Beware Of The Rule Of The Three

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Those who donÃÆ'ƒÆ’ÃÆ'†â€™ÃÆ'ƒâ€šÃÆ'‚¢ÃÆ'ƒÆ’ÃÆ'‚¢ÃÆ'ƒÂ¢ÃÆ'¢â€šÂ¬ÃÆ'…¡ÃÆ'ƒâ€šÃÆ'‚¬ÃÆ'ƒÆ’ÃÆ'‚¢ÃÆ'ƒÂ¢ÃÆ'¢â€šÂ¬ÃÆ'…¾ÃÆ'ƒâ€šÃÆ'‚¢t study history are doomed to repeat it. That, I think, is the primary value of empirical research and case studies. So that you know what are the general principles and can abide by them. One of the theories that I find easy to remember is Dr Jagdish Sheth's "Rule Of Three". This says that in any industry there can only be three big players and the others will all either fall by the wayside or transform to niche players. Growing industries may have three leaders who are displaced in turn by a new crop, until the final three emerge. I bring this up, because this year we're seeing the Rule of Three at brisk work in the Indian IT industry. First was iGATE buying Patni. Patni did not make it to the top 3 in the last shakeout, nor did it become a niche player. What happened was inevitable. iGate has been funded to take a shot at the Big 3. Cognizant, which started its life as a niche player has expanded over the years and has now thrown its cap at the No 3 slot, displacing Wipro. Dr Sheth sits on Wipro's Board which took the decision to have a change in management, recognising the danger before it. News reports say Infosys is seriously considering a reorganisation too, triggered by the performance of TCS and Cognizant. Mindtree has a great reputation but has not been able to hit the $1 billion mark nor is it content to be a niche player - its founder Chairman, Ashok Soota has left to start a new venture. Strategic differences are cited. HCL, a firm that unlike Wipro could not make the transformation from Top 3 in hardware to Top 3 in software has been following the "Blue Ocean" philosophy. They have followed a semi-niche strategy focusing on a few service lines and pushing hard for growth. Seems to be working for them! This jostling for the top 3 spots happens across industries - cements, cars, steel - just look at your own space. Mobile phones is another industry where there is a shake-up in progress, with new players like Micromax and Karbonn attempting to displace the earlier triumvirate. Another lens to look at this is whether to pursue market share or profitability(http://paulwriter.com/resources/item/107-corporate-dwarfism-why-profitability-can-stunt-growth). Obviously, to stay in the top 3, market share must be a priority, even over profitability. With a growth rate of 8.5 per cent and per capita income expected to touch $1000 for the first time - often a trigger for exponential growth in consumption - India will offer a host of opportunities to entrepreneurs. Remembering some of these management principles will help these creators of post-modern India stay successful. The message in the marketing bottle is clear - you either have to aim to be in the top 3 by market share, or you should specialise as a niche player. There is no middle road - just a nasty ditch! Jessie Paul is the managing director of Paul Writer, a marketing advisory firm. She is the author of No Money Marketing (Tata McGraw-Hill).