Overview
Large-scale strategic growth programmes that normally involved some type of stage gate model have previously dominated the innovation practices of large organisations, but we have recently seen the emergence of a more entrepreneurial approach to new product development. We have used this model of innovation quite successfully in order to open up adjacent and new markets spaces for the largest mobile network operator on the African continent.
The Challenge
Mobile network operators face various serious challenges to their current business models such as declining voice and data revenues or the potential disappearance of the SIM card as free public WiFi becomes more widespread. Their major advantage is that they are in people’s pockets all day, which allows them to create new customer relationships around alternative products and services.
Our Approach
Our client had decided on a very ambitious growth target for its new venture design process, so we were quite rigorous in the initial ideation phase so that only significant new opportunities were pursued. We ultimately decided on five new ventures in the areas of banking, insurance, media, healthcare and education. All these ventures were organised as special-purpose vehicles and separate legal entities with operational funding from the parent organisation but with dedicated entrepreneurial teams. We also decided to forego some of our professional fees in return for equity in these new businesses which created a very balanced partnership. The majority of new ventures were operated between 12 and 18 months before a decision was made to either incorporate them back into the parent company or spin them off as separate entities into the marketplace.
Key Insight
As we had structured these ventures as separate organisations outside of the control of the parent company, it was much easier to respond to various challenges in an agile way. The fact that we also did not have to compete for investment against very established parts of the business made it easier for us to prove our business case to investment committees after sufficient time had been given for the company to mature. Most of these new venture design experiments also generated various learnings e.g. testing new strategic alliances that could benefit the parent organisation in numerous ways that they would not have had otherwise.
The Outcome
The new ventures in banking and insurance received the most traction initially as the African continent provides multiple opportunities to serve the underbanked and underinsured market. The media business was quickly absorbed back into the parent organisation as there was a good fit with the ambitions around the app store value proposition. The healthcare venture was successful initially in terms of a telemedicine offering to underserved groups in society but could ultimately not compete in a highly regulated market environment. The education business was absorbed as strategic initiatives into the parent organisation’s foundation and is currently being evaluated more according to philanthropy impact metrics.