Changes will transform Safaricom into a technology firm, says Peter Ndegwa

Safaricom has explained that ongoing internal changes at the telco will allow it to access new growth markets as it transforms into a technology company.

In an interview with Nation.Africa, Safaricom Chief Executive Peter Ndegwa said the firm started implementing the agile way of working two years ago, and the company is only scaling it up.

Mr Ndegwa said the agile way of working is not new since it has been implemented by global media and online companies such as Netflix and Amazon.

“Agile started in the software industry in recognition that probably the traditional way of operating and developing software was out-dated and therefore agile was born to allow them to launch software and to improve software with more pace,” he said.

He explained that in Safaricom, the agile strategy is not new since it started being piloted in 2018.

Small teams

“What we are doing now is to increase the scale. Not everyone will go fully agile,” he said since departments like Finance will still operate largely in its traditional way. But those that will be affected will be in the front-end side of the company such as the marketing and technology teams.

The strategy will see the firm come up with small teams known as squads. The squads will then be put together in a tribe. The tribes will then report to the executive committee.

There will also be chapters such as marketing that span across squads and tribes.

He said the strategy involves bringing people in a small team that has one mission. This allows innovation. The small team starts with a minimum viable product and keeps improving it in line with customer feedback.

Squads

He said the squads would focus on specific missions such as product missions or customer missions. He said the teams would prioritise the mission to deliver a customer outcome. He said when organisations become big, they become more internal and this leaves only a small group to deal with customers at the frontline.

“But agile almost reverses that such that everyone’s job is to deliver an outcome that improves what we are promising the customer,” he said.

This he said is how to deliver on their promise of being simple, transparent and honest.

 “When you go through change, the most important thing is the why. Safaricom has been an extremely successful business and the two things we have been very good at is combining innovation and technology to transform lives,” Ndegwa said.

“But having celebrated our 20th birthday, it is now pertinent to get to the next phase of growth. How do we build a future that sustains the growth,” he said.

Ndegwa said the company now wants to be a purpose-led technology company.

“We want to move from just a telco with a payment platform to a technology company. We want to go into areas that are more solutions oriented, we want to be a lifestyle brand for individuals, and an empowering brand for SMEs” he said.

He said the company wants to digitise new areas such as education, health, and agriculture among others. He said the company is also interested in going regional. He said it is for this reason that the company came up with the mission to be the customer obsessed digital first organisation.

Mr Ndegwa said the company is not changing because something is broken but because it will improve the way its employees work and what they deliver for its customers.

He assured employees that the company would be very transparent in terms of the status of the changes and what to expect.

“We are not changing because we are weak, we are changing because we are strong and we want to access new growth areas. We are not under pressure to save costs,” Mr Ndegwa said. Each tribe will have between 60 and 100 employees while squads will have between eight and 12 employees.

“Squads will deliver on a customer journey or a customer outcome. You do not pre determine how many squads or tribes you will have. Once you have front runners and you learn from them, you continue launching new squads and new tribes,” he said.

Mr Ndegwa, who marked one-year anniversary at the helm of the company at the end of March, said the intention of agile is not to reduce staff numbers. He said the change would instead give their employees an opportunity to better their craft.

Ndegwa maintained that at the end of the process, the company will have increased its staff numbers and not the other way round since it will hire more people with technology backgrounds and digital skills.

“We will bring in a lot of people externally who have digital skills. We will also upscale internal people so that they can acquire new skills. We are talking about the concept of one more skill,” Ndegwa said.

 Safaricom, which made Sh73.6 billion in net profits in the last financial year, which makes it more profitable than three of Kenya's top largest banks combined, said the change will also allow it to deliver better returns to its shareholders.

Superior returns

 “We want to continue to deliver great and superior returns to our shareholders and most importantly we want to be relevant to our community,” he said.

This comes at a time when it has emerged that the telco’s market dominance is slowly but surely being whittled down by its competitions and new entrants in the lucrative telecoms sector.

This is after it emerged that its market share has been chipped away quietly in the last decade in what has seen its shrink by about 20 percent.

Latest statistics from the Communications Authority of Kenya (CA) show that the market share of East Africa's most profitable company has contracted to 63.6 percent, compared to the 80.7 percent in 2010. At this space, in another decade, Safaricom will have less than half of the market.

Though it was previously seen as unassailable, the Competition Authority of Kenya (CAK) in a memorandum to the senate standing committee on information, Communication and Technology says that the market share of Safaricom has been decreasing over time indicating lack of significant market power.

The competition watchdog says that the current Kenya's telecoms competition landscape illustrates that as at September 2020, Safaricom had a market share of 63.6 percent, Airtel 27.2 percent, Telkom 6.2 percent, Finserve 2.7 percent and Mobile Pay 0.3 percent.

"Notably, there has been an entry of players such as Finserve and Mobile Pay. The ease of entry is one of the parameters of existence of competition (and also potential competition) in the market," CAK says in the memorandum.

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