From the Lionesses of Africa Operations Dept
Tuning into the fabulous Harvard/Lionesses of Africa ‘Women and the Changing Face of Entrepreneurship in Africa’ Conference this week, and seeing all our friends from the 100 Lionesses Club (we really must change that to ‘Celebration’, not ‘Club’) made us think of one legend of a Lioness who went to Harvard, (who’s short, simple yet very effective obituary we recently read from A16Z in their September newsletter here), who led before us creating the pathway for so many of us to follow. Sadly recently departed, the one and only RBG, Ruth Bader Ginsburg.
We are no experts on Law, but she is widely considered to be one of the most important legal minds in American history, fighting often and consistently for (amongst other important issues) gender equality and especially the fight for equal access for women to financial services. She did not shy away from fighting for men either when gender discrimination was shown as in Moritz v. Commissioner. But no surprises, the bulk of her cases were on behalf of women, who sadly were having to fight for even the most basic of rights such as opening a bank account, applying for a mortgage, or holding a credit card. Given the important precedents she set in many of her cases, we have absolutely no doubt that many of these have been used across the globe to batter down gender discrimination.
It would be daft to ask the question we often ask at this stage of our letters, namely, why does that matter to Lionesses? We have shown on previous occasions why, although not as obvious in the 1970’s and 80’s when RBG was fighting many of her most important gender cases, financial gender discrimination does still indeed continue. We see this with the terribly low number of women led and owned businesses that gain funding at each stage of the funding cycle as opposed to their male counterparts. As we heard from the brilliant Professor Zoe Marks who gave the Key Note speech on Day1 of our conference at Harvard, US$195 billion was raised by men vs just US$6 billion for women from Venture Capital. As we have argued before, with such a lack of funding, surely survivorship bias (we only see those that have survived) surely means it is better therefore for investors to fish in the pool of women led businesses than the lake of male ones? Hopefully the Harvard Conference will be the catalyst for meaningful change in this thinking.
Assuming that modern technology would aid women and be gender blind, we have been sorely disappointed as Apple Pay and the bank behind this Goldman Sachs found that the algorithm or Ai had taken on the mind of its maker and was awarding greater credit to a number of males vs their spouses for whom even a cursory glance at the net wealth of each would have seen this was ridiculous. What does that mean for the future for investing in businesses as Ai plays an ever increasing role? Will Ai (that learns from it’s previous successes) not only continue down the road of investing in male dominated businesses but perhaps even accelerate this? We shall watch with interest as this unfolds.
However, one of the other areas with which we at the Lioness Hub are particularly concerned is the supply chains of global companies and how we can get our inspirational Lionesses a foot in that door.
As our Head of Finance (HoF) often says, once we know the rules, we know how to play.
If the playing field is not even for all players (and the numbers suggest that even in supply chains, women-led businesses end up a mere fraction of their male counterparts), what is it that ticks the boxes of major western companies?
In our discussions with a number of these companies they have mentioned their need for
security of supply,
building a resilience in their supply chains,
looking for value (because ultimately this is what the end customer wants and demands).
It is rare that the ‘SDG’s’ or ‘supporting women’ or ‘buying with a Gender Lens’ is ever mentioned, and if they are, these will be way down the list.
In turn, during our many discussions with Lionesses there is never any desire for pity because they have been unable to raise finance, no wish to be treated in any way different from men, there is simply a wish for there to be an even playing field.
There is certainly common ground here!
So let’s look at the list above starting with security of supply.
Security of supply, or the trust that you bring to the table, of being clear with your concerns for deliveries and not promising too much when you know you cannot produce at that speed or deliver is absolutely essential in any supply chain relationship. Our HoF has worked in Pakistan and India at factories designing tighter and more efficient workflows and this ‘promise the Client, we shall work it out later’ route that many manufacturers in that part of the world think works, simply exhausts any goodwill that might be built up over the years. In China’s defence, many of the factories our HoF has worked with do not go down this route, but then have very large MOQ’s (Minimum Order Quantities) and due to this highly efficient systems in place.
This is a strength Lionesses have. We ‘do what we say on the Tin’. There are no exaggerated promises, no saying yes and hoping. We can certainly be trusted, and if things go wrong (as they do occasionally), we talk, which in turn allows our Customers to think of solutions with us. We must use this to our advantage.
Of course as we heard on Day1 from the brilliant Lorna Scott, Founder of Inverroche, you simply cannot plan for Government dictates such as the one that banned exports of Alcohol during the recent Covid 19 pandemic response in South Africa. Given the need not to fill out the country’s hospitals with the usual Friday night drunks, and to hopefully lessen the terrifying abusive partner figures we see from that country, one understands the need to control in someway drinking during lockdown, but banning exports as well? It made no sense and for companies such as Lorna’s, she said it would take 18 months to recover the goodwill from her offshore B2B customers.
Building resilience.
Lorna went onto say that she was determined to source local, and if not from South Africa then certainly from Africa. This reliance on self, and by that we also mean reliance on our own countries or continent, has never been more important. Toothpicks imported to Kenya when there is Bamboo grown locally? So daft.
Why put yourself at the mercy of Foreign Exchange fluctuations by buying offshore? Source locally and relax each evening. That will build resilience into your own supply chain, you will create a far closer relationship with your local supplier than if you are simply yet another customer on a very long list of customers of an internationally based factory. When CV19 struck all PPE gravitated to the huge western countries, if you were a long standing customer of one of these factories trying to source PPE this during that time, sorry for you!
Resilience is also about creating strength in your own company to withstand shocks. It is well known that a US$ saved is worth far more that an extra US$ earned through extra sales (up to a certain point of course!).
According to the NYU, Stern School there is an average operating margin for US companies of 10.70% (interesting spreadsheet comparison of US Industries can be seen here), for the average company, sales would have to increase 10x to drive the equivalent profit impact saved. That is huge and why we have been going on about ‘Lean Transformations’ recently. During good times we tend to worry less about costs as we push the company further in gaining sales, in dark times when the tide has gone out, all the rusty bikes and dead shopping trollies can be seen. Time to do a spring clean.
Easy wins include bringing all purchases under control with a centralized system or team, to pre-approve spending and to control the process. This means there will no longer be unapproved spending, those post-purchase sign offs that are often thrust under your nose, just as you are leaving - not a chance!
Many companies allow spend on contractors, consultants, and other part-time labour to swing through with little or no oversight. When was the last time you sat with the consultants to ask when their project will finish. Consultants love ‘mission creep’.
Remember you are cutting costs to prepare for the next move up in the economy. To sack heavily trained and well connected sales staff on Day1 of CV19 might have been a solution if you knew there were guaranteed to be no sales for two years, but the reality is that businesses had to sell more than ever during this time, so these well trained and well connected staff become on the whole more valuable. There was also an instant need to think outside the box and nothing concentrates the mind more than the threat of zero sales for someone paid in large part on commission. Make sure any cuts don’t destroy your company’s ability to perform. Make such decisions with the full set of data available, calmly, rationally and certainly not during a panic attack.
Resilience is also about training. Train for what the new future will bring. You may have pivoted into making PPE recently, but you know that soon there will be a glut and all the western and Chinese manufacturers will once again look to Africa to dump. That is not a good use of your training budget for the future, but what we have seen is more working from home, more mobile led business. How can you create resilience in our business to be ready for the new way of doing business? We have written previously about if you are B2B currently, can you jump into B2C as an addition (without alienating your current B2B customers of course)? How will deliveries work B2C, do you have the packaging for 1’s and 2’s rather than crates? Your staff will need training on all these aspects. For good reason the phrase, ‘A chain is only as strong as its weakest link’ is so often used. This is a supply chain, don’t be the weak link!
Finally ‘Value’. We have written previously about not rushing down into the ‘cheap’ trap as there will only be one winner, the Chinese. Our products and services already add incredible value, do not be afraid to shout about this. This is an essential part of what we do and if we are to break into international supply chains (and here we are not just talking about supplying the west, but with the African Free Trade Agreement coming into force, surely there are huge opportunities there), we have to add Value. Shout about it; ask your customer about it and where you can improve; talk to your suppliers about this and where you can work together; then innovate, test, improve and scale.
The great RBG knew and fought against injustices, pushing against boundaries and breaking apart age old chains that bound women, but on the whole she concentrated on finance, not supply chains, and for a reason. The tick boxes in finance were (and to a certain extent, still are), unfair to women, but supply chains are far simpler.
Give your customers what they want:
security of supply
resilience within their supply chain
value
At the end of the day, all we ask is to be heard. Bring all three of these to the table, you will be heard and you will be listened to…
Stay safe!