by Lionesses of Africa Operations Dept
There was a time when if you wanted to travel from Kenya to New York, the only option was a boat. Telegrams were the fastest way to get a message any distance and if a child left to study or live and work in another country, an occasional letter would be all that one could hope for. These days we have got as close as possible to Teleportation (moving from A to B instantaneously), without actually climbing into a machine and being transported to another place, as Zoom/Teams have become commonplace. We are now suddenly ‘transported’ into the office or living room of another with such ease. Indeed perhaps teleportation is not so far off – they have recently invented the ability to have a hologram placed in front of you that you can touch and the sensation will be just as if you are shaking their hand – incredible! Of course not everything is changing – on the subject of letters home (or occasional zoom), to be fair in this area – plus ça change, plus c’est la même chose!
However, this change from boat, to train, to car, to plane, to our very own ‘teleporter-lite’, called Zoom happened over centuries, but the speed of change has accelerated exponentially in the last few decades. As fans of Downton Abbey will know (shown in over 220 countries, and viewed by a global audience of an estimated 120 million people – so we are clearly not alone in being a fan!), modes of transport moved from Boat, to Train, to Plane and Car (yes, we too are still in shock over Matthew Crawley!), changes constantly picking up the pace and wireless, television (black and white) and so on moved in. Can you imagine what His Lordship would have made of the mobile phone, or Zoom?! Certainly the pace of change in just our Grandparents and then our Parents’ life has been massive, our children must be blown away to think in just our lifetime the first personal computers arrived (about 45 years ago) and the mobile phone appeared as we discussed last week (here)!
It is this acceleration that we have to understand is here to stay and as always with acceleration, it moves us faster and faster whether we like it or not. We have to either grab on or we shall be left far behind.
50 years ago if we had an amazing product, we had to build into our businesses such departments for production, distribution, marketing, accounting, and a few other extra cost centres in order to get it from pilot project, to product, then out the door and into the hands of our customers.
10-20 years ago if you as a business wanted something extra immediately, rather than wait to build that department onto your business, you could outsource. Apple Inc still does that as they do not touch the manufacturing process. As Goldman Sachs say in their excellent ‘A Survivor’s Guide To Disruption’, (‘GS1’) here: “Apple…is organized entirely around the customer experience and does not manufacture any part of the iPhone. In fact, Apple has so little to do with the actual production chain that when a customer purchases an iPhone it is quite possible that no Apple employee has touched any part of that phone.”
More recently and certainly within the last 5 years we have suddenly seen Outsourcing being turbo-charged and called ‘Everything-as-a-Service (EaaS)’ as Steven Strongin calls it in his equally insightful research, ‘The Everything-as-a-Service Economy’ Research paper (‘GS2’) here. In recent years this EaaS has been invented, accelerated and now exploded across all major centres of the globe. Exponential acceleration – “Hold onto your Hats!” as they would say in Downton Abbey!
At its most obvious we see how we are now able to export and sell to Europe without either needing to set up an office there (a serious cost centre), or requiring a Distributor who would take out much of the profits. Instead we can now call up Amazon, deliver to one of their huge state of the art warehouses and use their fulfilment centres, without once setting foot anywhere near the EU. Deliveries and returns handled while you sleep. Obviously others have now set up in competition to Amazon in fulfilment and so pricing will start to fall, but still – how easy was that. In Amazon’s case they do not white-label (allow you to put your name and logo on their service), but some of their competition are very happy to, so it will carry your name, yet the engine room, all the regulation, health and safety, employees, trucks, boxes etc will be employed, run and still owned by the experts in their field. This is important – they are experts in logistics, you might not be.
Likewise in finance you can set up your own ‘Crowdfunding’ page to raise money for your business or cause. Taking it one step further you can now white-label your very own ‘Crowdfunding’ site and attract both investors and those for financing or grants.
Want to really push the boat out? Why not become a Banker (be careful what you wish for, lunches were not what they used to be in this industry!)? That too can be white labelled under EaaS – just ask the great Anne Boden who jumped into this very male industry and founded her own bank – Starling Bank. Now she is really putting the Cat amongst the Pigeons as she launches ‘Banking-as-a-Service’. Starling Bank have the UK and EU regulation covered, the engine room working at full steam – you just have to think of a really cool name! As they say: “We’ll take on all the regulatory aspects, scheme compliance, Anti Money Laundering (AML) and Know Your Customer (KYC) so you can zero in on your user interface, customer experience, PR and marketing.”
Anne is not the first and will not be the last, for example, Standard Chartered launched ‘Nexus’ their ‘Banking-as-a-Service’ offering in March 2020 in Indonesia.
Just thinking about the costs involved in setting up our own bank 50 or even 10 years ago brings water to our eyes, but here today, we can click our fingers, jump through a few hoops (there is still AML and KYC to be covered) and Bingo! you can attach a Bank onto the side of your business. Hmmm, ’Lionesses of Africa Bank’ has a certain ring to it, doesn’t it?!
“From technological infrastructure to manufacturing to delivery and after-market services, companies no longer need to do it all. Instead, they can rely on third-parties for many of their needs. As a result, firms can better direct their resources to their areas of competitive advantage – concentrating their investments rather than diluting them by spreading them thinly everywhere.” – GS2.
But (and you knew there was a ‘But’ coming). For all the opportunities this brings, this is a nightmare for the incumbents who are not aware of the ease at which they can now be attacked. We wrote last weekend about timing being everything (here) and how incumbents were having a rough ride and how Sir Richard Branson has said that “…the most important thing to remember is that the best time to go into a new business is when it’s being run badly by others.”
This ability to attack just got a great deal easier. This is why one has to appreciate this risk, look seriously at one’s own business and admit to oneself where the business’ strengths and weaknesses lie. Are their others, who are leaders in that particular weak spot of yours, who can do it better?
This is not a failure – this is actually strengthening your business. Why carry that weakness, trying to fix it, throwing money at the problem…? Exactly because we have moved on from ‘Outsourcing’ to ‘EaaS’, it is easier than ever for companies to concentrate on their core – what makes them GREAT, and bolt on the rest. The fact they are not ‘bolting’ on just anyone, but the leaders in that particular field, and then white-labelling it so it appears if this is all one big happy, incredibly well run company under your inspirational leadership, is so powerful. You know that the ‘bolt-on’ will not let you down because they really are leaders in that field (how’s that for helping your sleep patterns?!). This is not a distributor you happened to meet at a trade fair, or an outsourcing company that found your number in Yellow Pages. This is a leader in their own field who has driven their business and industry to the next level. Because this is a white-label situation you really are able to ‘kick the tyres’ because this is not an arm’s length outsourcing relationship but will carry your name (hence the legals docs are significantly more serious), you also have access to areas and most importantly control far more that matters to you, than a mere outsourcing relationship ever would. Plus they have invested in areas you were unable to either afford, or never realised you needed…
“By leveraging other firms to provide core business functions, EaaS companies can scale their businesses at a faster pace than before and access expertise or technology that would otherwise have been out of their reach. EaaS businesses can thus do what they need to do to compete, not only more cheaply, but also more quickly and – most importantly – better than they could on their own.
The most radical and sometimes confusing aspect of these new business models is that they allow firms to organize themselves around their sources of competitive advantage…Today, the best firms are typically organized around what they do well and – to the extent that they can – rely on other firms to do the rest.” – GS1
With your competition able to access this as well, urgency and nimbleness has never been a more important strength. If you have areas where you know you are lagging, then now is the time to look very closely to these. Think of EaaS as ‘Outsourcing on Speed’. It has taken Outsourcing to a new level. No longer do you have to explain to customers why you have kept on Albert in the warehouse because you can’t bear to see him go, or why Joe’s Truckers and Warehousing hold and deliver your stock. If you “need[s] help to ramp [your] production, distribution, marketing or any other business function, [you] can do so at a world-class level, at a competitive price and at a speed that would have been unthinkable just a generation ago, simply by leveraging other firms’ resources.” GS1
…And so this is no longer Albert or Joe, but your Trucking and Warehousing operation (it bears your name) and they, no sorry – YOU – have the latest and most modern warehousing, barcoding, receiving and delivery system in the country – all paid for monthly or ‘per use’, rather than you investing in purchasing the systems and training the employees via a massive loan at high interest rates from your bank…
Concentrate on what you do best and EaaS the rest!
Times have moved on, luckily you can use the same tools that a young upstart will look to use to attack you and your market, but you will not only defend your position in the market, but actually secure it further. Do not waste this opportunity.
“As a consequence, the only way for a firm today to defend its market position is to actually have the best product or service. Anything less is likely to result in quick displacement…
For firms today, surviving disruption is largely about giving up functions best left to others. Failure is usually the result of attempting to preserve functions that have become dead-weight and that distract the firm from enhancing its core advantages.” – GS1
At the risk of receiving angry letters (please address them to Melanie!), is that not what Downton Abbey is all about, this battle to preserve functions in the face of new advances. Luckily for Robert Crawley, the 7th Earl of Grantham and even for Mrs Patmore the cook, the pace of change although frightening was slow then and only just starting to build.
We have no such luxury…
Stay safe.
