The success of any economy is strongly underpinned by entrepreneurship, innovation, the development of new business ventures and new products. Other commercial activities such as business growth, trade, turnaround and optimisation play a supporting role. Whereas there is a strong belief especially in mainstream economics that infrastructural development and natural endowments underpin successful economic development, there is little if any evidence in the world supporting the correlation between either natural resources endowments and economic prosperity or infrastructural development and economic prosperity unless the two are driven by innovation and support strong powerful entrepreneurship. To the contrary, the word is replete with numerous examples of natural resources deficient but highly prosperous countries whose prosperity is a direct product of the countries’ high levels of entrepreneurship and innovation. Developing countries still struggle to understand the supremacy of mental capital over natural resources in driving economic performance, growth and prosperity. Second, a major confusion in the use of the terms entrepreneurship, potential, innovation and business has created a major drawback in accelerating economic development and economic growth. In many cases these three terms are abused in developing countries and the abuse is not without bad consequences in accelerating economic development. In this article, I will provide a case studies to explore entrepreneurship, innovation, new business venture creation and product launches. I will do it with two companies in Zimbabwe, Lunar Chickens and Econet.
Creating a New Business Venture: Lunar Chickens
Lunar Chickens was the brain child of Dr Gideon Gono, a former high flying banker credited with a highly successful turnaround of one of Zimbabwe’s banks, The Bank of Credit and Commerce into one of Zimbabwe’s top banks then rebranded as CBZ or the Commercial Bank of Zimbabwe. His exploits as a high flyer and turnaround maestro must have either got the attention of the Zimbabwe government, or Dr Gono might have approach the government himself, to assume the headship of the Reserve Bank of Zimbabwe. It was period during Zimbabwe’s economy had taken a sharp descend after the famous land reform. The appointment of Dr Gono created a tremendous amount of hope that with him at the helm of the central bank, the economy would soon stabilise and turn northwards again within a short period of time. However, the economy continued its decline at an accelerating rate, landing Zimbabwe a position of being one of the best of the best in the world in recording the highest inflation. After several episodes of gymnastics with the currency, Zimbabwe realised that the its currency was a mad horse that could not be tamed; they abandoned it and replaced it with multiple currencies with the Uinted States Dollar as the main currency. I bring this episode not as an economic piece, but to provide insight into the fighting spirit and tenacity of Dr Gono and also to highlight an emerging leadership theory that leadership success is context- dependent. Successful leadership in one context does not necessarily mean successful leadership in another context. Leading a national commercial bank and leading a national reserve bank are two different animals altogether even when the fact that many aspects of leadership practice are universal and are context independent.
During the same period, Dr Gono ventured into business and started a high profile poultry business venture. The project was bold and highly ambitious one in which large sums of money were invested especially into the acquisition and installation of poultry rearing infrastructure. According to available information, Dr Gono’s vision was to become Africa’s first black billionaire chicken farmer. Going by the sheer size of the poultry rearing infrastructure set up at a plot at the outskirts of Harare along Harare Nyamanda road around the Shamwa road turnoff, Dr Gono’s vision would not be something impossible. In addition, given his success record, no one would have doubted that Dr Gono would fail to achieve his vision. Lunar chickens did enter the market, but its success was not as much as was expected given the size of the investment and Dr Gono’s track record. At the time of writing this article, Lunar Chickens is not palpable on the Zimbabwean market and the massive poultry infrastructure (deemed as state of the art when it was built) along Nyamapanda is lying idle, with no signs of any life. For a venture that attracted much attention, one is left wondering if the current silence signals permanent collapse or a temporary slumber from with Lunar Chickens will rise again and propel Dr Gono towards his vision of being Africa’s first black billionaire chicken farmer. Questions also arise on what really went wrong with the business venture for it to fail to take off powerfully and gain a major marketshare in the poultry markets in Zimbabwe, regionally and internationally.
Trying to provide answers to the questions surrounding Lunar Chickens is like venturing into a jungle with many unknowns. However, even without inside information into the business, there are many insights that can be gleaned and many lessons that can be learnt in strategy, entrepreneurship, innovation and the launch of new business ventures.
It is often said that most new business ventures fail due to lack of capital. This does not appear to be the case with Lunar Chickens given its installed capacity and massive infrastructure. This points to other factors.
There are many questions that can be asked in order to pierce the veil on the Lunar Chickens;
- What drove Dr Gono to set up a chicken business (instead of any other business venture) during a period of high economic turbulence and in a market that was dominated by Irvines, a highly experienced, multigenerational operation with a strong footprint in the regional markets?
- To what extent were market research and opportunity assessment undertaken to support informed decision-making in terms of whether or not to venture into the market, at what scale to enter the market and how best to enter the market.
- By what processes, if at all, did Lunar Chickens move from idea to launch of the poultry business?
- How did top management Lunar Chickens choose the market entry strategy that it used?
- What expertise was used in the idea to business launch and what was the quality of the capacity and capability of the expertise?
Personal drivers in Choosing Business Ventures
Different business people use different decisions drivers to choose to venture into one business and not in another business. In general, there is a concept that people either enter into a business either for a good reason or for a flawed reason. Good reasons for getting to a certain business include potential for success in the market, market attractiveness, the possession of some core competences that can deployed into the business as well as clear indications of being able to succeed. Flawed reasons for entering into a certain market include,
- Ignoring strategy and a strategic approach in choosing and entering markets
- Mistaking passion for the business for competence
- Being driven by the desire to take on a dominant player without having devised a clear advantage or innovation to the business that will provide a decided advantage over the incumbent;
- Being pushed into a market because it appears fancy or modern or prestigious without establishing industry viability and profitability,
- Entering a market because one has the resources do to so and mistaking having enough resource for strategy.
Opportunity Management and Market Research
The way an organisation manages opportunities has a strong bearing on the success or failure of a new business venture. Many business organisation do not employ a well thought out, systematic opportunity management approach that guides them towards the best possible outcomes and away from the worst of calamities in the development of new business ventures as well as new products and services. Then there are companies who use some kind of formal, structured opportunity management approach but the approach is either poor, flawed or too complicated. In still many other companies, opportunity management approaches may exist but there is neither reference nor adherence to them, leading to flawed or poor movement from idea to business launch. Tied to this opportunity management is market research with some companies completely ignoring any research. Other companies without knowing it, do a poor job at market research while still many others. There are also some companies that may do good market research they dismiss the research if they do not support their ego-driven desire and conclusion to set up in a certain market even when they have no better justification to disprove the market research findings. A combination of passion for a certain industry and ego is a double sword which leaves a business owner either at the zenith of success of the abyss of recording failure at lunching a new business. This is why a well-structured, opportunity management is critical to help business people minimise disaster and maximise success in the risk areas of setting up new business ventures. Innovation and entrepreneurship are like a made horse; they need harnesses to keep them in check and make them take the business person away from doom towards destiny. Structures, processes, procedures are the harnesses for innovation and entrepreneurship in creating and launching new business ventures.
Strategy and New Business Venture Set Up and Launch
Real, original, pure, unified strategy was mooted circa 300 BC with a single purpose to increase the odds of winning in wars and battles as efficiently (minimum loss of life and assets) and as effectively (best result in the quickest possible time) as possible. Regrettably through the scholarly attempt to understand and maybe improve strategy, strategy has been deformed, dismembered, adulterated, butchered, contaminated, cut to pieces and the pieces given to different occupations and disciplines as the complete understand of strategy itself. The result is that instead of strategy helping to improve performance and results in the corporate world, sport and other areas of life, few people still fully understand strategy in its original meaning and its value and importance in miniming the chances of failure and maximising the odds of success. The mutation of strategy has created a biblical Tower of Babel of strategy, with each person having a different and incomplete understanding of strategy and hence scrambling the true power of strategy. Given Dr Gono’s pedigree, one would have thought Lunar Chickens would have been launched more successfully than it did if real strategy was deployed, even when it is accepted that strategy does not guaranteed success hundred percent of the time. With respect to Lunar Chickens, an application of some basic strategy principles would have helped reduce the risk of failure; for example;
- How accurate was Lunar Chickens’ competitor analysis given that it was entering into a market dominated by a highly experienced multigenerational operations Irvines?
- What unique differentiator did Lunar Chickens have in order to win market share also given that many traditional consumers of poultry products in Zimbabwe were not producing their own chickens and eggs for personal consumption and for sale to augment their incomes?
- What strategy did Lunar Chickens have in mind to deploy against the flooding of cheaper chickens from markets such as Brazil which were landing at or below the production costs of a chicken in Zimbabwe?
- The poultry business Lunar Chickens ventured into is a scalable project which fits the “test small roll out big concept” so why did Lunar Chickens choose a big bang approach in such a venture?
- Poultry production is a standard existing operational concept which fits the “market first, marketing and sales capacity second and production third” concept. Did Lunar Chickens prove and confirm an additional multimillion dollar market for poultry exist before they established their production lines or they set up production lines on a mixture of speculation, hope and unproved extra demand.
- The successful set up of new business ventures is dependent on the competence of the team behind the launch. It is possible to have a powerful visionary business person, with a big bold vision and enough resources to envision and launch a stellar new business venture. However, such a visionary may have his vision up in smokes if he does not build the best possible team with the strategic, technical and operational capacity and capabilities to help the visionary make the right decisions, to put in place the best possible strategies, plans and processes and to execute effectively and strategically.
This article does not imply that Dr Gono’s vision is dead, neither does it imply that Lunar Chickens is dead. Some large scale projects are also known to move in starts and stops, sometimes hibernating for years before they rise again and inch forward before going into another slumber. Completely writing off a vision or business venture that has been started is not a good idea. This article was to explore what could have taken Lunar Chickens towards a start stop pathway. Whether or not Lunar Chickens will eventually gallop towards a billion dollar operations in a matter for the future to decide.
©Simon Bere, 2019