Thanks Rob. This is a very pertinent question that is often debated. The current view is through private sector growth, people’s skills and wages will grow and this is one way to grow their purchasing power. Ultimately, you do want high domestic consumption, as you rightly pointed out. I think there is still work to be done on the skills development to allow citizens take advantage of the higher skills jobs being created through the investments for sure. The approach will have to change to some extent as the country grows, and it has seen some changes already actually. Kagame’s leadership is definitely a big part of the story, and happy to chat about it more.
Luca, your question is spot on. This is a tension that is constantly being evaluated. And RDB is the primary driver for investments, so within the overall economy, it has a very strategic role. A similar business / operating model is generally embraced by the entire government. On one hand, as a country that was playing “catch up”, it often does feel that maybe its even bending backwards too much. But the question often is – what is the alternative? The options were limited given the targets it set. So far the push somewhat seems to be in the direction of establishing a certain baseline, for Rwanda, middle-income status, and then at that point, with some economic power, it has a higher bargaining power. However, that being said, some of the ways it tries to manage this tension is through the sectors it targets / prioritizes and where the investment tax benefits / waivers are given: infrastructure, services, agro-processing, IT, and other key areas that have been identified as critical to economic turnaround / growth acceleration…so not just any investment is treated the same. This encourages investors to focus on sectors that the country has identified as critical for its people. There are also requirements in place for number of jobs created, how the local economy taps into the FDI benefits. Very much a work in progress, i’d say, as the country learns from its own mistakes, as well as those in the region.
This is a great example of network effects! Price setting is always a challenge, and being able to estimate a willingness to pay, like ASOS is doing through its social media usage is a smart way to go. Moreover, given the quick turnaround in fashion cycles that allows something out of date from last season to remain very catchy for the young and price-sensitive consumer. Social media usage is also an excellent capitalization on a “fashion trend” but my one concern is precisely that it may just be a “fashion trend”, thus presenting a huge risk. We are definitely in a heavy social media usage phase, but I wonder if our generation or the next generations will continue to use social media like we do today, or with the growing privacy concerns and increased aggressive marketing that comes out of users “likes”, if users will scale back how much information they share. In this case, it will be interesting to see how ASOS will then inform its fashion preferences, and how that affects the business and operating model alignment.
Blackberry’s focus on security drove its high adaptation by corporate clients, for whom this was a big concern, but their lack of focus on innovation and productivity became their downfall. I particularly remember when we had blackberry blackouts on our work phones repetitively, and what followed was a push on management’s side to find a solution that addressed both security and reliable productivity. I wonder however, now that corporations have evolved to other smart phone operators, allowing them to achieve both productivity and security as these platforms have also evolved, if this is a market that would be open to reconsidering blackberry use after an unsatisfying user experience. It was often that someone had a blackberry for work and another phone for their personal use, and now that one have one phone for both, that is sometimes subsidized by the company, who is blackberry’s target market now or in the future? This is not very clear to me so it will be interesting to see how they evolve to address this.
I enjoyed reading this Selin, I was not aware of Maiyet! Managing to align a business and operating model that is truly focused on a double bottom-line in an industry, where, like many others, the trade-off is often made in favor of profit maximization over sustainable business practices that create true economic value for those at the bottom of the supply chain. Maiyet is definitely challenging the status quo by showing that a luxury brand can make a profit and make an impact doing so, something that more businesses that rely on cheap labor in harsh working conditions in less regulated markets around the world should emulate. This is a very pertinent issue as the world becomes more aware of the pervasiveness of exploitation driven profit maximization and perhaps the transparency of brands like Maiyet will put more pressure on industry peers to adopt better supply chain practices or at least equip customers with the knowledge to demand fairly traded products.