Hey there, time traveller!
This article was published 6/3/2021 (484 days ago), so information in it may no longer be current.
I learned the story about David versus Goliath back in Sunday School. It was a wonderful example of what the underdog could do when he uncovered a weakness in his enemy. This story has been used as an analogy for the underdog fight in business and sports for decades. In business analogies, most of the stories have simply been about the large and cumbersome soulless corporation (Goliath) that is typically able to crush its smaller competition (David).
I believe that local companies, typically defined as single location companies, can compete successfully against the large corporations. I will not refer to the local companies as "small businesses" because to the owners and people who work there, it is in fact their life and a very big business. So, let’s just call the two protagonists David and Goliath and define their characteristics.
Goliath is at least a national competitor, if not an international competitor. It knows its customers by account number. It has growing revenues, particularly in the past year because it could stay open primarily as an essential business. Vast financial resources are noted in its balance sheet and this gives shareholders a good feeling about their retirement funds. When it launches a new product, service, or division, it takes time. Once started, it can often act as a road grader to any smaller competitors who usually do not have the same resource availability.
David operates in the local market and knows its customers by name. If a change is required or improvement in operations is needed, the Davids can respond quickly to make it happen. Resource availability is often with banks or specialized investors. And its revenues were probably affected in the past year as it adjusted from in-person customer visits to virtual or online sales only. Unless of course it was deemed an essential service.
This doesn’t seem like a fair fight at all. And yet, the backbone of our economy has always been the Davids. More people are hired each year by these companies than by the Goliaths. Aiding in recovery and sustainability is the use of "buy local" campaigns and Small Business Week. Chambers of Commerce know that having a Goliath in their city or province is a perk — great to have a trophy company or three. And yet, it is the Davids that drive more growth, innovation, and related employment.
There are three steps that David can use in its local battle against Goliath. Let’s begin with focus. David should be better at what it does than an organization that does many things. Since there is no one best way to compete, David must quickly become better at its specialty, or it may become irrelevant. David can also sponsor local events and organizations. I have yet to see a "jungle-named company" on a rink board ad in my local arena.
Second, David must be deliberate in looking for ways to be different than Goliath. Harvard Professor Dr. Michael Porter states that "The worst error in strategy is to compete with rivals on the same dimensions." By accumulating small advantages, David can be perceived by its customers as different than Goliath. One of the best ways to identify these differences is by "phantom or undercover shopping" the competition. When you carefully assess the Goliath’s customer journey through an in-store visit, an over-the-phone transaction, or a web store purchase, you will uncover specific areas where you can improve the customer buying experience. David should be able to make this happen easier than Goliath.
Third, David must ensure all staff have an opportunity to offer suggestions and specific actions to serve the customer more efficiently and more effectively. David’s employees know the pulse of the customer and can quickly provide their insights to the owners. With less bureaucracy to wade through, this speedy information sharing should allow David to make changes faster.
David’s agility should be a key competitive advantage both short- and long-term. The need to be vigilant and track Goliath’s moves will always be there. Because most Goliaths are publicly traded and need to disclose material business activities to shareholders, there is typically a lot of public domain material available that can help the Davids understand what the Goliaths are up to. Compiling data from many sources, analyzing, and then acting on it quickly can be hallmarks of success for all the Davids. The Davids need to understand the Goliaths’ weaknesses and prepare their smooth stones for the battle.
In conclusion, the question is: is David ready for the battle? And is David prepared to do what is necessary to win? If David follows these basic steps in a consistent and diligent way, its preparations will be solid.
Tim’s bits: In my work as a Certified Management Consultant, I use and have access to many tools. One tool the Davids may find useful is the Value Intensity Profile. It helps to identify where your organization stands in comparison to your competition in delivering sought after value by your customers. In my next article I will explore this tool with you.
Tim Kist is a Certified Management Consultant, authorized by law, and a Fellow of the Institute of Certified Management Consultants of Manitoba.
Tim is a certified management consultant with more than two decades of experience in various marketing and sales leadership positions.