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Tuesday, August 06, 2019

Okere unveils 5 forces for social and global impact - ITREALMS

Being a keynote address by Austin Okere at the ACT 2019 Breakfast Dialogue on the 25th of July, 2019.
With Tunde Falawiyo at 3rd ACT Foundation breakfast dialogue in Lagos,
 where the "Austin's 5 Forces Model for Analyzing Sustainable Growth" was unveiled.
Good Morning distinguished Ladies and Gentlemen, it is indeed an honour and a pleasure to share my thoughts and insights at this third ACT Breakfast Dialogue.

I do commend the ACT for the good work they are doing in the multi-stakeholder platform to build relationships and leverage on core knowledge, skills, resources and assets of all sector players to facilitate the necessary scale needed to drive social development in global progressive order.

The leadership challenge is clear. It will be impossible to achieve true social and economic development without collaborative action by business, government, NGOs and civil society, while Effective governance creates frameworks for stronger institutions, transparency and respect for rule of law.

After Founding and listing CWG as the largest Security in the Technology sector on the NSE, I turned my effort towards enabling shared prosperity through mentoring Businesses to scale geometrically to optimize the jobs they create through the Ausso Leadership Academy.

Being a Consultant at the SDG Africa Centre in Rwanda has opened my eyes to the global framework for economic growth that protects the fundamental pillars of humanity and the planet. The SDGs are about People, Planet, Prosperity and Peace – and about driving development in an inclusive way that leaves no one behind.

I am pleased to announce that I will be using this platform to launch the new model that I have developed called Austin’s five forces model for analyzing sustainable growth (A5F) – You will be the first to see it (of course besides my son, Omimi Okere who helped me with the artwork of the diagram).

I see Five Forces driving sustainable growth as follows – Organisations, Population, Enablers, Infrastructure, Socio-Political Environment. I will use the A5F to talk through my presentation and end with a short video on Champion testimonies at the Ausso Leadership Academy.

Organizations

The more and of scale in the polity, the more jobs they can provide, and the better for social mobility and sustainable growth

Many of those in a society stuck at the wrong end of the Gini-coefficient is majorly locked out of the ‘consumption pool’ for a variety of reasons; including affordability, availability and awareness.

According to Efosa Ojomo, a research fellow at the Clayton Christensen Institute for Disruptive Innovation, the way we define competition, and the method employed by companies to assess the competitive landscape leaves out the most important competitor of all - non-consumption.

And nowhere is this feisty competitor more prominent than in emerging markets. While companies compete for the few people in the consumption pool, their fiercest competition is the huge segment of society that is not consuming.

Finding ways of including this large demography will not only boost production, sales and distribution but will also provide additional jobs to meet the increased demand. This sets off a self-sustaining cycle of growth and further inclusiveness.

Entrepreneurs, investors, and managers can invest in what Harvard Business School Professor, Clayton Christensen calls ‘market-creating innovation’ to transform complicated and expensive products into simpler and less expensive products, making them accessible to significantly more people in society, for instance, Indomie Noodles

Market-creating innovations pull people from non-consumption into the consumption pool. Companies that engage in these types of innovations are the engines of economic growth in an economy.

A perfect example of a market-creating innovation is Henry Ford’s Model T car. Henry Ford was able to manufacture a car that was inexpensive enough for an American with a modest income to purchase.

He also made the car easier to drive so that owners would not have to hire a driver or need special expertise. Some of Ford’s innovations were the assembly line which reduced the Model T chassis assembly from 12.5 hours to 1.5 hours.

Ford passed on the cost savings to the new class of consumers of automobiles such that by 1925 the price of his car had plummeted from $825 to $260.

Most developed economies are built of the back of the deep entrepreneurial activity

Just imagine if we could mentor each of the 36,994,578, micro-business to scale to the point of adding just one more employee - this will absorb all the 21m unemployed in the working-age population with much more leftover for immigrants

Population

While society in the past was split between the haves and have nots, society today is split more along the lines of those who are included and those left behind. This inequality is most heavily felt in emerging markets, where 80% of the world resides.

Take for instance fast developing India. While globalisation has significantly increased GDP, it has also expanded the already wide chasm between the rich minority and poor majority.

For instance, seven companies on Fortune’s 2016 Unicorn List were in India, mostly in the e-commerce sector. That’s more than South Korea, the Netherlands and Canada combined.

However, the 12.5m employed directly and indirectly by the ICT sector and contributing 25% of India’s export revenue, accounts for only 2.5% of the national labour force.

The bottom line is that India is an agrarian society with more than half the population engaged in agriculture and allied industry. By cutting subsidy on irrigation and other rural needs and switching farm output from food crops to fertiliser intensive cash crops, the poor have gotten poorer.

On the other end of the chasm, dollar billionaires in India have jumped to 110 in 2015; the third-largest after the US and China, while dollar millionaires have crossed the 250,000 marks.

This is what the Canadian political philosopher, Crawford Macpherson describes as the ethic of possessive individualism.

In his book, Innovation and Entrepreneurship, famed author Peter Drucker wrote about an entrepreneurial society and its impact on economic development. An entrepreneurial society is one that it is either prosperous or on a path to prosperity; different from mere growth.

Economies can grow without becoming prosperous. We saw this happen in the 2000s when many African economies, such as Nigeria, Angola, and Equatorial Guinea, were the fastest growing in the world but failed to create prosperity for millions of their citizens

A close examination of those left behind shows that they are mostly the youth of our society. For example, while the unemployment/underemployed rate in Nigeria is 32.6%, the rate among the age bracket of 15-24 years is as high as 58.3%.

The sheer size of unemployed youths is surely a time bomb waiting to explode, as they are left to be seduced by terrorist ideals or other antisocial proclivities out of desperation.

A highly engaged Labour Force earn salaries for an expanding stable middle class, that ensures purchasing power, and they pay taxes for Infrastructure development and social welfare

By 2050, Africa’s population will double, reaching 2.5b people – just about the current combined population of India and China. In Nigeria, the working-age population increased from 111.1 million in 2017 to 115.5million in 2018

What is worrisome is that while the population was growing at a rate of 2.6%, the GDP growth rate was just 1.9 %, lower than that of the USA 3.1% in Q1 2019 and 6.9% and 6.6% China and India respectively

Enablers

Enablers refer to Regulators, Technology, Education, Healthcare, Financial Institutions and Social Impact Organisations

While Regulators can either be a source of tailwind or headwind depending on your clime, Technology such as Artificial intelligence, Machine Learning, Virtual, Augmentation, Virtual Reality and Big Data has drastically disrupted the landscape, with the most impact felt in technology platforms

The biggest impact of technology has been in Platforms, such as Facebook, Google, Amazon, Uber and Airbnb. There is hardly an area of economic and social interaction that is left untouched by these Platforms in some way or form.  -Source: BTC Manager.

Two major areas in which the Platform Czars have riled the establishment are in transportation and hospitality; the major ‘culprits’ being Travis Kalanick of UBER and Brian Chesky of Airbnb.

UBER, until recently a relatively unknown company out of Silicon Valley in California, employs 3m drivers and 75m riders globally today. This transport services disrupter is now valued at $82.4b and operates in many major cities across the globe.

Airbnb, a previously obscure company with similar roots, has over 5m listings worldwide and is now valued at $35b.

These Platforms provide a means of significantly extending services at low-cost efficiencies, and as a result draw many people into the consumption pool, while also creating many jobs along the value chain which would otherwise simply not exist

The ubiquity of broadband and the proliferation of smartphones has extended the life of Platforms and made services that were hitherto unavailable to a large section of the population possible.

This heralds an era of unprecedented inclusiveness. For instance MPESA today has more than 60% of Kenya’s 33 million mobile users and in 2015 transacted $28m on her platform – equivalent to a whopping 44% of their GDP. Similar applications have metamorphosed across Africa, and Mobile Money services are today generating 6.7% of Africa’s GDP.

While Platforms will bring inclusiveness and bring a lot of people into the consumption pool, there are major regulatory challenges that have to be surmounted as a result of issues that were not foreseen when the governing statutes and regulations were enacted.

To fill the regulatory gaps these Platform behemoths have resorted to what could be referred to as spontaneous deregulation, which has arisen as a result of Platform disrupters ignoring laws and regulations that appear to preclude their business model.

Believing in the efficacy of their utility model and its appeal to pent-up global demand, these disrupters seem to see many rules and regulations as belonging to the past and impractical for today’s innovative clime.

They therefore simply ignore them, opting for their own version of self-regulation, usually based on a mutual rating system between service providers and consumers. Facebook has had to face Regulators in the US and Europe over this, while it has claimed UBER Founder Travis Kalanick

A bigger dilemma perhaps is the placement of regulation. For instance, who should regulate the plethora of Fintech companies springing up globally and providing Platforms for financial inclusion; should it be Central Banks or the Communications Commissions? The jury is still out on this.

Another major worry is the issue of the Platform provider having an undue advantage by also being players on their Platform. This makes them the judge and jury in their own case. A glaring example will be Facebook and her Libra Cryptocurrency which is threatening to replace the US Dollar as the global reserve currency

Education one area where there is a need to reach far more than our traditional schools can cater to. Here again, leveraging on online learning Platforms to provide Massive Open Online Courses (MOOCs) are coming to the rescue.

Research and Markets forecasts that e-learning will grow to $325 Billion by 2025 from $107b in 2015; perhaps becoming the future of education

Infrastructure

Infrastructure speaks to Power, Ports, Transportation, Communication and Housing. By 2050...the infrastructure needed for the for 2.5b Africans will be unprecedented in the history of humankind.

700m housing units, 300k schools, and 100k health centres. Can you imagine Nigeria without a significant network of Rail or a functional underground transport system in 2050?

The UK has Underground Tube system moves 1.35b people annually and has been operating for about 150 years. African countries such as Ethiopia and Kenya are making strident advances in rail transportation

Socio-Political Environment

Nothing impacts the attraction of Capital and rapid Economic Development like a stable socio-pollical environment. Nigeria is a classic example of a nation rich in-laws but weak in enforcement. The blind application of the law without regard to status, colour or creed is what enshrines deterrence and increases the value of the real estate of the postcode.

There is no doubt that the recent imposition of a hefty $15b fine by the US Government on German carmaker, Volkswagen, for emission results falsification will cause contemporaries to think twice before yielding to any similar yearnings for shortcuts.

It is the pursuit of deterrence that drives developed countries from sparing any high ranking members of the society who fall foul of the law, not least their Presidents, who are held to a higher account. The celebrated case of former American President, Richard Nixon in the Watergate scandal is a good example.

On this score, we have a lot to do to change the negative perception of the Nigerian (and indeed African) postcode. The rule of law is more about enforcing existing rules than creating new laws. Any society that does not abide by some code of conduct whether in public or private matters tend to become chaotic, and virtually ungovernable.

The whole society eventually descends into a macabre dance of impunity. Conscience is thrown out, and justice is on sale to the highest bidder. According to Yury Fedotov, Executive Director, United Nations Office on Drugs and Crime,

“Corruption represents a major threat to the rule of law and sustainable development the world over. It has a disproportionate, destructive impact on the poor and most vulnerable, but it is also quite simply bad for business”

CONCLUSION

Notice that I have not included natural resources such as Oil and Gas or other commodities as a significant factor in sustainable development. These are a bonus that the state can capitalize on to accelerate growth but are no means a necessity

There are many successful nations with no significant natural resources that have done very well, such as Singapore and Dubai, and some with significant natural resources that have also done well such as Norway

The difference between the poor and rich nation does not depend on the available natural resources, there is, therefore, no substantiation to the notion of substantial natural resources as a curse – otherwise, why is Norway not cursed?

Japan has limited territory, 80% mountainous, unsuitable for agriculture or farming, but is the second in the world's economy. The second example is Switzerland, it does not grow cocoa but produces the best chocolates in the world

Executives from rich countries who interact with their counterparts from poor countries show no significant intellectual differences. The good news is that racial or colour factors also do not evince importance: migrants heavy in laziness in their country of origin are forcefully productive in rich European countries.

What then is the difference? The difference is the attitude of the people, moulded for many years by education and culture.

When we analyse the conduct of the people from the rich and developed countries, it is observed that a majority abide by the following principles of life: Ethics, as basic principles, Integrity, Responsibility, The respect for Laws and Regulations, The respect of the majority of citizens for the rile of law, The love for work and pride in their work, the effort to save and invest, The will to be productive and Punctuality.

In poor countries, a small minority follow these basic principles in their daily life. We are not poor because we lack natural resources or because nature was cruel towards us. We are poor because we lack the right attitude

According to the ancient Greeks, the founders of modern civilization, there are three kinds of people in any society

Idiots - all out for his personal pleasures and his personal treasures

Tribesmen - does not necessarily mean belonging to a certain tribe; which is not bad in itself, but people with a tribalistic mentality; their primary, only and ultimate allegiance is to their tribe. Their tribe is their god and their religion is tribalism

Citizens - the ideal person, they called the citizen; someone who has the skills and the knowledge to live a public life, who is able to live a life of civility.

The citizen recognizes that he or she is a member of a commonwealth and thus strives for the common good. The citizen knows his right in society but also knows his responsibility to society

The citizen can fight for his right but always with an awareness of, and with the respect for the rights and interest of others. Of their neighbours, of the smallest minority and of the worst of his enemies

Indeed, no sovereign can make any significant advancement when the number of idiots and tribesmen far outnumber the number of citizens... take a guess at what percentage of Nigerians behave like idiots, tribespeople and citizens. Do the results shock you?

"Law of Sovereign Advancement"

Nigeria is her people; If we want to see change, we have to start by being citizens of our country.

Let me end with a quote from Maria Robinson that says, "Nobody can go back and start a new beginning, but anyone can start today and make a new ending."

With initiatives such as this by ACT, we can indeed start today to make a new ending towards engaging for growth for social and global impact.

Thank you and God bless you!

*Austin Okere is the Founder of CWG Plc, the largest ICT Company on the Nigerian Stock Exchange & Entrepreneur in Residence at CBS, New York. Austin also serves on the Advisory Board of the Global Business School Network, and on the World Economic Forum Global Agenda Council on Innovation and Intrapreneurship. Austin is a Consultant to the Sustainable Development Goals Africa Centre in Kigali and now runs the Ausso Leadership Academy focused on Business and Entrepreneurial Mentorship

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