Why Nigerian Late-Movers, Too, Can Win the Future

All successful multinational companies began with outrageous dreams. But it was their organizational confidence, strategy and leadership that made those dreams true.

Today, Nigeria is Africa’s largest economy and thus attracts investor interest worldwide. While oil companies dominate the country’s landscape, investors are more interested in companies in fast-growing sectors.

Last June, when the World Economic Forum (WEF) convened in Abuja, the new WEF list of “global growth companies” was augmented with six Nigerian companies, including the mobile payment Interswitch Ltd, holding company UAC of Nigeria PLC, Computer Warehouse Group, agricultural Notore Chemical Industries, Seplat Petroleum Development, and Nagode Group.

In addition to these fast-growing companies, the Nigerian Stock Exchange (NSE) has some 200 listed companies with a total market capitalization of $81 billion in 2013. Even more importantly, there is also the far larger population of small-and-medium size enterprises (SMEs), which actually employ most Nigerians.

As these companies begin to spread their wings internationally, they share a common denominator. They are “late-movers.”

Late-movers

Forget the world of economics textbooks that speak about ‘perfect competition.’ Ignore the business textbooks that portray global competition as a quest for a fair playing field.

The reality is that many industries are globalizing. Most are dominated by old multinational companies from the advanced economies (US, Europe, Japan), although in the past three decades we have seen a significant rise of new multinationals from large emerging economies (e.g., China, India, Russia, Brazil, but also Turkey, Indonesia, Mexico and beyond).

So when Nigerian companies begin to move across the border, they will have to cope with both advanced-country multinationals and emerging-country challengers. But just because you join the game late doesn’t mean you can’t win – big time.

Whenever I work with companies that are eager to internationalize, I like to tell a story. Today – well, or at least until recently – Japanese companies are still seen as remarkable industry giants, including such brands as Sony, Matsushita, Toyota, Honda and many others. What is easily forgotten is that they did not become great when Japan was thriving. On the contrary, Japan began to prosper when these companies succeeded.

When Akio Morita, Sony’s legendary chief executive, began its internationalization, quality Japanese consumer goods were still rare and few. The image of anything marked “Made in Japan” that had been shipped abroad before the war was very low. Most people in the United States and Europe associated Japan with paper umbrellas, kimonos, toys, and cheap trinkets.

In choosing the name Sony, Morita and his senior executives did not purposely try to hide our national identity—after all, international rules require you to state the country of origin on your product—but they certainly did not want to emphasize it and run the risk of being rejected before they could demonstrate the quality of their products.

As a result, Sony printed its line “Made in Japan” small; and then even smaller; and finally as small as possible – until it was so tiny that it angered the U.S. Customs which forced Sony to make the line at least readable.

In order to surpass the perceptions, Morita understandably wanted to minimize the role of its origins and shift focus on quality, which Sony set to upgrade and innovate.

Transcending the past

Now, let’s fast forward to 2007-2008, when I was working with several Chinese companies in information and communication technology (ICT). As we explored classic Harvard Business School case studies, some executives felt overwhelmed.

I argued that those case studies were mainly about advanced-country multinationals that would soon be challenged by a new generation of emerging-country multinationals, spearheaded by China. They thought I was nice and polite, but not realistic and prescient.

They saw themselves competing with huge capital-intensive foreign multinational companies, which came from rich countries. As they saw it, they were only one generation away from abject poverty and incessant famine. “So, how could we make it?” they lamented.

The perceptions of countries are not irrelevant. They are often shared by managers of local companies that hope to become global players. Even more broadly, they affect self-perceptions, which, in turn, shape our self-esteem and sense of our potential as human beings.

In his biography, Nelson Mandela also addresses the issue of perception. He tells this wonderful story of when he was first flying on his Ethiopian Airlines flight to Addis Ababa and found himself surprised, even alarmed to find a black pilot in the cockpit, the first he had ever seen. He had the integrity to tell the story – not because it was a sign of weakness, but because it recalled his ability and willingness to transcend the past.

Those businesses that prove successful have managed to break out of the marginal mindset. Their leaders understand only too well that as long as you regard your corporate origin as a liability, you can only see so far.

Will the future

In the case of the new multinationals, the problem is not that they typically enter the global marketplace at the bottom of the value curve. Coming from poor countries, they naturally deploy cost-efficiencies. The real problem is that they are too often content to stay at the bottom.

Whether it is because of a paralysis of will, lack of confidence in organizational capabilities, or unwillingness to commit resources to mount their challenge, as long as companies suffer from a flawed self-perception as second-class citizen, they are not likely to deliver their true potential.

If you want to succeed internationally, what you need is organizational confidence, a clear strategy that articulates where you are coming from and where you plan to go to. And as the executive, you must have the passion, drive and leadership to make it all happen.

Today, Haier is a Chinese multinational consumer electronics and home appliances company. It has 80,000 employees and generates $30 billion in revenues last year. But when Zhang Ruimin built his company, one of his biggest obstacles was to break the mindset that quality was a foreign value and that affordability means bad quality.

To get his message across, Zhang once pulled almost 80 refrigerators off the line, some for minor flaws such as scratches, and ordered staff to smash them to bits. At first, his people thought the boss had gone crazy. In China, you don’t throw away what you can use, especially for marginal cosmetic reasons. You know the value of money.

But while the debacle stunned the staff, it also got their attention. They understood that Zhang was serious. If you wanted to beat your rivals and especially if you wanted to beat your rivals abroad, you had to be the best – and want to be the best.

Dan Steinbock