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The Cloning business


Wednesday, October 21, 2009

Rajit Nair

In the late 80’s, once in a week, my friends and me used to dine outside utilizing the savings from each one’s pocket money. This was during our college days and to have food outside (to get permission from our homes) and that too from the leftovers of our frugal pocket monies was a challenge. The system worked based on sponsorship on a rotation basis. The favorite hangout for us was a ‘roadside diner’, popularly known as “Tattukada” run by a dynamic entrepreneur (I think his name was Salim) in Kesavadasapuram, Trivandrum. I am sure Salim was the pioneer who introduced this concept in Trivandrum, where the customers could see ‘live” how Parottas (Barotta) were made from a dough.

His growth was phenomenal and envious. In a very short span, people putting aside their class and pride and against the social stigma to have food from an open roadside diner used to either dine in or takeaway from Salim’s “Tattukada”. Besides the quality and freshness of the food served, the location (right in front of a crowded bus stop; GCC readers, when I mention crowded, it means at a time more than 500 people waiting for the State Transport Corporation Buses, which mostly fail to stick to the schedule) also played a vital role in his success. The tempting aroma of the food (fat omelet, fried spicy Chicken and Chilly Beef) starting from 6 pm every evening acted as the only marketing initiative for the eatery.

The success story as usual prompted many other entrepreneurs in the neighborhood to ‘clone’ the business model of Salim, replicating the style, menu and almost similar taste started populating the Trivandrum ‘eateries map’. Saddened by with the advent of ‘clones’, the immature businessman in Salim closed our favorite refectory and like many Keralites, left for the Gulf to make the local population and expats there to get to seduce them to his scrumptious Parotta (or commonly called Chabathy).

Well! This is a very simple example of business cloning or in common terms stealing of someone’s business concept. In almost all parts of the world, we can see such concept infringements. As a short cut to success the majority of investors or entrepreneurs have the tendency to copy something that has already proved successful. Also, people who lack innovative ideas or out-of-the-box thinking may opt for copying.

Human beings are ‘programmed’ to take risks, if you watch a toddler trying to walk, s/he takes those initial steps risking of falling down. But when it comes to business, investors don’t even show the courage of a 1 year old.

We have witnessed mushrooming of Investment Companies in the GCC countries during 2007-2008 (pre economic crisis). They also would nominate for the ‘business-cloning’ category. Interestingly, all theses companies were with the same articles of association, same objectives, same Organization Structure, almost the same corporate logo, but with different sets of people in the vanguard. In some cases, even the investors also were the same, but in different permutations.

The alarming factor is in the similarity of their business strategies. There are many reasons for the striking similarity. However, the finger points to the Strategy Consultants these companies engage. As these ‘Strategists’ might have used the same template resulting in an output which shares the same genome.

Due to the sudden boom of investment houses, talent sourcing was always a challenge. Especially, to headhunt a Chief Executive always made the Director Board’s job difficult. (Please read my next article on Board of Directors). As talents become sparse, the Board of Directors was forced to elevate ‘unqualified’ people to such critical positions. Some examples are as follows. A Stock Trader made as a CEO of an investment company and naturally he focused only trading in stocks because that is his only strength. Similarly, when a Real Estate Broker was installed as CEO, he focused only on Real Estate acquisitions.

This reminds me of the ‘follow the trend’ prevalent in the Malayalam film industry. When one movie is a box-office hit, then all the Producers and Directors would go for the same “formula”. Shameless, even the music (including background score) also would have ‘striking’ similarities and; often such movies flopped.

Like-wise as an outcome of the Economic downturn most of the investment companies met with the same fate as they shared the same script.

We need investors or promoters or entrepreneurs to think differently and to show courage to take risks and thereby invest in innovative ideas that would lead to success. Blind Copying would lead to dead-end in the new business paradigm.

Editor: You can read this also at Rajit's Blog.

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