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Category Archives: Finance


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Cannibalise your business before someone else does

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This article also appeared in Finweek Magazine in their 21-March 2013 issue

Prozac, a breakthrough treatment for depression, is one of the biggest-selling, most profitable medications of all time. Since its launch in 1988, Prozac accounted for US$ 21bn in sales and 34% of Eli Lilly’s revenues in that time. In essence Lilly was the house that Prozac built. However, the US patent for Prozac was coming up for expiry in 2001. Executives at Lilly knew that this would trigger such a huge loss of revenue that 2001 was known throughout the company as “Year X”. So how did Eli Lilly prepare for Year X? In South Africa in 1997, Eli Lilly introduced Lilly Fluoxetine, its own generic version of Prozac. But this would eat into sales of Prozac. Why would Eli Lilly conceivably do such a thing?

Inevitably, markets are cannibalised. As business leaders, we have a choice: we can either cannibalise our own business lines, or we can enable existing or new competitors to cannibalise it for us. With pricey Prozac coming off patent, it was inevitable that other pharmaceutical companies would jump in to claim their share of the very lucrative antidepressant market. Rather than let competitors grab its Prozac market share with generics, Lilly chose to bring out its own generic. The thinking was that Prozac users could be converted to the cheaper, chemically similar Lilly Fluoxetine, rather than to the competitor antidepressants, and this would prevent some of the Prozac fallout. It was a smart strategy and helped Lilly stay in the antidepressant game.

So why should you cannibalise your own business? And what can happen if you don’t? Continue reading →


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Your business: Is organic the way to grow?

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This article also appeared in Finweek Magazine in their 07-March 2013 issue

In last week’s article we explored how growing too quickly could sometimes, but not always, be bad for your business. By contrast, even though it often gets a bad rap, slower, organic growth, could actually be a better strategy for your business in the long-run. Continue reading →


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Is rapid growth bad for your business?

rapid growth graph tech bizThis article also appeared in Finweek Magazine in their 28-Feb-2013 issue

In 1999, the Webvan Group promised to transform the grocery shopping industry. Thanks to an über-successful IPO and other sources such as venture capitalists, it raised a staggering $1.2bn in start-up capital, rivalling big players like Amazon.com. Fast forward to 2001, when Webvan went bankrupt, barely 18 months later. The cause? It ran out of money.

How is this possible?

When investors inject capital into a business, they want a return on their money. And the expectation is that rapid growth will usually fuel this return. Americans even have an expression for fast-growing firms: “gazelles” are publicly traded companies that have grown at least 20% for each of the previous four years, kicking off with US$ 1m or more in sales.

But sometimes, growing too quickly can actually be bad for business. Continue reading →


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Do CEOs with MBAs perform better?

CEO MBA runningThis article also appeared in Finweek Magazine in their 17-Jan-2013 issue

In recent years MBA programmes have received a lot of criticism: teaching flawed financial thinking, ignoring business ethics, hiding from the real world of business and sheltering MBA students in academic theory. And so, as the argument goes, MBA business leaders are ruled by greed and short-term gain. Hence much of the blame for the global financial crisis fell on high-profile MBA alumni like Lehman Brothers’ Richard Fuld (Stern’s MBA of 1973), and Merrill Lynch’s John Thain (Harvard 1979). Let’s not forget Jeff Skilling of Enron, who had an MBA, while Bill Gates and Steve Jobs didn’t even complete university.

With these criticisms in mind, do MBA-degreed CEOs perform better than their non-MBA peers? The effect of a CEO’s MBA (or lack of one) on the business’ performance is very much contested ground, with evidence to support both sides. Continue reading →


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Starting an internet business in South Africa? Be a copy-cat

This article also appeared in Finweek Magazine in their 31-Jan-2013 issue

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Starting and growing an internet business is hard. Even though the barriers to entry are dropping every day, the odds of success are still worryingly low. It is very difficult to predict what the market will like and what it won’t. Is there a way to increase our chances of success? Yes, it’s called the copy-cat strategy. Continue reading →


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Idea Workshop: Captalise on New Frontiers

bright ideas to profitTake your company and your career to new places ….

All around us new frontiers are breaking open – offering staggering rewards to those who first see and seize the opportunities they offer.

Presented by Neil Hinrichsen, one of South Africa’s ground-breaking entrepreneurs, and cofounder of Fundamo, acquired by Visa for $110m.
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Whether you’re working in a corporate or an entrepreneur in your own business, this intensive 3-day workshop will show you how to DISCOVER, DEVELOP and DELIVER new ideas that open up new markets and possibilities for your company.

Limited places available. Book now and get the early bird rate!

Find out more about this exciting Johannesburg event here.

Brought to you by MBAconnect.net in partnership with Microsoft BizSpark and Enablis.


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Supporting our women entrepreneurs: how does South Africa stack up?

This article also appeared in Finweek Magazine in their 29-Nov-2012 issue business-woman-stairs_170x170

Looking around the audience at a recent talk on entrepreneurship, I was amazed to see that I was the only female entrepreneur there. The speaker noticed this too, and posed the question, “Why are there so few female entrepreneurs, and more importantly, does it matter?” At the time I didn’t think gender differences were important in the entrepreneurship space. However, further research proved eye-opening. Continue reading →


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Celebrating Failure

This article also appeared in Finweek magazine in their 6-Sep-2012 issue

The American author Theodor Geisel, who wrote under the pen name of Dr. Seuss, was rejected by 27 publishers when he submitted his first manuscript. When he finally found a publisher, his 46 books including “Cat in the Hat”, and “Green Eggs and Ham” went on to sell nearly half a billion books worldwide.

Renowned writer JK Rowling shares a similar story. Her first book “Harry Potter and the Philosopher’s Stone” was submitted to 12 publishing houses. All 12 rejected it. But then the number 13 turned out to be an incredibly lucky one for Rowling and the Bloomsbury publishing group. Rowling went from living on social security to being a self-made billionaire. In its 2011 world billionaires’ list, Forbes estimated Rowling’s net worth at US$1bn.

Looking at these phenomenal turnarounds, there are a number of critical lessons we can take away:

Continue reading →


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Why Budgets are Bad for Business

This article also appeared in Finweek Magazine in their 16-Aug-2012 issue

In my previous life in corporate, one of the biggest time-wasters was the budgeting process. We would write off three months preparing budgets for the next year. Invariably we tweaked last year’s numbers, added some inflation and extra for contingency, and there you had the new spend which you had to defend.

Why is this exercise destructive for your business?

Continue reading →