In
the last post we examined how failing to grow or expand can kill a business. I
also shared the example of my barber who finds it hard to leave the
self-employment business model for the franchise model. The example actually
got me thinking about our Igbo businessmen. As brilliant and dedicated as they
are to the trade of trading, we don’t have any of their businesses equaling the
feat of companies like Shoprite™ or Game™. In fact, Shoprite just opened its tenth
Nigerian store in Ibadan and, guess what, it is their largest mall in West
Africa! And they have four more stores in the pipeline for 2014. Those boys
just keep popping up everywhere! We will examine one last reason why we tend to
have a lot of abiku businesses in Nigeria.
Chief
M.K.O Abiola was a business tycoon larger than his country of birth and even Africa
itself. He had investments on several continents and in an array of industry
sectors; from automobiles to agriculture, from publishing to banking, from
aviation to shipping lines and so on. As a lad, I grew to know his vast
business empire to include the likes of Concord newspaper, Concord Airlines,
African Ocean Lines and Abiola Farms. But as I write this piece, sixteen years
after his demise, they are no more. I also remember travelling from Ilorin to
Ibadan in the late 80s and staring in wonder at the tin-clad factories of the
Alata Flour Mills. Today the structures are still standing, but I can’t recall
the last time that whitish smoke rose from its chimneys. The famous Odutola
Tyres of the 1970s is also no more. The last time I drove past the production
plant in Ibadan with my father, who speaks forlornly about their bicycle tyres,
it was eerier than a cemetery. Need I say more?
A
factor common to the three aforementioned family businesses is the passing on
of the business owner. These were no small businesses back in the day, they
were very popular and appeared very profitable. They employed hundreds, if not
thousands, of workers and were regarded as the blue-chip companies of their
time. In fact, I believe the owners would have scoffed at anyone who told them
that under a decade, their empires would be described in the past tense. But,
it’s painfully so and that must stop!
Let’s
briefly consider another ginormous family business, possessing a few tricks,
which our businesses could badly learn from to be free of the abiku syndrome.
The lessons are quite apt because the business owner has also passed on. It is the
Wal-Mart Stores Inc. founded by Sam Walton. This multinational retail company, ranked
as the world’s largest public corporation in 2014, employs over 2 million
people and interestingly still remains under the ownership of the Walton family.
But more importantly, the business marked its Golden Jubilee in 2012, twenty
years after the founder’s death. I will tell you what struck me the most as I
read his autobiography, Sam Walton: Made
in America. I believe it’s the most important factor that Nigerian
businesses require to continue in existence, long after their founders’ death.
The factor is to any business what a foundation is to any building.
Going
back to the baby analogy (from my last post): At conception, a baby is no more
than a cell (zygote). The cell grows and sub-divides into two cells, which grow
and further sub-divide into more cells. Through this process of sub-division,
the cells multiply and grow. Then at some point, the cells begin to specialize; they start to develop into
tissues which will develop into organs and which in turn will form the systems
of the baby’s body. Without the sub-division and specialization of cells into
systems, the baby cannot exist as the complex, higher being that it is.
A
start-up is like that single cell conceived by the founder. In the beginning,
he could wear several hats and perform all the roles himself. But, as the
business grows, it has more workers, more customers, more suppliers, more funds
and even more regulations it has to adhere to. In short, it is more complex
than a start-up and requires some level of specialization to function properly.
And that is where the breakdown begins for most unlisted Nigerian businesses. Specifically,
we find that the same ad-hocness that characterized the start-up days are still
present in the growing business.
For
instance, a friend who works at a very large Nigerian oil corporation came
begging for some money in the first week of the month. Jokingly, I asked him
how he managed to quickly spend all his last month’s salary. He replied that
‘Chairman’ was out of town and had to return before the payroll cheque could be
signed! My shock wasn't small. If a simple mandatory process like workers’ pay-roll was not already formalized, I wonder
what would be the fate of a one-off, unplanned expense that is badly needed to
avert a threat or cash in on an opportunity when ‘Chairman’ is on vacation.
The
company should have specialized units like HR and Accounts that should be in
charge of the payroll, without waiting for ‘Chairman’. Other departments like R
and D, operations, sales and procurement should be up and running regardless of
the Chairman’s mood or availability. One man can sail a boat or even a ferry,
but no matter how extraordinary the sailor, he needs a crew to sail a ship. It
is often because we have one brilliant entrepreneur assiduously trying to sail the
ship that we have all manners of business shipwrecks, especially when the
sailors are dead. The presence and mentality of one-man business must be shed
as your business grows.
My
advice is this: Like Sam Walton, have corporate strategies, systems, structures
and processes formally put in place for your growing business. Recruit trustworthy
and tested hands to implement them and employ those who will monitor for
compliance.
Some
people argue that bureaucracy will set in, and it will stifle creativity and manoeuverability. But I tell them that the alternative, anarchy, is a worse
condition. By delegating tactical and operational decision-making further down
the chain of command you can reduce bureaucracy but I know no of other cure for
anarchy and chaos than structure. I keenly watch large business corporations
that have the one-man business model and mentality. My fear is that they do not
go the way of the many moribund businesses we have around today.
One
last thing. As your business is growing, have a management board of competent
and experienced persons, which you will make yourself accountable to. This is
one structure you need to have in place because, as they say, “In the multitude
of counselors there is safety.” After all what we are seeking is safety from premature business death.
Another great one
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