How can Mang Inasal sustain its success?

Republishing the most requested "Will Mang Inasal still be successful now that Jollibee owns it?" column.

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Hi Dad,

I just arrived in HK . I have a couple of hours before my connecting flight to Mla, so let me edit your follow up to my Mang Inasal piece.

I really like how you followed up with the marketing science and the ratio of Mang Inasal's probable success now that Jollibee owns 70% of it.

By the way, Injap emailed to me a response to the column and gives his regards and thanks. I'm sure he'll respond to the 15% probability of success of Mang Inasal...

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MarketingRx for November 12, 2010 

"How can Mang Inasal sustain its success?"

By Dr Ned  Roberto & Ardy Roberto

Q:   Your column on Mang Inasal's success secret is still the continuing topic of our group's conversations.  We're a foursome of Asian Institute of Management (AIM) Master in Entrepreneurship (ME) graduates and you taught our batch.  There's one question raised during our past two weekly gatherings that we all tried answering.  But we heard as many different answers as there were members.  So we thought we'd pass on the question to you:"Assuming it's true that the 5 secrets you identified as responsible for Mang Inasal's Edgar Injap Sia's P3Billion success were correct, would these be the same 5 secrets that will sustain Mang Inasal's future success with Jollibee Foods Corp as it's new owner?"

A:     CONVENTIONAL WISDOM PRESCRIBES that to do a good job at managing the future do so via the success of the past.  But experience tells us that navigating the future with this mindset has proven to be a recipe much more for disaster than for success.  For a more enlightened answer, we need a more enlightening framework.  Because we're talking about the future, we need a better foresighting basis for diagnosing what can sustain Mang Inasal's success under Jollibee. 

A particularly appropriate foresighting framework is in micro-economics and another one in the literature on sustainable competitive advantage.  We diagnose by taking each at a time.

It's about "Complementarities"

Stanford University professor of micro-economics and "auctionomics," Paul Milgrom, coined the term "complementarities" to explain synergies from combining compatible business practices.  In the case of Sia's Mang Inasal, its sustained competitive advantage over the 7 years when it scaled up to 303 stores came from not only repeating each one of its 5 secrets of success.  The more significant factor was its maintaining the 5 practices' complementarity role for one another in the mix.  In fact, it's more the mix that counted in the success than the individual elements in that mix.

Let's recall those 5 factors and practices that were supposedly behind Mang Inasal's superior competitive advantage.  Those 5 are: (1) Ready, fire, aim!; (2)  Work your butt off!; (3) Think innovation.  Copy but add something of value; (4) Think BIG!; and (5) Think marketing.

We'll skip the explanation of each and rely on your memory to remember the Mang Inasal column 3 Fridays ago (or check out www.marketingrx.org or www.inquirer.net.) But what needs underscoring at this point is that none of these 5 practices can be said to be anything new or innovative.  So treated separately, not a single one of them can be claimed to be a success secret.

The application and exercise of complementarities have shown that business success such as Mang Inasal comes from Sia's creativity. As the innovating entrepreneur, Sia had put to work each one of the 5 factors of success along with each of the other remaining 4 practices.  For example, the surprising effectiveness of his peculiar but unknown way of combining "ready, fire, aim" with "work your butt off" yielded an outcome whose value was greater than the simple sum of the effectiveness of each of these two.  There was synergy in the way Sia paired the two.  And so it must have been with the rest of the mix of his 5 good but very ordinary business practices. 

 So is sustaining Mang Inasal's success in the future just a matter of maintaining the complementarities of its 5 success secrets and practices?  Aren't complementarities just another way of saying you're managing from the past?  Isn't this basically imitating the past?

It's about Synergy and the "Mathematics of Probabilities"

There is some truth in saying this and that's why we need to integrate into this discussion David Dranove's thinking about sustainable competitive advantage.  Dranove is professor of strategy at the Kellogg School at Northwestern University. 

Professor Dranove's provocative thesis came from his analysis of numerous cases of synergy.  According to Professor Dranove, you can gain extraordinary results from just mixing but in the right proportions or levels ordinary means.  So suppose under Jollibee Foods' system of doing marketing (in putting up in the next 300 more Mang Inasal stores) the new Mang Inasal is able to maintain practicing its 5 success secrets.  Assume further that this  continuation has a high probability of 70% success.  Now, the chances of also successfully replicating all 5 practices in the way that Mang Inasal has done it in its first 303 stores is not going to be 70%. 

Why 70%?  That's the ownership split under the acquisition and assuming that Jollibee Foods will allow the 30% owning Sia to have his ways 70% of the time until the raising its number of stores reaches 300 more.  Professor Dranove's mathematics of probabilities predicts that the likelihood of maintaining the complementarities is 0.70 to the 5^th power which equals 0.17 or 17%.  So there's just 17% chance that Mang Inasal will go on succeeding and repeat its success in its first 300 stores to be true for its next 300 more stores.  That's risking at less than even chance of winning!

What if there's not 5 but 6 secrets to Mang Inasal's success?  And what could the extra one secret be? 

6th Secret 

In Mang Inasal's line of business, that's choice of good location.  Edgar Sia had the enviable knack of choosing the most suitable locations for his first to his 303^rd store.  That's suitable with respect to his target customer segment.  With 6 instead 5 practices to maintain complimentarities, the chances of future success goes down from 17% to 12% ( = 0.70 to the 6^th power). 

But succeeding in the next 300 stores will mean that somewhere along the path toward the total 603 stores, Mang Inasal will have to shift from single market segment targeting to two or even multiple market segment targeting.  That will impact the 70% success ratio and bring it down and therefore further bringing down the 12% success ratio.

All these are a form of foresighting according to marketing science.  But even science is not fool proof.  In fact, we hope Sia's and the new Mang Inasal's marketing art would remain superior over our marketing science.  It's a great marketing story to not have a happy ending.      

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The story is not finished yet, and my bet is that Mang Inasal and Jollibee will prove MarketingRx wrong! :-)

Mang Inasal's P3B secret

Mang Inasal's P3B Success Secret


How does one go from one restaurant in his neighborhood mall to selling 70% of his company for P3B in seven years selling Ilongo style native grilled chicken?


Two weeks ago, we talked about the finalists of the 2010 Entrepreneur Magazine Entrep10 Awards program. But the entrepreneur whose name is splashed all over the business headlines for the past few days is Edgar Injap Sia III, the founder of the ubiquitous Mang Inasal. The Jr MarketingRx was one of the judges in the 2009 Entreprenuer Magazine Top10 Awards that gave four thumbs up (including the "thumbs" of my feet) to Sia III during the judging process. 


Mang Inasal's success would make any entrepreneur green with envy:
- from one store in Robinson's mall in Iloilo in 2003 to 303 stores as of today
- P3.8 billion in sales a year
- sold 70% of his Mang Inasal's holding company (Injap Investments Inc) for P3B to Jollibee Foods Corp.
(he will be paid a P200M deposit and 90% within 30 days of closing of the deal; the rest of the 10% to be paid over the next 3 years)
- Sia III is only 30+ years old!


According to the data and articles that Entrepreneur Magazine gave us judges (we were trying to get a hold of Edgar, our fellow GoNegosyo Angelpreneur and a recent Most Inspiring Young Entrepreneur of Year Awardee, for his comments) here are the 7 secrets, yes, I know, 7 again, to his P3B success:


1. Ready, Fire, Aim! Sia III was presented with an opportunity when a slot at the Robinson's mall in Ioilo was vacant. He reserved the space without knowing what to put up. His gut just told him that there was an opportunity since he saw potential in the space. It was only after a few weeks that he came up with the concept of a Chicken Inasal fast food store. The first fast-food, value for money type of Chicken Inasal restaurant. His approach to expanding to Metro Manila and Luzon was the same: "I was not very familiar with Manila, because I was born and raised in Visayas. I only visited once a year, and it was usually for very short stays. So I knew I was in for quite a challenge taking Mang Inasal to Luzon," Sia III told Entrepreneur magazine.


2. Work your butt off! Sia III worked his butt off day and night. He wasn't afraid of getting his hands literally dirty. Sia III was known to work long hours and help mop and clean up the first store. Then he would come home and help prepare and marinate chicken for the next day. He realized it was going to be lots of work, but he didn't give up. His work ethic and attitude brought him through lots of disappointments and trials. 


3. Think Innovation!! Simple Innovation pays dividends. Just don't copy, copy and add something of value. Sia III entered the chicken Inasal scene late. There were established restaurants already. But he simply did the "Positioning" game of Al Ries and Jack Trout and scored a slam dunk. Mang Inasal was the FIRST Chicken Inasal restaurant that would be a fast food type outlet (quick service) with unlimited rice. For P49 a student or office worker could have a filling tasty, grilled chicken meal. 


4.  Think BIG! Sia III started getting franchise inquiries fast but held off for two years before offering the first franchise. He did the right thing by networking and getting help from the Philippine Franchise Association (PFA) and coming up with a franchise opportunity that was affordable. For about P800,000 start up franchise fee, you could have your own Mang Inasal franchise. (Total investment is about P3M-P4M). After his first franchise offer in 2005, there are now over 300 branches/franchisees. 


5. Think Marketing! The marketing message of Mang Inasal remains simple and focused. All you see is a picture of a tasty looking piece of grilled chicken, the name Mang Inasal, (sometimes you see the price: P49) and a bold tagline : "Unlimited Rice!"

6-7. There's more than 5 secrets to Mang Inasal's success. :-)


The story of Edgar Injap Sia III, aka Mr Mang Inasal will surely inspire many entrepreneurs and marketers for years to come. Thank you to Entrepreneur Magazine and GoNegosyo. Get a copy of Entrepreneur Magazine's December 2010 issue featuring the Top10 Entrepreneurs of the Philippines. 


WE welcome your comments and questions. Send them to us at MarketingRx@pldtDSL.net or DrNedmarketingrx@gmail.com. God bless!