According to the World Bank, 70 percent of all sub-Saharan Africa works in agriculture.
Most of these people are young and poor, extremely poor. But, by using innovative business models and technology, a number of young enterprises in Africa could succeed in fundamentally changing life in rural areas and helping young people escape from poverty. During a recent journey to East Africa I had the opportunity to meet some of their leaders.
Illuminum Greenhouses is a start-up in Nairobi, Kenya that produces and sells smart, remote-controlled, and solar-powered greenhouses. Sensors make it possible to calculate the actual amount of irrigation that is needed. According to Taita Ngetich, one of the founders, this can reduce water consumption by up to 60 percent. Yet, one of the greatest attractions for young farmers is that they can control their greenhouses using an app on their smartphone. Instead of having to be on-site constantly, they can focus on other income generating activities. Taita says, “Remotely controlling greenhouses using simple text messages represents a big increase in quality of life. Now, young farmers can also meet up with their friends and are no longer tied to their farm.
With its affordable solar energy systems, SolarNow brings electricity to poor rural households and communities in Uganda, where 85 percent of the population lives off-grid. SolarNow also sells electrical appliances such as irons, refrigerators, televisions, and will offer solar-powered tablets with internet access in 2016. That may not seem like anything special, but it is the service package that makes the pioneering difference. The company gives its customers a two-year guarantee on its products, which SolarNow’s managing director Willem Nolens says is highly unusual in Africa. In addition, SolarNow caters to customers’ varying income situations, which depend on the harvest, and offers 24-month loans with customized installment payments. According to Willem Nolens, both parties profit from the model. He says, “Installment payments are good for us and for our customers. They know that they will continue to enjoy good service, and we know that we will continue to receive our money.” The offer is hugely successful: Solar Now has already sold solar home systems to 10,000 households, providing access to energy to around 60,000 people.
Virtual City is a software company that specializes in agriculture and is headquartered in Nairobi. With a new solution, Virtual City now wants to enable farmers to have a share in the increased value of their produce along the value chain. “Up to now, when farmers sold their produce at a low price at their farm gate, that was usually the end of the story and there was no more business to be done,” explains John Waibochi, CEO of Virtual City. However, on the way to the next biggest market, the value of the produce would increase steadily from middleman to middleman. Virtual City’s new product brings together farmers and their business partners in a collective and thus makes the farmers the long-term owners of their produce. Using a mobile app, farmers can track the increase in value of their produce and receive a percentage share of the sales price when it is sold to the last processing party in the chain. Real-time data transmission and electronic documents guarantee absolutely transparent processes and fair payment.
Apart from their business objectives, these three companies have other things in common: Their business models all build on new technologies. They also all put the focus on their customers and they all designed their products and services based on customer needs.
Design Thinking: Driving Innovation and Transforming Culture
Originally developed as an innovation method for products and services in Stanford, design thinking has the power to “enable new and surprising forms of working together creatively”– according to the Hasso Plattner Institute (HPI). “We-intelligence is the new catchword and collaboration is the cornerstone of a new awareness of work.”
Taita Ngetich got to know design thinking when he participated in the Global Entrepreneur Summer School. “When I arrived home, I examined the customer-friendliness of our greenhouses again and postponed the launch to make significant improvements. I’m sure that this will prove itself in the long term and, in particular, that it will boost our customers’ confidence in us.” Willem Nolens and John Waibochi discovered and tested design thinking as part of the SAP Social Entrepreneur Fellowship program. Afterwards, SolarNow completely reorganized its sales concept and replaced the previous franchise system with its own branches. Furthermore, the company’s culture and values were discussed with all employees, with the goal of improving service quality and customer retention. Virtual City, meanwhile, reassessed and improved the market presence for its new product.
Design thinking changes behavior within companies, too. “At management level, we now work much more as a team. Everyone has taken on considerably more responsibility for his or her area and set much higher targets. That changed my management style. I can now take care of what a CEO really should be taking care of, namely our customers,” says John Waibochi.
The effect these three companies have on their customers, employees, suppliers, and competitors is massive: Imagine you are a farmer who is a customer of all three companies. Wouldn’t your life change fundamentally as a result? Now imagine that this doesn’t happen to just one farmer, but to an entire cooperative. And how many companies wouldn’t follow suit and develop similar business models, even it was just to keep up with the newly set standards?
These business models have huge potential. With them, the companies also bring new values to rural areas and their own organizations, thereby creating a whole new future.