BAKHRESA GROUP OF COMPANIES ENTREPRENEURSHIP AND INNOVATION

Identify the strand of organisation structure and innovation approach used by the Bakhresa group. Is it ‘organic’ or ‘mechanistic’ structure followed by the Bakhresa group? Among the two which one is more suitable to innovation and why?

How can Bakhresa group manage the tension between the need for creativity and efficiency?

Discuss the main organisational characteristics that facilitate the innovation process in the Bakhresa group.

Explain the key individual roles within the innovation process and the activities they perform in the Bakhresa group.

How did Bakhresa group establish innovative environment that propagates the virtuous circle of innovation? Explain its features.

BACKGROUND

BAKHRESA GROUP OF COMPANIES – TANZANIA

Bakhresa Group is one of the leading Industrial Houses in Tanzania, East Africa. Started in a humble manner with a small restaurant in the Port City of Dar Es Salaam, Tanzania, in mid seventies, it has now emerged as a respected business group in the Region. The Group has its operations spread in Tanzania, Zanzibar, Uganda, Kenya, Malawi, and Zambia and most recently in Mozambique. Plans are in place to spread its wings to other countries. The group now boasts of a turnover of more than Three Hundred Million United Sates Dollars and is a proud employer of more than two thousand employees associated directly. There are several companies under its umbrella and have investments mainly in Food and Beverage Sector, Packaging, Logistics and Real Estate.

The Bakhresa group of companies offers two groups of product and services that is food and beverage, and services. Examples of food and beverage companies owned by Bakhresa includes; Bakhresa Grain Milling (Malawi) Ltd, Salim Bakhresa & Co Ltd, Bakhresa Grain Milling (U) Ltd, Bakhresa Grain Milling (Mozambique) Lda, Zanzibar Milling Corporation Ltd, Bakhresa Food Products Ltd, Azam Bakeries Company Ltd, Salim Bakhresa & Co Ltd and those of services includes; Omar Packaging Industries Ltd, Said Salim Bakhresa & Co Ltd, Paper Kraft International Ltd, Bakhresa Food Products Ltd, etc

ORGANISATION STRUCTURE AND INNOVATION

Identify the strand of organisation structure and innovation approach used by the Bakhresa group. Is it ‘organic’ or ‘mechanistic’ structure, among the two which one is more suitable to innovation and why?

The structure of an organization is defined by Mintzberg (1978) as the sum total of ways in which it divides its labor into distinct tasks and then achieves coordination among them. One of the problems is recognizing that different groups within an organization behave differently and interact with different parts of the wider external environment. None the less, there have been numerous useful studies exploring the link between the organizational structure and innovative performance.

Trott (2005) described the two organizational structures such as Organic and Mechanistic structure as follows:-

Organic

Mechanistic

1.0

Channels of Communication

Open with free information flow throughout the organization

Channels of Communication

Highly structured, restricted information flow

2.0

Operating styles

Allowed to vary freely

Operating styles

Must be uniform and

restricted

3.0

Authority for decisions

Based on the expertise of the individual

Authority for decisions

Based on formal line

management position

Free Adaptation

4.0

Free Adaptation

By the organization to changing circumstance

Reluctant Adaptation

5.0

Emphasis on getting things done

unconstrained by formally laid down procedures

Emphasis on getting things done

Emphasis on formally laid

down procedures

6.0

Loose informal control

with emphasis on norm of cooperation

Loose informal control

Tight control

7.0

Flexible on-job behavior

permitted to be shaped by the requirement

Flexible on-job behavior

Constrained on-job behavior

8.0

Decision Making

participation and group consensus

Decision Making

Only superiors make decisions

Source: D.P Slevin and J.G Covin (1990) ‘juggling entrepreneurial style and organizational structure: how to get your act together’, Sloan Management Review, Winter 43 – 53

Mechanistic organization tends to offer a less suitable environment for managing the creativity and the innovation process. From Bakhresa group of companies’ case study analysis the following facts were deduced “The channel of communication is highly structured, there is restricted information flow, and operating styles are uniform and restricted. Authority for decision is based on formal line management position and the management is reluctant to adapt changing circumstances”. Therefore Bakhresa group of companies use the mechanistic organization structure which offer less suitable environment for innovation and creativity. The seminal work by Burns and Stalker (1961) on Scottish electronic organisation looked at the impact of technical change on organisational structures and on a system of social relationships. It suggests that ‘organic’, flexible structures, characterized by the absence of formality and hierarchy, support innovation more effectively than do ‘mechanistic’ structures.

THE DILEMMA OF INNOVATION MANAGEMENT

How can Bakhresa group manage the tension between the need for creativity and efficiency?

Organization

Efficiency gains

The efficient day to day operations within an organization require stable routines which can be achieved in stable and controlled environments

The development of new products/services requires creativity and room to try out new ideas this is achieved in a loose and flexible environment

Creativity gains

From the Bakhresa group of companies study case analysis shows that “The management of the Bakhresa Group is committed to long-term growth rather than short-term profit and the organization is willing to invest in the long-term development of technology and is aware of its threats and opportunities” and thus comply straight to the organization creativity gains and efficient gains as described by Trott (2005) above.

ORGANISATIONAL CHARACTERISTICS THAT FACILITATE THE INNOVATION PROCESS

Discuss the main organisational characteristics that facilitate the innovation process in the Bakhresa group.

Trott (2005) explains the following organizational Characteristics that Facilitate the Innovation Process

Growth Orientation

It is characterized by a commitment to long-term growth rather than short-term profit. Not all companies’ first and foremost objective is growth. Some companies are established merely to exploit a short-term opportunity, other companies would like to maintain the company at its existing size: the objective of innovative companies is to grow the business the actively plan for the long-term, as it has been seen in the Bakhresa group of companies “The management of the Bakhresa Group is committed to long-term growth rather than short-term profit and the organization is willing to invest in the long-term development of technology and is aware of its threats and opportunities.”

On top of that Trott (2005) added the following characteristics that facilitate the innovation process.

Vigilance

It is characterized by the ability of the organization to be aware of its threats and opportunities. Vigilance requires continual external scanning e.g. within the marketing function the activity would form part of market research and competitor analysis collecting valuable information is one thing, but relaying it to the necessary individuals and acting on it are two necessary associated requirements. Presently Bakhresa group is catering the fuel needs of customers in Zanzibar and Local bunkers. The vision is to enter the international bunkering business in near future since Zanzibar is the gateway to the East African coast.

Commitment to Technology

It is characterized by the willingness to invest in the long-term development of technology. Most innovative firms exhibit patience in permitting ideas to geminate and develop overtime. This need to be accompanied by a commitment to resources in terms of intellectual input without a long-term approach it would be extremely difficult for the company to attract good scientists. As seen in the Bakhresa group of companies technology is highly applied, most of the tasks are machinery operated. On the other hand the Company has a well supported IT system to run its day to day operations.

PC Workstation

Internet Access

Satellite base Fleet Management Solutions – Tracking System

Fleet Cost and Maintenance Management System – Road Base

Daily Reporting – Fleet Management System

Real time location of trucks at finger tips

Speed monitoring feedback on screen at all times

Telephone and SMS availability at all times

Acceptance of RISKS

It is characterized by the willingness to include risky opportunities in a balanced portfolio. It means the willingness to consider carefully risky opportunities. Ability to take calculated risks and include them in a balanced portfolio of projects. Being an entrepreneur Bakhresa took a great risk to even in the foreign land and still think to spread its wings all over the African countries.

Cross-functional Cooperation

It is characterized by mutual respect among individuals and a willingness to work together across functions. Inter-departmental conflict is a well documented barrier to innovation. Often conflict has been observed between marketing and R & D functions as the two groups often have very different interests.

Receptivity

It is characterized by the ability to be aware of, to identify and take effective advantage of externally developed technology. Most technology based innovations involve a combination of several different technologies. It would be unusual for all the technology to be developed in-house. That is why business is witnessing an in chasing number of joint ventures and alliances.

Slack

It is characterized by an ability to manage the innovation dilemma and provide room for creativity while organizations place a great emphasis on the need for efficiency, there is also a need for a certain amount of ‘slack’ to allow individuals room to think, experiment, discuss ideas and be creative.

Adaptability

It is characterized by a readiness to accept change. The development of new product innovations will invariably lead to disruptions to established organizational activities. Major or radical innovations may result in significant changes, although the two are not necessarily linked. The organization must be ready to accept change in the way it manages its internal activities. Otherwise proposed innovations would be stifled due to a reluctance to alter existing ways of working or to learn new techniques.

Diverse Range of Skills

It is characterized by a combination of specialization and diversity of knowledge and skills organizations require individuals of a hybrid nature who are able to understand a variety of technical subjects and facilitate the transfer of knowledge within the company. It is the ability of the organization to manage this diversity of knowledge skills effectively that lies at the heart of the innovation process. Bakhresa Group started in a humble manner with a small restaurant in the Port City of Dar Es Salaam, Tanzania, past three decades, it has now emerged as a respected business group in the Region. The Group has its operations spread in Tanzania, Zanzibar, Uganda, Kenya, Malawi, Zambia and most recently in Mozambique. There are several companies under its umbrella and have investments mainly in Food and Beverage Sector, Packaging, Logistics and Real Estate.

The Bakhresa Group has established companies dealing with variety of products from manufacturing of Food and Beverage Sector, Packaging, Logistics and Real Estate and has become a market leader because of innovation and entrepreneurship.

THE ROLE OF THE INDIVIDUAL IN THE INNOVATION PROCESS

Explain the key individual roles within the innovation process and the activities they perform in the Bakhresa group

Trott (2005) explains innovation process is essentially a people process and that organizational structure, formal decision making processes, delegation of authority and other formal aspects of a so-called well run company are not necessary conditions for successful technological innovation. The study of Rubenstein has revealed that certain individuals had fulfilled a variety of roles that had contributed to successful technological innovation.

Technical Innovator:

This individual is an expert in one or two fields. Generates new ideas and sees new and different ways of doing things. Also referred to as the ‘mad scientific’. In the Bakhresa group of companies there is no technical innovator.

Technical/Commercial Scanner

This individual acquires vast amounts of information from outside the organization, often through net working. This may include market and technical information. For the company to survive and perform effectively, technical information is very important as seen in the Bakhresa group of companies.

Gatekeeper

This individual keeps informed of related developments that occur outside the organization through journals, conferences, colleagues and other companies. Passes information on to others, finds it easy to talk to colleagues. Serves as an information resource for others in the organization, consequently for the organisation to meet customer needs it is important to search for the outside information to see what other organisation do.

Product champion

This individual sells new ideas to others in the organization. Acquires resources, aggressive in championing his/her cause, takes risks. As per Bakhresa group of companies there is no product champion.

Project Leader

This individual provides the team with leadership and motivation. Plans and organizes the project ensures that administrative requirements are met. Provides necessary coordination among team members sees that project moves forward effectively. Balances Project goals with organizational needs

Sponsor

This individual provides access to a power base within the organization: a senior person. Buffers the Project team from unnecessary organizational constraints, helps the project team to get what it needs from other parts of the organization. Provides legitimacy and organizational confidence in the project. The Bakhresa Group engages commercial scanner, gatekeeper and project leader and sponsor to facilitate the innovation process. Even though the Bakhresa Group of companies lack product champion and technical innovator still the innovation activities within the organization is excellent.

ESTABLISHING AN INNOVATIVE ENVIRONMENT AND PROPAGATING THE VIRTUOUS CIRCLE

How did Bakhresa group establish innovative environment that propagates the virtuous circle of innovation? Explain its features

As from (Porter’s 1985 cited in Trott 2005) explained that, given the importance of innovation, many businesses have spent enormous sum of money trying to develop an environment that fosters innovation.

Creating a virtuous circle of innovation means getting competitive advantage over others.

Virtuous circle of innovation

The organization’s

Reputation for innovation

High morale and Attraction of

Retention of creative creative people

people

Motivates people and organizational

Reduce frustration encouragement of

Creativity and innovation

A willingness in the

Org. to accept new

ideas

Development of

Innovative

Product

Reputation of the Organization

It takes many years to develop. It is strongly linked to overall performance. Some companies are able to achieve wide exposure of new products or new research as seen in the case analysis Bakhresa group of companies started in a humble manner with a small restaurant in the Port City of Dar Es Salaam, Tanzania, in mid seventies, it has now emerged as a respected business group in the Region. The Group has its operations spread in Tanzania, Zanzibar, Uganda, Kenya, Malawi, and Zambia and most recently in Mozambique.

Attraction of creative people

Creative people will be attracted to those companies that themselves are viewed as creative. TOP scientists and researchers will seek employment with such companies. Currently Bakhresa group of companies is an employer of more than two thousand employees associated directly.

Organizational encouragement of creativity

The creativity has to be supported with actions and resources with the time to be creative: Organization can try to build sufficient slack into the system to allow for creative thinking and tolerates errors and mistakes and successful ideas need to be rewarded.

Development of Innovative Products

Developing new products that are genuine improvements compared with products currently available. Taking an example of Bakhresa Food Products Limited (BFPL) is based in Dar Es Salaam, Tanzania and produces high quality, delicious and nutritious “Azam” brand Ice Creams, Fruit Juices, Frozen Chapattis and “Uhai” (means “Life” in Kiswahili) brand Pure Drinking Water.

Azam Bakeries, the largest bakery in Tanzania, produces the popular Azam brand bread, cakes and donuts. The state of the art technology is used for producing the bakery products making the company proud of supplying essential food in the country.

It has a modern biscuit factory producing the finest varieties of biscuits. Many varieties of biscuits such as Chai, Creams, Glucose, Coconut, Nice, Marie, and Shortcake are popular in the country.

Willingness to Accept New Ideas

Many organizations suffer from an inability to implement changes and new ideas even after rewarding the people involved in developing those ideas. Once a new product idea has been accepted it is important that it is carried through to completion. In future Bakhresa group of companies expect to trade

Lubricants

Jet A1

LPG

With 60odd resorts of 150beds capacity each, in Zanzibar there is also ample scope for bulk supply LPG (In tanks), if they will able to arrange logistics.

Increased Motivation and Reduced frustrations

Individuals within the organization can see their ideas and efforts contributing to the performance of the business; they will be encouraged still further: on the other hand if seemingly good ideas are constantly overlooked, this will lead to increased frustrations.

High Morale and Retention of Creative people

A rewarding and enjoyable working environment will help to retain creative people. This in turn should reinforce the company’s innovative capabilities.

The Bakhresa Group, given the importance of innovation, has spent enormous sums of money trying to develop an environment that fosters innovation. The Bakhresa Group is aware of developing a reputation for innovation which helps propagate a virtuous circle that reinforces Group’s abilities.

RECOMANDATION AND CONCLUSION

As seen in the case study analysis, Bakhresa group of companies is now expanding towards all over the Africa supplying services and products. The company mainly caters through the food and beverage products and service products. The organisation structure of Bakhresa group of companies is characterized by ‘mechanistic’ structure which is not very much conducive for enhancing innovation process within organisation, for more efficiency and effectiveness I suggest Bakhresa group of companies to start adopting ‘organic’ structure. Meanwhile the structure of Bakhresa group of companies lacks the product champion and technical innovator so I suggest also including those two individual roles for maximum output of companies. Despite various organisation that falls under the umbrella of the Bakhresa group of companies the top management of all sub companies is comprised by family members, something that might bring trouble when family instability happens.

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