What new dynamics for French groups in Africa?

For 11 years, as part of its International Development Observatory (ODI), BearingPoint and its partners HEC Paris and CIAN have been questioning executives on international development issues. Entitled “Metamorphoses, or how French companies are reinventing themselves in Africa and for Africa”, the 2020 edition of the ODI analyzes the “group-subsidiary” couple in Africa, along three axes: organization, promotion of human capital and innovation mechanisms. Back to the main lessons to be learned.

Tighten the steering of Africa departments

87% of the actors interviewed within the framework of our study declare to adopt a posture of “controller of operations” vis-à-vis their African subsidiaries. This management method is characterized by a strong and regular involvement of the head office in the activities of the subsidiaries: active participation in the definition of the strategy of the African subsidiaries, setting and monitoring of operational objectives (choice of performance indicators and definition of the frequency of reporting), centralization of services intended for the business sector (purchasing in particular) or even identification and implementation of synergies (shared service centers). It is clear that the position of the Corporate Department will naturally define the level of autonomy left to the subsidiaries. The number of incompressible sovereign functions left in the hands of the Corporate Africa Department is illustrated as an indicator that is both revealing and consistent with this choice. The more the Corporate Department adopts a “hands-on” posture, the more functions it centralizes.

Another striking fact: the holding companies generally remain located in Paris, while the operational departments are multi-localized, most often in line with the regional division defined for the continent.

Strengthen the responsibilities and prerogatives of subsidiaries

Today, the Corporate Departments seek to accelerate the empowerment and empowerment of African subsidiaries. They are developing more decentralized models based on two key factors:

• the granting of Corporate Management functions to leading “mass-market” subsidiaries that extend to a number of countries united within a region;
• and the pooling of resources through the establishment of Shared Service Centers (CSP) and centers of expertise.

The organization of the head office-subsidiary relationship of French groups in Africa is therefore evolving towards new models characterized by the transfer of certain CorporateAfrica management prerogatives to the lead subsidiaries, in a logic of delegation of authority. Main benefits identified: speed of decision making, therefore reduction of time-to-market and better risk control.

The Orange Group, which installed its Africa and Middle East department in Casablanca in January 2020, stands out as a precursor of this logic of bringing together decision-making centers and African markets.

Encourage “repats” and promote local skills

Companies operating in Africa are actively contributing to the “brains return” to the continent, to the detriment of old models which favored expatriates or seconded workers for management positions in African subsidiaries. Several factors explain this paradigm shift:

• the level of education of these profiles has improved considerably: their level of study, as well as their professional experience equivalent to those of seconded or expatriates occupying strategic positions within structures on the continent;
• talents are more available and want to return to the continent to contribute to its economic development; they are particularly motivated (70% of African MBA students want to relocate to Africa);
• the “repats” better understand the socio-cultural characteristics of the environments in which they work and have soft skills enabling them to help companies offer products / services, or even managerial approaches adapted to local specificities. They combine legitimacy and the ability to navigate between different worlds.

At the same time, French groups are strengthening their partnerships with locally recognized training institutions through internship policies and recruitment forums. Which ensures a sourcing quality for “young graduates” profiles.

Retain high potentials

As they operate in particularly competitive African markets in terms of talent recruitment, French groups are renewing their attractiveness and retention systems. They capitalize on different levers:

• compensation level above market standards;
• attractive package with additional elements adapted to the local context (health cover, housing allowance for example);
• access to training and coaching systems for continuous development of skills;
• prospects for geographic and functional mobility within the Group
• mobilization of employees as part of the company’s CSR policy (skills sponsorship, civic actions or intrapreneurship).

Innovating in Africa is not more difficult than elsewhere

In terms of the organization of innovation, 61% of the companies questioned as part of the study have set up a hybrid model of organization dedicated to Africa. This model is characterized by the existence of centralized and pooled innovation structures dedicated to Africa which collaborate with the innovation poles existing in each subsidiary of the continent.

The groups are part of a logic of systemic innovation. Innovation is not a one-way street, from the parent company to the subsidiaries or from the subsidiaries to the parent company, but rather a two-way street. This model makes it possible to create a permanent loop of innovation adjustment, both vertical (from head office to the subsidiaries) and horizontal (between the subsidiaries).

Main benefits associated with the process:

• optimal use of the knowledge that subsidiaries have of their markets;
• involvement of subsidiaries which enhances the value of employees;
• an optimized innovation cycle thanks to a lean structure making it possible to reduce the time-to-market;
• dissemination of the culture of innovation within subsidiaries

The innovation organization model of Société Générale Est Afrique perfectly illustrates this pattern. Three types of actors coexist:

• at group level: the Innovation Department within the Africa, Mediterranean Basin and Overseas Department;
• at the regional level: the Dakar Innovation Lab and the Casablanca Digital Factory;
• at the local level: the innovation centers of the subsidiaries, led by “Innovactors”.

The financing of innovation is also pooled. For a given product for example, in an MVP logic^[1], the head office bears the costs associated with the development of a base that can be adopted by all the subsidiaries. Each subsidiary then finances the specificities it wishes to bring to the basic product.

Innovate while taking the context into account

In terms of “open innovation”, defined by Henry Chesbourgh, as “The use of inflows and outflows of knowledge on purpose to accelerate internal innovation for the benefit of expansion into new markets”, French groups favor co-creation and corporate venture within their subsidiaries in Africa.

Co-creation brings together all initiatives for the development of new products / services with players in local innovation ecosystems such as hackatons, entrepreneurship competitions, or partnerships with research institutes.

A specific form of private equity, the corporate venture refers to the financing of innovation through the acquisition of a large company stake in an innovative start-up. For example, the CFAO Group has launched, in partnership with Tsusho Corporation (TTC), the Mobilty54 joint venture. This investment vehicle targets African start-ups operating in the field of mobility and which will enrich CFAO Automotive’s value proposition. Orange also launched Orange Ventures, a multi-stage technology investment fund of 350 million euros with an international focus which finances innovative start-ups in Orange’s fields of expertise (Networks & IT, Digital Enterprise, Cybersecurity , and Fintech) and beyond (Consumer platforms, E-gaming, Edtech, Health, etc.). Orange Ventures manages Orange’s corporate venture activity on a global scale, including Africa.

In conclusion, French companies have resolutely taken the step of differentiation. The context of increased competition and the advent of new partners from African States have accelerated this dynamic which is based on the redefinition of their Africa and l’empowerment of their African subsidiaries. The enhancement of human capital and the development of HR practices help strengthen the employer brand of French companies compared to their European and pan-African competitors. Finally, faced with increasingly connected customers who claim their identities ” afrotopic and afro-contemporary »***, French companies are starting to set up innovation systems that are more pragmatic because they are “localized”.