Effectuation Stories

          Case studies, lessons and stories about Effectuation!

          Hunting with the pack - The Story of Baloo Patel

          The Entrepreneurship Train

          Baloo Patel was born in Uganda in 1939, but the tracks to his entrepreneurial career had already been laid; laid by hand, in fact, by his ancestors who had been brought from India to work on the East African Railway. Starting out as a bank teller in Kenya, he soon moved to working in a tour operating company. Believing he could improve the business, he participated in a management buy-out of the operator, and with the stroke of a pen, became an entrepreneur.

          From Trains to Planes and Balloons

          With responsibility for the tour business, Patel started to imagine new services and new offerings. Clients enjoyed seeing the Kenyan landscape and wildlife from the ground, but might the air be even more dramatic? In 19xx, he bought a plane and entered the aviation business. And in 19xx, he bought a balloon and offered silent aerial excursions above wilderness treasures of the Masai Mara National Park. Business soared, and Patel used the proceeds to expand into real estate, printing, insurance and mining.

          Hard Lessons of Hard Assets

          With every step of expansion, Patel had the benefit of knowing the clients and the market, so he could be comfortable with demand, but he took the risk associated with buying hard assets. This risk was underscored in his printing venture with his cousin Nayan. In 2002, Patel observed that Kenya's population of 35million people was supported by only about 300,000 physical phone lines. The cellular industry was poised to take off. He was going to benefit by printing pre-paid cellular phone cards. So he invested in specialized equipment for secure card printing. But the cellular phone operators in Kenya had existing suppliers, they were wary of local providers, and Patel's equipment lay still for years. Until disruptions in Kenya's transportation system left the operators without foreign printed cards. And put Patel in business"_finally.

          Don't Risk what you Don't Have to

          The experience has added sophistication to how the two, now along with Patel's, son Rohan, expand the businesses. Wilderness Lodges, their high end hospitality offering within the boundaries of Kenya's national parks uses properties leased from the government. Their latest venture Sankara Hotels and Resorts, a hotel management company will similarly hold no hard assets, but operate contemporary five star hotels for business travellers in Africa's key growing cities.

          "Our new business, Sankara, is based on the Sanskrit word meaning 'causer of tranquillity'. Appropriately named, our goal is to develop refined hotels that offer functional yet tranquil guestrooms whilst simultaneously offering vibrant recreational and entertainment facilities that will become the centre of daily urban life. On a personal note, it has a special meaning for me; I find that the more I spread risk and reward with my partners, the more tranquil I am in running the business."รน -Baloo Patel

          Putting Flexibility to Work

          As you venture out into the savannah of entrepreneurship, it is worth thinking about who might share risk with you. Not only will these people or companies lower the amount of money you need to get going, they will also have an incentive to help you succeed. Perhaps the real entrepreneurial lesson from Kenya is that hunting is more effective when you're part of a pack than then when you're on your running on your own.


          Stuart Read is professor of marketing, IMD, Lausanne, Switzerland. Robert Wiltbank is associate professor of strategic management, Willamette University, Oregon. Art is credited to susush, through stock.exchng.

          British Airways Business Life
          Stuart Read

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