Monday, May 12, 2014

Resource Curse At a Corporate Level

When we hear of resource curse we think of Nigeria as a whole or the oil producing communities in the Niger Delta. We think of politicians and government corruption. But it is not only in nations and communities that we can find resource curse. Companies and businesses also suffer resource curse. And that is what I'll explain in today's special post.


Resource curse, like we often say, is suffering in the midst of plenty. It sounds like a crude definition, but it's a completely sound definition. It results from mismanagement of abundant resources in a form so extreme that the nation or community or company that owns the resources gains little from it and pays dearly in labour for it. The gains go to some other nation or community or company.

Resource curse at a corporate level is a result of extremely poor corporate management and plenty of resources (labour and available capital). The obvious examples are public corporations like NITEL and PHCN. NITEL had everything -- fund, labour and monopoly power -- and still crumbled because of terrible management.

In the private enterprise world, it's harder to point out clear examples as most private companies experiencing resource curse simply fizzle out without most people noticing. The only example I can give that drew public attention is HiTV. A company that had everything going right for it except its management. It had an unusual brand acceptance, better than the competitors it met.

So how do you avoid a resource curse?

1. Know why you are succeeding.
One peculiar thing in all cases of resource curse is that there was a very high initial success. Every little effort at the beginning was yielding amazing results. And it led to access to good supply of capital and labour. The issue was that most had little factual explanations of why they succeeded. No elaborate data gathering and effective KPI analysis.
In business nothing is worse that being successful and not knowing why. It is a precarious state.

2. Be Efficient
The other great feature of a resource curse is waste. Inefficiency.
When the management focuses on being efficient, on monitoring their KPIs and making business decisions that aim at reducing cost and increasing revenue, it will be impossible to become a victim of resource curse.

3. Invest in Technology and Better Processes
Thriving companies/businesses are continually investing in technology and improving their business processes. It's the guaranteed path to remaining successful and relevant.

Are you experiencing business success at a level beyond your expectation? It's time you monitored all aspects of your business closely to avoid resource curse. We can help you develop a robust KPI dashboard and business data analysis template.

To your success!

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