As Etisalat dies officially with its transition to another brand and we as business consultants sit back to analyze their loss while we hope that the network’s integrity, data and fate of its tens of millions of subscribers would not be compromised. This came amid the loan disagreements between consortium banks and brand disengagement and collapse, there’s so much to learn. The solution in sight right now would be their current lenders totally taking over, they may try to continue to operate the company until they find a buyer (or) at near salvage value and scrap cost, merge the company with the existing players in Nigeria. But how did Etisalat even get here, how did they even get it wrong and what can we learn from it?
The firm took loans in USD in a country with dwindling exchange rates and when Naira crashed, it could not service a foreign currency-denominated loan with Naira. The loan wasn’t even hedged (A hedge is a capitalist clause in an investment to reduce the risk of adverse price movements in an asset).
Also, I looked critically at the NCC data and it is glaringly that it consistently and consequentially lost subscribers quarter after quarter. What was R&D doing with analytics, as it was the only telco with such trend.
On top of that, the panic wasn’t well managed in the eyes of its investors. Its foreign investors (Middle East billionaires) lost faith in the firm and there wasn’t enough Disruptive Innovation in any of its balanced score card (Financial Structure, Brand, User and Market Experience, Internal Structure or its Growth Curve ). As you build your own firm, don’t ever allow that happen to you, at least not in that mix, except you are cooking or creating a formula for self destruction. Reverse Osmosis of Disruptive Innovation could have helped.
What is Disruptive Strategy?
When you are not a market leader and you don’t have a deep pocket like MTN, Capitalising on flank based, stealth based and Guerrilla based Creative Destruction in your Balanced Score Card can help.
Disruptive Innovation in any industry is any innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. This is what Etisalat could have done. Innovative is powered by creative destruction, they should have concentrated more on how to acquire or even create new markets by rethinking its market and customer engagement tactics. It’s more like disrupting the equilibrium of micro-economics to macro-economics using innovation to incessantly revolutionize that industry’s economic structure from within, incessantly destroying the old one, incessantly creating a new one by cheaper and more enjoyable products. But they can’t create cheaper products as they ran against economy of scale as compared to the likes of MTN and Glo.
In my years of studying innovation, I have come to the summary that what kills companies is that they move strategic decision making to the accounting department. Strategic decisions are now dependent on ROI with higher IRR and NPVs (Return on Investments with higher Internal Rate of Returns and Net Present Values) and shorter pay back period, as against how truly user’s lives can be made easier, more exciting and better with their products, till a new company comes from the bottom and provides that more intimately and affordable. Learn more with us.
We are Hexavia!