The Anna Karenina Principle & The Impossibility of Aggregation-based Entrepreneurship in India

?Music to read this article by

?Buffalo Soldier Bob Marley https://www.youtube.com/watch?v=uMUQMSXLlHM

?Banadeek Taala – Amr Diab https://www.youtube.com/watch?v=qs-1MwA6Jg0

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EXECUTIVE SUMMARY

• All happy families are alike; each unhappy family is unhappy in its own way – Leo Tolstoy (The Anna Karenina Principle) The concept has been applied to finance, project management, ecology, the human microbiome, and software development, amongst others.?
• A humongous sub-culture in Entrepreneurship thrives on presenting aggregation as a business: from cobbling together cobblers(!), to space travel via grocery stores and tire puncture repair shops.
• As with the attempted domestication of various species, the ‘aggregated’ above are likely to renege, thoroughly pulverizing efforts at aggregative entrepreneurship.

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UNABRIDGED VERSION

?The Anna Karenina Principle and “Domestication”

The logic in this article largely follows that of my personal hero, Jared Diamond, on his application of the Anna Karenina Principle to man’s domestication of wild animals.

?Let the fact that I am a Carpenter/woodworker/stonemason be my excuse for suggesting the 'domestication' of Artisans/Skilled Workers/Craftsmen. Domestication is a general idea whether applied to wild animals or skilled workers/artisans/craftsmen. Being a naturalist too, the term “wild animal” to me is a term of endearment insufflated with the highest respect. A free spirit, risk-taking, and utter self-reliance characterize the “wild.”

?The Anna Karenina Principle and domesticating “Wild Animals”

All happy families are alike; each unhappy family is unhappy in its own way – Leo Tolstoy (The Anna Karenina Principle)

Therefore, in any situation, the Anna Karenina principle states that just any ONE deficiency causes failure. Consequently, a successful endeavour has to avoid EVERY possible deficiency. As applied to the domestication of wild animals, these include:

?o?? Diet

o?? Growth Rate

o?? Captive Breeding

o?? Disposition

o?? Tendency to Panic

o?? Social Structure

?Because of this, in spite of the huge variety of animal species, ONLY 7 have ever been domesticated: Dogs, sheep, goats, cattle, pigs, horses, and camels; these are the ONLY animals that satisfy all six of the conditions required for domestication.

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What is aggregated by Entrepreneurs

Amongst many other areas, the following are ‘heavily’ chosen by aggregators.

·?????? Food Outlets

·?????? Trash and Waste Collectors

·?????? Logistics Providers

·?????? Travel

·?????? Shipping and delivery

·?????? Admissions Consulting

·?????? Interior Design

·?????? Repair Services

·?????? Home services

·?????? Retail

·?????? Handicrafts

·?????? Tire Puncture repair

·?????? Health Care Providers

·?????? Etc.

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The Anna Karenina Principle applied to ‘wild’ Artisans/Skilled Workers/Craftsmen (ASC).

‘Craftsmen’ - The male version is largely used since there are exceptionally few women Doing these jobs.

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Diet?

Animal Species …must be easy to feed. Finicky eaters make poor candidates. Non-finicky omnivores make the best candidates.

Artisans/Skilled Workers/Craftsmen Aggregation demands that skilled workers omnivorously attend to every job as per their rota. For instance, as part of a home repair aggregator, a plumber will have to attend to something as simple as a leaking tap or something as complicated as an entire buried hot water line. The charges will differ, and therefore, the desire to perform tasks will also differ. Amongst skilled craftsmen like plumbers, carpenters, electricians, painters, and masons, very few would be able to tolerate an ‘omnivorous’ diet of assignments. At the very least, they would exaggerate the task, overcharge and most often simply refuse and force the customer to cancel. The air conditioner repair man and their natural insistence on unnecessarily recharging gas is the exemplar.

Growth rate?

Animal Species ..Needs to be fast enough to be economically feasible. That’s why there are no elephant farmers – the gestation period is over 18 months, and it would take over twelve years for their herd to reach adult size.

Artisans/Skilled Workers/Craftsmen

They are in short supply. They do not breed ie they usually do not train apprentices in large numbers. Though there are training schools, hardly any certification is in place for ASC. Even the advantages of aggregation are largely lost because the bargaining power is in the hands of the ASC. Magnification of Craftsmen Under Management (CUM like AUM) is highly unlikely to happen. Priests (pujaris) are a case in point. Just planting a flag here, an online religious ritual is like online swimming, of course!

Captive breeding?

Animal Species Must breed well in captivity. Rituals like the need for privacy or long, protracted mating chases make poor candidates for domestication.

Artisans/Skilled Workers/Craftsmen Do not breed well in 'captivity'. Find it difficult to fraternize with those who are essentially ‘competitors’. Rituals are an important feature. Either religious or ‘relationships’ with suppliers. Case in point: carpenters have better relationships with hardware shops and lumber yards than with their own.

Disposition?

Animal Species The ill-tempered are not good candidates for domestication, for it results in injury or death to handlers. The Zebra is an exemplar – a tremendous survivor – but those very qualities make it exceptionally independent.

Artisans/Skilled Workers/Craftsmen Fiercely Independent, after all, they ran their own businesses, no? Don’t tell me what to do – is the Mission Statement. Largely Impervious to one or more of: Technical Training Customer Service/Delight High requirements of ethical behavior SOPs, ERP, Systems, and other rigor

Your tire repair guy who bangs away with a 12-pound hammer on your alloy rims is the exemplar! And by the way, they loathe the unskilled entrepreneurs who ‘make money off their hard labour while just relaxing in an air-conditioned office with a computer’

?Tendency to panic?

Animal Species Any species that would rather bash itself to death against a fence than accept hand-feeding is impossible to tame. Calmer ones that mingle with their herd are easier to work with.

Artisans/Skilled Workers/Craftsmen Exhibit extreme stress under attempts at organizing. Will take flight and set up individual, direct connections with the customer provided by the aggregator. Will join but also leave in groups.

Your car hail service driver, who will invariably, especially on airport pick-ups, will hand you their visiting card for private pickups is the classic example.

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Social structure

Animal Species Lone, independent animals make poor candidates. Those with a social hierarchy make excellent candidates because they will follow their leader. If it can imprint on a human leader – that would be the best.

Artisans/Skilled Workers/Craftspersons! Ha ha ha!. They already have a superb network. Far, far better than what the aggregator could ever offer. Check this example of a housemaid and her extraordinary network. Why would they ever trust software and a brand? Why?

Conclusion

So, in general, aggregation (domestication) is resorted to and will work when the entrepreneur is

• Not possessed with direct Artisanal/Skilled Work/Craftsmanship qualities
• Has access to a large pool of completely unskilled folk who, at best, have a driver's license and a smartphone.
• Can access a sufficiently large pool of customers whose needs are generic and need lo-skills to satisfy.

This will result in a happy family. Anything else is deeply subject to the Anna Karenina Principle.

?What do you say?

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S. Ram Kumar is a B-School Professor, Author, Speaker, Agent-Provocateur, Unicyclist, Woodworker and Stonemason [email protected]

www.luckfogic.com