Monday, November 16, 2009

You can't be two things at the same time Jack...

Last week I visited Syria and Lebanon. What I observed there was the classic dilemna of the opportunist.

Let's briefly remember how an opportunist firm functions in the market. Most of the time, it observes the market before it takes any action. The timing of the action heavily depends on the "take off moment" of a particular product in the market. When the demand becomes visibly strong for a particular product, it enters the market with a cheap imitation. Numbers talk, a business model on automatic pilot. What's the relation with neurons and brain then ?

The opportunist tries to walk on the footprints of another brand. Therefore, it should be always cheaper to fit itself to the existing slot. Otherwise, it has no reason to exist in the first place. However, here comes the neurons. Remember that such firms take action when the sales are visibly strong. This is the time they lose actually. Strong sales means consumer has already established a relation with the original. Hir mind already has a clear understanding of what the brand stands for. Remember, brain is plastic. Time passes and new pathways are established in the brain to associate the original with its identity. If you want to kill your opponent in the market, you should never let the time pass. Time passes and neurons establishes the pathways, the original is embedded into sub-conscioussness. What does the latecomer have to establish itself in the market place ? Price...

Just because of this simple fact, the opportunist loses in the long term. Because he is not the only smart guy in the city. Others with better cost structures attack using the same formula. Market place turns into an arena. Blood spills...At the end of the game, everyone loses, profits evaporate.

Here comes the dilemna. The opportunist who is too afraid to innovate finds itself in a worse position in the long term. But it is too late to leave the price game. Because neurons works for both ways. They establish the original as the innovator, you as the cheap imitator. You can't make the quantum jump unless you have a very deep pocket to re-programm your consumers.

You can't be two things at the same time. Simple as that. Human brain is where you record your identity. You can't erase the pathways overnight to compete in a different field with a different identity.

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