Type 45 Destroyers vs. Speedboats — How To Displace The Giants In Your Sector

Now bear with me; I’m not normally one for analogies and this one feels like it belongs in a motivation seminar a bit too much for my liking. But hopefully it will frame the rest of the blog nicely or drive you away instantly, so here goes: Your largest competitor is a Type 45 destroyer, and you are a speedboat. Although I know nothing about boats — and even less about making good analogies — this does sum up the difference quite nicely.

Establishing yourself in a dominated market is tough. Whether you’re a tech start up or run a hairdressing salon, there’s usually someone doing it on a bigger scale than you. My business operates in an oligopoly; there’s a limited number of suppliers that take the majority of the market share, and that’s not uncommon. But how (at least in my humble experience) can you displace the giants of your sector?

The Status Quo

Big business are, well, big. From an initial view, seeing the reach of your biggest competitors can be intimidating. Take my competitive space: Salesforce, Oracle, Zendesk and eGain are the biggest four that I cross paths with most often that report combined revenues of around $40bn per annum. To put it in simple terms:

· They have sizeable bargaining power

· They’re known to be powerhouses in their space and their brands are very recognisable

· They have scope to invest in more leading and bleeding edge technologies to spread risk

· They have access to incredible amounts of capital and labour

· They have economies of scale to push down operating costs and can use this to undercut on prices

Sound familiar? Doubtless your industry has businesses with these characteristics too. But, back to destroyers and speedboats, there are characteristics about you that big businesses cannot challenge.

1. Move Fast, Pivot and Innovate

Make change where your competition cannot. As a speedboat you can change course quickly in reaction to market forces as you see fit. You can change your messaging, branding and purpose with little friction and run figurative rings around your slow-moving counterparts.

This is something that big companies struggle with as they can’t easily innovate. It’s a problem for them and even has a name: the “Innovator’s Dilemma”. In summary, as a disruptor you start from behind, but innovate faster and provide a more lightweight, simpler product.

To grow aggressively, focus on developing a product or service that presses on key weaknesses in the market that exist right now, don’t focus on trying to develop a fully fledged product. That gives you scope to grab interested clients and develop from there. Eventually, your rate of innovation will reach an equilibrium of the incumbent and ultimately make their business uncompetitive.

The flip side to this, of course, is that they have the capital and labour force to spread their risk by investing heavily in emergent innovation more widely. But just like spreading bets on a roulette table, returns are generally small or negligible.

2. Offer Unparalleled Support

Although largeness is an advantage, so is smaller size. Large businesses must introduce processes to be able to scale. My advice would be to look at your space and find a way you can press on the customer support weaknesses that exist with your competitors. Luckily for the agile scale up, big businesses make operational change slowly and their support structures are classically archaic, lack intimacy, a feeling of real care, authenticity, and knowledge.

When smaller businesses go to speak to a potential or existing client, they’re not dealing with an account manager that has no attachment to the business, they’re speaking to the person who knows about their problem, and knows how to solve it.

Process is essential to scale, but like the destroyer, it’s very difficult to change your path once you’ve begun on your trajectory, especially as the expectations from customers are becoming increasingly tighter — big businesses struggle to innovate their support structure to keep up. So overservice and provide clients with access to people that will make them love your business.

3. Make Them Love The Business As Well As The Product/Service And Know The Difference

As an extension to customer care, make your clients love the business, not just what you’re selling. Salesforce is a perfect example of this; a superb platform that is known to be extremely complex to use, with a really detailed pricing model. To that end, there’s a huge market that exists just to support businesses using Salesforce. How backward is that? A product so complex and so lacking support from the supplier that people can earn a living supporting a piece of software they don’t own, develop or control.

For Salesforce then, most love the product, not the business. Dan Cobley (ex CEO at Google UK) advised me that as a small business, I should be aiming for the opposite. He asked me if our clients love our business or our product, “well, the business, of course” I said, to which he replied, “how many support people, compared to developers, do you have?”. The answer was about 10:1 at the time, really framing the focus on product, not business.

It isn’t just support though; as a smaller business you can inject personality into the relationship, as well as overservice. Most of our clients get head time from our founding few, or at least our executive team, and that makes them feel valued. My best advice is to not make your clients just feel valued, actually value them; that’s the Salesforce problem in a nutshell, you’re a number on a balance sheet, not a business with challenges we could solve together. By making clients love the business, the people within it and the product, you’ll on-board and retain clients much more easily. It doesn’t need to be something you only have at a small scale either; as a team of 350 we still manage it and, while we’re far from Oracle sized, we’re working hard to maintain the intimacy in our relationships.

4. Create An Ecosystem

To counter the vast capital and labour the big competitors have, partnering with other speedboats (it will stop soon) is a great way to spread your risk. Unlike the mergers and acquisitions route big destroyers go down (this is the last one I promise), partnering with others not only unlocks access to other functionality and skill sets you didn’t have before, it’s also much more effective than M&A because your partners are obsessing over their USP in their space, just as you are in yours.

As well as ecosystem plays through other start up and scale up partnerships, it’s also worth looking at big businesses that have holes you can help fill. We do this with telephony providers that we know cannot innovate in our space and would rather us manage the areas they (1) don’t understand and (2) have no inclination to spend time and resource developing themselves. Be it telephony in contact centres or work masseurs in shared office spaces, there’s always somewhere you can find to partner. My advice is to do it with other disruptors first, as they’re your key to gaining market share and changing the status quo.

What Do Buyers Want?

Ultimately, boiling it down to its base components, buyers don’t want to be with a company because they’re a mammoth. Sure, with size comes stability (or the perception to the wider business that it’s a safe decision), familiarity and kudos, but it’s not the be all and end all. It’s important to accept that sometimes businesses don’t have enough drive to make a difficult decision and would rather go with the easier option, so you can’t win them all. I’ll be writing another piece in the future about finding your ideal clients, but you need to know who works for you.

Eventually, your speedboat is going to need an upgrade (okay, I lied I about not doing it anymore). But make sure you don’t become who you’re competing against as you scale, re-educate the market, change the status quo and continue to innovate; keep true to your core USP’s that provide growth so you can get the best of both worlds. Most importantly, as you grow, reflect on the market and make aggressive change to your organisation to make sure your customer feels loved, they’re the forefront of everything.

Thanks for reading.