Four lessons from sub-Saharan Africa on building effective business ecosystems 

Rapid change requires constant adaptation in the face of emerging challenges and customer needs. This can often best be achieved by ‘co-creation’ with key stakeholders; in this context, companies increasingly design business models that embrace interdependent relationships between producers, consumers and other stakeholders. These ecosystems are difficult to develop and maintain, and often fail. How can we create and sustain effective and innovative ecosystems?

Extensive work in Sub-Saharan Africa has shown that four pillars are key when developing and maintaining dynamic ecosystems. This challenging yet intriguing context - where, for example, access to resources is challenging - makes the following observations on emerging patterns likely applicable elsewhere.

1) Providing a north star

Why do people join such ecosystems? People who connect with a joint purpose, belief system, collective goal, or a ‘bigger than myself’ motivation often report benefits from engaging in communities and networks of like-minded people and organizations. But what makes them stay over time? Concrete benefits and a sense of belonging, as well as meaningful relationships, seem to matter to many.

Nigeria’s Diamond Bank built its ‘BETA ecosystem’ to bring female micro-entrepreneurs, for whom traditional banking had not worked, into the formal financial system. Diamond Bank hired agents who used mobile devices to open bank accounts for these entrepreneurs and provided them with cash in/out services. It combined Nigeria’s traditional Ajo system of local, communal saving schemes along with formal financial systems such as electronic banking.

Diamond Bank has managed to integrate over 600,000 people into its BETA ecosystem, which has become one of the bank’s fastest-growing savings and transaction accounts. One of the issues raised by the entrepreneurs was the necessity to close their store or entrust it to someone in order to visit the bank. Retaining them required maintaining the ‘human touch’ - the initial basis of trust - which, in practice, meant regular visits by agents to the stores themselves. To this date, the greatest reason for drop-outs from the scheme remains an interruption of these ‘BETA friend’ visits.

2) Redefining ‘tribal’ boundaries

Demarcating an ecosystem and its ‘narrative’ shapes how we form opinions and how we engage with people within that same ecosystem. Ethnicity is crucial in so many contexts, and this is particularly true in Sub-Saharan Africa. This means that scaling solutions often necessitates redefining traditional group boundaries.

Our study of IT enterprises in Kenya shows how successful companies and ecosystems develop ties across ethnic groups. They reframed the ‘in-group’ idea, basing it on factors such as common interests. ‘Tribe’ does not have to be defined by geography or heritage only; they can also be shaped pro-actively based on other factors, such as shared interests. A teller in a Sokoto branch of the bank can share interests with a like-minded CEO in Lagos - transcending ethnicity and other socio-economic factors.

Socialising effectively in ethnically fragmented settings can include bringing people together with entrepreneurs from different tribes, facilitating cross-tribal event interactions, integrating ambassadors and speakers from various tribes, or convening an ethnically diverse group of facilitators and mentors at trainings.

3) Facilitating interaction and identifying embedded multipliers

Recurring and self-governed interactions are what keep these ecosystems alive. Aligning the ecosystem’s core solution with the needs and interests of all stakeholders helps develop the buy-in necessary for increased engagement.

Both digital and physical environments often host ‘multipliers’ who connect with and influence others, nurturing interactions and ideas as they arise. Informal networks often create ‘unofficial’ leaders, who can be identified and legitimised by formal authorities as ambassadors.

Or existing multipliers can be leveraged, reinforcing the core of the programme and establishing the role of the organization as an orchestrator. For example, RLabs, an organization based in South Africa that scaled into 22 locations and whose low-cost education model is now being used by hundreds of thousands of people, identifies and encourages well-connected local organizations to use their methodology. Or take Facebook: Even without an initial physical presence, the company developed one of its strongest developer clusters in Lagos. This was enabled by the company partnering with existing incubators and tech hubs rather than competing with them. Leveraging existing multipliers is often key to shaping the ecosystem.

4) Developing an inbuilt capacity to cultivate serendipity

Companies and support organizations such as incubators or government agencies often try to plan everything, devising and tending top-down programmes. However, potential solutions are often unknown, and locals may know best what is needed and when. A support infrastructure that considers these dynamics puts those closest to the problem at the centre, particularly in dynamic environments where the unexpected should be expected.

Supporting people who embrace new ideas and who can maximise outcomes in environments that allow for serendipity is crucial. Kenyan technology and innovation hub iHub uses events and semi-structured programmes to facilitate the unexpected, and its legitimisation of and investment in unexpected emerging ideas helps to turn serendipity into opportunity. Companies around the world develop agile structures and processes to cope with the unexpected, enabling their stakeholders to identify and move forward with new ideas. Who would have thought that in China a washing machine might be used to wash potatoes?

Translating unexpected outcomes into practical benefits happens by incentivising the identification of unexpectedly emerging opportunities and developing funding to pursue them as they emerge. This allows for cracking the serendipity code. Overcoming the perception of serendipity as a loss of managerial control, and seeing it rather as a sign of a healthy culture in a platform ecosystem is crucial to avoid valuable outcomes.

Thus...

Ecosystems can effectively scale financial and social impact, but are often dynamic and unpredictable. Companies, educational institutions and support organizations must rethink their approaches. Developing a mindset that makes the best of the unexpected – and cultivates serendipity ­– becomes a necessary skill for ecosystem development.

When many people in some parts of the world rely on less than $1.25 per day, understanding how we can create productive employment through ecosystems can ensure not only company success, but also societal prosperity and inclusive growth.