Beware growth for its own sake


Arthur Goldstuck | CEO | World Wide Worx  | @art2gee | mail me |

It’s a given that sub-Saharan Africa is the world’s fastest growing region in numerous industries, from music to cloud computing. Not so given is how to take advantage of this growth.

The biggest hurdle facing any business expanding across the African continent is not only the geographic size of this market, but that it in fact comprises 50 markets.

The challenge of the continent of Africa, is that it’s fragmented  across so many countries and geographies. We see Sub-Saharan Africa as a growth market for F5 because of the increasing digitalisation that’s going on here. But for an American company to build the right coverage model here takes quite a bit of time.

– Francois Locoh-Donou, President and CEO at F5 Networks

Locoh-Donou told Business Times during a visit to Johannesburg that South Africa was one of F5’s largest markets in Africa, with clients including banks, government entities and telecom companies. It saw tremendous growth opportunity, but growth for its own sake would be costly.

Business riches awaiting on the continent

What is gating F5’s growth is not the market opportunity or a competitive dynamic, but their coverage of the continent. The strategy is to have more of the right partners in the right geographies with the right distributors, and augment that with their own resources along the way. But they have to be measured in how they do that.

F5’s strategy is not to say, okay, we’re going to hire 200 people in Africa tomorrow. If we did that, we would take way too much risk that we wouldn’t be able to manage. It’s growing in a way that is measured, and finds the right priorities around the best opportunities in the market.

While that makes business sense, it is hardly typical of the gung-ho messaging that accompanies many a breathless forecast of business riches awaiting on the continent. It helps that F5 has never made promises of rapid growth to its investors.

IT companies go through stages. F5 has been around for 25 years, they now have close to 20,000 large enterprise customers around the world. So they do gain new customers every single week, but a large part of their strategy is not to go in and find new customers; it is to grow within our customers, because we bring new solutions to them.

Managing expectations

Such incremental growth does not always satisfy the stock market, but Locoh-Donou says F5 has managed expectations.

We are a publicly traded company and we also want to reward our investors as we grow, but we have a disciplined approach to growth. As we grow, we want to grow profitability. One of the big drivers for the company is to deliver double-digit earnings growth every year. That involves the right balance of pursuing growth, but doing so in a way that is disciplined in how we spend.

The wheels did not come off during the pandemic, but they did go somewhat flat last year as the global supply chain crisis arrived at their doors.

They got a lot of orders, but they couldn’t ship them. If they were just religiously obsessed with that double-digit earnings growth, they would have cut costs, but that didn’t make sense because demand was still very strong. So they deliberately chose not to grow as much in 2022.

That also meant F5 did not join the global IT bandwagon of over-hiring during the pandemic and then having to lay off a big chunk of its workforce as the market cooled.



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