The African Advantage: Home-field advantage in data scarce battlegrounds

By Tinashe Mukogo CA (SA) INSEAD & Musekiwa Samuriwo

Executives in Silicon Valley and more broadly in developed markets are used to making decisions based on reliable data and even more so now with the advent of ‘Big Data’. Even companies such as Amazon who pride themselves in the ability to make fast decisions in uncertainty generally want to make a decision with 70% of the required information at hand.

The challenge when operating in Africa is that often reliable data is not available. A simple google search can help illustrate this.

When searching online about the US market, one can easily get reliable information on something as specific as the amount of Ice Cream produced in the US state of California whilst searching for even the most elementary data point about the African market, such as the population of Lagos in Nigeria, gives results that are ‘unreliable’ and ‘disputed’.

This lack of reliable data can partly explain why large Multinational Corporations (MNC) have not been as successful in Africa as one would expect considering the resources at their disposal. A BCG Study shows that over the last few years MNC’s operating in Africa have been losing market share.

This failing performance can be linked to strategies that are heavily reliant on data, which can often end up being incorrect. For example, the BCG study recounts the story of an MNC manager who discovered that the company’s market share was 10% lower than he had been led to believe.

Home field advantage, however, allows the African entrepreneur to avoid building strategies that are not reflective of the reality on the ground.

The Power of Observation

In the absence of reliable data, the most innovative business insights in Africa are seldom unlocked by analysing desktop reports but by careful observation of social and cultural interactions.

For example, when M-Pesa was a launched in Kenya in 2007, the game changing insight was not derived from market reports but by observing the extraordinary lengths people working in the city would go to send money back to their rural homes. Recently Safaricom (with PharmAccess and CarePay) launched M-Tiba, a mobile wallet for Healthcare that won the Financial Times/IFC Transformational Business Award.

The idea for M-Tiba came from the observation that money for health care sent by friends, family or donors was often squandered by the receiver on other goods such as alcohol. The solution? A secure mobile wallet that well wishers can send money to that can only be spent on Health Care Services.

In the absence of reliable data, the most innovative business insights in Africa are seldom unlocked by analysing desktop reports but by careful observation of social and cultural interactions.

Unfortunately, many Tech Entrepreneurs in Africa undervalue this home-field advantage and often spend more time observing Silicon Valley or developed markets rather than their own.

This explains why pitches for ideas often start with phrases like the ‘Uber of….’ or the ‘Facebook of…’. Whilst sometimes these descriptions are useful they can also be red flag that as entrepreneurs we have not carefully studied and observed our own market. Simply observing networks of family, friends or strangers at something as simple as an event can reveal subtle cultural cues that can lead to a game changing insights.

The ‘Job to Be Done’ as Observation Tool in Africa

To conclude we would like to recommend the ‘Job to be Done’ framework as a practical tool that the African entrepreneur can utilise. Whilst, developed in the USA by innovation expert Clayton Christensen, this framework works well for the African based entrepreneur as it does not require extensive capital to start and leverages the power of observation.

In short, this framework helps the entrepreneur deeper understand why customers make the choices they i.e. ‘what job is be done’ by the product they are ‘hiring’.

Careful observation can help unleash the home-field advantage in data scarce battlegrounds and allow the entrepreneur build a resilient customer base.

However, the ideal customer base for the entrepreneur may not always be whom you would expect. Sometimes the richest customer base is actually made up of the poorest people. More of this in our next post.