Q&A with Angaza Managing Partner: How startups can create value through collaborative innovation
David Ross teaches innovation, entrepreneurship, and investment at Carnegie Mellon University Africa, and serves as the manager of the Industry Innovation Lab. During a recent class, he welcomed representatives from energy company Ignite to discuss how startups can create value through collaborative innovation.
Angela Homsi, Angaza Capital Managing Partner, and Gil Karie, Director of Innovation, caught up with Ross during a class entitled “IT Innovation and Business in Africa” last month, attended by students pursuing their Masters of Information Technology at CMU-Africa.
Ross: “We’re very pleased to have Angela and Gil to help us build on our knowledge of collaborative innovation. Can we start off with learning how Ignite looks at collaborating with external organisations and how it fits into your business strategy?”
Homsi: “One thing that is important to raise is that Ignite was built from the onset very much as a learning and evolving organisation. We recognised early on that some of us are less than all of us working together. If we want to be an exponential-growing organisation, collaborating with great people with great technologies in a thoughtful way will be the key to achieving our goals.”
Ross: “In what areas are you collaborating with external organisations and startups?”
Homsi: “There are two areas in which we’re looking to embrace new technologies and new partnership continuously. First, new products and technologies that serve our customers and secondly, new processes and methods that help us do what we do better, more efficient, or smarter about how we do things.”
Ross: “The diversity of serving 1.5 million customers across six countries opens up significant challenges to solve for. What have innovators and entrepreneurs that have been successful in working with Ignite and your platform done differently?”
Karie: “There are many problems and diverse challenges in the markets that we serve. Successful entrepreneurs deeply understand the challenges, have done their homework about their markets, about us and what we have and can do, and seek to align their solution with the problem and our platform. They propose collaborations that seek not just to introduce a solution and be done, but to learn something new or validate existing assumptions.
It is not uncommon among innovative people to fall in love with their idea. Their idea is their baby. Everyone who has children knows that their baby is by far the most amazing, cute beautiful and smart baby that’s ever lived on the planet. This is what we call the “cute baby syndrome”. To get beyond this natural and normal feeling we have to learn from others. We like to work with people who are eager to learn and challenge their assumptions, who are not too in love with their idea, who will go the extra mile and think deeper about the people, their needs and how a solution can adapt to meet those needs.”
Ross: “When in development of a startup’s lifecycle should they be seeking pilots to collaborate with other organisations?”
Karie: “If we follow the Lean Startup model of proof of concept (PoC) followed by minimum viable product (MVP) we like to see that startups have had multiple MVPs.
“We prefer this because in the markets that we serve there are so many different customer needs and having a single MVP may not adapt to a broad customer base. We prefer to hear from an entrepreneur that’s had two MVPs that failed and one MVP that was successful going into a pilot because it shows that they’ve learned a lot more than an entrepreneur who had one MVP and was successful. It also shows alignment with our method of testing and validating assumptions for product market fit.”
Ross: “Would you say that adaptability to the market conditions and to your platform is a key to success for entrepreneurs who are seeking collaborations?”
Karie: “Yes, this is a great way to describe what we’re and other organisations like us are looking for in our collaborations.”
Ross: “Am I correct in thinking what should be taken from your underlying methodology or belief system is that development of innovations and the development of the entrepreneurial process can be seen, perhaps as a series of experiments that test a series of cascading assumptions that build upon each other?
“If assumptions are validated, then you can build from that assumption and make further assumptions towards the growth of your innovation with an iterative process of hypothesis and testing. Is that in line with a similar methodology that you follow?”
Karie: “Yes, that is absolutely how we see it – 100 per cent.”
Ross: “Thank you for that. Now we have a question from one of our students.”
Steven Kijooma at CMU-Africa: “Do you have a methodology or specific way that you listen to your customers? Also what do you do before you take action in investing resources or time into a pilot with an entrepreneur?”
Homsi: “Not just for pilots, but for our ongoing operations. We have a constant feedback loop that we’ve put in place seeking to achieve continuous improvements. We have call centres, we have surveys, and we have our people on the ground serving customers that we listen to across numerous channels.
“When we think about pilots, we think about the technical, commercial, and operational factors that we could learn the most from in conducting a pilot. We think about one region and one group of people in which we can deploy a solution on a small scale. We think about the supply chain, the areas that need to be tweaked or adjusted to make the pilot successful in terms of working in a potentially remote area. We think about what training is needed to whom about what. We try to do as much thinking around the solution as we can before investing significant resources.”
Ross: “How do you suggest entrepreneurs and companies should iterate with pilots?”
Karie: “A pilot is a test, a test to validate assumptions. For example, a solution may sound amazing and it may be amazing, but may or may not work. I don’t know if people will want to use it. I’m not sure if people will want to pay for it. With every new technology we are piloting, we first try it in one village, so we will be able to learn something new about it. Then, we try it in another village and we learn something new. Then we roll it out throughout a district and we again learn something new. Each time we, our collaboration with the entrepreneur, and our ability to serve our customers got better and better from this iterative process.”
Ross: “Can you provide us some guidance on the types of questions that are good to ask during a pilot?”
Karie: “Sometimes a pilot can produce a “yes” or a “no” answer to a question, but answers to the question of “why?” or “how?” are far more insightful.
“One story comes to mind from a friend at IDEO who wanted to test if a particular medicine in pill form was good or not. His team visited an 80-year-old grandmother, who was very happy with the medicine and was very positive to all questions they asked.
Then they asked her the most important question, “Can you show me how you take the medicine?”. She agreed and showed them that she cuts the pill in half before taking it. They immediately saw that the pill was too large for people, so they reduced the size of the pill. It was a huge success and they saved a bunch of money in production. This shows that the quantitative information, the data layer, needs to be part of the whole picture with customer experiences often containing the most valuable insights.”
Ross: We’re big fans here at CMU of customer discovery and gaining insights from customers’ experiences. There’s so much insight that that can be generated from seeing how your customer uses your product or interacts with your product. So while we’re talking about data, are there types of KPIs or data that people should be tracking while they’re running a pilot?”
Karie: “One required KPI is “did people pay for the system?”. Others include “how many times did they pay (in a pay-as-you-go)?”, “did they ever stop paying?”, and “why did they stop paying?”. We found that in many of our pilots with rural farmers that income and cash flow are seasonal, so we adjusted the sales and payment cycles to fit the realities of our customers and what they can afford and when.”
Ross: “Aligning to the living experiences of your customers is crucial. We have a question from another one of our students.”
Chris Dare at CMU: “How do you know when you’ve gotten enough answers from users or potential customers when conducting interviews?”
Karie: “That’s a great question and there’s no magic number or the right amount of people to ask in order to be statistically right, and it’s very different for each innovation in each market. One way to look at it is to see when the impact of what you’ve learned starts to decrease significantly. If you ask the same question and get the same answers over and over again and don’t have any new insights coming out, then you could consider thinking of new questions or directions or perhaps you’ve learned all you can in a particular area.”
Ross: “Thank you. We have a question from Endegenaamare Alemayehu.”
Ende at CMU: “Your work is in rural areas and sometimes things in rural areas can be a bit more challenging to communicate and perhaps slower and harder to reach that exponential growth curve. How do you manage your investor expectations working in rural markets settings?”
Homsi: “We believe that the rural areas in Africa are an absolutely huge market that has been completely left behind by traditional channels. We believe that they need so many of the most basic things people living in the cities take for granted. By addressing those needs we believe that we can actually support leapfrog innovation and create a win-win in terms of social, environmental, and economic impact. We’re fortunate enough to have investors that share our vision and are taking a more long-term perspective on delivering on the positive transformation of these underserved markets.”
Ross: “At CMU-Africa we have master students in information technology and electrical engineering from several different African countries. The majority of them want to work with startups and new innovations or start their own companies, ideally to create leapfrog innovations. What advice would you have for them? You’re encouraged to be as controversial as possible!”
Karie: “That’s a great question, and since you asked me to be controversial, I’ll say that most people are looking at new products or service innovation, but that’s not always the best area to focus on. Many great companies have grown not because of their innovative products or services but because of the strategy, business model, or something that helps the customer in a way that others haven’t done before or effectively. I’d encourage students to challenge yourself and think about how you can innovate and do something really crazy using something that already exists, but done differently in ways that people haven’t seriously considered before in a way that makes your customers very, very happy.”
Ross: “Adapting innovations for the market in ways that others aren’t – sounds like great advice. Angela, do you have any controversial advice for our students?”
Homsi: “Entrepreneurship is a challenge like no other and there are many different types of ways to be an entrepreneur. I’ve seen some great companies emerge from two people going after a similar problem that have joined forces. In the world today, knowledge and experience are becoming more complex and more specialised. Joining forces and developing a web of knowledge and expertise is becoming more and more valuable. My advice is to develop collaborations with others while you develop your own knowledge and never stop exploring how that collaboration can create value in unexpected ways.”