With the exception of organizations that have a service or product that relies on instability, the majority of organizations prefer a market place to be stable in order for the organization to conduct business. When I refer to stability, I refer to predictability in the political, security, financial, community arenas. I refer to the general atmosphere that allows management to asses all aspects of the industry to generate a sound strategy based on management’s vision. In our decision to launch Validity in Egypt, that was the major question we had to answer. Can we deliver value to Egypt & the MENA region at this time as management consultants where customers are slashing their expenses as a result of an economic downturn? Why Egypt? Are there business opportunities for management consultants to pursue in Egypt? All these questions and more were being provoked, challenged, researched, and analyzed.
After determining the questions to be asked, we moved on to gathering facts about the structure of the management consulting industry from the perspective of companies already in the industry. We assessed our potential customers, suppliers, substitutes, new-entrants, supply and demand as well as our competition to grasp where we can systematically achieve purposeful results. Gathering information related to the industry structure provided us with a clear perspective of how the economic value created by an industry is divided: how much is captured by companies in the industry versus customers, suppliers, substitutes and potential new entrants. The question became: can we deliver value in this industry and in this geographic scope and achieve attractive returns? The facts were clear. The industry was negatively affected by the aftermath of the Egyptian Revolution of January 25th that resulted in a lot of customers cutting expenses and being unable to afford consultants any more. Rival consultants forecasted that there is tremendous growth in the industry in the next 5 years but not in the near future. To the naked eye, the fact is that Egypt is not a market to invest in right now, in the management consulting industry and in a lot of other industries as well. However, it was important to stay mindful of the fact that the industry structure is dynamic and not static, and our facts were merely a snapshot of the industry at a point of time.
Value Chain Analysis:
In our analysis, we set out to discover whether we had a competitive advantage in the Egyptian and MENA markets, not by trouncing rivals but by creating superior value. Being taught to always dig deeper into a subject matter, I started asking more questions, to understand the logic behind the consensus resulting from our research. Why was Egypt not a good investment at the time? In each of the thirteen industries we researched, what are the problems causing instability and decreasing performance? How has the service of management consultancy been delivered? How were results measured? How were results linked to financial value? All these questions were driven by a belief that in times of instability there are opportunities that exceed those found in times of stability merely because there is so much more work to be done to achieve stability. It’s important to keep in mind that when I refer to work I am not referring to the consulting industry only, but in general, to all industries, both profit and non-profit. Another driver for these questions was yet another belief: management consultants are result drivers. In times of financial downturn and in the wake of failures to hit budget targets, management consultants are expected to be a valuable asset to any company. The facts our research generated made me question the approach in which consultants are delivering their services to their clients. Where is there an unmet need and how can we create more buyer value? The research findings and market interface pointed to in the direction of not launching Validity Egypt, if taken at face value. However, we saw the lack of business and instability seen by a lot of management teams in our research as a great opportunity and a client base that needed to be served. In times of instability the majority of businesses desire stability to achieve business objectives. As we see it, businesses have the ability to create collective stability in their respective industries because the sum of all companies is a community, but these businesses must make strategic decisions to a follow a different path.
It was time to make strategic decisions for Validity Egypt, and we had to formulate our belief into a strategy. Choosing a distinctive value proposition to offer our customers in Egypt and the MENA region, we had to know which customers we are in the position to help, which needs can we meet and at what relative price? Our strategy integrates the demand and supply sides together, where the value proposition represents the demand and the value chain represents the supply.
The fact is a lot of firms are withdrawing, decreasing, or halting investments in Egypt and other MENA countries. The more important fact is that instability does not necessary equally lack of business growth. Each organization needs to assess its specific industry, analyze in depth how to be unique, and finally strategize.
Can we grow business in Egypt or the MENA region?