January 26, 2006
A Collounsbury Lesson on Business in MENA
I've gotten more or less numerous requests in the past with respect to "doing business" out here, etc.
Here is one I distill from recent meetings and my core line of work where it appears my home office is in the process of losing a deal with a major client. Largely because the American side wants to build in all kinds of "best practice" whanking rubbish into the game, without regard to the actual market.
Rather exactely the sort of thing I gather from the seminars and like the gold plated advice everyone from DIFD to USAID to EU (but oddly, rarely France.... hmmm) like to pimp.
In an emerging market you do not need expensive "best in class" and "best practice" - what you need is "better than the other guys" efficiencies, but one's that work in the bloody market with the bloody staffing one can realistically expect. Perfection (even in the ridiculously delusional business sense as personified by Six Sigma) becomes the enemy of the good.
There is my "Lounsbury Doctrine for Business in MENA" (with due respect for Pratike for naming my political doctrine) part One.
Second, don't judge the market opportunity by what is going on in home market, judge it by what is potentially "disruptive" relative to home market and/or export markets - pricing perhaps.
Americans have become obsesses with technology as the source of advancement in business-economic terms, and that's important, but it's not the only thing. Esp. in emerging markets, rather trivial seeming organisation changescan often find a lot of value and export competivity. That's a disruptive change, and in the contect of a lower income emerging market, more useful.
Part of this entry brought to you by my sheer frustration yesterday on a call where our side couldn't fucking understand universal bank practice and underwriting. Myopia.
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In an emerging market you do not need expensive "best in class" and "best practice" - what you need is "better than the other guys" efficiencies, but one's that work in the bloody market with the bloody staffing one can realistically expect.
This is true even in developed countries. I recently had a discussion with a CEO who bragged at some length about how "hiring the best people" was a key component of their strategy. He was left a bit flat when I, being in a contrarian mood, pointed out that any business plan that can only be executed by "the best people" isn't very robust. A really good organization will be set up in such a way that mediocre employees working well within their limited competence zones can still deliver consistent, high quality results. In the very best organizations, such as investment banks and McDonalds, most employees could be replaced by well-trained monkeys.
Any profitable company takes cheap and readily available inputs and turns them into something valuable. This applies to raw material and labor alike. The trick of making money in developing countries is figuring out a structure that allows undereducated locals to deliver valuable goods and services, not figuring out how to turn undereducated locals into Mckinsey alums.
Posted by: Anonymous at January 26, 2006 04:19 AM