Slaying Goliath - ebook

SLAYING GOLIATH:How Small Companies Can Compete Against Their Large Competitors

Foreword ....................................................................................................................... 1

Chapter 1: Capitalizing on Your Advantages ...................................................................... 2

Strategy 1: Creating an Information Advantage ................................................................. 3

11 Ways to Maximize the Information You Generate from the Outside World .................. 4

Strategy 2: Creating a Time Advantage ............................................................................ 7

Strategy 3: Creating a Scope Advantage ......................................................................... 10

Strategy 4: Creating a Scale Advantage .......................................................................... 12

Strategy 5: Creating an Innovation Advantage ................................................................. 14

Why Innovation is Challenging for Large Companies................................................... 15

Strategy 6: Setting Your Operating Point Closer to the Funnel Singularity .......................... 17

Chapter 2: Attenuating Larger Companies’ Strengths ....................................................... 20

Strength 1: Great Senior Managers and Top Technical Talent ........................................... 21

5 Tips for Leveraging a Smaller Team of Technical Talent ........................................... 22

Strength 2: A Technology Platform in Place with Customers ............................................. 23

Strength 3: A Deep Patent Portfolio and Ongoing New Patents ......................................... 25

Strength 4: User Comfort with a Product’s User Interface Look and Feel ........................... 26

Strength 5: Well-Established and Plentiful Customer Relationships .................................. 27

3 Types of Large Company Customer Relationships .................................................... 28

Strength 6: Well-Developed Distribution Channels........................................................... 29

Strength 7: A Brand Name and Reputation .................................................................... 31

A Template for Creating and Understanding Brand Associations .................................. 33

Chapter 3: Defending Against Larger Companies’ Attacks ................................................ 34

The Nature of Large Company Attacks ........................................................................... 35

5 Factors that Influence How Aggressively Large Companies Attack ............................ 36

How to Defend Against Large Company Attacks .............................................................. 37

Chapter 4: Executing Against Execution ......................................................................... 41

Genetically Engineer Your Organization .......................................................................... 43

Create Challenging Focal Points .................................................................................... 44

Sample Goals for Every Department ......................................................................... 45

Measure Progress and Make Frequent Adjustments to Close Gaps ................................... 46

Be Flexible .................................................................................................................. 46

Wake Up to Your Current Situation ................................................................................ 47

End Note .................................................................................................................... 49

Appendix .................................................................................................................... 50

Slaying Goliath: How Small Companies Can Compete Against Their Large Competitors | 1

We’ve all heard the story of David and Goliath. It’s a classic

metaphor for small versus big, smarts and strategy versus

power and resources. It’s an allegory that promotes hope for

the little guy. When bigger competitors appear too large to

attack, David’s triumph is a reminder that there’s vulnerabil-

ity somewhere — you just have to identify and attack it.

Of course, that’s often much easier said than done. David

never had to go up against the likes of IBM, Computer

Associates, BMC, or Microsoft. Some expansion-stage tech-

nology companies wage that war every day and it’s not one

that most of them win. That doesn’t mean that there aren’t

opportunities in markets where Goliaths exist, however.

Let’s say that you’re the CEO of an expansion-stage com-

pany in a $2 billion market and your behemoth competitor

already owns 60 percent of it. Yes, they’re dominating, and

trying to defeat them is an uphill battle you can’t — and

probably shouldn’t — fight. However, there’s still 40 percent

of that $2 billion market that your behemoth competitor

does not control. If you can manage to take 5 percent of the

total remaining market and steal as little as 1 percent away

from that big competitor, you’re looking at potential revenue

that exceeds $50 million.

The challenge is actually identifying your biggest competi-

tors’ vulnerabilities and formulating a plan of attack. What

can you do better than those competitors? What market pain

point are they ignoring? What advantages does your smaller,

nimbler business have relative to customer engagement, tal-

ent management, or new market opportunities?

If you are going to succeed in a David versus Goliath type of

battle, you must be able to show your customers and pros-

pects the value of a business that’s focused on one product

and one pain point. You’re not going to try to sell them a

suite of solutions that they don’t need — just the thing that

fixes their problem.

“Slaying Goliath: How Small Companies Can Compete

Against Their Large Competitors” is intended for CEOs and

senior executives of expansion-stage companies and shows

you how to build a long-term defensible competitive advan-

tage over larger companies. Specifically, you’ll learn how to

capitalize on the natural advantage your smaller company

has over its larger competitors, minimize those larger corpo-

rations’ inherent strengths, and execute against your vision

in a way that allows you to keep your foot on the gas and the

pressure on bigger competitors to respond.

The bottom line is that winning in a market that’s dominated

by a big business isn’t easy. But it’s not impossible. Remem-

ber, all you need to excel is a very small piece of their pie.

So, what’s your Goliath’s biggest weakness (or your crowded

market’s biggest need) and how well is your company posi-

tioned to go after it?

Scott Maxwell Senior Managing Director and Founder OpenView Venture Partners

Foreword

http://blog.openviewpartners.com/keyword/expansion-stage/

http://www.openviewpartners.com


Chapter 1:

Capitalizing on Your AdvantagesIn theory, David shouldn’t have had a chance against Goliath. After all, Goliath was a grizzled

warrior with a coat of armor and a massive sword. David, on the other hand, was at least half

Goliath’s size and showed up to the battle with little more than a sling and five stones.

But that didn’t seem to hinder his confidence. That’s probably because David recognized that his

opponent’s advantages (brute strength and size) could also be turned into disadvantages that he

could capitalize on. The same principle holds true for expansion-stage technology companies. This

chapter outlines six strategies that can help small, expansion-stage technology businesses recog-

nize and take advantage of their competitive advantages and use them to expose their much

larger competitors. In the end, that’s the fastest and easiest path to winning the battle against

any proverbial Goliath.


Strategy 1: Creating an Information Advantage

Expansion-stage companies have the natural advantage

of being closer to their customers than large companies

are. Make the most of this by increasing the flow of

information into your company.

What melts more slowly, a small snowball or a large one? All things being equal,

the large snowball will melt more slowly because its outer layer of snow insulates

the snow inside. By contrast, more of the snow in the small snowball is exposed to

the outside world, and it therefore reacts to the environment faster.

Big companies have the same basic geometry as a large snowball. Most of them have a

much harder time getting a true feel for their outside world (i.e., their customers, market,

and competition) than small companies do. This has nothing to do with the quality of the people who work there or the com-

pany itself, it’s just a natural disadvantage that large companies have relative to small ones.

So how can you exploit this opportunity? First, create an advantage by maximizing the information you generate from the outside

world (i.e., your customers, non-customers, competitors, suppliers, and others outside of your company’s walls). Then exploit that

advantage by using this information to make adjustments to all aspects of your business (e.g., product features/functions, pricing

approaches, specific technologies, customer service process, marketing messages, distribution approaches, etc.).

Unfortunately, as companies evolve, they naturally lose touch with their customers. The good news is that every company has

the opportunity to increase the flow of information coming in. If you address this issue early in your company’s life, you will

have a tremendous advantage not only against larger companies, but competitors your own size, too.


11 Ways to Maximize the Information You Generate from the Outside World In a rapidly expanding digital world, it’s tempting to gather exceedingly large amounts of data simply for the sake of collecting

and having access to it. However, hoarding volumes of data won’t do you much good if it’s not actually useful.

In fact, it will likely just overwhelm your team. Instead, the key to maximizing your information-gathering efforts is to uncover

truly valuable information — not data — that is contextually relevant and beneficial. Ultimately, that can be achieved by

performing one or all of these activities:

ONE. Expose all of your employees to your customers.

Your employees walk around with mental models of your customers, including their needs, the tech-

nology that will best meet their needs, how they interact with your product, the best approaches to

helping them resolve issues, and the marketing messages that will best resonate with them. Your

employees use this mental model to help them make decisions. The better their mental model aligns

with reality, the better their decision-making. That’s why everyone in your organization, or at least all

key decision makers, should be interacting with customers to better their understanding of them.

TWO. Ask your salespeople.

Salespeople generally have a very good view of how prospects and customers perceive all aspects of

your company. Speak to several of them to help separate the overarching themes from the one-off

situations. Conduct pipeline reviews to study each prospect situation to see where you stand in the

process. Perform loss reviews as well. Most loss reviews come from the salesperson’s presumptions.

A better approach is to ask the prospect why he or she chose a competitor and for feedback on what

you can do better.

THREE. Study your customer service interactions.

Tracking trouble tickets is one of the best ways to determine how your customers are doing with your

product and how you are servicing them. If you have customer service reps, listen to the phone calls,

ask them about their interactions, give them a few questions to ask your customers, and then gather

the feedback. Once a trouble ticket is closed, ask your customer for feedback on the process.

http://www.tcd.ie/Psychology/Ruth_Byrne/mental_models/


FOUR. Monitor the Internet.

Monitor social networking sites, Internet forums, message boards, blogs, and other sites. There is a

tremendous amount of information available online. Most people reading this already know what to

do. If you don’t, enter your company and product name into Google and start reading.

FIVE. Ask your customers.

Once customers have purchased your product, most will be willing to give you detailed feedback

because they want you to continue getting better. User conferences, advisory boards, and surveys

are great ways to get information. Another approach is to sit down with customers periodically to

really get to know them.

SIX. Ask industry analysts.

Some product markets have industry analysts who cover providers, customers, and prospects.

Good analysts tend to have an accurate pulse on the perceptions in the market. Be careful,

though, because they often have a large-company bias.

SEVEN. Use your website.

Incorporate Web analytics into your website and then mine the results for useful information.

Beyond building better usability and conversion into your website, the Web data can be very useful

for improving various functions. For example, visitor interaction with your product pages can tell you

a lot about their interests. Interaction with your customer self-service pages can tell you a lot about

their issues with your products.

EIGHT. Use your product.

Incorporate data gathering into your product and then mine that data for useful information. When

the product is browser-based, it’s a pretty straightforward process of instrumenting your Web inter-

actions with the customer using Web analytics. When the product is on the customer site, the issues

become trickier because privacy issues are more amplified and many customers do not want infor-

mation flowing out of their computer systems. That said, many customers will still allow the infor-

mation sharing if it’s done properly.


NINE. Find out what your competitors are doing.

Make a list of things you would like to know about your competitors and then get creative about how

you are going to (legally and ethically) get the information. Study their websites, visit their booths at

conferences, and use resources such as Hitwise, Compete, and Alexa.

TEN. Find out what related companies are doing.

Do the same things you would do to find out more about your competitors, but also call the person

who shares your role at a related company and invite them to lunch. Ask about their best practices.

You can probably get and share some good ideas, as both sides will be more open given you are not

competitors.

ELEVEN. Share what you’ve learned.

Work this knowledge into your management meetings, company wiki, e-mail, management reports,

employee feedback systems, and all other vehicles you have to manage/monitor progress and commu-

nicate internally.

This list is intended to generate ideas, not mandate all of the things you need to do right away. If you try to do too much, you

will water down your efforts and actually get less useful information. Remember it is information, not data, that you are looking

for. Also, you need to spend the vast majority of your time building a great product and then selling and servicing it. Start with

the easy steps, and increase the activities as you grow.

A natural question is, why can’t large companies execute against the same tactics? They can, and some do. But they still have

the natural disadvantage of being the large snowball. If the large company and the small company execute these tactics equally

well, the small company will have the edge.

http://scottmaxwell.wordpress.com/wp-admin/www.hitwise.com

http://compete.com

http://www.alexa.com/


Strategy 2: Creating a Time Advantage

Large companies have a natural disadvantage as they grow because it takes them

longer to get things done. An expansion-stage company, however, can turn on a dime.

As companies grow, solid communication between employees becomes much more difficult. To try to have perfect communication,

the employees would have to spend all their time communicating internally, rather than focusing on customers.

To solve this problem, people divide up into departments and communicate at the department level rather than at the individual

level. They use all kinds of vehicles (phone calls, meetings, e-mails, business process software, blogs, content/information man-

agement systems, and videoconferencing) and a host of other approaches to discuss, review, approve, adjust, and so on.

Even so, department members still have trouble communicating. So they organize into divisions. The divisions communicate

through a low-bandwidth communication pipe called a VP (or an SVP, EVP, or a president), using all of the communication

vehicles noted above. Even then, there are meetings to contend with — the ultimate bottleneck for large companies — where

all of the most important decisions are made.

What are the implications of that departmental culture? One of the most obvious is the production of poorly filtered information

that lacks a prioritized, efficient process for acting on it. For instance, think about the old summer camp game of “Telephone,”

where a number of people sit in a circle and one person whispers a story into the ear of the person sitting next to them. That

process continues until the story reaches the person who originally told it. By then, the story has been interpreted and verbally

annotated to the point where the person who created the story doesn’t recognize it anymore.


The information flow in larger corporations is very similar. As information makes its way through the organizational pipeline,

it typically is filtered and stripped of key details and nuance, and boiled down to only its most important elements. In the pro-

cess, good information can be lost and bad information can embed itself into the company.

Departmental politics can also create internal issues that eat away at senior managers’ time, forcing them into meeting or

inbox gridlock, and killing their productivity. That not only impacts those managers’ ability to make key long-term decisions on

smaller products or newer markets, it also causes them to lose focus on the one thing that really matters — the biggest needs

of their customers. Even if those senior managers are able to determine the right course of action, corporate hierarchy and orga-

nizational change management can make it difficult to actually get it done.

The result of all these issues is that planning horizons tend to be in years, rather than days, weeks, or even months. It’s the only

way to keep all the groups in rough alignment. So how do you capitalize on the larger company’s disadvantage? By being nimble

and able to pivot. Here are some ways to do so:

Pick a product market that is rapidly evolving or has dynamic needs or tastes. Markets with

needs or interests that change

quickly are perfect for small

companies — the video gaming

industry is a great example. It

is difficult for large companies

to move at the pace of change

required to meet the needs of

these types of markets.

Pick a product market that has significant long-term innovation potential. The innovations that

can take place between a large

company’s release cycles are

tremendous. The large company

essentially designs and launches

its missiles, but by the time they

hit, the innovation has moved

significantly beyond where they

were aimed.

Build your market before the large companies know what hit them. The extreme approach

would be staying in stealth mode

until all the release details are

worked out, and then exploding

into the market. This is much

easier said than done, but the-

matically the idea is to build your

early market quickly before large

companies have time to act.

Use newer technologies and business model components. You are probably aiming at the early adopters, at least

initially, so this approach will be advantageous, or at least somewhat expected, for a smaller company. Also, although

both you and the large company have to go up the learning curve on the new technology, you should be able to do so

more quickly due to your small size.

1 2 3

4


Package your whole product offering to include innovations in product, marketing, sales, and service all at once. When

large companies must create

change in multiple departments

and divisions, small companies’

time-based advantage is amplified

(due to the communication and

decision-making issues).

Rapidly evolve all aspects of your business. Use your informa-

tion advantage — and the obser-

vation that large companies must

have long time horizons — to

rapidly move forward all aspects

of your business, such as your

product, marketing messages, dis-

tribution approach, and customer

service. The key is to get ahead of

the target before the large com-

pany’s missiles land.

Put your senior management, particularly your CEO, out in the field as much as possible. Get

outside the company and meet

with customers, prospects, the

press, industry analysts, and

others. It will give you better

information and another edge over

large companies.

The bottom line is that it takes large companies a significant amount of time to get important things accomplished, and change

is difficult, even for the best companies. Use your smaller size to capitalize on opportunities quickly, change direction rapidly

when you need to, and improve your strategic position.

5 6 7


Strategy 3: Creating a Scope Advantage

Expansion-stage companies are able to focus on one product market, while larger

companies need to increase their scope to sustain growth. Gain a strategic edge by

focusing on a small niche and developing an intense focus on meeting the needs of

the target customers in that market.

What happens when you take a magnifying glass and focus the sun’s energy on a single small spot on the ground? It burns. It’s the

same way with your company — if you harness energy into a small focal point, the energy of that focal point intensifies. The key is

that you need to take your available energy and focus it on a point that is small enough to do meaningful work.

Large companies have a difficult time with focus. They generally have many products aimed at numerous customer segments

using many distribution approaches. Even though they have many more resources, they have to spread those resources across a

variety of different product markets. While large companies may have economy-of-scope/economic advantages, the expansion-

stage company has a strategic scope advantage.

To properly aim your magnifying glass, you need to:

Focus on a small niche product market. Target the specific needs

(pain points, tastes, and scenarios)

of specific customer types (perso-

nas) in a specific market using a

specific distribution approach.

Train the energy of the entire company on your chosen niche. Get everyone in the company fo-

cused on delivering to your niche,

and only that niche. The activities

you need to get focused on in-

clude product, marketing, distri-

bution, and customer service.

Make sure that each employee is focused on two to four major activities that will make you win in your niche. The company as a

whole needs to focus, each group

needs to focus, and each individ-

ual needs to focus. Doing so takes

management time and attention,

but it works.

1 2 3


Make sure that all management systems reinforce the focus. The focus should be tied into everything — corporate/depart-

ment goals, plans, resource approval processes, reports, staff

meetings, compensation systems, etc. This is an extremely

important point because everyone in your company has ideas

they want to pursue that are not necessarily aligned with your

focal point.

Set up your company with as small a staff as possible. A small staff of truly A-caliber people

will allow you to focus your and their time much

better than a large staff. This isn’t to say you

shouldn’t hire for positions you really need, just

that you are better off with as few people as

possible.

4 5

“Creating a scope advantage

is a powerful strategy for any

expansion-stage company. It

takes a keen understanding

of how to divide a market, pick a target

segment, uncover unique customer insights,

and deploy innovation around those

insights. Most of all, it takes a tremendous

amount of focus and discipline. At Kareo,

we have created a scope advantage by

becoming the only medical office software

marketer focused on serving the needs of

small medical practices a tactic that has

paid significant dividends for the company.”

– Dan Rodrigues Founder and CEO, Kareo

Keep Your Team Focused

To prevent any distractions, it’s important to reinforce the perception that executive leadership is focused on a primary focal point. While you don’t want to squash innovation and creativity, the best way to keep your team focused is to not share any of your ideas that fall outside the realm of your focal point. Ultimately, that philosophy will rub off on the rest of your company.

That’s not to say that you should totally discourage creative thinking. As long as everything centers on your current focal point, you should encourage employees to brainstorm new ideas and act on the best ones. For ideas that are not within the current focal point, consider keeping a repository that you assure your team you’ll revisit when you decide to expand or pivot the business.

Communication is also critical to maintaining your team’s focus. Consider developing an elevator pitch that reinforces your focal point strategy and execution, and deliver it to employees, prospects, customers, and partners until you hear everyone inside and outside of the company repeating it.

You hear about focus all the time. But if you apply it, you will — like the magnifying glass and the sun — be capable of burning through your niche. Need more energy given the resources you have avail-able? Just make your focal point smaller.

http://www.kareo.com/


Strategy 4: Creating a Scale Advantage

Large companies have difficulty seeing and/or addressing small markets, even if they

are high-growth. This shortcoming gives expansion-stage companies time to establish

a foothold in the market as well as to create some level of defensibility before the

large company enters the market.

Beehives can often grow quite large before they are discovered. Typically you won’t notice the bees until you get stung. Bees

methodically build up their hives at a small scale, in an out-of-the-way place, so you’d probably miss the signs that they were

there and building their presence.

It’s the same way for big companies: small markets and/or competitors emerge that are away from their center of attention,

too small and/or out of the way to notice until the market (or competitor) stings them.

Build Your Hive

Pick a product market that is relatively small or latent to start — something that is probably

tucked out of the way. The small market most likely has special needs that you can

uniquely meet. The latent market (one that has not yet been discovered) is even better

— although more difficult to find — as you will have no competitors, large or small.

This niche approach has been around forever, but continues to be important. It is

very difficult for large companies to attack or even be interested in small, special-

need markets, which effectively gives you an opportunity to grow relatively undis-

turbed. And, when you are noticed, you will still have the time advantage.


This idea is easier said than done, but here are four tips to get you started:

ONE. Look for related product markets.

Identify a product market that could be appealing to large companies, and then look for related

markets that might be too small or off of large companies’ radar, such as:

» A different geography, culture, and/or language

» A different scale point (e.g., bringing enterprise software to the small business market or bringing consumer ideas to the business market for B2B companies)

» A vertical market that has specific needs that current competitors may not be meeting

TWO. Pinpoint a market that large companies do not find interesting.

Pinpoint a product market that large companies do not find interesting, but believe someone should

serve. This might seem difficult to uncover, but it’s relatively straightforward if you’re willing to ask

a large company’s employees about them. When those companies are not planning to address a

market now or in the near term, they’re often willing to discuss them.

THREE. Study latent markets.

Uncover a small product market or latent market that one or more expansion-stage companies are

attacking, and study those. Great places to look for ideas include venture capital firms’ websites

(most list their current portfolio companies), blogs, and social networking sites.

FOUR. Find latent markets that no competitor is going after.

Find latent markets that look interesting that no competitor is going after. While you won’t have

competitors, the market will be more difficult to discover because it does not currently exist. The

best approach is to talk to people who have a propensity to purchase and/or use products you cur-

rently offer. Ask them about their pain points and what solutions they wish they had. If you hear the

same answer several times from similar types of people, you might have something worth exploring.

This strategy may seem similar to creating the scope advantage, but it is very different. The scope advantage is about focus;

the scale advantage is about what market you should focus on.


Do you get confused when you read about innovation? There seems to be a lot of working definitions, reports, and books,

and many frameworks and methodologies. However, the topic is not as complicated as people make it, especially from the

perspective of the expansion-stage company. For purposes of this eBook, innovation can be defined as the creation and

application of new ideas that someone finds useful or entertaining. The key points are:

Someone needs to find the new idea useful or entertaining. Innovation starts and ends with the customer.

The idea needs to be new. Extrapolations or extensions of older ideas

do not fit this definition, nor does borrowing ideas from other companies that

have already successfully used the idea.

The idea needs to be applied and used. An idea by itself is just an idea.

A Degree of Change

An innovation can be relatively easy or difficult to apply depending on the user’s degree of change or effort implementing

the innovation until it becomes “intuitive.” This includes understanding the benefits of the idea initially, convincing the

decision maker(s) to implement the idea, actually implementing the innovation, and guiding users through their learn-

ing curves. Another factor to consider is the innovator’s degree of change or effort applying the idea, introducing it to the

prospective users, and getting them to become users. This can include real effort in one or more departments, including

research, development, manufacturing, suppliers and partners, logistics, marketing, distribution (both direct sales and

indirect channel sales), and customer service.

Strategy 5: Creating an Innovation Advantage

Large companies have difficulty executing against certain types of innovation.

Expansion-stage companies that understand the challenges can develop specific

strategies to come out ahead in the marketplace.


All of the different terms that people put on innovation seem to boil down to the degree of change and where the ideas are coming from. This includes:

» Incremental innovation, evolutionary innovation (less change)

» Radical innovation, revolutionary innovation (more change)

» Closed innovation (ideas and application approaches come from inside a single organization)

» Open innovation (ideas and application approaches come from inside and outside an organization)

Why Innovation is Challenging for Large CompaniesThe list of issues that typically prevent well-run large companies from driving true innovation is a lengthy one and, not surprisingly, it’s significantly larger for businesses that are poorly run. Often times, those issues include the following:

They primarily focus on their core product markets. Since most large companies are public, they need to show revenue and earnings growth each quarter. The most effective way for them to do that is to focus on selling to the larger opportunities in their core markets. As a result, large companies tend to play to their strengths — their products, platforms, and channels of distributions already in place, or established customer relationships — and leave smaller opportunities up for grabs.

They tend to be fact-based and sometimes political in their decision-making. That process tends to reject many of the new ideas that come through the pipeline in favor of lower-risk initiatives (ideas are very fragile when they are new, after all). The need for fact-based analysis comes from some combination of management training (business schools teach fact-based analysis), some level of needing “proof” or evidence that a project will be successful, and the need to reduce proposed new initiatives to numerical analysis, which makes it easier to set priorities. Politics also tends get in the way of appropriate decision-making, particularly when employees become more concerned with career advancement.

They tend to be very difficult to change, let alone to change quickly. If change must be coordinated across departments, the difficulty level grows exponentially. That’s because large companies rely on economies of scale and economies of scope, powerful economic concepts that help them reduce their cost structure and achieve higher operating margins. Essentially, this means that different products share manufacturing processes, distribution, finance, marketing, and all other areas of the company. This economic gain creates less ability to change (due to complexity in each department), especially when change is significant. Making matters worse, large companies are typically older. More often than not, the people who originally did the thinking behind the processes in each department have left the business or department altogether.

http://www.investopedia.com/terms/e/economiesofscale.asp

http://www.investopedia.com/terms/e/economiesofscope.asp


Focusing on the Right Opportunities

Because it’s more difficult for larger companies to innovate, expansion-stage companies can create an innovation advantage if

they’re able to focus on the right opportunities and execute against them. That starts with hiring top talent, but expansion-stage

companies must also do the following:

ONE. Focus on innovations that conflict with the large companies’ decision- making process.

The fewer facts available, the more difficulty larger companies will have performing the

fact-based analysis they often rely on. For instance, you might explore new technologies

for larger companies’ existing products, customer segments not addressed by the large

competitor, or completely new distribution channels and customer service models.

TWO. Make it difficult for larger companies to incorporate your innovation into their core business.

That might include developing technology that larger competitors would have difficulty

building into their current platform, or executing an approach that would require signifi-

cant change to one or several of a larger business’s departments.

Remember, if you aim directly at a large company’s core business, you’ll need to create

an innovation that completely disrupts its business or economic model. Rather than

doing that, you should choose innovation opportunities that have a long runway. That

will allow you to continue innovating while larger companies attempt to catch up, and

increase your lead with rapid innovation advancement.

THREE. Build the best network possible to help guide you.

There is a tremendous ecosystem of potential users, senior managers (both retired and

active), VCs, consultants, accountants, and lawyers who are all interested in helping

emerging companies ascend the innovation curve and build their businesses. The more

you build your network, the more it will help your innovation.

If done right, expansion-stage businesses can have a significant innovation advantage

over their far less nimble large competitors. The key is to understand your leverage

points and use them to maximize impact.


Strategy 6: Setting Your Operating Point Closer to the Funnel Singularity

One of the best ways for smaller expansion-stage companies to combat their Goliath

competitors is to create a profit machine that is very difficult for those businesses to

compete against.

How do you do that? Traditionally, it would be by allocating your resources against nailing the customer experience at low price

points, rather than allocating significant resources against sales and marketing activities. With today’s Internet-based sales and

marketing approaches, however, companies can now execute that strategy more aggressively.

The basic idea here is to make everything (e.g., product, pricing, customer service) so compelling to target customers that they purchase the product without significant sales and marketing effort or expense. The closer you get to zero sales and marketing

expense while still growing the business, the better you have executed against this strategy.

This strategy is perfect for small companies competing against large ones. No matter where your large competitor has placed itself, set your operating point closer to the funnel singularity.

The Basic Elements of Funnel Economics

Funnel economics is essentially:

cash flow generated by sales & marketing activity sales & marketing expenses

If you shrink the denominator faster than the numerator, the limit is a singularity. From a business standpoint, if you aim for

this economic singularity in a very large market, it could be a formula for a very successful company.


This strategy has some really basic but powerful requirements:

» Make something useful and make it really easy to install, configure, use, and update

» Design into the package one or more “features” that will compel users to tell people about the product,

and influential people to write and talk about it

» Make the purchase transaction as simple and easy as possible

» Constantly improve the product with rapid development cycles

» Give away free beta and trial versions of the product, and price it competitively once the free period ends

» Keep the sales and marketing expenses (the denominator) as low as possible, and put your resources toward

the first five elements of the strategy, which should drive customer adoption

Don’t confuse this approach with simply eliminating sales and marketing. You still need both. The key is to keep pushing for

efficiency and to keep sales and marketing costs as low as possible relative to the gross profit generated by an activity. If a

company sets the right operating point in the right market situation, it should still be growing, possibly explosively, however for

reasons other than purely an aggressive sales and marketing effort.

Identifying the Optimal Operating Point

The six items listed above are powerful, but there are a handful of other issues that every company must consider. First, the

larger the market, the better the strategy works. Companies that sell to consumers or a universe of small/midsized businesses

will have a better outcome than companies that only have a few hundred (or fewer) possible customers.

Next, your company must find its optimal operating point. Think about it this way: Each of the six strategic requirements listed

above have control knobs that your company’s management can rotate to set the optimal level for each element, determined

mostly by user response to each element. The core assumption to test is that you can improve your results by decreasing sales and

marketing resources, increasing resources spent on the product, and reducing the price (or eliminating it for a period of time).

These themes have been applied successfully to companies selling to consumers, small businesses, and large enterprises in

all areas of information technology (infrastructure, applications, software as a service, etc.). The strategy can be deployed in

different forms at different operating points by every company selling to any customer segment, provided the segment is large

enough. To be effective, you simply need to focus on aiming toward the economic singularity and make sure that you start

closer to it than your competitors do.


It’s All About Your Advantages

Your specific competitive advantages might have been covered in this chapter, or they might be far more unique to your market

or product. Regardless of what they are, the six strategies listed in this chapter should help you better identify those advantages

and understand how they can be applied against your market’s Goliath. Ultimately, that’s the key to engaging in any sort of

battle against your market’s biggest players. Without knowing your own strengths and formulating a plan to capitalize on them,

it’s highly unlikely that you’ll be able to expose your larger competitors’ weaknesses or maneuver around their strengths.

In the next chapter, we will discuss some of the most common large-company strengths and provide some tips for attenuating

them. Whether it’s great senior management or technical talent, a deep patent portfolio, or well-developed channels of distribu-

tion, no large company is impenetrable if you know how to identify the gaps in its armor.


Chapter 2:

Attenuating Larger Companies’ StrengthsLarge companies do have some natural advantages. They tend to have tremendous capital and

human resources, stronger brand recognition, and wider market presence, among many other

assets. However, those strengths do not mean that your smaller business should quiver in fear.

In fact, there are some ways expansion-stage companies can minimize the strengths of large

companies and, in many cases, create an edge.

Let’s start by exploring the primary strengths of big companies. Including the ones listed above,

your larger competitors likely possess:

This chapter addresses each of those strengths — along with a few others — and shows you how to

attenuate the large company’s strengths in each of these areas. By the end of this chapter, you should

be able to formulate a plan to mitigate your larger competitors’ seemingly insurmountable strengths.

Great senior managers and top technical

talent

A technology platform already

in place with customers

A deep patent portfolio and ongoing new

patents

User comfort with their user

interface

Well- developed

channels of distribution


Strength 1: Great Senior Managers and Top Technical Talent

Well-run large companies have great senior managers and employees at all levels and

they generally have recruited and trained a large bench over the years. However, the

amount of time these senior managers can spend on a given product market is very

small, as they often have too much on their plate.

As a result, the senior manager advantage over expansion-stage companies in a given product market is more perceived than

real. A large company’s sizable division of great technical talent is more of a perceived advantage as well. The truth is that most

great products originate from a small group of talented architects, engineers, and developers rather than a large corporate team.

Hire a talented A-caliber staff that knows how to establish the processes you need. When your company was in earlier stages of

development, you probably did not want or need to establish formal processes. But as you grow, these processes become neces-

sary to compete against more well-structured competitors. Therefore, job candidates who are experienced with formal processes

will add much more value.

Keep in mind that some A-caliber people will fit into your organization better than others. For example, you might want to look for

managerial and employee talent that is more risk-seeking and hands-on. While those people may not possess the understanding of

formal processes, they will still be a great addition to your team and you won’t be competing against large companies for them.

For any top prospect that you want to hire, especially if you are recruiting them away from a well-run large company, you need to convey to them a sense that the company has a high probability of success and that they will succeed along with it.

How to attenuate the large company’s management strength…


A few ways to do this include:

Outlining a vision for the company. Make it sub-

stantive, and be sure that it is both achievable

and interesting. What customer segments are you

attacking? What is your approach? Why will it win

relative to others? If possible, demonstrate progress

against that vision as well. The better the product

and the more happy customers you have, the better

you will show.

Discussing the company’s funding. If you are profit-

able, it is easy to show. If you lack profits, make sure

to discuss your funding source and give the candidate

confidence that the funders are behind the company.

Exposing them to your advisors. If you’ve sur-

rounded your company with great advisors (board

members, advisory board members, angel investors,

VCs, etc.), you should encourage top prospective

employees to meet with them. This is particularly

important for more senior candidates that you’re

competing against other companies for, as it will

leave the impression of a more substantial and well-

supported company.

There is no magic formula here, but if you’re going

to attenuate the large company’s talent strength,

you have to hire the best candidates you can find.

Keep in mind that adding only one great leader to

an expansion-stage company can make a signifi-

cant difference, and multiple great leaders working

together is one of the most important ingredients

for success for all companies.

5 Tips for Leveraging a Smaller Team of Technical TalentContrary to popular belief, expansion-stage companies actually start off

with a strategic edge when it comes to technical talent. If you focus on

these staffing and organizational tips, you can increase your advantage:

Inject the customer into the process and the people. The closer the development group is to the customer’s needs, the better.

Make everyone sit together. Yes, projects can get done without people sitting in the same space, but if everyone is together it will inevitably create more — and better — communication opportunities.

Expand the group only when the product is ready for it. Your company’s core group of developers and engineers should consist of three to five highly talented people who work well together and have a very good feel for the best approach to building products quickly. Having too many people in this group will actually hurt its production.

Create an organizational structure that activates a healthy ten-sion between groups. That tension will result in better technol-ogy through productive discussion. If your team is divided into groups, you might organize them by designers, developers, and product testers. Don’t give one group more power than the others, and encourage debate.

Implement rapid development cycles. This approach gives you great starting points to examine the product, share it with pros-pects, and make iterative improvements, which results in much more rapid product and business model evolution. It also seems to keep people excited about coming to work and it forces all aspects of the business to work in a well-choreographed manner.


Strength 2: A Technology Platform in Place with Customers

Larger companies typically have a technology platform in place with many customers,

and those platforms are often integrated with customers’ other applications and data

sources. They can continue evolving this platform by adding functionality, which is a

big advantage over smaller companies scratching and clawing to survive. And, if your

business develops a good idea that is easily replicable, larger companies can simply

incorporate it into their platform.

The first thing you should do is focus on the prospects who are not using (or don’t want to continue using) a large company’s platform. No matter what that platform is or how well it is distributed, there is always a segment of the population that is not

satisfied with it. If you aim at that segment, you could neutralize one of your competitors’ major advantages.

Creating an approach that is completely separate from the large company platform is also a logical way of minimizing its advan-

tage. There are several architectural ways of doing this, so think carefully about the natural architectural possibilities for your

platform, and build in capabilities that fundamentally need a different platform.

In other words, don’t force a different architecture. Instead, create customer-driven function in your product that results in the

fundamentally different architecture. A great example of a company using this approach is Salesforce.com, which has a wholly

Web-based approach to CRM that is completely different than the traditional installed software architecture used by some of its

biggest competitors.

How to attenuate the large company’s technology platform strength…


Another option is to create an approach that leverages more than one large company platform at the same time. This is more an

observation than a structural issue, but large companies tend to want to build their own platforms rather than share the best of

all the large company platforms.

If your product or service leverages the natural heterogeneity of any user environment, you will minimize any individual com-

pany’s platform strength and probably gain a slight edge (some people refer to this as “living in the white space between large

vendors”). For example, Veritas (now part of Symantec) grew to become a very large company by providing data lifecycle man-

agement solutions for all the major platforms.

Lastly, you could embrace a large company’s platform, though this option comes with unique challenges that you must be

prepared for. For example, you might:

Focus on tactical feature/func-tion enhancements to the large company’s platform.

This strategy works in the short

term, but you need to be ex-

tremely nimble and always ready

to release the next generation of

feature/function when the large

company builds your feature/

function into its products (and it

will if the ideas are useful). For

example, C360 has a platform

that leverages Microsoft CRM and

users say it does an excellent job

extending the capabilities of the

core platform.

Focus on customer needs when the large company releases the next generation of its platform.

Most large companies are so

focused on their next-generation

platform that they leave many

holes for expansion-stage com-

panies to fill with respect to user

needs. Some opportunities could

include migration of data and user

settings to the new platform, mi-

gration of all other supporting in-

frastructure (connectors, back-up

systems, administrative systems),

and allowing simultaneous use of

both the old and new platforms.

Create a deep domain expertise that leverages the platform but makes it very difficult for the large company to replicate.

For example, Acorn Systems has

a profit and cost allocation system

for businesses that uses solely

Microsoft infrastructure, and its

depth of domain expertise and

software/service sophistication

makes it very difficult for Micro-

soft to re-create it.

These approaches work no matter whether your target users are small businesses, large enterprises, governments, or other large

organizations. The more you aim at the business product markets, the more important these approaches become. In all cases,

make sure you approach the situation in a way that mitigates the platform advantage of the large companies.

http://www.veritas.com/

http://www.c360.com/

http://www.acornsys.com/


Strength 3: A Deep Patent Portfolio and Ongoing New Patents

Most large companies have a large patent portfolio along with an ongoing machine

that churns out new patents. It is likely, or at least possible, that you will get tripped

up in one or more of a large company’s patents if you are not careful. In fact, this is

becoming a very serious issue that virtually all technology companies must consider.

From an expansion-stage company perspective, you can play defense and offense. Both are important. Defensive strategy is all

about making sure you know the patents in your field and understanding them well enough so that you develop your platform in

a way that does not conflict with those patents.

Offensive strategy, on the other hand, is all about acquiring your own patents. Some experts say this is the more important

strategy, largely because there are three possible benefits for having your own patents:

» They can give you protection, allowing you to defend your approach and make it harder for others to attack.

» You can use your patents as a negotiation tool if a large company claims you have violated its patents.

» You can position your business to monetize its ideas through royalties and agreements, which can also allow you to make

money beyond your product market sales.

That said, dealing with patents is often a tremendous resource drain. As a result, companies need to develop approaches to

maximize and leverage their position, and act accordingly to minimize the large company’s patent strength.

How to attenuate the large company’s patent strength…


Strength 4: User Comfort with a Product’s User Interface Look and Feel

Regardless of which technology platform you decide to implement, the user interface (UI) is

an independent issue altogether. That UI, after all, is often the single most important piece of

technology in software or Internet companies, while also having the greatest opportunity for

improvement.

The more frequently a user interacts with a product’s UI, the more important it becomes to the overall platform (and, in gen-

eral, the more valuable the platform becomes to the user). Over time, that user comfort creates some level of vendor lock-in,

as the user interface becomes a natural part of the user’s day.

All too often, larger competitors with more established products own their user interfaces, making it very difficult for growth-

stage companies to disrupt that advantage. So what should you do if you’re facing that situation? There are three relatively

simple steps you can take to mitigate a larger competitor’s UI advantage:

Embrace and extend the UI already in place. There are often many opportunities to make a UI much better through deeper

integration with the user platform. This approach does not necessarily minimize the large company’s user interface advantage,

but it does at least allow you to align yourself with it.

Create a similar look and feel to the large company’s UI. As users become comfortable with a particular interface, the approach

becomes more and more intuitive to them. If you can align your UI with an approach that your users are already comfortable

with, then you stand to make your product feel more intuitive.

Make your UI easy and fun. You don’t always have to simply adapt to or embrace a competitor’s UI. If you make your interface

easier and more fun to use, you could create a radically better experience for your target customer segment. When you focus

on their needs, there are many ways you can improve the UI experience for all your users. For instance, you might give users

access to popular features or functions regardless of whether they have a network connection, or integrate your UI with different

devices (e.g., smartphones or tablets) that they use to interact with your software.

How to attenuate the large company’s user interface strength…


Large companies tend to have solid UI approaches, but no interface is without flaws, and most have areas that could be greatly

improved. By using one of the strategies above, your company could establish a new approach that disrupts — in a positive way

— a user’s comfort with a larger competitor’s UI.

Strength 5: Well-Established and Plentiful Customer Relationships

Well-run large companies have numerous great customer relationships that typically result from

all of the value-add points of contact with their customers including marketing, sales, professional

services, and customer service. The best big businesses spend a great deal of time maintaining and

improving those relationships over time.

Those relationships are similar to a well-stocked bank account. Just like cash reserves can help you get through natural disas-

ters like a hurricane or earthquake, or unplanned life hiccups like job losses, strong customer relationships can help big busi-

nesses survive issues such as better competing product releases, product bugs, and other temporary setbacks.

While it’s often difficult for an expansion-stage company to compete head-to-head with a large company that has built great

relationships with its customers, vendors, and distributors, it’s not impossible.

First, try aiming directly at the large company relationships. This strategy works particularly well if you have a product set that is

highly complementary to the large company’s. The best approach is to try to get a small number of sales by aligning your product with

the large company’s products, and then contacting the large company to discuss ways in which you might be able to work together.

Alternatively, you might target prospects that the large company does not have relationships with or where the relationships are weaker. This generally means going after small and midsized businesses, municipalities, and consumers.

Lastly, you might radically rethink your approach to serving your prospects and customers in all segments. With myriad new

approaches to developing customer relationships — including online chat, e-mail, voice recognition in phone systems, and

online tutorials, FAQs, or training videos — there are tremendous opportunities to produce much better relationships with your

customers and prospects.

How to attenuate the large company’s relationship strength…


3 Types of Large Company Customer RelationshipsIt is important for expansion-stage companies to understand the strength of relationships that the large company has with its

different customer segments. Here are three greatly simplified characterizations of larger company customer relationships,

which should help you analyze those relationships and develop a strategy to address them:

Very strong direct relationships: Large enterprise and government sales that involve field sales staff and professional

services staff selling, installing, configuring, and training at the customer’s location generally produce very strong rela-

tionship bonds with the customers (assuming there is a positive outcome). Not surprisingly, these types of relationships

are the strongest.

Solid inside sales relationships: Direct telesales relationships can also create strong relationships that, while not as

strong as field sales, are still very difficult to penetrate. Also, indirect relationships that companies created through

distributors, vendors, resellers, or OEMs probably fit into this category, assuming those channel partnerships are strong.

Virtual relationships: Internet-based relationships are probably the weakest relationships, as they do not generally involve

human contact (which, despite our virtual world, is still very important to relationship building). Nevertheless, virtual

relationships can be valuable if they are developed and addressed correctly.

“Many small business owners often think that their large competitors have an advantage

in the marketplace when it comes to sales. The sheer size of their sales force, support

team, and marketing budget can cause sleepless nights for many of them. But the reality

is that when it comes to sales, being a bigger company isn't always better. In fact, smaller

companies have several advantages, including being more accessible, adaptable, and agile — all

characteristics that serve them well in establishing successful customer relationships.”

– Kelley Robertson, President of The Robertson Training Group

http://fearless-selling.ca/


Strength 6: Well-Developed Distribution Channels

Because of their size, reach, tenure, and network, large companies seem to naturally

have well-developed direct and indirect distribution channels that allow them to

deliver their products and services in a more cost-effective and scalable manner.

Those distribution channels can come in several flavors including direct and indirect, but they’re almost universally leveraged to

efficiently sell more products and services to a wider audience. Large companies typically spend years perfecting their distribu-

tion channels, and they generally have well-thought-out distribution approaches that function at a very high level.

First, you could align your business with your larger competitors’ distribution channels, provided your product complements

theirs. This relationship can result in more prospect introductions and valuable indirect channel partners.

You could also align yourself with a large company’s biggest competitor, or focus on distribution channels where the larger com-

panies aren’t involved or have some well-known issues. Generally, those two options are best executed by contacting indirect

channel partners that have pre-established relationships with your target customers and, for one reason or another, are not cur-

rently working with your larger competitors.

Lastly, you can mitigate larger businesses’ distribution channel strength by developing channels of your own that are more effi-

cient than the ones used by larger companies. This needs to be part of an overall strategy that includes offering a simpler and

more targeted product, lower price point, and more efficient customer service. For example, you could use telesales into depart-

ments of large enterprises if the larger competitor uses field sales into those same large enterprises.

How to attenuate the large company’s distribution channel strength…


No matter which distribution strategy you choose, use the following approach:

ONE. Start with direct distribution.

You need direct access to and relationships with the end users so you can perfect your

product, services, and marketing messages. Growth-stage businesses also benefit greatly

from acquiring some customers by word-of-mouth.

TWO. Work on expanding your reach.

Once you have perfected your value proposition to your customers directly, work on

expanding your reach by building up indirect channels. Perform some research to truly

understand the channel partner segments that are best for you. Then you can offer value

to channel partners by letting them know what’s in it for them. The best way to do that

is to find out who they currently do business with, why they work with those partners,

and how you can craft a package that will help them.

THREE. Prime the pump.

When that value proposition is finally ironed out, prime the pump. If you have ever

siphoned gas from a gas tank, you know that just putting the hose into the tank doesn’t

do anything. Just like you need to create suction to get the gas flowing into the bucket,

you will need to offer up leads and help close some deals with each of your channel

partners. This will teach them how it’s done and show them how easy it is to make

money relative to selling other products and services that are in their catalog.

Relative to direct channels, indirect channels take a very long time to build. They also require you to relinquish some economics,

which is hard for many companies to swallow (especially if they have a direct sales culture). However, if you are building a large

company or if you have a product or service that is a natural fit for indirect channel sales, then you will want to pursue this

strategy. If you need or want short-term results, though, you will need to pursue a direct strategy.


Strength 7: A Brand Name and Reputation

In a lot of ways, branding has been turned into a relatively esoteric topic by business

experts. However, if you boil down a brand to its essence, it’s basically the mental

model (or models) that your customers, prospects, employees, and partners have

developed for your company and its products and services.

After all, a brand or reputation is not necessarily a tangible thing like a company, product, name, or symbol. It’s a psychological state (more specifically, a repeatable biochemical reaction) that gets triggered in people’s minds when they read or hear your name, or see your symbol. That mental model could be an image, sound, touch, feeling, taste, thought process, or any other type of reaction.

In that sense, large companies benefit from many years in the marketplace, which typically allow them to develop a well-known name, and logos or symbols that are well-recognized by a large number of customers and prospects.

When you think about some companies, their reputation often precedes them and you can probably define their brand relatively quickly. For instance, if someone says Google (the brand), it likely conjures up images of Web searches and results pages (the mental model). If someone mentions Facebook (the brand), you likely picture its trademark blue logo and font, or your news feed (the mental model). In both cases, the brand and the mental model are interchangeable. If you think about social media, for example, Facebook is probably one of the first brands to come to mind.

The relationship between a brand and its mental model is not as clear-cut for some large companies, however. If someone asked you to describe Oracle, IBM, or Microsoft, for example, you would have a much more difficult time describing or picturing what those brands represent. That’s typically because those larger companies’ brands have become too complex, or they’ve lost focus.

How to attenuate the large company’s brand and reputation strength…




Ideally, larger technology companies would develop their brands at the product level as they grow. Apple is an example of a company that is particularly good at doing that. In the tablet category, Apple’s iPad stands alone. In the mobile phone market, the iPhone is widely considered a category leader. The same applies to the company’s laptop and desktop computer offerings. Each brand stands for something, and consumers know exactly which parent company stands behind them.

Apple is the rare exception to the rule, however. Generally, larger companies do not develop individual brands very well, and sometimes confuse buyers by including their company name in individual product brands. Given that failure to effectively man-age a portfolio of products and services, expansion-stage companies can seize the opportunity to become the brand in their par-ticular market niche. The goal should be simple: When people hear or see your company’s name or logo, a clear mental model

is triggered.

Ultimately, that can be achieved by following three steps:

ONE. Package the mental model.

Determine the best message for your company or product. How do you get people to

understand how you fit into their world? You could start from scratch and try to explain

everything, or you could simply adapt to pre-existing mental models and brand associations.

If you can understand those associations, link the right ones together, and then link your

company to them, you’ll win.

TWO. Make sure that every activity you do is aligned with your message.

The product, marketing activities, sales, professional service, customer service, and everything

else you do must reinforce your message as simply and effectively as possible. Anything you

do that is not aligned with the message does not reinforce it and will probably complicate it.

THREE. Deliver your mental model repeatedly.

Once you have the message that you want to deliver, start communicating it. Recite it

often enough so that senior management, the marketing team, salespeople, customer

service reps, outside influencers, and prospects or customers are repeating it, too. The idea

is to plant enough seeds so that the mental model eventually spreads itself organically.

As you grow, keep in mind the importance of developing and maintaining your brand portfolio. As you enter new market or

customer segments, you may want to create a new brand entirely, rather than muddy your existing one with new mental models

or brand associations. While that’s not common practice with technology companies, it should be.


A Template for Creating and Understanding Brand AssociationsGeoffrey Moore describes several approaches to creating brand associations in his classic, must-read book Crossing the Chasm.

One approach that he suggests for the elevator pitch (with some slight modifications) addresses these key pieces of information:

» For (insert specific target customers)

» Who are dissatisfied with (insert the current alternative)

» Our product is a (insert new product category)

» That provides (insert key problem-solving capability)

» Unlike (insert the alternative product)

» We have assembled (insert all aspects of your customer approach, which he calls the “whole product”)

There are many ways to boil down messages to their core meaning and develop the right mental model for your audience. Iden-

tify a simple approach (like the one above) that will help you form a simple message, and ignore any approaches that are overly

complex. It is much more important to have one simple message and to over-communicate it, than to try to get too clever and

ultimately cloud the message.

Undercut Their Strengths

Aside from their sheer size, reach, reputation, and networks, big businesses often possess the capital strength to overpower any

potential threat. But for all of their advantages, larger companies have some clear disadvantages, too. They’re less nimble, less

aware, and, in some cases, less desperate to succeed.

As an expansion-stage company, it’s your job to identify your larger competitors’ advantages and disadvantages, and brainstorm

ways that you might be able to mitigate or exploit them. Like Goliath, every big business has a soft spot that’s just waiting to be

exposed. If you can do that, it might open the door to significant growth opportunities for your business.

Of course, as soon as you throw that first stone, you run the risk of awakening a sleeping giant. So, what do you do when Goli-

ath picks up his sword? In the next chapter, we will explore the myriad flavors of large company attacks and provide five tips

that will help you defend against them. Ultimately, your survival largely depends on your ability to prepare for those attacks.

If you’re able to anticipate your opponents’ actions before they actually happen, you may be able to navigate around their

jousts entirely or, better yet, turn the sword on them.

http://www.tcg-advisors.com/who/moore.htm

http://www.amazon.com/gp/product/0066620023/104-2908392-0898369?v=glance&n=283155&v=glance


Chapter 3:

Defending Against Larger Companies’ AttacksIf you are successful, sooner or later you will be attacked. Prepare now so you’ll be ready to defend

yourself when a large company comes knocking.

Once a large company discovers you or your niche — or gets stung by your growth — it won’t

be long until it responds and tries to reclaim its share of the market (or attempts to wipe you out

entirely). As a smaller company, you can’t afford to wait for that response to happen. You need to

prepare for it well in advance, and create a plan of action that will help you defend against a larger

company’s assault proactively and aggressively.

This chapter explores the nature of large company attacks, discusses the specific steps you need to

take now to prepare for those inevitable attacks, and lays out a plan to help you build a fortress

that will insulate your growing business from those threats.


The Nature of Large Company Attacks

Like a barrage of punches from a heavyweight champion, large company attacks often come from several different angles (also

known as attack vectors). In an effort to confuse the market, befuddle your company’s leadership, and destroy your reputation,

those attacks will generally attempt to derail your progress through a series of tactics.

First, large businesses typically attempt to create fear, uncertainty, and doubt by flooding the market with new product

announcements. This often comes in the form of press releases, customer meetings, webinars, and other customer communica-

tions that trumpet new products in your market, whether or not those products currently exist. Large companies will plant the

announcements with the media outlets and industry analysts that they have relationships with so that these influencers can

help them facilitate that sense of uncertainty and doubt.

Next, large companies will attempt to attack your company’s — or your management team’s — reputation. This tactic typi-

cally manifests itself through large company sales reps or business development people attacking your business in one-on-one

conversations with customers and prospects, but it can also occur through claims of patent infringement. Of course, that patent

approach only works when the large company has at least one patent that you might be infringing on, or if it can encourage a

third party to take action on a patent that you might be infringing on.

If those tactics didn’t derail your business, large companies might opt to execute focused and unfocused organic attacks.

The unfocused attack (which, fortunately for expansion-stage companies, seems to be used quite often by larger corporations)

essentially involves building and launching the large company’s product within existing departments with existing staff. Gen-

erally, this attack vector will be much less effective, because the new product will not get the attention and focus it needs to

compete against a solid expansion-stage company.

A highly focused organic attack, on the other hand, has a much greater chance of disrupting expansion-stage businesses’ prog-

ress. It typically begins with a heavy dose of fear, uncertainty, and doubt, and includes:

A reorganization of the

company to assemble

highly skilled, focused

teams

Heavy spending on

product development,

sales, and marketing

An onslaught of product

promotions and perma-

nent price adjustments

(the most aggressive

attacks offer free

products)

Some level of bundling,

including possibly

building your features

or function into their

platform

1 2 3 4


If none of those approaches proves effective, larger com-

panies might simply offer to buy your business or your

best competitor. Of course, that tactic is only effective if

you — or your best expansion-stage competitor — is actu-

ally interested in being acquired and the offer is beneficial

to both parties. It’s important to remain skeptical and

defensive when you receive acquisition offers, because

many large companies will make an offer simply to gather

intelligence and understand your company and its prod-

ucts in greater detail.

5 Factors that Influence How Aggressively Large Companies AttackLarger businesses can’t spend all of their time and energy

worrying about every startup and growth-stage business

that tries to steal a piece of their pie. They’ve got to decide

which emerging businesses are the most dangerous, and

determine how aggressively they should attack those

threats. To do that, they typically consider five key factors:

How much they believe a new product or new product market will damage their core business.

How large and profitable they believe this new market is and will become.

Whether the product market or a particular busi-ness’s core strengths align strategically with their current and future business needs.

How aggressively they need or want to grow.

How their corporate culture and senior manage-ment style aligns with the threat (some companies are more acquisition oriented, while others skew more toward organic growth).

Ultimately, the more larger competitors believe that those

five factors could impact their current and future health,

the more likely they are to react swiftly and aggressively

with one of the tactics discussed in this chapter.

“ Throughout my career, I’ve seen countless large

companies use fear as a tactic against their smaller

more nimble competitors. First they broadcast that

they have all of the same products and capabilities

as their competitors, regardless of whether or not

it’s true… including on their websites and in the

marketing literature and PowerPoint presentations

they give their sales teams. Second, they try to

convince customers that any smaller competitors are

also weaker and won’t survive, which implies that

using any of them is a waste of time and money and

that you are risking your job if you do so. By focusing

on the points outlined in this chapter and being

prepared, you can help undermine their attack.”

George Roberts, Venture Partner,

OpenView Venture Partners


How to Defend Against Large Company Attacks

Whether it’s a 60-yard Hail Mary pass or an interception returned for a touchdown, there are almost always several game-chang-

ing plays throughout a football game. However, most great football coaches would tell you that the biggest games are really

won and lost before the game actually begins. Whether it’s a well-thought-out game plan or weeks of preparation and game film

study, the more prepared a team is to execute its in-game strategy, the higher the likelihood that it will win.

Defending against a large company attack is no different. If you wait until an attack begins to respond, you will probably lose

(unless you are lucky). If, however, you prepare for every possible scenario and formulate a strategy for defending potential

attacks, you will probably win (unless you are unlucky). The latter requires expansion-stage companies to understand five key

defensive focal points and use them in the appropriate situations.

Focal Point No. 1: The best defense is a good offense

Your first major focal point should be maximizing your advantages and minimizing the large company advantages. We’ve already

discussed these concepts in Section 1, and the more you are able to implement them successfully, the more defensible you will

be to the large company’s attack.

Focal Point No. 2: Delay the attack as long as possible

You have the opportunity to manage the large company’s perception of both you and your product market. You need to consider

their window into your company and product market and determine how you can paint that window with the scene that you want

them to see. The more you dominate your market niche, the better your opportunity will be to hold all of the proverbial paint

brushes. In the end, the large company’s perspective will help determine the emphasis that it places on attacking your market.

The market will hold more interest to the large company if it appears larger and more profitable, and if it seems relatively easy

to win. Therefore, your goals should be to:

» Make the customer economics appear very lean or opaque at first. For instance, the advertising-driven business model is an

example of economics that are very opaque to outsiders, whereas a product with a set customer price is easier to understand.

» Focus on a niche market. Even with good customer economics, if a large company perceives the market to be a small num-

ber of buyers, it will likely have less interest.


» Identify an older market. Doing new things in an old market is not very attractive on the surface. For example, Google

probably bought itself a lot of time against its competitors because earlier search engines had not been very successful.

Similarly, Salesforce.com entered an older market in a new way, and there were a lot of early naysayers.

» Make your approach too unique for the large company. An extremely unique product or business model will catch the large

company flatfooted for a very long time. The less data that is available on the approach and the more differentiated it is

from the large company’s business model, the more naysayers there will be in the large organization, which will likely pre-

vent any real attack. Google, Salesforce.com, Webex, and Skype are all great recent examples of this.

Focal Point No. 3: Add the Teflon coating

As we discussed earlier in this chapter, most large company attacks are initiated by a deluge of fear, uncertainty, and doubt.

If you’re not prepared for that barrage, that approach can quickly dent your armor and make you more vulnerable to ensuing

attacks. There are several ways to minimize the effectiveness of that approach, however.

The first is to focus on customers that aren’t enterprise businesses. Ultimately, the smaller the decision-making group, the less

likely it is they’ll be impacted by fear tactics. Furthermore, if those decision makers have any questions or concerns about your

product or product market, they’ll likely discuss them with you directly.

Next, make your product relatively inexpensive and easy to switch off. The lower the cost of a buyer’s mistake, the less the deci-

sion maker will be worried about taking a leap of faith. Keep in mind that costs include everything from the actual price of the

product to implementation, configuration, professional services, and system migration. Try to keep all of those costs as low as

possible if you suspect that a larger competitor is ready to attack.

Lastly, remove any incentive for customers or resellers to wait for a large company to incorporate your product features into its

own product. The more buyers or channel partners believe that their business will be harmed by waiting for that integration,

the better your chances are of convincing them to do business with you now.


Focal Point No. 4: Fortify your position

Once a large company decides that it is interested in your market, you want that business to look at you and think, “This company

is going to be extremely difficult to displace.” For that to happen, you should strive to develop the following characteristics:

A large number of really happy customers who speak highly of you and your products. That will ultimately come from building a

product that meets your customers’ deepest needs, providing outstanding customer support, and continuing to focus on cus-

tomer experience.

» A very specific brand identity in your product market. You should strive to be the Facebook, Salesforce.com, Webex, Apple,

or Google of your market niche.

» A product that is extremely difficult to replicate. Products in this category tend to have some specific characteristics, such

as an easily evolvable architecture, significant product engineering and development, an intuitive user interface, wide-rang-

ing product platform interoperability, and established or secured patents. Low employee turnover is also a critical compo-

nent of product replication. The fewer employees that leave your business, the less opportunity a competitor will have to

mine critical product information.

» Business and economic models that are extremely difficult to replicate. The more aspects of your business and economic

models that the large company does not have, the more difficult it will be to copy your product or service. For example,

many large companies do not use unique channels of distribution or have customer service built into their products. If your

product leverages either one, it will make it more difficult for larger businesses to replicate.

» A wealth of capital. The more capital you have, the more you will be able to defend against attacks. Also, the more capital

you have that the large company knows about, the stronger and more defensible it will make you appear. That doesn’t nec-

essarily mean you need to seek venture capital as soon as possible, however. A very high growth rate with a positive cash

flow or a strong balance sheet can also make your business seem less vulnerable.

If you do all of the above very well, the large company will have a much lower probability of organizing itself to compete directly

with you. If it does, you will have a much better probability of defending the attack.


Focal Point No. 5: Be prepared to negotiate

If you have executed the points above, then you should expect an e-mail or phone call from a large company at some point.

Once a large company performs its analysis (assuming that it does the analysis correctly) and recognizes the unlikelihood of

successfully attacking you, it will probably approach you — and your competitors — to discuss a potential acquisition.

Focus on what you want out of this call and its follow-up activities. Are you ready to sell, and, if so, at what price and terms?

To help you answer those questions, you need to consider what would happen if you chose to accept or reject an acquisition

offer. In other words:

» What is the probability that a large company would execute a very targeted attack at you if you turned down its offer,

or that it would choose to purchase your best direct competitor to fuel an attack?

» Will there be other opportunities for you to sell your business, both now and in the future? And are those acquisition

partners better than the one you’re considering now?

With these two issues fully considered, you should be in a relatively good position to pre-determine the best outcome of your

conversation with a large company. For example, if you are convinced that you will win regardless of a large company’s attack,

then you should hold out for a very strategic price or just go it alone (in which case, you need to be very careful about the infor-

mation that you offer up in negotiations). If, however, you are less confident in your company’s ability to fend off an attack and

conclude that this large company is your only potential acquisition partner, then you should determine a fair price and sell.

Well Positioned to Defend

You need to set up well in advance of an attack so that you are best positioned for a positive outcome. The more time you invest

in preparing for an attack, the more defensible your strategy will be — whether it’s an acquisition or an aggressive growth plan.

That preparation will ultimately give you more confidence to move forward because you can do so knowing that you’ve consid-

ered every possible competitive situation.

In the next chapter, we’ll explore steps that a growing company can take to execute against its vision and growth plan, while

keeping its foot pressed firmly on the gas pedal. To do that, you’ll need to genetically engineer your organization around a set

of key principles, create challenging focal points that keep everyone on the same page, and measure progress so that you can

quickly close any gaps in your vision.


Chapter 4:

Executing Against ExecutionHow can you maximize the pace of your company toward achieving the series of goals you have

set for it? The quicker your pace toward the goals, the faster your company will develop into a

large, profitable company with a defensible competitive advantage.

We have focused on how expansion-stage companies can gain strategic advantages and minimize

large company advantages. If you take the best of the ideas, distill them to their essence, and apply

them to your expansion-stage business, then you should have a very clear idea of what you are

trying to achieve (i.e., your vision).

The focus of this chapter is how to best execute toward your vision. Think of this as pushing your

fast-forward key for as long as you can, so that your organization moves rapidly toward nailing a

series of short-term goals and, ultimately, your longer-term vision.


Quite a bit has been written on execution. If you have been studying the topic, you have found there are many possible inter-

personal and intergroup issues, many different types of people and situations, and lots of advice on leadership methodology for

approaching each situation.

Here we boil away all of the tactical details and present the most important skeletal components for execution. You will find

these components in all companies that have been high-achieving for a long time. If you get the skeleton right, you should be

80 percent of your way toward optimal execution. Get it wrong, and your results will be significantly lower than they could be.

You still might get lucky with a unique product or unique product market for awhile, but you will regress toward the mean over a

longer period of time.

The essence of execution is fourfold:

Genetically engineer your organization. You

need the right people

doing the right activities

in each position. In that

way, having recruiting,

training, motivation,

reward, and separation

systems that are 100

percent aligned with

performance is key.

Create challenging focal points. Every in-

dividual and workgroup

in your organization

needs to be given a few

short-term, challenging

focal points that are

aligned with the com-

pany milestones and

interdependencies.

Measure progress and make adjustments frequently to close gaps. Every individual

and workgroup needs

to review progress,

understand gaps, and

get help closing the

gaps on a regular basis.

Weekly, monthly, and

quarterly retrospectives

are a necessity.

Be flexible. Adjust your

longer-term goals based

on short-term results.

The world rarely turns

out the way you expect.

These skeletal ingredients are very similar to agile software development principles applied to the entire organization (although

we have tried here to make the key ingredients more black and white for clarity). Throughout this chapter, we’ll discuss each of

these four ingredients in greater detail.

1 2 3 4

http://agilemanifesto.org/principles.html


Genetically Engineer Your Organization

Genetically engineering your organization means getting the right people doing the right

activities, with a management approach that is merit based. This process isn’t always easy

to execute, unfortunately, but the payoff is greater efficiency and focus, which will make

defending against or countering larger competitors a much more fruitful endeavor.

To make sure you foster the right culture and attract the kind of talent that is motivated

by the right things, you need to ensure that the organization is perpetually:

» Finding and assembling the right people. Anyone you hire must fit into the culture you’re trying to establish: Either hire

experienced people who fit the culture, or bring in entry-level, A-caliber people and train them into your culture. The latter

tends to be the best long-term approach, especially if you supplement the entry-level people with experienced managers.

That strategy will be less effective in the short term, however, so you need to determine the trade-off you are willing to make.

» Executing the right activities. Your company’s leaders should know how to focus on and perform the right activities. If you

supplement them with entry-level, A-caliber people, then you will form a team that generally should be doing just that.

The right people should set up the right activities and provide proper oversight.

You need to be sure, however, that your hires know exactly what they are doing. Good people will do a good job executing

what they think is right. But if they do not know exactly what they are doing, you will end up with the wrong activities and

it will be much more difficult to re-focus on the right activities.

» Fostering a meritocracy-based management system. If you want a management system to maximize execution, you need to

create a culture that attracts top performers who want to win, and pushes away lower performers who aren’t motivated by

the same things. Generally this means compensation and advancement goes to those who perform, and separation goes to

those who can’t or won’t perform.

Starting with recruiting, let prospective employees know that you have a performance-based culture that rewards top per-

formers and does not have time for underperformance. Once people are hired, set goals for all employees and reward the

highest performers with things like compensation and advancement, or challenging new opportunities and leadership roles.

As for underperformers, consider moving them into less critical positions or helping them find jobs outside of your company.

That will help you maximize your execution and do the right thing for employees who might be good people, but aren’t living

up to your expectations.


» Preventing and discouraging bad behavior. Finally, you must make sure that favorites, sacred cows, politics, and other

non-merit-based management approaches do not creep into your organization. These not only hurt execution short-term,

but also dramatically impede your ability to build a long-term sustainable execution advantage. Merit-based approaches

get high-performers focused on results; non-merit-based approaches disengage high-performers and get everyone else

focused on issues other than results.

Managing for high performance will significantly reduce the energy focused on bad behavior, but you will also need to manage

away these behaviors (and potentially the people exhibiting them) before they breed in your organization. This is particularly

difficult as you grow into a large organization, as there are more places for these behaviors to fester.

Create Challenging Focal Points

If you have a high-performing staff in place and a management system that motivates them to do

the right things, you need to disaggregate your longer-term vision into a series of goals for each

department, group, and person in your company. This gives everyone a focal point to think about and

act on when they come into work every day. Generally, the more they focus on the goal, the more

their activities and actions will be aligned with the goal. For that to happen, goals need to be:

» Specific. “Having the best product” is a horribly vague goal, and it can be very difficult to take action against. On the

other hand, improving product download speed or installation time, and increasing user satisfaction are much more

achievable goals.

» Measurable. Measurability goes hand-in-hand with specificity. If you can measure your performance against your goals,

you can determine the pace of improvement. For example, a measurable goal might be to decrease the number of clicks to

complete a given action; that goal can be easily benchmarked and tracked.

» Short-term. Having the goals be short-term is highly important, as an immediate goal creates a sense of urgency in the

business. Forget goals that are one year out, and set goals that need to be accomplished this month, this week, or today.

» Achievable. You want everyone to know that you are serious about everyone meeting their goals, and to build excitement

around achieving them.


Sample Goals for Every DepartmentThe more your goals are segmented to specific people or departments across your organization, the better your people will

begin to understand company interdependencies. And the more your people help each other to meet goals, the more that

setting these focal points will drive execution. Here are some idea starters to help you create more specific, measuable

goals for every department:

For Product Development: Make the next build by Friday; release the next version of the product to customers by next month; work toward builds every other day by the end of the quar-ter; build specific use cases into the product by a certain date

For Marketing: Create 100 qualified leads a day by the end of the quarter with an average cost of $10; generate at least one featured article in a trade magazine this month; gener-ate at least 30 customer referral leads per week by the end of the quarter

For Sales: Establish 50 new customer contacts each day; create $1 million in bookings this month; build a $20 million qualified pipeline by the end of the quarter

For Customer Service: Pick up the phone by the second ring 95 percent of the time and don’t leave anyone on hold for more than two minutes; resolve 95 percent of customer issues while they are on the phone and the remaining 5 percent within three business days

For Business Development: Create and present at least three partnership proposals by the end of the quarter; close on one deal that gen-erates a specific revenue stream in a specific time periodFor Finance: Reduce days receivable to 50 days by the end of the quarter


Measure Progress and Make Frequent Adjustments to Close Gaps

Focal points are only words on paper until you put a management model in place that reviews progress against goals and makes

adjustments as you determine gaps in progress.

Your management model should give everyone the opportunity to review their results versus their goals and also the opportunity

to hear the ideas of others. Everyone should have review sessions at least weekly, while some work groups might require daily

goal reviews.

Review sessions should not be meant to put people on the spot or create

unhealthy stress, but rather to be collaborative sessions to truly understand

progress and to help people nail their goals. Try to create an environment

where people feel like their hard work is acknowledged and constructive

feedback is provided.

If the reviews are set up the right way, the combination of individual and

group accountability, problem solving and idea generation, and resource

adjustments based on results will make the sessions a critical part of your

execution program and something that people look forward to.

Be Flexible

Most expansion-stage companies are working in extremely dynamic markets and corporate environments. The nature of the

business is such that sketching out the long term and then focusing on the short term is a necessity. However, sticking to those

longer-term goals when potentially game-changing market opportunities arise or execution challenges become apparent is not a

good idea.

This brings us to the issue of annual budgeting and planning sessions. Thinking through an entire year and sketching out a plan

and budget are very important to making sure that you are rethinking the big picture at least once a year. However, the annual

planning cycle is more of a starting point than the final plan for expansion-stage companies.

Each day, month, and quarter will bring its own surprises, and reviewing and adjusting your plan each quarter (if not more

often) is an absolutely critical part of the execution process. You will have plenty of time for long-term planning when you are a

large public company that must implement these approaches as control systems.

MONTHLY REVIEWS:

In-depth reviews for everyone

to get a detailed understand-

ing of what is going on and

to offer ideas and assistance.

QUARTERLY MEETINGS:

Meetings to engage in more

in-depth reviews and to set

the next set of goals.


Wake Up to Your Current Situation

Many companies and managers think these four skeletal execution ingredients are obvious and unnecessary, or they think that

they’re doing these things well. The truth is that many growth-stage businesses are quite average when it comes to execution.

Every once in awhile, however, you’ll meet a senior manager or a team that has implemented these principles and the results

are truly phenomenal.

How do you determine where you stand with respect to execution right now? Start by taking a baseline audit of your current

approach. The best way to do that is to ask several employees a series of key questions:

» What are the short-term goals of our company? What are the measurements? Are they easy for you to measure? Are the

measures objective?

» How does your group (or team or department) contribute to those goals? What are the measurements? Are they easy for you

to measure? Are the measures objective?

» How do you contribute to your group, thereby contributing to those goals? What is the deliverable that you are currently

working on? When is it due?

» How does your supervisor, team members, and/or other groups review progress and assist you in achieving your goals?

Do they know this? Do they have measurable goals against this? Are they easy to measure?

» What are the rewards for nailing your goals? What happens if you don’t nail your goals?

» Do you think that everyone in the company understands their goals and is working hard to achieve them?

If yours is like most companies, the results of your survey will be awakening. You will probably discover a complete lack of con-

sistency in the answers, which is the key indicator that the ingredients described above are not in place (or if they are in place,

they are not being executed well).

If you are a high-performing company with high-performing teams and individuals, you will see a consistency across answers

and a clear enthusiasm for the processes that have been established.


Disciplined Execution

Execution is not rocket science. It is all about getting the right people in place, telling them what is expected in the short term,

reviewing their progress, making adjustments, ensuring success is rewarded, and eliminating the less successful processes and

people from your organization. Of course, the approach outlined here takes some level of management discipline. Many people

lack the commitment to either implement these items or to continuously execute against them. If that’s the case in your busi-

ness, you may want to make someone in your organization responsible for ensuring that processes are followed, sitting in on

conversations periodically, and providing feedback and reminders to every manager who is responsible for execution.

Although the subject of interpersonal behavior has not been addressed here, it is important. In general, however, if you take the

steps outlined here, people won’t have a lot of time for bad behavior, or if they are exhibiting poor behavior, you’ll be able to

identify those issues and address them immediately. Ultimately, you’ll have to remove anyone who displays extreme unaccept-

able behavior, even if they’re high-performers. The last thing growth-stage businesses battling larger competitors can afford is

rogue employees who undermine the company’s strategy and expose it to potentially deadly mistakes.


End NoteEntering the 2012 Major League Baseball season, the New York Yankees had a payroll that nearly topped $200 million. They

were the odds-on favorite to win their division, the World Series, and just about anything else that was up for grabs in baseball.

The Yankees had more perceived talent, more money to spend, more leverage on the trade market, and the kind of historical

cache that demanded respect.

The Baltimore Orioles, on the other hand, were a smaller-market team with far fewer built-in advantages. The Orioles had

finished with a season record below .500 for 14 consecutive years, and in 2012 the team’s payroll barely crept above $80 mil-

lion. Its squad was full of undervalued older players who lacked star power, and younger players who were relatively unproven.

Yet, a funny thing happened in 2012. The Orioles very nearly knocked the Yankees off of their perch. At the end of the regular

season, the Yankees finished a mere two games ahead of the Orioles. Head-to-head, the teams split their 18 regular-season

contests and, fittingly, they ended up facing each other in the American League Division Series. Ultimately, the Yankees won

that series in five games, but they were taken to the brink by a supposedly less talented, less funded band of misfits. Goliath

was very nearly upended by David.

So, how did the Orioles do it? While some of the team’s success had to do with Yankee injuries and a few other extraneous

factors, the near upset wasn’t a fluke. In the years leading up to the 2012 season, the Orioles had drafted better players than

the Yankees, spent their money more wisely and efficiently, formulated a strategy for success, and executed better than their

seemingly better equipped rivals.

That strategy captures the essence of this eBook. While the uber-competitive business environment that expansion-stage tech-

nology companies deal with is certainly different than the one Major League Baseball franchises face, one core lesson applies:

Big doesn’t always win. Yes, there are numerous advantages to being a big business (not the least of which are deep pockets,

a wealth of top talent, and an established brand reputation), but no large company is impenetrable.

As we’ve hopefully shown with this eBook, the key to winning against larger companies is to understand your own strengths,

identify your larger competitors’ weaknesses, exploit those weaknesses, and execute against your goals better — and faster

— than most bigger businesses are capable of doing. And once you develop some momentum, don’t take your foot off the gas.

In the end, that will force larger competitors to respond to you, rather than the other way around, and that will put you in a

position to create opportunities in crowded markets that might have otherwise seemed impossible to grasp. We’re not suggest-

ing that doing that will be easy, of course, but it’s certainly not impossible. Remember, before his battle with Goliath began,

no one gave David a shot. And we all know how that story ended.


AppendixFurther Reading on Execution

There are many details beyond the outline above that will help bring you from 80 percent to 100 percent in terms of execution.

Here are some books for further reading:

The Breakthrough Strategy by Robert Schaffer. Robert does a great job of distilling down execution into what you need to do

and what you need to look out for.

The Wisdom of Teams by Jon Katzenbach and Doug Smith is getting to be a classic on building high-performing teams. Empha-

sis is placed on performance, focus, and discipline.

Double Your Profits in 6 Months or Less by Bob Fifer. While this book is not directly about execution, Bob has some great ideas

that are completely aligned with getting things done in the short term.

Execution: The Discipline of Getting Things Done by Larry Bossidy, Ram Charan, and Charles Burck. This book also has some

great ideas, although it is probably a bit too heavily weighted toward large companies (rather than expansion-stage companies).

http://www.amazon.com/gp/product/0887304044/103-8448409-7551052?v=glance&n=283155


http://www.amazon.com/exec/obidos/ASIN/088730740X/bookstorenow57-20/103-8448409-7551052


About OpenView LabsOpenView Labs is the strategic and operational consulting arm of OpenView Venture Partners, a global Venture Capital firm that invests in expansion-stage technology companies.

More InformationVisit the OpenView Labs website for more ideas and inspiration for senior managers of technology companies.

To learn more about OpenView Labs or OpenView Venture Partners, contact us directly at (617) 478-7500 or [email protected].

You are welcome to republish excerpts from this eBook, as long as you link back to OpenView for attribution. Please also share this eBook in its entirety with anyone you think would be interested.

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