Edwin Macharia, Partner, Dalberg Global Development Advisors, Kenya
speaking at the session “Davos Insights: Reforming Market Capitalism” at
the Annual Meeting 2017 of the World Economic Forum in Davos, January
20, 2017. PHOTO | COURTESY
Firms must come up with new business structures, more than
before, to survive innovations that are disrupting traditional revenue
streams, according to a senior executive at Dalberg Advisors.
Edwin
Macharia, a partner and Africa Regional Director at development
consulting firm Dalberg Advisors says that more organisations will be
forced to break the four walls of their businesses to protect their
legacy revenue streams at the face of disruptive technologies.
This,
he says, is more important as the business environment becomes more
segmented, making it impossible to lift solutions from other regions to
solve unique challenges facing businesses in a different region.
“Traditional
firms like banks grew by taking models from other regions such as
Europe and applying them locally. This way, they naturally ran into
limits of how much of that model could be transferred here,” says Mr
Macharia. “But with all the disruption happening, you now have to start
by understanding the unique context you are operating in. This calls for
increased need to breaking up some of the traditional structures that
used to deliver revenues.”
He says that local brands
such as Equity Group and Cooperative Bank dislodging multinationals such
as Barclays and Standard Chartered Bank offers a glimpse into how local
solutions resonate more with customers.
“At Dalberg,
we understand that context is hard to teach. So in Africa, our staff is
about 70 per cent African so as to offer clients local solutions based
on deep understanding of the core of an industry,” he says. This has
been one of the strong points for Dalberg, which has 24 offices globally
including Nairobi, helping it win clients in government, businesses and
NGOs.
About 60 per cent of its work is in Africa, making it one of the largest advisory firms on the continent.
It serves South Africa, Tanzania, Kenya, Rwanda, Uganda, Ethiopia, Nigeria, Ivory Coast, Senegal and Guinea.
In Kenya, Dalberg has had an advisory role in a number of deals
including the merger of Mount Kenya, Rift Valley and Kisii Bottlers to
form Almasi Beverages Limited.
The three had distinct companies with own managers, boards of directors and shareholders but were seeking economies of scale.
Profit for many firms continues to fall despite cost-cutting measures such as staff redundancies and launch of new products.
According
to Mr Macharia, with the business environment facing increased
disruption, CEOs have to be more alert in responding to changes within
the shortest time possible. This, he says, calls for timely data.
However,
he adds that many markets in Africa such as Kenya operate in a
data-poor environment compared to other markets, leading to delayed or
wrong solutions.
This motivated Dalberg to launch
Dalberg Research which specialises in the inventory, collection, and
analysis of primary research data for businesses.
The
firm rolled out its first product, Location Analytics (LOCAN), which is a
geo-spatial research database about markets, consumers and their
lifestyles.
“In Kenya, we have 120 slices of data that
is geographical located and gives a sense to what is happening at a
particular location. This is credibly powerful to help companies we
advise to make informed decisions,” says Mr Macharia.
This
is supported by Dalberg Data Insights, which collects big data and runs
analysis to help businesses measure the impact of any events in their
industry.
The tools help businesses to have a continuous understanding of the market and how it is changing so that they adapt.
“If you are not checking on that you get side-swiped by a dramatic big trend,” says Mr Macharia.
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