Why business is like ... Monkeys, coconuts and rice

Drill a hole into a coconut just big enough to squeeze a small hand into, hollow out the inside, then stuff it with boiled rice - you've built yourself a monkey trap.

by Jennifer Harris, director of JRBH Strategy & Management,www.jrbh.co.uk
Last Updated: 31 Aug 2010

Put one of these outdoors in certain parts of southern India and there is a good chance that a monkey will pick up the scent and wriggle a hand through the hole to get to the sweet-smelling contents. Herein lies the cruel trick: once it has a hand clenched full of rice the poor blighter won't be able to pull it back through the tiny hole. But it won't let go. The rice is just too good to abandon, so the monkey finds itself trapped.

Businessmen may rate themselves as much smarter than monkeys, but there are many examples of companies holding on to clients, assets or businesses for short-term gain without properly considering the long-term effects. Today's credit crunch offers a prime example. In prioritising short-term profits over the greater risks, banks have been storing up trouble - and in some cases even endangering their own survival.

The monkey's problem is its inability to weigh up the value of sweet-smelling tucker against the potential risk of standing exposed in a hostile environment without the use of one of its arms. For the animal, and similarly for banks dealing in high-risk securities, the promise of near-term reward is intoxicating and dulls their ability to correctly estimate the trouble being stored up for later.

Of course, a cannier monkey would figure out how to use a stick to reach the rice inside the coconut. Indeed, the trick is not to abandon the bounty but to work out how you can exploit short-term possibilities without jeopardising the business in the long term.

Tags:
Strategy

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