PAPER ON STRATEGIC AND

CHANGE MANAGEMENT

By Erouane Langard Okenkali

The industry driving forces which are impacting on the mobile telecommunications market in

Africa are social, economical, political and technological.

The social factor to consider is the large size of the market. Africa is the second largest

continent with a population estimated at 1. 216 billion people in 2016. Africa’s

population size combined with a very low level of mobile penetration to the exception of

South Africa (72% of mobile penetration) makes it an appealing target to explore and take

risks upon when the Europeans and American markets have almost reached full maturity.

The social risk however with the appealing size of the market is also the ill level of

infrastructure and the ravaging effects of diseases such as HIV. A lot of

telecommunication services work and scale up by offering short to medium terms

contracts to their clients. How good are such terms on clients who may not be alive in 5

years or too sick to work for their money and honour their commitment? In comparison to
Europe where the population is aging and therefore healthier, Africa’s poor infrastructure

and health services put its appealing market at risk for mobile telecommunications and

technology growth. However, with the rise of insurance companies, this risk is currently

being mitigated.

Africa has more than a few economical factors playing to its advantage but they may not

exactly be those anyone expects.

First of all, Africa was a relatively virgin market in this industry when European and

American markets mobile penetration were well on their way to full maturity. This made

Africa not just an open market but also a market with a potential for fast growth. It was as

a result no surprise when the founder of MSI Dr Mohamed Ibrahim, declared 8 years after

launching in Africa “return on capital was in excess by 30% per year. By any yardstick,

these projects are more rewarding than in Europe”.

It is true that Africa’s “incomes are low per head of the population” and “personal

wealth over the past 30 years has been on the decline”, but these very same shortcomings

and risks have been the same to drive its current success. One of Michael Porter’s five

forces is the threat of new entrants and the previously mentioned shortcomings have

unintentionally but very effectively created walls to keep European rivals and

inexperienced companies at bay of African markets for a long time. It is has therefore

given a chance to local companies such as MTN and Vodacom to thrive and mature in a

market they understood better than anyone else without the fear of European (T Mobile,

Orange ) and American ( AT & T) giants. It was and still is a risk to invest in

infrastructure in Africa but these local companies and many others are willing to take the

risks, therefore the current thrive of the mobile telecommunications industry.

When it comes to political factors, the continent doesn’t exactly portray the best image of

democracy and smooth political transitions. War, conflicts, political upheaval and unrest,

the power of unions and strikes as seen in Congo, Zimbabwe, Gabon and South Africa to

name only a few over the past years have been major deteriorating factors to the

continent’s economy. Despite the fact that African Governments are a little more

conservative than their American and European counterparts much more liberal, most of

African governments have shown an incredible will in supporting the spread of

information technology even to the poorest and most rural areas. They have also shown

good faith to the spread of globalization which comes along with an influx and exit of

knowledge and resources including people. The later inevitably has led to an increase in

demand for not just communication, but better, cheaper and faster means of

communicating with the outside. Arguably, the political borders separating countries

within the continent are only colonial. The creation of regional organizations and

coalitions such as Southern African Development Community ( SADEC) or Economic

Communities of West African States ( ECOWAS), the African Union and many more

have shown governments intentions to come together and increase trades between

countries by opening themselves up to each other. All of the above has therefore driven

and is still driving the rise of mobile telecommunication within the continent.

At last, how to speak of telecommunications without mentioning the impact of

technology and innovation at its core. The current rate of mobile penetration in Africa

remains below 30%. This gives room for not only growth but also innovation for the

future. In 2006, Airtel at the time called Celtel had sufficient coverage across Africa to

launch and innovate with a new service called “One Network”, the arguably first

borderless network across Africa. While borderless network were not a new technology in

Europe and America, it was a new territory in Africa because of its low mobile
penetration. And, there’s yet more technological innovation to come in the future for

Africa in this specific industry because a lot remains to be done to cover the remaining

70% of the population without access to adequate telecommunication tools.

1. Some of the strategies of the African mobile companies have indeed appropriately

addressed the industry driving forces.

Looking at social factors, it was earlier mentioned that Africa for most still has a poor

infrastructure. For that reason companies such as MSI and MTN in order to support their

growth strategies, decided to invest in infrastructures. MTN went as far as spending $900

billion while building its Nigerian network in 2004. Another aspect to consider is the high

level of mobile penetration in South Africa mentioned above. While South Africa has

achieved a remarkable market penetration, the rest of the continent still has a long route to

go. And fully aware of that and in order to achieve its market growth, MTN used its

strong financial position in South Africa as well as its expertise and knowledge to expand

to other African countries with a very low level of market penetration.

When it comes to economical factors, telcom companies have used different strategies.

One of them is the consistent use of different mergers and acquisitions to penetrate new

markets. As it has been well established, a strong subscriber base is the key to

profitability in this industry. It is in that spirit that MTN, trying to create a greater gap

between its South African rival Vodacom decided to acquire a Middle East Company

called Investcom for $5.5 billion. The strategy not only grew its subscriber base but it

also escalated MTN’s reach to new markets in Middle East countries such as Yemen,

Afghanistan, Cyprus, Syria, Iran, as well as five new African countries, increasing its

subscriber base by five million.

Another company that used a similar strategy is European giant Vodafon. From 1993 to

2013 the giant slowly but surely started buying more and more shares of Vodacom in

anticipation of a predictable saturation in its original UK market. By 2009, the company

owned 65% of the South African company and by 2013 the company came under

Vodafon’s control. The strategy here was to buy shares for the longer term and gain

access to a new market and eventually expand to new regions around that market. This

explains why and how Vodacom now has interests in most of countries in the SADEC

region.

As for strategies related to political driving forces, it was mentioned in the previous

question that though African governments were a little more conservative, they had

nonetheless made significant efforts to open up to other African countries and to the rest

of the world. It is fully aware of such political opportunities that MSI made the move to

acquire government licenses from diverse African countries in order to spread its reach

and subscriber base. It is also interesting to observe that MTN and Vodacom first grew in

their by spreading to neighbour countries within the same regional organization before

expanding to different regions. It is debatably easier to move from one country to another

country with strong ties with the previous one than it is to move to just any country. This

shows that these companies took advantage of political agreements and relations between

countries in order to tactically gain influence and establish new markets.

When it comes to technological factors, Telkom grew more influence on top of its

monopoly over landlines by differentiating its products. The market becoming more

technologically savvy and with the increase of competition from the likes of MTN and

Vodacom, it started offering new products such as internet services, data, 3G, cloud based

services, broadband and 3G technology. The strategy was to remain competitive, sway

new clients in while keeping current clients from moving to new offers. In the same way,
the low level of mobile penetration in combined other African countries estimated to less

than 10% at the time the article was written was perceived as a cry of help for

technological innovation. MTN seize the opportunity to fulfil its growth strategies by

proceeding with various mergers and acquisition at the same responsible for the various

technological advancements in these countries.

2. There are many risks but also benefits for expansion beyond home countries.

Looking at risks, an expansion may put the company in the middle of political and

economical uncertainties that continue to plague some African countries. In South Africa

for instance, the elected president by the population has tainted more than just his career

his career with corruption allegations weakening the country’s international credibility in

the process. And just like it was the case 10 years ago with Mbeki, the dominating party

ANC elected a new president before the previous one had finished its terms. As much as

Ramaphosa has restored much hope into the country, he is still not the elected president

and whether he stays in power or not is still to be decided. This put Africa’s number one

economy in hazardous position and putting off current and potential telecom investors at

risk. The current water crisis in Cape Town is also another factor impacting population

movements, households spending as well as potential investors. Neighbour country

Zimbabwe is still recovering from the late exit of Mugabe, leaving the country in a

position of uncertainty. As for the wealthier and petroleum dependent countries such as

Nigeria, Gabon and Angola, the slump in oil prices has plunged some of these countries

(Angola, Gabon) in a serious economic crisis, with a serious decline in households

income and a lot of layoffs.

An expansion is expensive with no 100% certainty return on investment. MTN spent

$900 million for its infrastructure expansion in Nigeria in2004. The above polico-

economic are factors that may cause such an expansion substantial loss in capital. The

political instability mentioned earlier especially put high and expensive infrastructure at

risk of loss in case of a rise in conflict or civil unrest. The same goes for economical

crisis. Lower income and high layoffs can lead to an increase in crime and therefore a risk

of damaged property.

Another interesting factor to take into account that will with certainty negatively impact

an expansion is the current low rate of digital literacy of most African countries.

According to the African Digitalisation Maturity Report 2017, South Africa scored above

the four-country average (Nigeria, Kenya, Ethiopia, South Africa ) in all areas, making

the country the most digitally literate of the continent. An expansion from South Africa

into another country for instance may carry the risk of investing into a country whose

culture is not as technology driven as its home country therefore, the greater chances of

failure and loss of investment.

Another risk resides in the fact that African governments are for most, well known for

their desire to maintain control over any major interests in their states. Expansion means

the expanding company needs to be willing to lose over some of its control to the

government in charge. In a global context, an expansion beyond Africa means competing

in highly mature markets well established with experience, and competitive players that

cannot be surpassed without a certain level f innovation.

Despite the multiple risks, the benefits remain somewhat worthwhile. Within the context

of Africa, the low digital literacy mentioned above is flipped over by the low mobile

penetration of most African countries. To the exception of South Africa and who reached
 relative market maturity almost 10 years ago, and Nigeria who recently reached an over

100% mobile penetration, a lot of other countries still have a relatively low mobile

penetration. An expansion in these markets means braoder customer base, increased sales

and profitability as a result. Although an expansion requires substantial capital and

resources, most area being rural, the long term benefits of entering a quasi virgin market

is reaping a new and unclaimed market .

Furthermore, low mobile penetration implies low competition. Although most African

markets have a few dominant players, the reality is that a margin of the population

remains untouched. That leaves room for new players to come in and still dominate the

market by spreading to untouched markets. An expansion therefore gives access to such

uncharted territory.

Africa is now somewhat organized in regional authorities with easy relations among each

other. The south is handled by the SADEC, the centre by the EMCCA (The Economic and

Monetary Community of Central Africa) and the west by the ECOWAS ( Economic

Community of West African States). An expansion in any country belonging to one of these

local areas opens the door and gives leverage to trading with any of its neighbour country.

The previous makes it easy to spread influence over many countries as a region. Such an

expansion strengthens the company’s influence but perhaps more importantly it strengthens

its brand in a somewhat growingly competitive Africa.

An expansion also allows companies to acquire a new set of employees and a new skill set

with it. Each country is different. Zimbabwe has the highest literacy rate of the continent

estimated at 90%. India also boast a high literacy rate estimated of 73%, some regions such as

Kerala going as far as 100%. An expansion in country as literate means quality employees

and people being the most important resources, this could lead to higher productivity, a
competitive advantage over home based companies and even potential for innovation with the

right leadership in place to take advantage of the local expertise.

Additionally, an expansion can be a strategic decision to diversify products and avoid the

risks of having all the eggs in the same basket. It was mentioned earlier that some countries

are currently experiencing political and economical unrest. A successful expansion can play

the role of a golden parachute in case the home country fails into chaos. In the same way, an

expansion can serve grow when the home country is failing to deliver the company’s growth

objectives. Vodafone for instance used the same strategy by buying a cut of giant Telkom in

South Africa to avoid the plateau its original UK market had reached.

3. There are many ways a company in a leadership position can maintain and extend its

position.

The first and most obvious one is through either mergers/acquisitions. MTN elegantly

established its empire influence beyond Africa into the middle when it acquired Investcom

for 5.5 billion in 2005. As a result of the acquisition, MTN increased its total number of

subscribers from 23 million to 28 million putting ahead of its competitor Vodacom left

behind with only 19 million at the time. Earlier in 2000, Vodacom also extended its reach to

Kenya by acquiring 40% the country’s main telecommunication service provider Safaricom.

Whatsapp boasting a total of 600 million subscribers was slowly becoming a real competitor

to Facebook and especially its messenger service. In order to defend its territory, Facebook

acquired Whatsapp in 2014 for an outstanding $19 billion. Lastly, Nike’s acquisition of

Umbro reduced its competition and made it the biggest football company in the world. This

sufficiently proves that Mergers/acquisitions although risky and expensive are still one of the

most strategic ways of maintaining and extending market leadership.

Multi-branding is yet another strategy. Multi brand is the process of creating different related,

sometimes even competing products or completely unrelated products in order to increase

market share. One of the best examples is found in the British- Dutch giant Unilever who

owns over 400 brands worldwide from Lipton, Axe to Magnum and Vaseline and made a

total of 50 billion Euros in 2016. Multi-branding allows a company to cater for different

customer needs and therefore makes room for a completely new market within its existing

market. Some clients may never consider using a company for a specific product but they

may be inclined to start a relationship with the very same company because of a different

product. Multi-branding may also cause confusion in clients mind therefore it is importantly

to proceed with careful caution. Another major challenge with this strategy is the ferocious

rivalry that exist between managers of different brands yet under the same banner.

The next strategy is quick and flexible adaptability to the changing external environment. At

some stage, Kodak was declared by the Baltimore Sun as the world’s biggest producer of film

for still and motion pictures cameras. Enjoying a quasi monopoly at the time, the company

missed to look over its shoulders and in the process neglected to notice the rise of digital

photography. It was consequently forced to file bankruptcy in 2012, giving to its Japanese

competitor Fujifilm and Canon. Adaptability would have allowed Kodak to either enter the

digital industry earlier or it would have encouraged it to buy stakes in Nokia’s early camera

equipped cell phones at the time to share its expertise. Another perhaps more effective move

would have been to make cell phones at once. Pepsico understood the importance of change

in market environment when obesity became a dominant issue in America. Indra Nooyi, CEO

at the time decided it was time for a 360 degree change when he forced the company to invest

in research to create healthier food and beverage products. The healthier decision paid off as

a report by Market Realist revealed that healthier products made 20% of Pepsico revenues.
Being acutely aware of market changes and adopting o such changes early enough can be the

determining factor to gaining or losing market share

Another strategy is to create a loop of products with no possibility of entry for the

competition. Apple did it well enough by creating an exclusive operating system (IOS) that

only works for Apple products on an exclusive store (Apple store) and only allows medias

from an exclusive software (iTunes). Apple is a machine built to lock clients in with no

chances of interaction with other competitive products. It is a risky strategy but if well

thought around diversified and complementary products with the necessary, capitals, client

support and marketing can be achieved.

A further strategy is more subtle but just as effective. The strategy is joint venture or

sponsorship. The companies Lays and Pepsi for instance have become some of the major

sponsors of the champion’s league while Heineken has remained its major sponsor for over a

decade. Football is Africa’s number one sport. Such sponsorship keeps the above mentioned

companies in their leadership positions since most of the population watches football.

The last strategy can be to create a new need in the market and through marketing create a

craving in the minds of clients. Apple for instance successfully created the first tablet (iPad)

and with its slick design and innovative interface created not only a new product but also a

whole new need in market forcing the competition to change strategies and enter uncharted

territories. By the time competitors like Samsung managed to catch up, Apple had already

won the new market by a large margin. In the minds of clients, Apple and tablet were both

the same and one thing.

Organizational change management and transformation have become permanent features of

the business landscape for many reasons.

For one, there has been a merge of new markets and labour pools have opened up

since 2000 because of the fast growth of globalization. Globalization has reduced the

cost of transport, lowered trade barriers, increased communication speed, and boosted

capital flows therefore making it easier for not only people (skills) to freely move

around countries but it has also made a way for local companies to straightforwardly

expand beyond their local market. The whole has ended up changing the nature of

local markets composition and therefore the market demand all over the world.

Companies have therefore no choice but to adapt to the movement in the market

(demand) as well as in the labour. The increased in labour movement and market

demand also had a reverse side on the whole economic ecosystem: the rise of

competition. And as expected, competition inevitably gives way to innovation in

order to maintain both competitive advantage and strong market position. The major

innovations over the past few decades have mostly happened in the technological

environment with the likes of Youtube where anyone can self teach anything, the

increased and almost dependent use of Search Engines of the like Google and Bing to

find resources instead of using a dictionary or library and Amazon and iTunes for

buying books & music online to name only a few. These technological advancement

have forced companies to not just adapt to current changes, but to also remain flexible

to acclimatize anew to the next wave of changes that is bound to happen at a rate

which has become almost unpredictably.

The third reason is simply the fact that capital flows and investor demand have

become less predictable.

As can be seen of the graph, Bank and money markets have been on the rise since after

1995. The common understanding is that certain types of capital flows are

more volatile and destabilising than others. As a result, flows such

as foreign direct investment, which are seen to prompt a longer-term commitment, have

come to be viewed as being relatively steady and unlikely to overturn without reasonable

cause. Because of their relative stability, such flows are often referred to as “cold”. On the

contrary, flows such as portfolio or bank and money market flows are often seen as a
form of speculation by investors seeking short-term gains and therefore volatile and

subject to sharp turnaround, exposing recipient countries to the caprices of international

financiers. Such flows unstable flows have caused markets to fluctuate on a yearly basis

therefore forcing companies to constantly change and predict the next change in order to

remain competitive.

The last reason has to do with organizations becoming keenly aware of the role that

culture plays. Culture can be broken down into a worldwide commonality and also the

different cultural units that form each unique society. Companies now need to address and

adjust to a global culture with the likes of the different green movements (save the Earth,

Animals etc), the need for healthier habits (food, beverage, physical exercise), the sharp

rise in the number of women at work as well as teenagers entering the work place before

they are full adults and many more. Locally, companies now need to take into account the

various cultural groups that make up a society and be sure to align with local cultural,

religious values and any change in such dynamics.

1. There are many reasons why change initiatives in organizations struggle:

- Change Fatigue. According to research done by both PWC strategist consultant

DeAnne Aguirre and LinkedIn senior product and design Micah Alpern, a full

65% of respondents reported change fatigue to be a real issue. Change fatigue is

the overtiredness that sets in when employees are pressured to make too many

changes at once or without proper transition periods between one change and the

next. This usually causes confusion, loss of personal engagement and commitment

and may lead to surface level or shallow change unable to be sustained in the

longer term.

- Lack of skills to ensure that change can be sustained over time. At first, the

leadership is always eager to start a change initiative. But it takes more than hiring
 a Project Manager Officer and change agent, installing a new software and issuing

new passwords to drive a successful change. It is equally important to keep the

change team in place as long as needed to make sure the change is fully

transitioned to the business as usual way of doing things, and address any

potential concerns in the process.

- Lack of ownership. Some companies make use of a top bottom or C-suite strategy

to initiate change. This method consists of having top executives plan the change

from start to implementation without any or little input from the top bottom of the

company. The challenge with this approach is that there’s no real buy in nor

ownership from the employees simply because they were not given a chance to

contribute to a change that is bound to affect them. In fact, perhaps the biggest

challenge with the C-suite method is that the knowable resistance that usually

comes with.

- An unclear vision. One of the primary reasons why change fails or struggles is

because the reason for the change and the expected outcome are unclear in the

first place. Questions such as “why are we initiating this change”, “What is on the

other side of this change” and “how will this change help us get closer to our

corporate goals and vision” need to be clear with everyone from the get go. If

people can tie the change to the greater cause, they will be more likely to buy in.

- Poor communication. Companies are usually very good at sending newsletter

announcing the future change and how it is going to roll out. On the surface,

everyone knows and seems to understand what the top management expects from

the organization however, even at such levels, communication by definition needs

to go both ways; it needs to be both downwards and upwards. Companies are

 excellent at downwards communication stream but not always as good when it

comes to upward communication.

2. Culture plays a vital if not lethal role when it comes to change. As mentioned by

retired CEO and chairman of IBM Louis Vincent Gerstner Jr. “culture is everything”

when it comes to change. Change cannot be successful if employees perceive it to be

contrary to the company’s culture. The company’s strategy for change therefore needs

to be built around the real strengths and weaknesses of the culture.

As seen from the table above displaying research by DeAnne Aguirre, most of

companies manifest a strong affirmation in the role culture plays when it comes to

change.

Organizations for the most part make use of some, if not all 8 well known steps of

change suggested by Harvard business school leadership expert John Kotter. The 8
steps include : establishing a sense of urgency, forming a powerful coalition, creating

a Vision, communicating the Vision, empowering others to act on the vision, planning

for and creating short term wins, consolidating improvements and producing still

more change, institutionalising new approaches. The last step is a somewhat

intellectual paraphrase of “changing culture”. As can be seen, culture is not only at the

bottom but it is considered as just another step. Having noticed that, it is important to

first redefine the term culture. Culture as understood is the set of ideas, customs and

behaviour that sets a group of coexisting individuals apart from another. In other

words, culture is a holistic way of doing, seeing and believing. These 8 priorities

should be rethought. Culture is not a step into change but an enabler of that change.

The 8 steps suggested by Kotter though effective, should each be addressed within the

holistic context of the organizational culture, making it 7 steps instead of 8 steps.

Culture is the overall umbrella driving or handicapping every aspect of change with

an organization. Whether it plays as a driver or as a handicapper will totally depend

on how the organization handles the change. Culture is used as an enabler when

commonalities between both the change and the current organizational culture can be

found and used as leverage to launch the change and build momentum. Overall, how

well an organization understands its own culture will determine how they can lever it

to support and enable any change the organization decides to implement. And, part of

knowing its culture is knowing the key people driving that culture. There are the

executives and leadership team but there’s also the informal leadership team. The

later consists of individuals highly favoured by colleagues for their influence in the

organization. Such people include the pride builders and the trusted nods. Pride

builders are the encouragers and those who help others take pride in their work and

enjoy it. Trusted nods on the other hand are the experts of the organization’s real
 identity, history and life patterns as a whole usually because of their seniority or

experience in the organization. If managed effectively and approached first with tact

and openness, such individuals can become the very ambassadors of cultural change

or adjustment within the company whenever there’s a change ahead.

3. Leadership plays one of the key roles when it comes to change initiatives. Change

initiatives require the full buy in of the leadership team of the organization; it all starts

with the top executives and the CEO. But for the leadership team, it is more than just

agreeing on the general direction of the change, it is also about agreeing on how it

needs to be done right from the beginning. Leadership is ultimately responsible for

presenting a united front which has the power to carry strength and serenity down to

the frontline managers and bottom line employees.

The leadership is also responsible for involving midlevel and front line people in the

change initiative. They are the ones directly involved with the operational side of the

company and will therefore be the most impacted by any operational changes. Putting

in place to have them on board from the beginning can be a make or break for the

company and the leadership team is directly responsible for such measures.

On top of the above, leaders also need to define the cultural traits the organization

needs in order to successfully implement the change. The term culture discussed in

the previous question emerges yet again. Leadership is directly responsible for setting

strong values tied with the overall vision of the company and the change to come

because such values will consequently drive the culture of the company and the

receptivity of change initiatives.

Another role of leadership includes crafting a speech and processes around change

initiative that addresses both the rational and emotional person. Objectives that add an

extra personal attach to individuals create a higher level of commitment from

employees. The reality is that leadership is always expect high commitment from their

employees. However, the term commitment is another synonym for Loyalty, fidelity,

dedication and allegiance, all terms that are linked to more than reason. They require

strong self beliefs and a level of faith which can only be acquire by creating a sense of

purpose. That task lies in the hand of the top C-suite of the company.

As has been said many times before, actions speak louder than words. Change often

times come with a change of behaviour, attitude or even habits. Leadership must

plainly model these new habits themselves from the beginning of the change

initiative. Employees tend to model their leadership and they will know and believe

that change is really happening when they see their leadership become the very

portraits of the change they are initiating.

Communication and more communication cannot be emphasised hard enough.

Communication from the top to the bottom and vice versa needs to be emphasized at

the start of the initiative, during the initiative, at the end of initiative and all between

each of these stages. The more kinds of communication employed the more effective

they are.

Leadership is also responsible for identifying change ambassadors within the

company to drive change. These are the pride builders and trusted nodes mentioned
earlier. They are also leaders in their capacity but unlike the top management, these

“employee elected” leaders for their direct personal value to people in the company.

They have the respect of other employees as such have the power to sway people even

when rational may fall short. The leadership need to therefore combine forces with

such informal leaders in order to effectively drive the change.

Lastly, leaders role consist of leveraging the power of formal and informal solutions.

A good example of formal structure involves the use of reward systems whereby

participants to the change are duly rewarded for their participation. It may sound

costly, but when successful, it will save the company unheard headaches including

financially.