Uber goes hunting outside Nairobi; the 'Uber syndrome' is making many African top execs sweat

There are two types of invader: the digital giants and the ankle-biters.

E-commerce app Jumia is an example of an "ankle-biter": small, smart and agile, unencumbered by legacy infrastructure. Most traditional retailers don't notice these kinds of services until they've taken a bite out of their flesh. (Photo/Jumia/FB)

E-commerce app Jumia is an example of an "ankle-biter": small, smart and agile, unencumbered by legacy infrastructure. Most traditional retailers don't notice these kinds of services until they've taken a bite out of their flesh. (Photo/Jumia/FB)

TAXI app Uber this week announced plans to launch in Mombasa, Kenya’s second-largest city, the tenth in Africa in which it operates.

Mombasa is particularly attractive because it is a hub for tourists who would want to get around the coastal city, particularly during the tourism peak season.

The planned expansion comes despite of recent reports of threats and attacks against Uber drivers in Kenya’s capital Nairobi, attributed to drivers of traditional taxis who complained that Uber’s pricing model is driving them out of business. In February, two people were arrested for allegedly smashing a window of an Uber contractor’s car.

The threats, intimidations and general sour mood prompted a government response; the interior ministry attempted to mediate between the two groups, while the transport minister came out in support of Uber, saying the country adheres to free-market principles and pledged to protect anyone against threats to provide services to Kenyans.

As a tech company, not a taxi company per se; Uber is able to avoid certain costs and taxes that traditional taxi companies face—responsibility for those costs fall to the drivers and not Uber, the company says. That means lower prices for consumers, and the real-time GPS tracking and driver identification makes the experience more reliable and safer.

Disruptive and polarising

But Uber’s experience in Nairobi is by no means unique. Globally, the reaction to Uber falls along two broad camps - it’s loved by drivers and passengers, but hated by taxi companies and regulators. It’s disruptive, and polarising - and hints to a changing world, that Africa is already at the centre of.

Most disruptive enterprises, like Uber, don’t gradually displace the incumbents; they reshape entire industries, “swiftly obliterating whatever stands in their way”, a new report by IBM states.

IBM’s Institute of Business Value carried out a C-Suite study with over 5,000 global C-Suite leaders, including more than 500 from Africa. Disruption from unforeseen quarters is the number one thing keeping them up at night.

IBM calls it the “Uber Syndrome”- where a competitor with a completely different business model enters your industry and flattens you.

A few years ago, business leaders could see their competition coming. The biggest risk was the advent of a new rival with a better or cheaper product or service. And you could fend off the threat by improving or expanding the range of products and services you offered, or getting to market more efficiently and imaginatively.

Invisible

“Today, the competition is often invisible until it’s too late,” the report states.

Technology is considered the main game changer for African busineses; six in ten African executives expect more “industry convergence” – or a blurring of boundaries between industries, such as the way mobile money brought together financial services and telecommunications in a wholly new way.

There are two types of invader, the IBM study shows: the digital giants and the ankle-biters.

The giants blow the incumbent players out of the water – such as the big telecoms MTN, Airtel, or Safaricom, muscled in on territory traditionally occupied by banks; or the way email and courier services nearly obliterated post offices.

The digital giants can damage you with a few well-placed punches. “But the ankle-biters are equally dangerous en masse. They are small, smart and agile. They’re also unencumbered by legacy infrastructure. In fact, they often don’t have any infrastructure at all because they use other’s assets. And they’re hard to spot until they’ve taken a chunk of your flesh,” the report states.

What makes it all the more difficult to cope is the lack of precedent, and the rapid pace of change. Many members of the C-suite admitted they find it hard to see what’s coming next, let along reflect on the wider implications.

“It’s impossible to predict what will affect our business because there are so many variables,” said the chief marketing officer of a South African bank as quoted in the report.

Hype, trend or tsunami

One Turkish exec put it even more bluntly: “The hardest thing is working out whether what’s happening is hype, trend or tsunami.”

In trying to fathom the future, however, industry leaders are still using conventional techniques to identify new trends and flesh out their implications. 78% of the survey’s Africa respondents use brainstorming as their main strategy; 58% use simulations. But barely half used predictive analytics, just one in four used crowdsourcing and 13% used cognitive computing.

IBM recommends that companies should make better use of predictive and cognitive analytics, and should consider forming their own “futures squad”.

“Set up a specialist forecasting team, equipped with the right technologies and skills,” the report says. “ People trained to use probabilistic reasoning techniques, and to recognise and eliminate bias, produce better forecasts. Consider designating a team specifically to scan for new technologies and monitor the marketplace.”

But the best advice is simple: “To handle disruption, think like a startup.”


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