment rate.
I believe that the fervent clamour for increased
minimum pay is misplaced, especially if the workforce is unemployable. A more
sustaining discussion will be the training of a marketable workforce, empowered
with the right skills of learning how to learn in order to adapt to the fast
changing global economic landscape, than the traditional rote learning in our
schools that churns out graduates that are untrainable with new skills.
It is very clear that we are at the throes of the Fourth
Industrial Revolution. A simple analogy for the Fourth Industrial Revolution is
a train, whose drivers are the entrepreneur disrupters. The passengers are the
global customers with pent up demand for value and convenience. The Public and
Traditional Private sector can stand in front and be crushed, stay on the
platform and be left behind, or come along for the ride in progressive
partnership. Companies who fail to adapt to the new imperatives of this global
revolution should prepare to write their obituaries.
Austin Okere is the Founder of CWG Plc, the largest
Systems Integration Company in Sub-Saharan Africa & Entrepreneur in
Residence at CBS, New York. Austin also and serves on the World Economic Forum
Business Council on Innovation and Intrapreneurship
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