Imagine the genie is popped from an Aladdin Magic Lamp and you are to make a wish. What would you ask for? The contemporary Aladdin Magic Lamp is the 'environment' and the 'strategic opportunities' that exist is the genie, only few people are popping their genie from the Aladdin Magic Lamp. Those few people form the class of the ultra-rich in the society that control the global economy because they understand and know how to pop their opportunities from the environment, match the opportunities with proportionate actions to produce results. These results have generated lots of debate and nations together with right groups are demanding equal share of results within the society. It is amazing to know that while those few people are awake thinking of how to find opportunities, the majority are sleeping, while they are taking risks, others are holding back and while they are investing from the scratch, their contemporaries are lounging. Inequality will further be debated because fewer people are popping the genie out of their Aladdin Magic Lamp and one those people to learn from is Amancio Ortega.
When you talk of business success in the contemporary world of 7.4 billion people and about $241 trillion worth of wealth, you will certainly mention Amancio Ortega who is the wealthiest retailer in the world, a self-made billionaire and a world over fashion giant. He paradoxically maintains a highly incognito public life and a modest lifestyle, He eats with employees in the staff canteen, visits the same coffee shop he’s been patronizing for many years and rarely take vacation from work only to Greece. Amancio has also featured temporarily as the world richest man by Forbes.com with a 2016 report showing him leaping ahead of Bill Gates although Bloomberg.com still retain Bill Gates well ahead of him. Amancio is interview-shy and didn’t have his picture on any media network until his company public offering in the early 2000; he is a humble and frugal achiever whose principles are worth mirroring.
Amancio Ortega was born on March 28, 1936 to a railway worker father and a housemaid mother, he dropped out of school when his father relocated to La Coruna and started working at age 14 for a local Shirt maker called Gala. His parent could hardly afford their daily bread for the family talk more of funding school bills. Amancio learned to make clothes by hand, he worked hard and developed unmatchable skills in the fashion business that latter transformed into an obsession.
Amacio with his humble background observed that most good clothes produced can only be afforded by high end individuals and the lowly placed never looked good because they could not afford those outfits then he vowed to make good clothes available for the poor at affordable prices in a high end environment. This is his success tipping point, he found his Aladdin Magic Lamp from the society by identifying needs, transformed the needs into opportunities and popping the genie-opportunity by taking immediate actions towards changing of the opportunities into products.
In 1972, Ortega demonstrated his training wits mixed with networking prowess by founding Confecciones Goa which made and sold bathrobes sewed by thousands of local women organized in a cooperative. The success of this enterprise gave this mysterious and frugal textile genius the experience to found Zorba in 1975 with his ex-wife Rosalia Mera. The name Zorba was changed to Zara eventually because a two block away bar has already picked that name. Zara is the genie of Amancio Ortega and imagine the genie telling the master, "Make a Wish", "Your Wish is my Command". Products after products started rolling out day after day until the global textile giant emmerged from the corner shop into a global stage. Amancio continued to place demand on the genie with hard work, perseverance and innovative thinking, breaking business barriers, taking market shares by storm and making entries into new markets daily.
Ortega created the holding company Inditex group (that currently holds the interest of Zara, Massimo Dutti and Pull&Bear) in 1985 and amazingly the fast fashion giant now creates about 12,000 new designs yearly with about zero advert cost. It’s been estimated that Zara spends only about 0.3% of revenue on ads but exhibiting unequal strategies of producing what customers want, deliver such in good speed and at a reduced cost.
These are the strategies that have placed Amancio Ortega as one of the richest 5 persons in the world and Inditex of which he holds over a half of the shares is worth well over $100billion in valuation.
Business Aladdin Magic Lamp only pops good luck when your business is built on the tripod of Convenience, Value Creation and Networking Effect.
Convenience for customers means producing what they want in tradition and style. When you satisfy customers’ needs, you will win their loyalty which is why Zara does not spend money on ads because the product is enough to showcase the brand and promote the products.
Value Creation is in producing satisfaction to the customers at the lowest cost. Zara has been able to make good quality styled outfits at affordable prices and in a high end environment that even the lowly placed can walk into the emblazoned Zara outlets and pick affordable dresses of choice. Value creation is also called dollarization which is the quantified opportunity cost of patronizing a particular product of a brand and if that value is positive for a customer, you are adding value and creating loyalty bank for your brand.
The networking effect is a snowballing factor in business which is the most important goodwill in the mind of the customers who become foot soldiers that protect and promote the brand and they also keep at making repeat purchases. Zara has been able to create networking effect by creating different cultural styles that match the emotional, cultural and social needs of people over time hence creating a myriad of loyal and addicted customers who careless about other products but will brand their wardrobes and closets with Zara products, they will also ensure their family and friends do the same. Zara stands for quality products at convenient prices and the reason for the high customer base. As an entrepreneur, you need to produce good quality products at convenient prices to grow your critical mass. This is the greatest innovation you can adopt in your organization.
These strategies have created a critical mass advantage for Zara over the years and the company has experienced growth in leaps and bounds with representations in about 88 countries and still counting. Obviously, Zara is in every city and in most remote places in the world with products on both the poor and the rich, it is the genie that Amancio Ortega pops every day. What is your genie?
This tripod strategy is used by modern companies like Amazon to gain competitive advantages and to truncate the business domination of some iconic contemporaries and controlling the business world. When Amazon started the online book sales by allowing customers buy online, package and ship to door steps, creating convenience at affordable prices and building their networks around the world, Banes and Noble twinkled at the forecast that Amazon is becoming the greatest book seller in the world but today, Amazon is much more valuable and profitable than Banes and Noble, the Nook has bowed to the Kindle Fire. Amazon is growing geometrically while Banes and Noble is contracting numerically. It is uncertain if Banes and Noble will ever outsmart Amazon again because while Amazon was building innovative networks, Bane and Nobles was boasting of reputation and while Amazon was creating strategies of fast fashion deliveries, Banes and Noble was expanding brick and mortar reach.
It is obvious from studying businesses around the world from Wal-Mart to Amazon, Zara to Spanx and from Microsoft to Apple. Google, Facebook and Alibaba that I've come to conclusion that critical mass innovation is built around the tripod strategy. In Africa, Aliko Dangote has his hand on this strategy but the price or value addition effect has not resonate the African business space because of lack of competition and his companies dominate in almost all the markets with 2 digits market share in a near monopoly across Sub-Sahara Africa.
The most competitive industries in Africa are the financial (majorly Banking) and the telecommunication and here is what competition can do. When telecommunication companies were licensed in Nigeria and MTN started operations on per minute billing, Nigerians demanded per second billing but MTN baulked with a claim that per second billing system is not realizable in Nigeria until Glo, an indigenous telco started operations with per second billing, MTN simply tweaked their operations to reflect the dictates and demands of the new market in order to remain competitive.
It is also overwhelming that DSTV, the cable business company, has near monopoly operations in Nigeria with its blanket billing system and until there is a competitor who can introduce 'pay as you watch' billing, DSTV will not stop making tremendous gain. There are many dominating companies in Africa that have controlled and hindered economic growth by being involved in corrupt practices sometimes instigating government functionaries against free entries to the markets they played.
Entrepreneurs need to learn these competitive strategies, create and pop their Aladdin Magic Lamp by their own will and take their businesses beyond leaps and bounds especially in Africa where big corporations intentionally ‘kill’ the upcoming ones to remain the major market players and there are no laws to checkmate those excesses.
It is time to pop your own Aladdin Magic Lamp and determine what the business future will be by providing convenience (service and easy access to products), Value (product satisfaction and price advantage) and network effect (creating critical mass).
You can either become another frugal Amancio Ortega or the innovative Jeb Bezos but by all means use these strategies to grow and develop your business into a global phenomenon.
‘Tope Oladele