Dear Entrepreneur, the Greatest Threat to Your Business is Non-Consumption!
Sometime ago, it was in the news that ride-sharing app, GoMyWay had shut down its operations. Consider the figures: the app had 2,000+ members; 106,630 rides offered and rides shared across 16 states in 2 years. Divide these numbers by the actual population of these 16 states and the actual number of rides shared in these locations. You will realise that the company lost to non-consumption.
While we often blame the tough terrain and the ease of doing business (or the lack of it), for the many woes that startups face in Nigeria, we tend to forget that many others thrive under the same circumstances. Usually, what differentiates both groups is how much each is able to adapt to market dynamics and how much people are willing to buy what they sell. So, even though the government has begun a commendable initiative to facilitate the ease of doing business, some startups will still die tragically.
What is Non-Consumption?
In his article, Non-consumption is Your Fiercest Competition- and it is winning, Efosa Ojomo defined Non-consumption as “the inability of an entity (person or organization) to purchase and use (consume) a product or service required to fulfill an important job-to-be-done. This inability to purchase can arise from the product’s cost, inconvenience and complexity, along with a host of other factors”.
If it is to be, it's up to me. pic.twitter.com/2zx2gSMrIP
— Nigeria First (@NigeriaFirstng) October 17, 2017
A 2016 report by Ericsson revealed that 53% of Nigeria’s population operate a bank account. The World Internet statistics report of September 2017 indicates that only a total of 47.7% of Nigerians have access to the internet. Other indices such as exposure to quality health services, access to power and quality education all point to one fact: the majority of Nigerians are still struggling to enjoy the basics of a reasonable life: electricity, health, broadband, quality education and access to financial services. The implication of this fact is that the majority of Nigerians are not disposed to using technology as we see it today.
The “over-populate-the-low-hanging-fruits-zone” syndrome
Then, one wonders why most of the tech solutions we create today are geared towards serving the very small population that has access to these amenities. In many instances, the consumers really do not see the services being offered as a necessity. In some other cases, there are too many startups offering the same service to the same target market. This creates a rat-race and just like every rat race, only one rat wins. And, the winner is still a rat!
In my opinion, the root of this “over-populate-the-low-hanging-fruits-zone” syndrome can be traced to two things:
- Too many tech entrepreneurs first catch the “tech-preneur” wind before they identify the problem they are setting out to solve. So, what do we do? We look for a silicon valley model. We digest it. Then, we begin to replicate it here. Sometime later in the journey, we realise what we have decided to sell does not sell. Someone said “you do not go looking for a problem after creating a solution. You identify a problem first. Then, you look for a solution to sell.
- Somehow, we have narrowed our definition of what entrepreneurship is. Going by the ecosystem we celebrate today, we will be able to produce adjoining services only to the real solution owners. This is more like providing excellent car-pimping services. Someone else still manufactures the cars!
— Emeka Azuka Okoye (@EmekaOkoye) August 5, 2017
What is the way out?
Someone talked about Entrepreneurs investing in a type of innovation called ‘market-creating innovation’. I call it “people-centric innovation”. This involves transforming complicated and expensive products into simpler and less expensive products, making them accessible to significantly more people in society. Most of the solutions that appear to be for rich and skilled today can be consumed by the rural majority if we go the extra mile to create options that suit their needs.
Secondly, we need to focus on what works. We need entrepreneurs that will fashion out creative ways of solving those challenges that seem to be holding us down: power, infrastructure etc. After we have solved these minor problems; we can sell our solutions on a large scale.
For instance, Graheem bank was conceived as a solution to a lingering financing problem among poor female traders in India before it became a large-scale financial institution. The challenge was real to the people involved (poor female traders), and the solution met a need.
If our startups can follow this model, seeking to solve any of the many pressing problems that crowd the Nigerian space, then, we would have a generation of entrepreneurs that have positively influenced life and how things are done.