Orange Envelopes | Small Business Optimized Marketing > By Design

Product innovation is expensive. Too expensive to be mishandled by a careless handoff to your marketing and sales departments at precisely the moment when you could convert interest in your shiny new product into coveted cash generating sales.

I’m amazed – no, actually appalled – at the number of companies who spend tens of thousands of dollars developing a new product, take it to a trade show, gain press recognition and even Best of Show awards and then do absolutely nothing to capitalize on the interest generated or monetize their efforts with a thoughtful sales strategy.

Two recent examples stand out for me:

At last month’s Consumer Electronics Show in Las Vegas, Griffin introduced an iPad mount that screws onto the end of a microphone stand. It’s the perfect solution for me since I like to use my iPad as a teleprompter for online videos that I post to assorted blogs, and the mic stand holder would let me position the iPad directly above the tripod holding my camera.

Apparently I’m not the only one who sees the appeal of  this innovation, since Griffin generated a lot of media mentions including major technology blogs like Gizmodo and tuaw.

Glad You Like Us. Now Go Away.
But heading over to the Griffin website, I discovered that despite its announcement, the product wasn’t available for sale but was Coming Soon. What does that mean? It means that if I want the mic stand mount I have to keep checking back every few days until it actually becomes available. Griffin took no steps to capture my identity to inform me when it becomes available, didn’t ask me for an email address to keep in touch, didn’t  take a pre-order (which I would have paid for) and, in general, did absolutely nothing to connect with me and potentially sell me on this or other Griffin iPad related products.

They wasted an ideal opportunity to convert innovation into sales.

Based on the size of their booth at CES, I’d bet that Griffin spent more than $100,000 to attend the CES and showcase their products, not including the cost of developing the products themselves, yet their  efforts resulted in annoyance and alienation because they failed to implement any method to satisfy customer interest or plan to get their new products out of their development lab and into our hands.

It Gets Worse
As badly as Griffin handled the handoff from innovation to sales, they’re all-stars compared to MacWorld Best of Show Winner Scosche.

At this month’s Macworld Expo, the device manufacturer introduced a terrific innovation that iPod and iPhone users have been clamoring for: a Bluetooth connected pulse monitoring strap that will track your pulse and calories burned throughout your workout.

The product was so innovative that Macworld name the myTrek one of the Best in Show winners and published a lengthy article detailing the product’s features.

Result: Nothing
Who could ask for more? Well, I could. Because I actually tried to visit their website to buy the product. I’ve been waiting months for someone to introduce this precise product to track my workouts so I clicked over to their website and found…nothing.

That’s right. Nothing. Not a product page, not a press release, not a blog post, not a single mention. Confused, I turned to their Search utility and entered myTrek. Again, nothing.

Innovation FAIL
So Scosche invested thousands to develop a highly sought after product integrated with the single most popular mobile phone in the world, they introduced it at the biggest Apple show in the country and gained Best in Show honors yet they failed not only to promote the product on their corporate home page, but failed to create a web page for the product at all.

And the only thing truly surprising is that they’re not the only innovation-focused company that treats its products with such disregard.

Corporate innovation is intended to produce results. Results that can be measured in dollars collected. There’s simply no excuse for any company to invest in innovation projects yet ignore the revenue  producing potential of those projects by failing to integrate sales and marketing functions from the  start so that the company can maximize the return on their investment and realize the full potential of their innovation.

When most people think of innovation and innovative companies, they mistakenly envision creative geniuses holed up in research labs pursuing that Eureka moment when they miraculously discover The Idea.

You know The Idea. The one truly transformative, groundbreaking and revolutionary business concept that will change not just a company, but an entire industry. That’s The Idea.

The problem is, The Idea really isn’t about innovation at all. In fact, ideas are actually pretty easy to come by. Spend some time at an entrepreneurs conference and you’ll hear at least a dozen ideas that you’re convinced can be the next Google, or Groupon, or whatever tomorrow’s raging hot company is.

Talk to any company that set up an idea forum for their employees to contribute to. They’ll they’ll you that they have so many great ideas that it’s damaging their capacity for innovation. With so many ideas – including those that are genuinely brilliant – to sift through, analyze, prioritize and assess, actual innovation bogs down.

Ideas are a Commodity
Ideas aren’t the problem. Execution is.

Those companies that you envision as innovation leaders aren’t brilliant because of The Idea, they’re brilliant because they had the nerve, the talent and the resilience to actually develop, refine and launch The Idea. They took The Idea from boardroom to showroom.

The Life and Death of an Idea
Several years ago, I witnessed both the inception of The Idea and its ultimate demise while running a company in the packaging industry.

As the manufacturer of label applicators (the machines that apply labels to products), I worked with companies that had special material handling issues that we were uniquely positioned to solve. While working with a major memory card manufacturer in San Diego, we were confronted with a production bottleneck that centered around label application.

The manufacturer was set up for short runs of memory cards with different memory capacities and needed to run 500 16GB cards, then run 1000 8GB cards, then run 300 32GB cards. The problem was that automatic labeling systems took over 20 minutes to changeover from one roll of labels to the next and was killing their productivity, forcing them to resort to hand applying labels to each tiny card.

Ask Why Not?
While brainstorming with my engineers, we asked a question that had never been asked before: what if we changed out the entire labeling head instead of the roll of labels? What if the labeling head itself were made as an interchangeable component instead of a fixed component?

This was The Idea. There was nothing like it in the industry and we had the engineering ability to rapidly prototype, gain proof of concept and ultimately execute The Idea.

And it worked. Product changeover time was reduced from 20 minutes to as little as 40 seconds. The client was so eager to get several machines that they paid the initial development costs in exchange for exclusive rights to the system for one year.

Death Was Swift
Then I sold the company and witnessed how The Idea can meet a swift and brutal demise, despite its promise and potential.

As novel as The Idea was, its brilliance would lay in its execution. The interchangeable labeling heads weren’t enough to guarantee success. The Idea’s success lay in its ability to handle and present the memory cards to the labeling head, to apply the labels with 1/32″ precision and to collect the labeled cards at the end of the process. Nothing that devoted engineers couldn’t resolve.

However, as most companies find out, conceiving The Idea is the sexy, fun and exciting part, but execution determines The Idea’s ultimate success and requires months of boring and tedious work to perfect in the real world. Ultimately, The Idea died when the new business owners declared that they were in the production business, not the innovation business and abandoned The Idea’s refinement process.

And now The Idea awaits another company to discover its potential and put it into production. Or maybe we weren’t as innovative as we thought, and we were just creative thinkers with an idea, not The Idea.

Update:

I found this raw footage of the labeling system on an archived hard disk. Note that even with my clumsiness in loading the labeling head, I still get it locked on in about 20 seconds.

AT&T Wireless suffocates innovation

I was reminded directly and personally this past week of the single most suffocating business phrase that stifles innovation and destroys your customer experience:

“It’s our policy.”

The culprit was AT&T Wireless, until this week the sole provider of iPhone wireless service. The issue: I wanted my college attending son to become responsible for his own phone bill and remove his line from my family wireless plan.

From a customer perspective, this should be a relatively quick and easy transaction. We were both in the store, so permission wasn’t an issue, there was no new equipment involved and we were keeping the same phone number. All we wanted was to change the billing name and address from mine to his.

AT&T’s response: that will be $500.

That’s right. AT&T wanted a $500 deposit, to be held for one year, to change the billing responsibility to my 19 year old son.

Putting that into perspective, his monthly plan was $39.95, so AT&T wanted him to essentially prepay an entire year for the privilege of remaining with AT&T.

Why? It’s their policy.

Since most 19 year olds have not yet established credit, AT&T is concerned that they will sign up for an account, get a new phone then disappear without paying their bill. AT&T would then be out the cost of a new phone (very expensive if it’s an iPhone) and whatever minutes they racked up. I understand their dilemma.

What I don’t understand is their adherence to a strict policy despite circumstances that clearly demonstrate its ridiculousness.

These include:

1. they were dealing with a long-term client whose total billings exceed $15,000. I’m pretty certain that I fit the profile of their ideal client: many devices, heavy data usage, big monthly bill.
2. there was no equipment involved. My son owns his phone, so there was no risk of AT&T losing hundreds of dollars in equipment.
3. the amount they were requesting exceeded his anticipated annual bill.

But, “it’s our policy” prevented them from considering reasonable options that would have protected their interests while addressing a highly valued customer’s concerns.

Had they been innovative and truly concerned with their client’s experience they could have:

1. enabled me to bear co-responsibility for my son’s bill (I volunteered, and they refused)
2. reduced the deposit amount to a reasonable fee of $100-150 (I requested this and they refused)
3. put a cap on the monthly usage so that his bill could never exceed $100 without payment or his service would be shut off (they certainly have this capacity, but refused)

OR… they could have examined my lengthy history with their company, taken into consideration my desire to establish my son as a direct client with their service, considered their near absence of risk and done the right thing: transfer the number, welcome my son as a new valued client and congratulate me for having a responsible son striking out on his own and taking care of his personal obligations. How many businesses wouldn’t welcome a client’s effort to introduce their son or daughter as a potential long-term client? AT&T could have elevated an ordinary transaction into a memorable rite of passage.

Instead, their adherence to “policy” destroyed my limited goodwill towards AT&T, will compel my son to switch carriers in a few months when his contract expires and will propel me to examine Verizon as an alternate service provider when my contract expires later this year.

The cost of their insistence that nothing can shake them from “our policy”? In addition to my personal enmity and determination to inform as many people as possible to their miserly and miserable customer service, when I shift my service to another provider, they will lose thousands of dollars a year on voice and data from six different devices.

Because it’s my policy to cease doing business with inflexible, short-sighted and uncaring companies.

Oregon football tonight combines two of my favorite things: the national football championship game and Nike innovation. And, believe me, there is no way Oregon would be playing in the BCS championship game without Nike’s passionate involvement in the Oregon program.

For most of my life, college football programs attracted and retained talent largely on the basis of their reputation. The college powerhouses remained largely unchanged from year to year. For those of us who grew up humming Boomer Sooner or admiring the steadfast simplicity of Alabama’s field presence, all was good. Year after year, these successful programs could count on attracting fresh recruits and replacement talent due solely to their prominent reputations.

So, what’s a poor doormat program like Oregon to do when facing in conference rivals like USC, UCLA and Stanford? Without a Rose Bowl appearance since the Eisenhower administration, and a lengthy record of on-field futility, the Oregon Ducks decided to outimagine their gridiron opponents. Not on the field, but in the recruiting trenches.

Oregon embarked on an innovative program to become the most recognizable, technologically advanced and, quite simply, the coolest collegiate football program in the country.

They decided that all those historic, legacy football programs could keep their history. Penn State generic uniforms? Snooze. USC’s cardinal and gold? Keep ‘em. Michigan’s maize and blue? Yawn.

Oregon fields a different uniform every single week. They never wear the same combination in the same football season (and there’s even a website that tracks every week’s uniform combinations). They have entire tractor trailers devoted to inventory of every color component of every uniform. 15 years ago, Oregon was green and yellow. This year they’re any combination of carbon fiber, black, neon green, white, silver, dark green, yellow and grey.

They receive hypercool products directly from Nike’s Innovation Lab, before any competitor, collegiate or professional, is even aware they exist. An entirely new “uniform system” that incorporates the latest lightweight, moisture wicking fabrics with Flywire strands to increase their strength while reducing their weight, integrated lightweight Deflex padding enabling the players to run faster without sacrificing any protection, receiver gloves that display the Oregon “O” when the hands are positioned to catch the ball, and an all new football cleat that incorporates the Flywire construction and introduces a new cleat pattern to promote speed.

You can argue that the Nike gadgetry is all marketing puffery and has no impact on how the players actually perform, but it doesn’t matter. What matters is that the 18 year old Southern Californian running back who’s picking his preferred football program thinks all the technology, the choices, the national exposure, the affiliation with Nike HQ and their Innovation Lab is the ultimate in cool. So cool that he’s willing to trek to Oregon to go to school instead of UCLA.

Great football programs are built on talent, and Nike’s founder and Oregon alum Phil Knight created the ultimate player draw: unattainable Nike swag. Every week. Showcased on national tv.

And, by the way, with just hours to go before tonight’s kickoff, we still don’t know for sure what Oregon will wear on the field. White pants, grey or black? The Beatles never generated this much pre-show anticipation.

I’m rooting for Nike tonight. And hoping Oregon pulls it out, too.

Examining Sony’s abject failure to make any impact in the personal MP3 player market, noted author and blogger David Akers concluded that Sony’s failure was largely due to unfortunate bad timing, not Sony’s strategic decisions or lack of innovative thinking.

Having examined Sony’s repeated failures to exploit their overwhelming market positions and brand magic to gain traction and market share in personal MP3 players, notebook computers, e-books, digital cameras and flat screen tvs, I believe that Sony’s failures can be attributed almost exclusively to their inability to incorporate design thinking into their product conception, development and execution and a singular reliance upon hardware appearance and technical distinction to define themselves with consumers.

That previous sentence was personally painful to write. I’ve been a Sony devotee since the early 1980′s. I’ve owned virtually every type of media device that they’ve ever created, starting with the cassette playing Walkman, the CD playing Walkman, the mini-Disc playing and recording Walkman, digital cameras, digital video cameras, ebooks and VAIO notebooks. I was a Sony fanboy before the term was even coined.

And I was perpetually disappointed.

Not by the quality of their products, which was uniformly excellent, but by their perpetual embrace of proprietary standards and refusal to open their technology ecosystem to their industrial compatriots. They did not play well with others.

Sony cameras worked only with the Sony MemoryStick, a media format adopted by exactly zero electronics manufacturers. So, while other PC users could slip their SD memory cards directly into a slot in the side of their PC, Sony users had to perform an intermediary step and find a USB dongle with a Memory Stick slot. But, since the quality of the pictures was great, I put up with the inconvenience.

Engaging with the Sony video cam was significantly worse. The camera would only connect to a PC with a FireWire port, not the universally available USB port. But, since I had a FireWire enabled VAIO, I was OK. Until I imported the video and discovered that Sony would only import the video in a proprietary Sony file format that could not be edited in any third party movie editing software program.

Their VAIO notebook introduced similar user frustrations. Although my VAIO was a gorgeously designed unit encased in a distinctive metallic purple, Sony simply refused to play well with third party accessories and ultimately had to be retired in favor of an HP tablet computer that promised to behave better.

And Sony’s recent foray into the ebook market did nothing to reclaim their previously held mantle as developers of the best designed electronics in the world. Although their ebook was visually distinctive, solidly manufactured and a pleasure to read, it enraged its users with its needlessly complex steps necessary to load content onto the ebook. Relying, as always, on a proprietary PC -based software platform to display and deliver ebook content, Sony infuriated Mac users who had no ability to load content on the Sony ebook. And even when I did load the proprietary Sony software on a Windows partition on my Mac, the software was so poorly designed, buggy and difficult to use that the entire experience of using their ebook was irreparably diminished.

It’s my decades of experience with Sony’s failure to deliver a single consumer focused, delightfully engaging and thoughtfully designed user experience that convinces me that Mr. Akers’ conclusion is dead wrong and will only provide another excuse for Sony to hide behind.

Sony’s problems with the MP3 players wasn’t that they mistimed the market. It’s that they never conceived the market that Apple imagined and created. It never occurred to them to create an absolutely delightful device AND a surrounding user environment that included finding music, listening to music, buying music, sharing music and syncing music. Apple didn’t win the MP3 player war because they timed the market better. They invented an entirely new immersive mobile music experience that just happened to rely on the iPod as the handheld component necessary to provide mobile music.

For Apple, it wasn’t about the hardware. For Sony, it’s always about nothing but the hardware.

For proof, simply look at the litany of missed opportunities that should have been directly in Sony’s sweet spot: game players as mobile phones (Sony missed it entirely, while the Apple iPhone is now the world’s largest selling portable gaming platform, eclipsing the multi-year headstart of Sony’s PSP), notebook computers (Sony’s insistence on incorporating proprietary components relegated them to single digit market share), MP3 players ( a market that Sony owned and surrendered entirely), digital cameras (again, an insistence on proprietary components limited their appeal, and they’re now an also ran), ebooks (they had the early lead with a gorgeous product that made the Kindle look like a cheap plastic toy, but again Sony’s insistence on proprietary software and file formats allowed Amazon’s Kindle to grab a dominant position they will not relinquish) digital music sales (Sony has an enormous catalog, but their feeble attempts to sell digitally were hampered by proprietary software and file formats, fanatical concern for piracy and a miserable user experience in finding, buying and syncing music.)

Every failure in every major segment can be attributed to the same institutional arrogance, intransigence and strategic ineptitude that has defined Sony for over 30 years. They believe they are wonderful technology designers because they produce visually distinctive products. But physical design simply isn’t sufficient to create an entirely new market and deliver an exceptional user experience.

Sony didn’t fail to extend their domination from portable cassette and CD players to MP3 players because of timing. They failed because they lacked vision. They perceived the market for mobile music as just another pretty device. Apple proved that the market actually wanted a thoughtful and delightful music experience. The difference between the two is software, not hardware. And Sony has never demonstrated nor developed the capacity to envision and create a software experience that delivered more than frustration, confusion and exasperation.

In the technology arena, there are several competitors who strike fear into the hearts of their competitors: Apple, Microsoft, and Google so dominate their technology sectors, that entrepreneurs and investors will intentionally avoid any attempt at direct competition with these behemoths.

But, as evidenced by last week’s Fortune list of the 20 dumbest business moments of 2010, being big doesn’t guarantee market success.

While Apple had a banner year and generated an entire new computing segment with its iPad tablet, Google had three major failures with their Buzz service, Nexus One mobile phone and GoogleTV, and Microsoft killed their Kin mobile phones just over a month after their widely hailed, billion dollar launch.

What each of these product disasters had in common wasn’t a necessarily a lack of innovation, but an absence of design appreciation and the essential need to delight and amaze their users with a products simplicity and utility.

Size Doesn’t Guarantee Success
In fact, I believe that many large companies believe that they can compel the success of their new ideas through the application of brute marketing force. After all, who is going to tell Microsoft that their social media friendly phones will fail if Microsoft is willing to commit $1 billion to their launch? Did I mention that they’re social media friendly? How could they fail in a Facebook world?

Easy.

Just like Google’s Buzz and GoogleTV, Microsoft’s Kin phones delivered miserable user experiences. They were too complex. Too difficult to use. They violated users’ assumptions about how things should work without offering a better alternative, just a different alternative.

Ideas Are Easy
What these failures demonstrate is that coming up with a creative idea for a product is actually the easy part. The hard part is selecting the right idea and implementing it exquisitely.

As a design company whose culture is rooted in delivering exceptional user experiences, Apple hit another home run not just with its conception of a touch-controlled tablet computer, but with its execution of a thoroughly delightful and intuitively simple device that resonated with virtually every user who picked it up.

Apple relied not only on its genius for creative concepts, but on its organization, its internal processes and its metrics in determining what products to pursue and when they’re ready for release.

It’s not their size (which recently surpassed a $300 billion market cap) that fuels their success, but their innovative business model.

Culture Trumps Strategy
Microsoft and Google may rival Apple in size, but what they lack is the design culture that infuses Apple. Microsoft may try to copy specific Apple successes (see their attempt to replicate Apple retail outlets) but without the corporate DNA that fuels innovation and insists on delivering memorable user experiences, their duplicative efforts are nearly guaranteed to disappoint.

Google has fallen into the same trap, believing that their dominant success in the search engine market will transfer just as easily into any technology venture they elect to pursue. But, despite being named one of the most innovative companies in the country by both Fast Company and Business Week, their inclusion seems reliant upon their intentions to enter new markets, not their ability to actually succeed in any new venture. At some point, the magic of their search engine prowess will fade and their perception as an innovative company will become dependent upon delivering memorable, exciting and successful new products and services.

Will this be the year?

Innovation fails far more often than it succeeds.  Wonderfully imaginative ideas that promise transformative effects for consumers and companies are more frequently abandoned than sustained, even in companies that have successfully fostered an innovative corporate culture.

Harvard Business Review contributor John Kotter examined failed change efforts and confirmed that nearly 70% of projects that required substantial change management fail to achieve their intended results. The implications of these failures are enormous. Wasted time. Wasted effort. Wasted resources. And wasted opportunities that are frequently attempted again and again. At best, these failures distract management and staff from pursuing other, more productive, efforts and at worst they can propel the company into crisis.

The failures to adopt and implement new innovations is rarely caused by a lack of resources or a lack of will by senior management. Instead, these failures can most frequently be attributed to a lack of leadership and engagement by employees at all levels.

There are no shortcuts to implementing change within your organization, but there are discrete steps that can help you cement the change and transform your organization:

1. Communicate a sense of urgency – It’s up to management to generate the energy necessary to overcome the unyielding weight of corporate inertia. Businesses are full of individuals who have worked for years to perfect their business processes, constantly refining them to make them more efficient and productive. The last thing they’re going to embrace independently is innovation that may disrupt or even threaten their current job.

It’s management’s responsibility to let their staff know of a specific vulnerability or opportunity that, if not confronted, will threaten the organization. Without motivation, employees won’t wander out of their comfort zones and the effort will stall before it gains any momentum. When you have at least 3/4 of your staff convinced that business as usual isn’t good enough, you’re ready to…

2. Create the vision. Impending threats aren’t sufficient to maintain a sense of urgency. Employees need to have a clear where the organization is headed and how they can contribute. The more detailed the vision, the more powerfully it can guide and align efforts throughout the organization.

3. Communicate the vision. Relentlessly. You can never communicate the vision frequently enough. It shouldn’t be limited exclusively to manager’s meetings or mentioned in passing in your monthly corporate newsletter. The driving vision needs to take center stage in your organization and be repeated and referred to daily. Managers need to demonstrate their commitment to and embrace of the vision in their actions, showing to all their unfailing efforts to achieve the vision.

4. Empower passionate teams to act on the vision. Enthusiastic and committed employees should be recruited and empowered to pursue projects that promote the company’s new vision. Enthusiasm is contagious, so remove obstacles from their way and let the rest of your staff see how effective and appreciated their nascent efforts are.

5. Target and pursue short term wins. Nothing succeeds like success, so identify early those short term goals that can be reached effectively and promoted internally as proof that the vision is attainable. Celebrate the early wins to motivate others and maintain the organization’s sense of urgency to complete the task.

Taking these steps will contribute to the potential for institutional embrace of innovation and change, but the job isn’t done until the change becomes the new way that things are done. When your employees see for themselves how the changes have enabled the organization to become stronger and more capable, they’ll start to live the changes instead of fighting them.

The National Science Foundation released a disturbing study recently that revealed that only 9% of American companies engaged in any product or process innovation during the three-year study period (2006-08).

Frankly, I’m not surprised with the near absence of corporate innovation because I see so few companies that encourage a culture of innovation.

Too many CEOs focus exclusively on improving financial metrics – increasing earnings and keeping a tight control over costs. Few understand their corporate value can be linked directly to their embrace of innovation and their capacity to constantly renew themselves.

That’s exactly what Apple has been doing, and its devotion to designing new customer experiences centered around technology has contributed to a 1,300 percent rise in its stock price in the past 10 years and a market capitalization that exceeds that of Microsoft.

Apple keeps innovating because it has intentionally created a culture of innovation. The company’s commitment to design and innovation is built into its DNA and enables it to foster, create, and execute radical ideas and remain in a perpetual state of reinvention.

Commitment to design and innovation is not the purview exclusively of large companies. Small companies actually have the capacity to move faster and more nimbly than their larger competitors, and it’s significantly easier to adopt cultural imperatives in a small company than a large one.

So, what are the essential cultural elements that your company needs to adopt to encourage innovation?

Purpose – Business leaders who can articulate a corporate vision with the right language can inspire their employees to perform heroic feats. Companies such as Apple, Nike, Amazon, Herman Miller, and 3M are all design and innovation leaders that inspire their employees with clear corporate visions of who they are, why they’re important, and where they’re headed.

They don’t inspire with challenges of 7% top line growth or the extension of an existing product line. Their vision is much broader: They want to change the world in their own unique ways. And they believe they are the agents for that change.

Challenge – You can’t gain a competitive advantage from doing business as usual in the same way that virtually every one of your competitors operates. Innovators and design thinkers create new solutions to problems that other companies are unwilling or unable to address. Take a look at every touch point in your organization and ask yourself if each one is delightful and memorable for your customers.

Why should calls to help centers be frustrating? Why don’t you have instructional videos posted for every one of your products? How can your packaging be reduced and improved? You’re surrounded by challenges if you’re brave enough to take them on. And when you succeed, your corporate differences will be clearly defined.

Encouragement – Leaders in innovative companies encourage their employees to try new things and to test new ideas despite the certainty that taking on challenging projects will inevitably lead to some failures.

Apple had monumental flops with the Lisa and the Newton. Nike had divisive fair trade issues to overcome. Even legendary 3M went through a lean period of innovation when its focus drifted in the early 2000s.

But like all successful design companies, those who emerge with the greatest successes are the ones that encourage, embrace, and celebrate failure. They just ensure that they failed fast and learn lessons from each disappointment. Failure expands knowledge, builds courage, reveals your strengths and weaknesses, and ultimately makes success a little sweeter.

Originally posted at Spin Sucks.

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

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

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

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

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

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

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

How can the entrepreneurial Davids succeed against their Goliath adversaries?

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

What tips do you have for defeating your large competitors?

Originally posted at Spin Sucks.