Cell C should follow Capitec’s lead

It is fascinating listening to industry analysts scrutinising current situations and dissecting future prospects in their respective areas of expertise.

You could be encouraged and thrilled, but sometimes you could be totally discouraged from following your dream of entry into an industry.

“Reasons” are galore including the most favourite one: “The market is saturated.”

Seemingly, there are set rules and holy cows. Don’t you tamper with those rules! If the boss says so, please don’t argue with him. He (or she) has been doing this for donkeys’ years. He can’t be wrong.

Chief executives of companies copy their competitors without blinking an eyelid – just like academics of higher learning quoting from 18th century manuscripts to argue a point in 2012.

We are slaves to intellectual laziness.

When I grew up in this country, banks closed early every Wednesday. I could not figure out why until someone told me it was because the bank executives “were off to the golf course”.

Corporate executives will set rules and stick to them even to the detriment of their companies’ growth prospects. This would only change when someone “disruptive” came around and challenged the status quo, just as Capitec Bank did.

A big  bugbear in a banking hall is the filling out of forms before you join a long line, irrespective of age and your state of health. Capitec’s is a paperless environment and lines are in the form of a row of chairs. So, you are asked to sit down while in a line and move from chair to chair until the tellers’ counters. The tellers are polite and professional. The bank closes at 5pm on Saturday and the branches are open for business on Sundays.

Look at the bank’s stunning results for the year ended February 29, 2012. Earnings were up 68% while the bank acquired a total of 877 000 new active clients for the year. There is a lot you can say about this business, but it is a true example of how to change the rules in your industry or business in general.

Not that you should not listen to experts and analysts. They are there for a very important purpose. But some of the forecasts and analysis have been proven wrong.

The cellular industry is a case in point.

When the country’s cellular industry kicked-off in 1994, experts forecast that the customer base was never going to exceed 2 million.

Where’s the customer base of these cellular companies now?  There are more than 60 million SIM-cards in the market.

This brings me to the crux of my argument.

When former Vodacom CEO Alan Knott-Craig and the new chief of Cell C, vowed to double Cell C’s market share within the next three or four years, many commentators in the market were baffled.

Currently Cell C, the third entrant into the highly innovative and high growth cellular industry, has 13% of the market. Knott-Craig now wants to push it to 25% in a few years.

Knott-Craig, who takes the helm at Cell C in the beginning of April says his mandate is to “make the third cellular entrant a real player’ as soon as he can. And he regards his target of 25% share of the market as ambitious but “not impossible and not negotiable”.

“If you are not sitting at 25% plus it’s very difficult to compete. You are always sucking the hind tit. In this game, numbers do matter and size does count.”

He wants to do this by “changing the rules”.

“The rules have been pretty much the same for as long as I can remember. If we use the same business rules it’s going to be tough to catch up. If we change them (the rules), we would change them to suit our purposes,” he says.

A lot of industry players would like Knott-Craig to explain his plan. He is not going to do it just yet.

Let’s take an example of a controversial factor in this industry: Nearly 50% of customers (more than 20 million people) in SA are black-listed, which means their applications for cellular contracts cannot be approved.

This is a lot of potential customers. So, if you change the rules and design a product offering just for them (the black-listed market) without killing your business, I bet you others will follow.

But hold it. I am not saying that’s what Knot-Craig is going to do. I am just saying therein lies a huge business opportunity.

You cannot apply foreign rules where they do not work.

Rules are there to be challenged.

Source: Moneyweb

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Cell C should follow Capitec’s lead