Zoona Mobile and the Four Strategies
The intellectual property for Zoona would require an investment in control whilst seeking to collaborate with competitors (Gans, Stern and Wu, 2016). This will be an inherently difficult strategy to implement for many reasons, firstly the idea will be difficult to protect using a patent. Patenting requires that the idea be novel, useful and non-obvious (Dauchy and Bagley, 2012) which in this case is difficult to achieve. Zoona Mobile is based on a simple platform tool which relies on the transferring of money on behalf of senders to receivers for a transaction fee. Many similar business models exist around the world such as Western union or XE money transfer and thus, it is certainly not novel or non-obvious. Even if Zoona Mobile were to find a unique, non-obvious and novel strategy for conducting their business, it could be easily imitated and designed around. Unless, of course, Zoona could come up with an inimitable idea of transferring money using a novel technology that could provide them with a competitive advantage. This is without mentioning the Zambian market which due to the strength of the legal system may make it difficult to defend their patent. Furthermore, collaboration is difficult as Zoona Mobile are seeking to establish a new value chain. Control is also difficult as the technology needs iterative and incremental contact with customers to adapt and respond to their differing and diverse needs as a rural unbanked community. Consequently, it is not recommended for Zoona Mobile to adopt this strategy.
Likewise, the value chain strategy involves collaboration with implementation in to existing value chains. This, again, is difficult as the model of Zoona Mobile involves establishing a new value chain rendering the business of sending money inefficiently via the post office and unsafe minibus taxis obsolete. However, if it does happen that Zoona meets similar competitors who seek to implement a similar business model, it may make sense to collaborate as the ‘winner takes all’ characterisation of the market means there is great risk if Zoona is unable to come out on top (Manigart, 2018).
Whilst the architecture strategy involves setting up a new value chain and engaging in competition, the investment in control may not be appropriate in the case of Zoona Mobile. The product from Zoona needs to meet the market and engage with the customer who will have unpredictable needs as a rural unbanked community. Furthermore, first mover advantages will be important and waiting to prepare an ecosystem before launching will be a dangerous strategy.
The disruption technology for Zoona mobile involves establishing their own value chain and serving a customer segment that is poorly served by existing firms. This could not be more suitable for Zoona Mobile. The new business model by Zoona Mobile which involves scattering booths around Zambia allowing unbanked customers to send money reliably and quickly for a small transaction fee can certainly better serve customers. However, it requires iterative adaptation to better meet the needs of the customers. The technology is easily imitable and thus, the best way for Zoona Mobile to consolidate market control is to gain control of complementary assets and establish their first mover advantages. As outlined by Teece, when imitation is easy, profits will accrue to the owners of complementary assets (Teece, 1986). This requires rapid expansion with many booths in as many locations as possible and establishing the loyalty and trust of a wide range of customers.
Consequently, due to the network externalities, where the service of Zoona becomes more valuable as more booths are set up and more customers use the service, the disruption strategy is the most appropriate for Zoona mobile. It will take time to build and develop the service for the customers. This involves execution and engaging in competition, adapting and iterating as Zoona become more knowledgeable about their customers. This strategy will require large external funding, as in order to attract customers, a low profit margin will need to be tolerated and large capital expenditures are required to sustain large growth with the purchase of booths and advertisements (Manigart, 2018). Depending on whether Zoona can establish itself as the market leader, Zoona should expect a high exit valuation and large returns. The financial exit that Zoona should expect in this situation is to be acquired for a high value or an initial public offering. Unfortunately, as large funding is required, this will come at a cost of equity, ownership and control for the founders, as investors will usually demand this. Mike Quinn as an established Oxford MBA graduate may be able to keep his position as CEO if he can prove he has the competencies for the role as Zoona Mobile expands and the requirements for the CEO diversifies. However, in terms of voting rights, board rights and information rights these will usually be surrendered to the company and if the founders have other ambitions, specifically to be in the driver’s seat and to maintain control then they may want to rethink their ambitions on growth. However, with the ‘winner takes all’ characteristics of the market this will be difficult to achieve, as if they do not seek to grow, a winner will take their place. If Zoona Mobile seek to maintain control, the only alternative is to bootstrap and to carve out a profitable niche (Manigart, 2018).
