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Business model innovation

In the previous article I looked at the concept of selling innovation to the business, i.e. getting buy in for innovation and changing behaviours in order to innovate.  I made the case that an established organisation is designed to execute a repeatable and scalable business model as efficiently as possible.  Every large organisation, whether it can articulate it or not, is executing a proven business model.  However, competition and change are relentless, so business models become obsolete, e.g. the cassette tape player was replaced by the cd player, which was replaced by the iPod, which is being replaced by mobile phones.  It is not always product and technology related though, how you employ technology and provide services are equally vulnerable to change, the obvious example being the Internet and how you can buy and sell almost anything online these days.  So that is why I want to look into business model innovation and how established organisations can approach it.

Business model innovation
The term “business model” is one of the terms that has different meanings to different people and this has led to some confusion (and probably frustration) with regard to what it actually means.  My interpretation is that a business model is an organisation’s plan for creating value, making a profit and differentiating itself from the competition.  It guides an organisation to create and deliver products/services and make money from them. It describes the product/service, who is it for, what channel sells/delivers it, how demand is created and how does the business make profit.  
Let me give a well-known example: Challenging brick-and-mortar bookstores, Amazon’s business model is that it is an Internet company that sells a wider collection of books than stores could carry.  Amazon originally started off with selling books, but the business (and business model) evolved and Amazon is now selling almost every consumer article conceivable, and has a range of other services that make consumers’ lives easier, from reading devices to online data storage. It has become one of the top brands in the world.
Although a business model is meant to have more longevity than a strategic plan, that doesn’t mean it will remain relevant and optimised forever. Organisations should periodically ask questions such as “Who are our customers? What value do we offer to them? How do we do this?” If the answers are different than before, it may be time for business model innovation. You can think of business model innovation as “the search for newness.” Innovating your business model helps you find new customers and new markets, create new offerings and, ultimately, create new value. It can also help you discover new ways of doing business.
Today, the rapid pace of technology today has made it possible for companies to innovate their business model without waiting for a new technology to arrive – they simply need to look for new ways to use existing technology to deliver a better value proposition. This includes better, faster, cheaper value to current customers, as well as new value that serve a segment of the market that was previously neglected.
So how does business model innovation work?  There are some established methods as well as one or two excellent books covering the topic.  However, I am of opinion that a proper understanding of your current business model is the first step to reinventing it using business model innovation.  From there it is a matter of investigating the opportunities, imagining future scenarios and generating ideas on how to get there. 

Next Time
Closely associated with business model innovation is “disruption”, a term coined by Clayton Christensen, referring to the occurrence where industries are basically made obsolete through an innovation that creates a new market and value network, displacing an earlier technology.  Think of film cameras almost disappearing overnight when digital cameras came into the market.  Yes, it can happen in Namibia as well, so next time I will look more into this phenomenon. I conclude with a quote from Demosthenes: “Small opportunities are often the beginning of great enterprises”.

Sources
Hassan, K. 2011. Reinventing Your Value Proposition with Business Model Innovation.  Online: http://i360institute.com

About The Author

Following reverse listing, public can now acquire shareholding in Paratus Namibia

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20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.