You think it's hard getting to the top? Try staying there.
The accelerated churn rate of the S&P 500 indicates that at least half of today’s top U.S. companies will get replaced by new ones over the next decade. That is a mind-boggling market value of $16.8 trillion up for grabs. And the craziest part is who replaces the old market leaders: It’s often companies that, just a few years before, were considered scrappy little startups.
So how does a new company rise to slay a giant? It doesn’t happen by accident. It’s as if the two are playing a game of chess—except the incumbent has been playing the game for years, and the startup is entering halfway through. The startup is at a severe disadvantage. Normal strategies won’t work. It must play by a completely different set of rules.
In my many years of working with successful disruptors, as well as researching the same at Cambridge University’s Judge Business School, I’ve seen a lot of companies lose this game—as well as a lucky few win it. Here are the four moves that I’ve seen have the highest chance of success against Goliaths.
1 Change the basis of competition.
For startups, the rules of the game are rigged. The incumbent has set the terms, and its scale, experience, and technology are nearly impossible to beat.
Consider every brick-and-mortar retailer that went up against Walmart in the 2000s. Walmart’s basis of competition was its ability to sell consumer goods at the lowest possible prices, and it accomplished that profitably because of its remarkable hub-and-spoke distribution model and its large, centralized procurement budgets. Other retailers could not catch up…until Amazon.
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