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Arment Dietrich

David and Goliath: How Small Businesses Can Defeat Their Large Competitors

By: Arment Dietrich | August 30, 2010 | 
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Guest post by John Heaney of Orange Envelopes.

Entrepreneurs perpetually play the role of David against their Goliath corporate competitors. And, just like their biblical counterpart, small businesses can defeat their large competitors by outmaneuvering, out-imagining, and outperforming them.

In a recent scholarly analysis, “How the Weak Win Wars: A Theory of Asymmetric Conflict,” author Ivan Arreguin-Toft analyzed battles between very large armies and small forces and concluded that during the past 200 years the smaller David-sized forces won nearly 30 percent of the time. In many of these battles, the smaller forces were outnumbered 10 to one, yet were able to defeat their numerically superior foe.

Even more amazing, is that when the smaller foe employed an unplanned, surprise battlefield tactic instead of conducting combat in the traditional and anticipated way, their winning percentage shot up to 64 percent.

The business lesson: When underdogs choose not to play by Goliath’s rules, they win.

Entrepreneurs are perfectly positioned to operate as insurgents against their entrenched corporate competitors because they’re more willing to challenge the conventions about how commercial battles are supposed to be fought.

Large companies expect to confront competitors. They build enormous corporate strongholds and fill them with regiments of employees in anticipation of large scale engagements. They deploy massive human and financial resources to execute their strategic plan and prepare to crush their competitors.

But, despite their size and strength, these lumbering companies are rarely prepared to confront nimble and fast-moving adversaries that refuse to challenge them on the battlefield of their own design.

How can the entrepreneurial Davids succeed against their Goliath adversaries?

  1. Define yourself differently. If you own a hardware store, and Walmart announces plans to open a store in your town, you’d better have a plan to be the anti-Walmart. You know how Walmart positions itself: As the low cost provider. Knowing that, you’ve got to recognize that you’ll never beat Walmart at its own game. Because you can’t win being the low cost provider, you have to define your own niche and then own it. Stock specialty tools, provide in-depth training classes, rent tools, or  become an expert and indispensable in home renovation. Be delightfully different.
  2. Attack their weak spots relentlessly. It’s easy to identify your large competitor’s strengths and essential to pick out their weaknesses. Large organizations are typically prepared to counter direct competition but are woefully unprepared to respond to guerilla insurgencies. Because they like to remain above the fray, you can attack them on your own terms on the battlefield of your choosing.
  3. Deliver the goods. The success of every strategy comes down to one essential thing: Execution. Once you’ve defined yourself, you have to deliver the goods repeatedly and relentlessly. There are no days off.
  4. Extend yourself online. People will continue to do business with people they like, so pursue efforts that make you and your business personable and likable. Start blogging daily about your unique approach to your business, create a Facebook page that actually invites people to engage with you, create compelling content on your website that informs, educates, and entertains, and connect with the Twitter devotees in your area to build enduring relationships 140 characters at a time.

What tips do you have for defeating your large competitors?

John Heaney’s professional experience has centered around marketing, branding, customer experience design, strategic communications, and business development. His current professional endeavors are focused on developing strategic digital marketing programs that integrate compelling social media components. His perspectives are captured on his blog at http://orange-envelopes.com/blog.

5 comments
Steve Nargang, PE
Steve Nargang, PE

The other factor of personal attention is that larger firms must prioritize their projects, and may put off a client as they handle larger or more urgent projects. A wise smaller firm will only take on projects they can handle with the proper level of attention.
And in reality, the larger firm will usually only assign a limited team to any given project, which may not be any more people than a smaller firm may focus on that same project.

Jennifer Devitt
Jennifer Devitt

We are a small business, and everyday we are competing Goliath, and guess what...we are growing and succeeding everyday!

Our clients like working with us over the big dog because with us the owner is actively involved in every aspect of the project.

Something the David's of the world can offer is personalized customer service...and hey our President's name just happens to be...David!

John Heaney
John Heaney

I can't count the number of times I've worked with a company that decided to satisfy their corporate ego and hire the large "name" firm to provide professional services only to discover that their account was assigned to junior staff members and they were nearly invisible to the firm. If you're a small firm and you can't separate yourself with imagination and personal attention during the pitch process, you don't deserve to win.

John Heaney
John Heaney

Jennifer, you hit on what is perhaps the single greatest weapon in the small business arsenal: personal attention. People will always continue to do business with people they like, and big businesses have discovered that close, personal relationships are tough to scale.

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