The Power of scale – By Alex Mabunda

Revenue management is not a value proposition.

When one of my business partners and I entered that classroom in February 2019 in Accra, Ghana, we were skeptical about how the week ahead would turn out. We were there representing our firm in the Standford Seed Programme – a one-year Stanford University Graduate School of Business (GSB) programme aimed at helping small and medium companies to scale.

There was nothing on the surface of it that invited skepticism. With almost 90% of the 60 firms participating in the course coming from West Africa, and only eight from Botswana and SA, the mood was lit, if not a little intimidating.

Our skepticism arose from us expecting just another talk shop of all sorts of clichés on business improvement. Little did we know we had come into the belly of the beast, where scaling techniques are concerned. I remember when we got back to the hotel and did a debrief.

We looked each other in the eye and agreed that in fact we had no business to speak of. We realised what we were really doing was stumbling into a contract, working it, getting paid and then going hunting for the next while trying to close whatever operational gaps arose.

It was all pedestrian and arbitrary. When asked, “what is your value proposition?”, we answered, “revenue management”. When asked, “what is your target market?” we answered, “municipalities and utilities”. And when asked, lastly, what our distribution channels were, or as they would dumb it down for us, “how do folks know you exist? How do you deliver and support the product?” we realised we had never explicitly thought about this.

We were then politely told that revenue management is not a value proposition, nor are municipalities a target market. It was when they told us why that we realised we had survived 14 years of free-styling as a firm.

This realisation left us with a sense of both elation that we had made it this far, and frustration that we had been living in the dark. The events of that day set in motion a transformation journey for our firm. Three years later, the firm has moved from barely having the vocabulary to talk scaling, to a comfortable sense of self-mastery in continually defining, implementing and measuring its scaling journey.

There is no doubt that SA continues to produce some of the world’s best firms such as MTN, Sasol, MultiChoice and some of the mining giants. It is also true that as a country we have not taken full advantage our potential to create a critical mass of new medium and large firms that are globally competitive.

It is still an indictment, for example, that despite being the biggest economy in Africa, our presence on the continent remains small compared to the relative size of our economy.

Many of our firms still leave lots of value on the table and much of that lies with the suboptimal capacity or capability in our operations to create and capture value. Of course, scaling a business requires money, time and huge effort.

With money, in particular, most businesses would rather realise it as profit than paying for things that, on the face of it, look mundane and unimportant. I mean who cares, for example, whether municipalities really constitute a target market?

It is not by coincidence that Standford-related firms in California and Silicon Valley have annual income the size of the 10th-biggest economy in the world. It is because they know and do stuff that many do not know and do, and with the Stanford Seed Programme, we had a rare privilege of being inducted into that knowledge.

• Alex is the Group Chief Executive Officer of Ntiyiso Consulting Group

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