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As a member of an angel investment group, I was disappointed to see innovative new businesses fail to thrive or survive against aggressive related tech giants, particularly in this digital/AI age. I always encouraged them to proactively create a strategy of anticipating this type of competitive threat, but I was never able to provide a blueprint for uncovering a company’s hidden potential.
I recently found a good source of specific guidance and recommendations in a new book, “Smart Rivals: How Innovative Companies Play Games That Tech Giants Can't Win,” by Feng Zhu and Bonnie Yining Cao. These authors are experts on platform strategy, digital transformation, and innovation, tempered by their time at the Harvard Business School and work in new markets.
I will summarize here their top six strategies for building a competitive and sustainable path to growth in this digital age for innovative businesses, despite the best efforts of tech giants to jump into every new opportunity they see uncovered and highlighted by your efforts:
1. Identify your best strength and amplify it. Rather than attempting to defeat tech giants at their own game, your goal must be to leverage your new technology, business model innovation, or an emerging opportunity, to redefine the business landscape. Avoid trying to become a jack of all trades, and master of none. Focus on a niche where you excel.
2. Drive customer centricity based on human touch. Use your intimate and current customer knowledge through human interactions with key segments to counter big data homogenization. Leverage your unique channels and resources and selectively innovate to achieve more customer centricity in the segments that really count for profit and image.
3. Find a platform versus a product opportunity. This may mean giving up some control, as Tesla did when it opened up its battery patents to become an industry standard EV platform. Digitalization has increased connectivity between products or services and their users, allowing new offerings to serve as channels and thus grow the opportunity for all.
4. Grow your own open and dynamic ecosystem. Tech giants want to own it all, while new entrants can be quick to leverage shared resources, boost innovation, and secure a competitive edge through managing a network of customers, suppliers, competitors, and partners. The challenge is to find partners who will honestly complement your strengths.
5. Distinguish tech giant friends from enemies. Smart rivals regularly analyze giants to anticipate tension and take action to arm themselves with patents, trademarks, and brand marketing. Take the necessary time to strategize and safeguard uniqueness and develop innovations to prevent potential enemies from easily replicating your value proposition.
6. Rebound from disruption through fresh growth. Capitalize on existing proficiencies to forge a new expansion trajectory rather than fight every incursion to the death. Create relationships with new partners to create new opportunities, such as adding a cloud business to your software product offering. Use acquisitions to expand your base.
Above all, avoid the pitfall of mimicking the tech giants, assuming all you need is to attract a small piece of their large pie. Focus on the more challenging, but ultimately more effective, objective of designing a unique strategy to amplify your competitive advantage, cultivate an internal mindset of being a smart rival, and ultimately finding a path that tech giants find hard to compete against.
This digital age and the new worldwide market are brimming with opportunities. In my experience, smart young businesses have long been recognized as the nemesis of even the best tech rivals, using these strategies and others. I urge you to start today in fearlessly going after them.
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