Disrupting Namibia’s Monopolies
Disrupting Namibian Monopolies
Namibia presents a unique economic case- a small market of 2.5 million people that is gripped by the monopoly chokehold. Innovation, entrepreneurship and business are the current buzzwords but very few have an idea of how this will look like practically within the Namibian monopolistic context.
Looking within Namibia, if the country embraces the qualities that make it a disruptive innovator’s haven, then the starting point would be with the monopolies. Monopolistic companies in Namibia are caught in repetitive cycles of sustaining innovation (innovation that incrementally builds on what already exists) and they are in current threat of being disrupted if they do not prioritize the learning and adaptation necessary to survive. The challenges come in that it is impossible to satisfy a sustaining innovation market and a disruptive innovation market from one company. Sustaining innovation focuses on the market’s current needs while disruptive innovation focuses on the evolution of market trends beyond the current state i.e. it looks at future needs that have not been mapped. Research shows that the two markets display very antagonistic behaviors that make resource allocation within the company to sponsor innovation quite challenging. Christensen noted in the Innovator’s Dilemma that most researched corporates that have successfully survived waves of disruption did so by separating the two functions of innovation into two different entities. IBM, Apple, Alphabet etc. prioritized disruptive innovation by spinning out companies; this means creating small companies outside of themselves that they owned majority shareholding. At the core the spin out company would comprise of the employees from the original (parent) company with a few additions. The company’s main priority would be to develop new disruptive innovation and sell this to a separate market from the parent company’s original market segment. Christensen observed that companies that embraced this type of model, survived wave after a wave of disruption. Namibian monopolies need to consider this for various reasons.
With growing exposure to the outside world through the Internet, Namibians are increasingly becoming aware of the various opportunities that lie within and outside the country’s borders. Consumers in Namibia are also increasingly becoming more sophisticated in their market activity. However, the challenges for the Namibians who seek to seize business opportunities lie in the interplay of the small market with the current industry titans. The way to mitigate this would be for the titans in Namibia to actively embark on spin out companies. This would mean providing their intrapreneurial staff members of these companies with the ammunition of resources to start spin out entreprise. This way, the parent company has the advantage of maintaining their mainstream sustaining market while ensuring growth and continuity in the disruptive innovation market for the future. These companies could also embark on investing in incubation hubs with young entrepreneurs where they provide the seed funding to establish an entity that focuses solely on disruptive innovation with a percentage shareholding model.
The obstacle with such a solution is overcoming the tendency to work in silo. Generally, there is a resistance to the element of sharing in business. However, this resistance from a protectionist view will ultimately be the downfall of both the monopolies and the upcoming entrepreneurs and small businesses. The corporates tend to resist investing into companies for a mere percentage stake of ownership while the entrepreneurs tend not partner up with corporates and relinquish partial stakes of ownership due to fear of being swallowed. However, realistically Namibia’s market fabric makes for a difficult case for each person and company to remain in a vacuum. Namibian monopolies need to embrace investing in their intrapreneurial staff and the nations entrepreneurs from a perspective of spin out companies. This will also prevent cases of replication and duplication that we observe in the market today, which technically with a 2.5 million sized market, we cannot sustain. This can be achieved by negotiating this model with win-win partnerships. Intellectual property (IP) can be instrumental in ensuring the health of these partnerships- i.e. governing ownership of intellectual output using the various legal instruments available in IP and commerce law. From the perspective of the monopoly, it would mean ensuring continuity and from the perspective of the entrepreneur it would be spreading risk and enabling access to resources.
Namibia embracing her disruptive innovation qualities will be a great benefit for Foreign Direct Investment. If Namibia brands itself as a market that is willing to absorb certain disruptive innovation as a pilot for large multinational corporations (MNCs), the country could house incubation hubs for these companies that cannot afford to operate in their current markets due to the clashes between sustaining and disruptive innovation market characteristics. This way, skills transfer from MNCs will occur through an entrepreneurial lens. There are numerous unemployed youth who could be groomed into the rightful candidates to champion innovation for MNCs. Government could provide a conducive regulatory environment that invites this type of FDI with the condition that the incubation hubs absorb a number of the local youth at a time.
Whether through internal or external companies, Namibia can structure a narrative that brands itself as a disruptor’s haven. One that shows how it harness’ it’s small population as ground for validated and experiential learning, and how it’s early technology adoption rate makes innovation easy to commercialize. Innovation from small markets are steering a new direction in economy development and Namibia is well within reach of doing so. If Namibia achieves this, it will put her at a significant market advantage and take her forward where economy size does not matter.