The Strategic Power of Cloning: Lessons from Sports, Business, and Investing
Humans are encouraged to innovate, embrace uniqueness, and carve out individual paths. Yet, amid this celebration of originality, a quiet truth emerges: Humans are not natural cloners.
The human genome seems to exhibit a bias against cloning, subtly nudging us toward the pursuit of individuality. But what if we challenged this perspective? What if we viewed cloning not as a limitation, but as a powerful tool for achieving success?
Consider the world of sports. To reach the pinnacle of performance, one can replicate the actions and strategies of the greatest players. While adjustments are necessary to adapt to evolving circumstances, the foundational blueprint remains remarkably consistent.
This concept extends beyond sports and finds significant applications in business and investing. For example, Microsoft built on the foundation of Lotus 1-2-3 to develop Excel, ultimately delivering a superior product. By cloning and refining, Microsoft turned a competitor’s groundwork into market dominance (Pabrai & Faber, 2023).
Similarly, McDonald’s invests heavily in analyzing and selecting prime locations for its franchises. Burger King, instead of undertaking an equally exhaustive analysis, has been known to follow McDonald’s lead, opening its locations nearby. This strategic cloning enables Burger King to benefit from McDonald’s extensive research (Pabrai & Faber, 2023).
The investing world also highlights the value of cloning. Warren Buffett provides a compelling example. By replicating Buffett’s investment decisions from 1975 to 2005 — buying what he bought at the highest price and selling what he sold at the lowest in the months he made those transactions — investors could have achieved an extraordinary 26% compounded annual growth rate over three decades, turning $1 million into $1 billion (Green, n.d.).
Mohnish Pabrai, a disciple of Buffett’s philosophy, embodies the practice of cloning in investing. By observing the moves of successful value investors and acting with conviction when patterns align, he has achieved remarkable success (Pabrai & Faber, 2023).
In business, cloning is not merely mimicry; it involves studying competitors, adopting proven strategies, and tailoring them to one’s unique context. Tom Peters, a prominent management author of the 1980s, illustrates this with a compelling example.
He recounts the story of two gas stations situated diagonally from each other at a busy California intersection. Both stations offered self-service, but one owner occasionally provided free services to random customers. The competitor dismissed this practice as unsustainable and refused to adopt it. Over time, however, the station offering occasional free services saw increased business, while the competitor experienced a decline (Pabrai & Faber, 2023). Despite the clear benefits of offering free services, the competitor failed to adapt, highlighting a resistance to cloning even when evidence supports its effectiveness.
Peters uses this anecdote to emphasize that even when competitors’ strategies are openly observable, many fail to replicate and refine them. This resistance underscores the untapped potential of strategic cloning.
When executed thoughtfully, cloning is not just an act of imitation but a deliberate process of learning, adapting, and enhancing. Whether in sports, business, or investing, cloning can serve as a powerful tool for success when approached with the right mindset.
Edited by Nicolas Nemati
References
Pabrai, M., & Faber, M. (2023). Mohnish Pabrai on Cloning & Compounding. YouTube. https://youtu.be/VzoIxD3MSOQ
Green, W. (n.d.). Richer, wiser, happier: how the world’s greatest investors win in markets and life 9781501164866.
Farrant, D. (2009). Taking Care of Busy-ness [Photograph]. flickr. https://www.flickr.com/photos/davidfarrant/3798007845/in/photolist-6MBMpT-2j5LcK9-2drG5J1-azsGRz-2jCyFv7-9o9vJ8-21vgJHb-MSmiNj-fxRyzc-axP45A-dKuKa1-2jjeHaz-aoHTRD-aoHWic-aoHXsg-Y38vaK-ujwfLa-aoLFUU-Q84wKt-JEJw9H-2jcXYnr-2dguygE-fnaPCc-CLDYxA-U5GtwP-SABzbB-2kMSs3D-2dJhibJ-cMK1AW-2D5p4h-XVMjKH-2ktpDa5-crf7A5-aoHUMa-inRLXa-YEp2Vd-sww7g-2j3EKeL-7WsmNc-nUYKn9-2p3ouxk-2nfYyug-2kzSvGH-2mqa9fi-P778Zz-dRhd58-2mCpMgr-7eztPP-2iVbLEA-8vgWzE/
