Several years ago, we worked on the rebranding of a coffee shop chain that belonged to a shrewd businessman who was more interested in the nuts and bolts of business, rather than the coating or packaging of it. Most of our ideas didn’t see the light of day, and when a competitor launched a café opposite our clients flagship store, with an ultra-modern city-slicker appeal, we were crest fallen. They say that in every work of genius you recognize your own rejected ideas, and recognize our rejected ideas we did as the competitor quickly gained customer preference.
The real lesson however, was that our client’s chain of stores was a cash cow in the real sense, with low investment and high returns, giving him no reason to be alarmed by the sudden appearance of a competitor. “Don’t jeopardize your cash cow,” he would say to us repeatedly, and indeed many years later despite the market dynamics, the chain is still bringing an impressive return-on-investment.
We see the same ideas with major brand companies that avoid unnecessary risks around production, pricing and distribution of their cash cow. Instead where they sense a market opportunity to grow their revenue, they develop line extensions and launch new products to build the additional value. Even if their major brand is threatened, rather than change the fundamentals of the brand, they will introduce fighter brands to address new competitors so that they don’t rock the boat and diminish returns from their main line.
Our tourism sector is our cash cow because it not only contributes Ksh. 220 billion of revenue, or 10.5% of our GDP, but also because the return-on-investment is highly attractive. In a 2012 study it was found that the total benefits of tourism in Kenya’s national parks delivered an ROI of 16 to 1 — not bad! The projected sector growth of 5.1% per annum between 2015 to 2025 is nothing to scoff at, especially with the current absolute job numbers at 543,500.
Not everything is rosy though because we are obviously underperforming with only 28 out of the 59 national parks making any money. The profitable parks are the life blood of the industry and they support the the other parks that are not bringing in an income. Considering the high return-on-investment in the tourism sector, without a doubt it is wise for the government to spend money to activate revenue generation from the rest of the parks in order to boost the GDP contribution sustainably.
There has also been a steady decline of wildlife populations with a 58% drop of non-migratory species in the Maasai Mara between 1977 and 1997 and a 70% drop of wildebeest populations between 1980 and 2000. These declines are brought about by changes in land-use including increased human settlement and the disruption of migratory routes. Even though tourism revenue is expected to grow substantially over the next decade, these facts paint a frightful scenario because the stages that can be expected in future are stagnation, followed by decline.
If we are to emulate successful companies we would fight tooth and nail to protect our cash cow and invest the necessary resources to boost the performance of a demonstrated high return sector. The other important initiatives to drive growth of the enterprise, would be developed to work hand-in-hand with our major brand. So with Nairobi National Park being within the top 4 profitable parks in Kenya, it is bad business to allow the possibility of accelerating an already declining wildlife population by building a railway over it.
The Standard Gauge Railway is the most ambitious infrastructure project since we gained independence, but just as a company would not jeopardize one part of its business to succeed in another but instead ensure that all it’s divisions are aligned, so does government have to organize our national priorities to collaborate rather than clash. And anyway, since a majority of traffic on that particular line will consist of freight trains, it seems that only the train drivers, rather than tourists, will enjoy the spectacular view.
The purpose of the East Africa Railway Masterplan is to reduce congestion on roads and promote tourism, so its critical for the initiative to work with conservation of our biodiversity in mind, and from a long term view, the costs associated with going around the park rather than through it will not be significant.
Steve Covey says ‘begin with the end in mind in life and career’. Looking at it from the eyes of the Republic, we need to ensure that history is kind to us for the decisions we make today and that the generations that come after us can benefit from our actions and proudly take over the baton, elevating what we’ve done to a higher level. Without balancing our priorities, we may allow conflicting interests to destroy our vision and limit what we can achieve.
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