A person seeking advice this week asked me, “Can innovation and innovative operations — processes, products, data, and technologies — be achieved and sustained using a copycat business model?” This approach continues to gain widespread appeal from would be entrepreneurs seeking to lift consumer and operating principles from the likes of Google, social networks, online auctions and of course prior employers. However, if history has taught us anything within the FSI and mortgage industries it is that those who follow the crowd in search of a quick profit and outside investment will reach an ugly demise — like lemmings rushing into the sea.
Ask yourself an underlying question on the unwinding saga confronting FSI and mortgage organizations — “Why did so many brilliant individuals make fundamentally erroneous decisions?” Why indeed. Was it a singular event that caused the failure or inappropriate enthusiasm for someone else’s model and success? My children would term them “biters”, patent attorney’s call them “opportunities,” regulatory authorities refer to them as “enforcements,” but using today’s more appropriate vernacular they represent the “Phishing Business Venture” or PBV. An illustrative model of the positive and negative aspects of copycat models is presented below.I should note that not all PBV’s are inherently “evil” or destined to demise. When executed properly, they have the potential to increase the original ideas several fold. When combined with new operating principles and separate innovations, PBV’s represent a potential to offer new products and solutions that could not be achieved if they simply started with a “green field” set of ideals. In essence, by leveraging new principles, personnel, and technologies, PBV organizations can yield greater returns for investors 1+1 = 3.
Then again, what frequently transpires is that “new” and “innovative” management teams simply tweak an ideal or series of solutions, while deploying the same functional premises and technologies that the “market maker” or “first mover” has already established. I’m sure the VC’s continue to receive functional proposals for social networks, SaaS offerings, SOA approaches, Web 2.0, grid computing, “e” options, and countless other PBV business plans that are merely trying to piggyback off an established player or leadership idea.
Whereas, it would be intellectually arrogant for me to presume influence over strategic investor decisions (i.e., VC, angel, PE, and wealthy individual), what I can do is ask, “Are you happy with your current business model?” A visible downstream implication of PBV approaches and “reused” management teams is they tend not to realize that the layering of “lifted and borrowed” ideals over a period of time has created a market irrelevant organization lacking innovation and applicability.
In plainer English — the PBV business model is broken, lacks real competitive differentiation, has the wrong personnel, and is “hemorrhaging” money — especially during a market rebalancing and shifting global wealth. Even within mortgage functionalities and corporations that should be booking huge sales increases I must ask, “Are you closing all the deals you think you should be why not?” Is it because the consumer “doesn’t understand,” “can’t make the investment,” or “doesn’t want to take the risk?” Often times it is this repeated copycat layering that has poisoned the approach, delivery offerings (i.e., more than products), confused the customer, and resulted in lots of “talk.”
So as FSI and mortgage industry personnel and their once unshakable investors continue to rush to the exits in droves, I can only shake my head and sigh. The copycat and outdated PBV models built on other’s successes have yielded little in terms of leveragability, sustainability, and adaptability. For investors, the panic is ebbing into capitulation. For industry providers, commoditization of solutions will begin to yield acrimonious legal retributions including patent violations, copyright infringement, and non-competition breaches. For lenders, many solution providers, outsourcers, and pundits sound too similar — all promising efficiencies, profits, and execution using nearly identical old-world approaches and terms.
For the mortgage industry, like the dropping of a stone into still water, the ripples of PBV’s have finally raced to distance shorelines. So ask yourself before you dismiss PBV as mere heresy or the fanciful rants of a John Deere driving farm boy, “How different is your business model as compared to your competitors?” Is this differentiation found in its technology, personnel, process, patents, or all the above? Is it time for new personnel and iterative restructurings? How are you objectively and quantitatively reaching these conclusions?
In closing, I must ask. “Will you harvest the seeds planted leading you and the organization to sustainable prosperity, or will you find yourself staring into the eyes of the reaper?”
