investiledysfunction

My last post was about companies going after the underserved in order to expand the markets available to them.  This effort of going after the underserved is what I have deemed pursuing Green Prairies.  To understand the name, read the prior post (link here).

Today, I read about Denis O’Brien, the founder of Jamaica-based Digicel, whose company embodies the Green Prairie strategy.  He’s set up his cellphone company in places others avoid like the plague, e.g., Papua New Guineau, Wester Samoa, El Salvador, Vanuatu, Haiti, East Timor and 27 other generally impoverished and inhospitable territories and countries.  It seems to be working as he’s built a $2.2 billion personal fortune with this business.

O’Brien’s strategy which he articulated in the 8/11/08 Forbes is “Get big fast.  Damn the cost.  Be brave.  Go over the cliff.  The competition doesn’t have the balls.”  Not the most common way to articulate one’s strategy, but you get the point.

He’s already tackled these poor markets and is making money and is now thinking about entering the USA where only 80% of the population has a cellphone.  If he does this, US incumbent carriers may be in for a fight.  Digicel has all the attributes of a disruptor.  They go after a market which nobody cares about and then move upstream.   If they can serve the impoverished profitably, their model can work as they move up the ‘foodchain’.

Digicel’s success is attributable to many things including O’Brien’s understanding of the importance of resource allocation.  “If you have limited resources, you have to be more clever, skillful, more defiant,” he commented in Forbes.  Digicel demonstrates why today’s little startup gnat can be tomorrow’s royal pain.  Although at $2.2B, Digicel is beyond the point of being a gnat.

He also has a penchant for risk-taking.  When asked about entering Fiji, he comments, “Everyone was saying, ‘Don’t go.  It’s unsafe.‘”  Accepting risk is part of innovation and pursuing green prairie strategies.   This is why it is always perplexing when companies make risk one of the deciding parameters they use to determine which innovative projects to pursue.  They’ll argue that a project is too risky to pursue.  To compound things, legal, corporate communications and others who aren’t paid to be innovative will confirm these notions.  In fact, if the risk is high, the main dimension to consider is whether the reward is sufficiently large to warrant taking it.  You get rewarded for managing risk well.  Ultimately, if it’s easy/not risky, others will do it. That’s easy.

Digicel is showing that taking risk and managing it well can be very profitable.  At the same time, they’re doing this with less resources.  Their established competitors will not be able to go downstream nor will they want to believing it is too risky, too small of an opportunity, etc.  In the end, they’ll miss the Green Prairie as Digicell lays claim to it.

Oddly enough, that’s a picture of my dad playing Nintendo’s Wii Fit which I snapped one morning when home visiting my parents.  In fact, my parents who’ve never really been fans of video games actually went out and bought a Nintendo Wii so they can play the Wii Fit.  My mom is pretty industrious and has decided that she should purchase several more to sell on eBay, but that’s a whole other story.

The short of it is that my parents are addicted to it.  My father does it for 30-45 minutes a day as does my mom.  This is the genius of going after what experts will call white space or pursuing blue ocean strategies.  To coin my own term, I’m calling these green prairies as it seemed a color describing a large space was necessary.

And so Nintendo has done this phenomenally well.  Instead of pursuing the hardcore gamers with their first person shooting games, Madden football updates or a game that lets you carjack civilians although that sounds like a great deal of fun, Nintendo decided to go after the “underserved”.  And as they’ve recently overtaken Sony in the USA, it seems they may be on to something.

Unfortunately, this is not a strategy that many large organizations take when it comes to innovation.  They go after the same old slice of the pie and find new ways to divide that up even further, and as a result, there are whole sets of customers left out but who likely have money in their pocket they’d gladly part with if the right offering came to light. Going after the underserved doesn’t mean the people at the bottom of the pyramid as CK Prahalad has made so famous.  It might mean this, but as Nintendo has shown, the underserved can also be people with money.

The problem with going after the underserved is that it requires taking risk.  The market research, the gurus, the pundits, the industry experts, etc will all say that there is no opportunity here because their worldview is narrow and confined to the market as they’ve defined it.  Your internal experts in the business, risk, strategy, legal, etc who are often Chief No Officers will also come up with a litany of reasons to do nothing.

Therefore, going after the underserved requires going against the prevailing wisdom (I use the term wisdom loosely here).  It is also risky as it will require changing your own organization’s view of how to interact and deal with this underserved population.  This population is underserved for a reason - because your current offerings are unattractive to them (for price, quality, etc reasons) or just not catered to them.  Just putting a new package on your existing product and calling it “Product for the underserved” won’t work.  You’ll have to understand what they want, how they want it, why they want it, etc.  And in many instances, the people who’ve worked for so long in your organization on serving existing customers may not be the best equipped to do this or even be all that willing because it may be seen as a competitor to the ‘old guard’.

But, the model of going after green prairies (I’m really hoping this terms sticks) works as shown over and over again.  Nintendo is just one prominent example.  Yellowtail wines, Cirque du Soleil (both discussed in Blue Ocean Strategy) and the Tata Nano are all examples of products and companies going after the white space - sorry I meant green prairies.

But doing this requires having the right people at various levels of the organization and a willingness to zig when others are zagging.  There is personal risk here if you are the person in charge because if it doesn’t work, people will come after you and blame the company’s failure on your risk-taking.  If it works, people will write Harvard case studies about you, the media will make anoint you a superstar, and other companies will mindlessly follow what you’ve done thinking that your “best practice” can be exported to them and somehow miraculously, they’ll get the same results.  There’s an overused concept around this that many talk about — it’s called risk-reward.

If you were hired to or feel it best to maintain the status quo, don’t bother finding the green prairies.  Someone else will and then they’ll write about what a dinosaur you are.  If you’re inclined to spend some time carefully considering opportunities, you might develop some pretty interesting ideas and see that green prairies are where it is at.