Companies win by accumulating capabilities. From Google to Flutterwave to Dangote Group, when companies accumulate capabilities, they operate in domains that generate higher value (usually upstream) compared with where most typical firms operate (usually downstream). Dangote Group can deploy massive assets and technical know-how in cement production, making it harder for new entrants and rivals.
Google uses its datasets to win on search. By holding the first-scaler advantage on search, it enjoys the virtuoso circle of network effects which keep compounding, making Google better.
And Flutterwave delivers an unmatched scale within the African fintech space, making it a layer upon which many companies run on. Indeed, its greatest capability is that it has unified the US, China, Europe and Latin America on API-based payment, from the lens of Africa.
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Like in the oil industry where they speak the language of upstream and downstream, here is the message: leave downstream positions in your sector, go upstream and capture more value in markets. Sure, only the few can make that upward transition, but the few which do, do unlock great opportunities that make them category-kings. #DreamIt
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Going upstream requires vision and courage, two attributes you don’t find in average people. There is the temptation of funding and supporting small businesses, as the argument goes, they employ more people. But again, how do you fund R & D, innovation, or break new grounds as a small business?
The capability to do those big and complex things is what deepens and sustains small businesses too, and once you get the thinking wrong, you continue to draw circles, with no actual forward progression.
In a market where no player is tackling big problems, growth is stunted, and value destruction is palpable.
“Like in the oil industry, where they speak the language of upstream and DOWNLOAD”……………..Prof, I guess you mean “downstream”
Fixed and updated. Thanks for catching that.
Upstream is caputal intensive much more than downstream sector. For example, the amount of money used to deliver 1 well in the upstream may be use to deliver 4 well in the downstream.
Upstream defintely not for average companies.