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Lessons from SA’s disruptors

South African industry leaders continue to disrupt their business models: digital is the enabler and customers will be the winners.

South Africa’s ‘mobile moment’ happened in late 2014, when for the first time internet searches from mobile devices exceeded those from desktops. By 2020 there will be 500 million people in Sub Saharan Africa with connected smartphones, setting the digital agenda for multiple industries.

So explained Google SA country manager Luke Mckend – at Thursday’s Digital Disruptors Conference at Gibs Business School in Johannesburg – who admits his daughter helped him set up his new phone. As a digital native she is one of 100 million people in Sub Saharan Africa who have smartphones and expect digitally-frictionless services. Google plans to connect this exponentially-growing digitised population through Project Loon, which is setting up high altitude balloons sending down LTE bandwidth to devices. He added that universities in Kampala became connected to the internet through its internet fibre project which transformed educational business models in the surrounding communities.

Google is helping build digital skills in Africa, engaging with communities to teach them how to properly interpret search results. Small businesses are benefitting from content-creation workshops and developers are being trained to build innovative digital platforms. Google is an early mover on the continent and is building out the supporting infrastructure.

Also, Google search is improving through natural language processing. In some countries, up to 20% of Google searches are now conducted by voice. My impression is that Google Now will quickly eclipse Apple’s equivalent ‘Siri’.

Is Microsoft a great innovator?

Conference host Chris Gibbons asked this of Nir Tenzer, marketing and operations lead for Microsoft South Africa. Tenzer reminded the conference about the Third Industrial Revolution which started in 1960 with the advent of the computer – a worldwide transformation that Microsoft helped to pioneer. He believes the Fourth Industrial Revolution is commencing and Microsoft has a mission to “empower every person and every organisation on the planet to achieve more”.

It plans to accomplish this through a ‘mobile-first, cloud-first’ strategy of three ambitions: reinvent productivity, create more personal computing and build the intelligent cloud platform. Tenzer credited CEO Satya Nadella for driving an improved global culture at Microsoft through digitally-savvy top-down leadership.

Dimension Data

Is your business able to innovate continuously at the pace of digital change? This was the challenge to business leaders from Alison Jacobson, MD of digital advisory at Dimension Data. She stressed it cannot be an ‘IT-only’ approach with agile methodologies confined to software development teams. It must be enterprise agility, starting from the boardroom and extending across the whole organisation. You cannot do digital and expect to achieve profitable disruption, you have to be digital.

Dimension Data has developed the ‘knowing-being-doing’ model which it uses to advise businesses on becoming digital. She agreed with Tenzer that you cannot put digital apps on top of analogue processes and expect digitally-disruptive results. It requires much more fundamental change because “connected products require a connected company”.

Cerebra publishes free ebooks on its website that solve business problems through digital principles. Many of these actually contradict industrial age hierarchical thinking that permeates the modern large organisation. It’s about being willing to create the business that will destroy your business; are you willing to ringfence a group of bright people who will cannabilise your profit through autonomous, disruptive thinking? Past success is the greatest barrier to continuous successful innovation.

Cerebra’s Mike Stopforth emphasised that while we keep hoping that technology will solve the problem, it’s more about how new tech is used in the context of digitally-disruptive cultures.

Banking

Barclays Africa CIO Ashley Veasey acknowledged that banks have traditionally made life difficult for their customers. His digital transformation mission in the last 18 months has been to improve customer experience of Absa’s banking products and services. To drive this he encouraged new thinking and new ways of working: from agile feature teams and rapid iterative software development, to letting his 5 000 staff dress in jeans and t-shirts.

The bank built a team of highly-progressive, digital rockstars such as Brett StClair, an ex Googler who has turned his digital disruption skills to banking. New leadership also inspired long-standing IT employees to move from a cubicle mindset to more collaboration; most people were technologically hungry for change and embraced new ways of doing things.

Veasey also created a team in the Absa Cape Town offices called ‘Aliens’; it employs surfers who write “killer code” and do their best work after a day on the beach. This creative incubator works with the global Barclays Techstars initiative that accelerates innovation through networks of start-ups. It recognises ten entrepreneurs every six months who it believes will drive digital disruption of banking.

Absa recently signed contracts with seven out of ten incubated start-ups and Veasey said that through these networks, it’s witnessed an influx of digitally-innovative skills into Southern Africa.

A number of recent achievements at Barclays Africa point to the success of this journey thus far; a new look for its mobile app took six months to develop and was released to the market five months early. Its website landing pages have a new look and feel and it is the world’s first bank to launch a banking service on Facebook messenger and Twitter, with about 6 000 transactions so far. Since its launch, app downloads have increased tenfold and customer activity on its digital platforms 20-times.

From a regulatory perspective, Veasey said the South African Reserve Bank is open-minded about the anticipated digital disruption and cited the R3 Blockchain consortium – of which Barclays Africa is the first South African participant to join. A critical enabler in its journey of tech transformation, has been a CEO, Exco and board of directors who have the faith to invest in new technology, be experimental and “live through the ups and downs of digital disruption”.

Discovery

Jamie Whittaker, head of digital at Discovery, says its client base runs from millennial “pesky whipper snappers” to more traditional consumers in different stages of digital evolution.

A customer’s online behaviour needs to be well understood to develop effective digital strategies – drones are likely to be significant disruptors. Amazon PrimeAir uses drones to make deliveries; they can bring medical equipment to remote patients and outdoor enthusiasts can use drones to follow and film themselves.

Discovery has sold 90% of all Apple watches through its highly-disruptive health insurance services and is actively investing in setting up a banking platform. CEO Adrian Gore has re-iterated this commitment and is hiring bankers and investing in systems.

Veasey complimented Discovery on its disruption in the insurance industry and described its data-driven approach to setting up a banking stack as “stunning”. He acknowledged that Absa is happy to be a utility service behind great brands that might be looking at the local market to launch a banking presence.

Uber

Local head of public policy for Uber, Yolisa Mashilwane, says globally SA is one of the fastest-growing markets for Uber – beating even San Francisco and other North American cities. Over 32% of people in Gauteng use cars for transport; this is Uber’s target market. Dissatisfaction with local public transport was cited in a recent survey as one of the main reasons for the dramatic growth in Uber requests; people highlighted driver behaviour, vehicle unroadworthiness and passenger overcrowding as key reasons to opt for the digitally-slick and convenient Uber option.

Uber has also launched an open technology platform offering partner- and driver-relationship models where independents can join and take advantage of their technology platform. Since inception, Uber has created 4 000 work opportunities – mainly for people from sectors losing jobs. Uber Cash and Uber Eats are new disruptive models being rolled out that continue to evolve and innovate the business model.

As of Feb 2015 it had moved over half a million South Africans and these new products look set to accelerate this success. Uber is also piloting taxi-sharing which will address traffic congestion and safety risks through its advanced data models for passenger verification. Uber Rush will offer quick and seamless deliveries for small businesses that aren’t able to invest in expensive transport networks.

Digital retail

Massmart Group e-commerce executive Colin Fleming spoke about the future of digital retail in South Africa. Amazon has set the standard and is winning on price by reducing costs of working capital through innovative supply chains. Amazon carries 130 million product lines and Walmart only 130 000; South African retailers need to figure out how they can stay relevant and avoid red herrings to become fully digitally enabled.

Massmart is focusing on doing this by building the right competencies and fundamental capabilities. It recognises that customer expectations are now being driven by the exponential organisations, such as Alibaba ‘the most valuable retailer, which has no inventory’ (Tom Goodwin, Havas Media 2015).

Walmart is piloting an innovative grocery pickup process at a number of stores. In total it owns 4 000 within 20 minutes of 95% of its US target market and the company is confident about competing with Amazon.

Whittaker also spoke about the new Walmart CEO, a digital native who drives innovation from the top of the organisation. Locally, the Massmart culture is receiving a lot of focus. Management understands that its ambitious, innovative agenda requires people who understand digital and have the courage to use it disruptively.

Peter Alkema is CTO at FNB Business Banking

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