They Tailor to Local Culture

“I have seen this so many times, ” Coca-Cola’s Neville Isdell said. “A company determines there’s an opportunity in Africa and they fly in all their expats, recreate what they have at home, and run it out of their European headquarters. It’s expensive because of the pay, the flying around, etc. But mostly it’s expensive because it doesn’t work.”

Neville knows what works. From 2004 to 2008, he was the CEO of the Coca-Cola Company and oversaw a dramatic rebuilding of its worldwide brand. Having spent his career with Coke, Neville retired in 2001. He was asked back by the company in 2004 to help correct its course as CEO, and in 2008 was named by Beverage Industry magazine as the sector’s CEO of the year.

Neville also knows Africa. Raised in Zambia from the age of ten, he attended the University of Cape Town in South Africa, then returned to Zambia and joined the local Coke bottler at age twenty-three. He came of age in the Coke family, assuming leadership of Coca-Cola’s large South Africa operation eight years later before taking on leadership positions worldwide.

Neville says that being local has been central to Coke’s success in frontier markets, enabled in part by its model of franchising to local bottlers. “There are always wonderful exceptions but in general expats don’t know enough or understand enough about the culture of the society and the way things really work to find a way to do things. This is where the Coca-Cola bottler model proved so valuable and well suited to Africa, because you need good African leadership and African partners to succeed.”

While Coca-Cola’s business model was well suited to developing a local presence, the traditional model of global oil companies is not. Aidan Heavey feels that starting Tullow from scratch in Senegal proved a massive advantage, in that it kept him from importing approaches and assumptions that would have been wrongheaded:

When we started working with the Senegalese, we didn’t have a fixed view on how you do things, because we were a start-up business. We were learning as they were. We set up a Senegalese business, and it was very much a company that was built to work in that country. That was a winning approach. We hired Senegalese people, we negotiated contracts the way they negotiated contracts. They were thinking a completely different way than we were. The logic was different and you had to think a slightly different way, but you always got to the solution you needed. I used to explain to people at the time that it was like back in the ’80s, if you had a big IBM mainframe it wouldn’t link with a Mac. If you had an Irish business you shouldn’t assume it would work in Senegal. That’s how you should think about it.

Of course, not every CEO starts with Aidan’s tabula rasa. Most will want to integrate their existing cultures and operations with local expertise. The winning path to that integration is to recruit, train, and listen to local talent. Mohamed El Kettani describes how Morocco’s Attijariwafa Bank does it:

You don’t want to be a Moroccan bank in Congo or Gabon, and they don’t want you to be. When in Congo or Gabon you want to be Congolese and Gabonese. Human capital is the key. We are fortunate that, at any one time, there are about ten thousand sub-Saharan students who come to Morocco to study in our engineering and commercial schools. We recruit from this population very heavily, finding the best and then putting them through a two-year program at our headquarters in Casablanca. We then send them out to the country branch offices. These are invariably the best flag bearers for the bank in the country.

Bharat Thakrar also points to human capital as the key to effective integration across regions. In Scangroup’s case, the human capital strategy focused more on lateral movement of employees. In 2011 Scangroup acquired Ogilvy Africa, doubling the firm’s size and moving its center of gravity far west of its Nairobi origins. The acquisition also represented the company’s deepest foray to date into francophone Africa. Bharat is sanguine about the prospects, but recognizes it will take time and an investment of attention:

The important thing to do is take your corporate culture and try to translate it to there. Most importantly, you’ve got to do it slowly. You’ve got to give it time, because it isn’t going to happen overnight. The way you do it is you exchange people and you grow people. The companies that have done that in Nigeria, for example, they don’t have the same horror stories everybody else does. It is easier for us to absorb and understand and relate to that culture, because we operated in Ghana two years and we’ve done well there. We’ve been in Tanzania, we’ve been in Uganda. We’ve come to understand the dynamics of cross-country growth a lot better.

Bharat’s reference to corporate culture really can’t be overstated. What remains constant across local offices is as important to success in Africa as what must change. I’m familiar with a Fortune 500 company that built up a significant operation in a West African country. In a misguided rush to “Africanize, ” the company built a cadre of local managers who had no exposure to the company’s operations outside their country. The company failed to do precisely what Bharat and Mohamed suggest in different ways: integrate the workforce by osmosis.

The result was disastrous. None of the company’s cultural values were present in the West African enterprise. Infighting, corruption, and low expectations were rampant. Staff that sought to reform from within had no support from the parent company. It was an anomaly and dishonor to the parent company, and to the country, where many fine companies with strong values are domestically owned and operated.

I’ve also worked with a company in the same sector and country that had far greater success with local operations. The company hired and promoted its African managers carefully (and more slowly), invested heavily in training for all staff, and adopted the same safety, environment, and community policies that it has around the world. Perhaps most importantly, the company rotates personnel both into and out of the West African enterprise. In its country headquarters and at its jobsites, the company’s culture merges with the local culture. It isn’t always harmonious, but it is high functioning and delivers both returns and accolades to the parent company.

Ultimately, there is a core of company values that drives performance across local markets in Africa, as elsewhere. ECP’s Tom Gibian has invested in companies from Algeria to Zimbabwe, and describes a conversation he has with nearly every potential investee:

There usually comes a moment in the discussion when you say to them, “Look, we know this is a unique environment. But we want you to know that, on topics like bribery or the value of our word, you’re talking to one company and we all share a single attitude. You may see on our side of the table a Ghanaian, an American, a Nigerian, but we all take the same approach to those topics. To you it might seem very naï ve or very simplistic. Maybe it even seems unrealistic; but that’s just who we are. If we’re to do business together, it has to be who you are too.

That ability to merge core values with local needs has been instrumental in ECP’s success engaging private sector investees. As the next chapter explores, it is an important element of the conversation successful firms have with government as well.

CHAPTER 6

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