Fixing broken business models: A playbook for African lead analysts
A 2023 report by Startup Genome highlighted that 74% of new startups in Africa fail within their initial five years of operation. These businesses often run after profits without any sustainable business structure in place. On the other hand, once the dust settles, one role emerges as crucial to preventing such failures – the Lead Analyst. These individuals are professional critical thinkers equipped with data and sharp reasoning. These analysts perform the role of organisational physicians, breaking down models, revealing strategic blind spots, and crafting solutions for enduring success.
To develop solutions, it is necessary for someone to first comprehend the cause of the issue. Business model failure does not exist solely because of revenue problems or cost management issues. Businesses frequently encounter problems when their core proposal does not match their consumer base, along with their revenue generation and expense management systems.
1. Identifying the value gap
The first step for lead analysts involves spotting the “value gap”, which shows the difference between company offerings and customer preferences. The 2022 PwC Africa SME Survey discovered that 41 percent of businesses created products that clients did not need. Through customer journey mapping and Net Promoter Score (NPS) analysis, as well as competitor benchmarking, lead analysts determine the value gaps.
Example: Nigerian startup Kwik initially provided on-demand bike delivery to individuals in Lagos. When the lead analyst reviewed customer behaviours, they discovered that 80 percent of the orders originated from SMEs requesting B2B deliveries. After the business model shifted towards SME logistics, the company achieved threefold revenue growth across 18 months and attained a 35 percent reduction in customer defection.
2. Cost-structure mismatch
Businesses frequently face challenges when their cost structures lack proper financial control and adaptability. Numerous startups across Africa follow Silicon Valley by spending their funds on growth instead of sustainable business operations. The implementation of activity-based costing alongside unit economics becomes essential through the guidance of lead analysts.
A recent study by Briter Bridges in 2023 found that a staggering 58 percent of early-stage startups in East Africa struggled to keep track of their unit economics, which led to operations that just couldn’t scale. Lead analysts who take the time to introduce cost metrics like Customer Acquisition Cost (CAC) compared to Customer Lifetime Value (CLV) often uncover hidden pathways to profitability that are buried under misleading vanity metrics.
Reengineering models: Building resilient enterprises from within
Once the diagnosis is complete, the real challenge begins: reengineering the model to ensure resilience, scalability, and relevance in local contexts.
1. The lean reinvention framework
Lead analysts help companies navigate the lean reinvention process—a journey that involves breaking down the business model to its core elements and rebuilding it based on validated assumptions.
Key Tools:
● Business Model Canvas (BMC): Updated with real-time data inputs.
● Rapid Prototyping: Experimenting with new pricing, distribution, or product features.
● Cohort Analysis: Monitoring performance across different user segments for more tailored pivots.
In Uganda, the edtech startup, Kanzu Code, initially focused on individual learners with mobile courses, but revenue hit a plateau. A lead analyst utilised cohort analysis and found that institutional buyers, like schools and NGOs, had higher engagement and longer retention rates. As a result, the startup shifted its model to focus on B2B licensing, boosting revenues by an impressive 4.7 times in just 12 months.
2. Localisation as a strategy, not just an afterthought.
Many emerging businesses in Africa tend to rely on Western models like subscription services and freemium apps without taking into account local factors such as the popularity of mobile money, internet connectivity challenges, or the dynamics of informal markets. Lead analysts tap into market ethnography, mobile payment trends, and regional case studies to create models that truly resonate with the local context.
Take, for instance, the Kenyan startup Twiga Foods. They connect farmers with retailers and shifted from a centralised warehouse system to a mobile-driven, decentralised distribution model after a lead analyst spotted some inefficiencies in their last-mile delivery. Now, Twiga supports over 100,000 vendors and handles thousands of mobile transactions every day, all while cutting operational costs by 30 percent.
Embedding data into decision-making
No business model is future-proof without a culture of data-driven iteration. Lead analysts have a critical role in building continuous improvement systems.
1. Building data pipelines for every function
The lead analyst builds central dashboards to layer data performance and identify bottlenecks from sales and marketing to supply chain and HR. The advent of platforms like Power BI, Google Data Studio, and Tableau has seen them used even by startups and emerging companies and organisations in modern Africa. A 2023 GSMA Intelligence report indicated that those African enterprises that embedded data dashboards were 23 percent faster in their decision cycles and 17 percent more productive as teams.
2. Institutionalising strategic reviews
These quarterly business model reviews, chaired by the lead analyst, ensure the evolving strategy aligns with reality. Each review must respond to new data patterns, changing customer behaviours, and evolving market threats. In Rwanda, fintech company Yego Innovision institutionalised quarterly reviews after a review from the lead analyst identified a 25 percent decline in driver retention on their e-hailing platform, introduced a loyalty programme and redesigned their commission model, which reversed retention by over 40 percent in two quarters.
Conclusion
On a continent full of potential but with failed ventures littering its path, enterprises that listen to their data, respond to their environment, and build business models founded on insight and impact will own the future. Lead analysts will remain the enablers of that future, quietly, fabulously, and relentlessly making fixes today for Africa to build on tomorrow.
