When asked at an analysts briefing whether NMB would venture into store banking after Century Bank and Kingdom, then deputy group CEO James Mushore answered tersely: “We don’t do business in the supermarkets.”
BY NDAMU SANDU
He would tell analysts in subsequent briefings of the bank’s strategy of targeting the high net worth individuals.
It was the norm during that time to have the rich clients as a niche market resulting in a number of banks putting stringent requirements that would bar those from the lower class.
A revolution that happened years later saw the introduction of point of sale machines and banks jostled for supermarkets to do business with.
Banks tussled for the bottom of the pyramid following the introduction of mobile money. The previously shunned market could now have money in the wallet, thanks to the simplicity in the know-your-customer process by mobile operators. In one swoop, banks were left clutching at straws as mobile money spread its tentacles.
Latest statistics show that mobile payments constituted the bulk of transactions in 2015, accounting for 87,9% of transaction volumes. Point of sale accounted for 5,64% of the transaction volumes.
Disruptive innovations have swept across all sectors of the economy, leaving behind casualties — the slow learners and those resistant to change.
The theory of disruptive innovation was first coined by Harvard professor Clayton Christensen to explain the phenomenon whereby innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost are the status quo.
Remember Zupco had monopoly in the provision of transport service? The deregulation of the transport sector in 1993 took it by surprise and reduced it to a pale shadow of its former self. Commuter omnibuses came on board and took over the provision of urban transport services.
Technology specialist Norbert Matuku said products of disruptive innovations had a different set of attributes from the existing products that were normally produced by established firms.
“The advent of commuter omnibuses [kombis] into the transport ecosystem led to the demise of Harare United as the domineering player in urban transport,” he said in a paper on disruptive innovation. He said commuter omnibuses addressed the time factor as passengers could not afford to wait for hours, as was the case with the conventional buses that required 76 passengers to fill up.
Fixed telephony service was at one time a symbol of status as people received calls at wealthy neighbours’ homes. When the monopoly of the then Postal and Telecommunication Corporation was broken, mobile telephony services came on board offering a convenient service as subscribers would move around with handsets.
Mobile operators have not been spared as WhatsApp, Viber, Skype and voice over internet protocol applications have eaten into their revenue streams.
A recent report by the Postal and Regulatory Authority of Zimbabwe (Potraz) showed that the proliferation of alternatives for communication such as WhatsApp and VoIP solutions such as Skype and Viber had led to a decline in international traffic.
Data from Potraz showed that international incoming and outgoing traffic declined by 0,3% and 1,2% respectively in the third quarter ended September 30 2015.
Analysts say disruptions in the economy were fuelled by the transition of the economy to the bottom of the pyramid and the advent of ICTs.
Business strategist Dennis Magaya said the upper and middle classes were collapsing while credit dried up as the economy was driven by smaller denomination transactions.
“We are becoming a $1 economy. As such, traditional corporates struggle to follow the money in the informal sector,” he said.
Magaya said ICTs were changing all business fundamentals on a massive scale and speed.
“It’s not about cash to invest, but the ability to adopt and innovate. In most cases, the ICT investment required is minimal compared to the investment in mind- set change,” he said.
Magaya said companies had to adopt business models by continuously validating their core business, core competencies, core assets, core products and core customers to create value and growth.
Companies, he said, should also design and implement a holistic digital strategy, avoiding ad hoc or reactionary approaches.
“Ask yourselves how digital strategy can be used to increase customer experience, increase service uptake, improve business efficiencies and most importantly in the Zimbabwe economy, to drive costs down,” he said.
He said companies had to review and change business processes to accommodate innovation, market shifts, increase customer demands and reduce costs.
Magaya said disruption was creating serious strain on skills and experiences required to lead and manage business and in many cases, “leadership is stuck in the past and not continuously training”.
Are Zimbabwean companies ready to embrace innovation?
Matuku said while senior managers and the “old guard” did not want to admit that they were a stumbling block to disruptive innovation by continuously focusing on incremental innovation, the reality was that big firms would collapse if disruptions were not adopted as part of the strategy.
“Organisations should adopt a structure that allows the accessing and integration of the acquired knowledge into the firm’s innovation process. Fighting disruptions is not the answer, it is a futile exercise. Established firms should therefore thrive to take lead in disruptions,” he said.
Magaya said the drive towards innovation had been slow and big corporates were being conservative.
“If you exclude the use of mobile and internet, there will be limited innovation. Companies take innovation as an accidental process rather than a strategic approach. As a result, you don’t find a department or a process or structure specifically designed to drive innovation,” Magaya said.
He said there has been limited investment at the low end of the market and in the end “innovation is generally called ‘kiya kiya’, which are business short-cuts aimed at survival rather sustainable drivers of value and growth”.