Mickey Malta

Notes from the zone where 'normal' things don't happen very often

Posts Tagged ‘Business

Think blue not red

leave a comment »

BOS is all about creating an uncontested market space and make the competition irrelevant

BOS is all about creating an uncontested market space and make the competition irrelevant

Minister Tonio Fenech is right in pointing out the lack of creativity in the way we tend to do business. As in many other areas, most of our business activity is based on the herd instinct. As the saying goes: qisna n-naghag ta’ Bendu.

As soon as someone comes up with a formula that seems to work well, be sure that a number of people will do their best to have a big slice (possibly bigger) of the same cake. Ideally, the copycats would want to take over that particular market and drive everyone else in that sector out of business.

I’m sure that many of you remember the mushrooming of grocer shops in the 1980s followed by a pirate video store in every corner later in the decade. During the same period, cinemas were a complete disaster and only a handful of people visited the complex in Valletta. However, as soon as Eden Cinemas redefined the standards and revived the industry, a number of entrepreneurs followed suit. A number of complexes opened around the island, and many others were proposed but thankfully never saw the light of day.

In these last couple of years, wine bars seem to be the recent ‘trend to follow’.  By now, we must have reached the top charts of wine bars per capita when compared to other major cities.

This is all due to lack of innovation and imagination. During the cinema-opening frenzy, I used to say to myself that if I were an entrepreneur trying to compete with Eden Cinemas, the last thing I would invest in would be a cinema complex. Instead, I would target their market segment (youths and families with small children) and offer an alternative product like, for example, an amusement park.

About four years ago, I came across a book called Blue Ocean Strategy which, essentially, advocates this approach. In a small market like ours, we need to think blue not red as even just one outlet or service provider in a particular industry may be enough for such a limited market. We need to compare ourselves to a small county in a European nation. We cannot compare ourselves to London, Rome, Berlin, or Paris.

With our current way of doing things, many businessmen seem to think that they should have the biggest slice and starve all the rest. Instead of achieving this goal, we end up with a huge number of people biting more than they could chew, or eating crumbs and scraps of the cake. This would eventually not be enough to sustain themselves, and they end up closing shop or diversifying. I experienced this myself when I worked for a company that wanted to dominate the whole of Malta and literally put everyone out of business. Not only this did not happen, but the company went bust in a few months. The crash was so spectacular that to-date it’s a textbook case on bankruptcy. Yes, you’ve guessed. I’m talking about Priceclub.

Apart from greed and an “I want it all” attitude, lack of market analyses and market studies also seem to be the main reasons behind unpleasant results. If entrepreneurs do their own research before investing in a new business, we wouldn’t have all these restaurants, wine bars, clothes shops, household shops, cinemas, real estates, radio stations and other ventures.

Instead, we would have a more diversified and a richer market to choose from, with the end result being happier customers, better profits for the investors, and a much wider variety for the consumers to choose from.

Advertisements

Written by mickeymalta

19/05/2009 at 23:37

Posted in Blog Main Page

Tagged with , ,