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David & Goliath: Relationships Keep On Changing
Harsh Pamnani For many years, we have heard about relationship of rivalry between David & Goliath. David was a little shepherd kid, and Goliath was a strong and giant warrior. Though, David didn't have experience using weapons and battles with warriors, he had experience of defending his flock against animals such as lions and bears. He picked up a few stones from ground, put them in his sling, rolled it around and let it fly to hit the giant Goliath between the eyes. With this unexpected attack, Goliath fell on the ground and David killed him with sword.
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Because of this memorable and inspiring win of little David over giant Goliath, people use David & Goliath analogy whenever a small player beats the big one. But both David and Goliath had different skills, strengths, and achievements. David was fast, creative and risk taker. He had measurement of number of stones required to be put in sling and speed at which he needs to swing and throw the sling to hit at the available vulnerable point of Goliath. On the other hand, Goliath was very strong and tall. He had knowledge & weapons to fight any strong soldier.
From business perspective, let's consider David as a small startup with lack of resources & Goliath as a market leader with ability to manage large scale businesses. Now, let's have a look at a few important points:
1. When market leader i.e. Goliath would have started the business, it would have been a startup i.e. a small player, David, and would have applied innovative ways to gain market share.
2. There are stories where startups have won over market leaders, but there are also stories of market leaders, who have sustained their leadership position.
3. During various stages of an organization's growth, an entrepreneur acts as both David and Goliath. Sometimes, he wins battles, and sometimes he loses.
By considering the above mentioned points and looking at a few growth stories over centuries and decades, we can think about a few new relationships between David & Goliath:
1. David discovered Goliath: The way entrepreneurs raise funds for their startups from venture capitalists, Christopher Columbus raised financial support for his exploration from king & queen of Spain. He was a David, who had courage to explore the unknown and ability to convince others to support him. During his exploration, he discovered America.
In America, many entrepreneurs thought like David, and started various organizations, which are now among the world's largest (Goliaths) in their respective areas. The USA has one of the world's most influential financial markets - Wall Street, world's major stock exchanges - NYSE & NASDAQ, world's leading hub for high-tech innovations - Silicon Valley, many prestigious educational institutions such as Harvard & Stanford, many large companies such as Walmart, GE, Coca Cola etc., world's largest entertainment theme park - Disney Theme Park, and many other renowned institutions.
The country that was discovered by a David - Christopher Columbus, has become a Goliath - one of the largest economies in the world.
2. David has become Goliath, but enters like David in new industries: Apple is one the largest & most valuable technology companies in the world. If we look from perspective of Apple's market leadership, technology dominance, brand value, and resources, it is a Goliath. But like David, it has entered into many industries and has competed with established players - Goliaths of respective industries.
There have been many instances, in which Apple and a few other innovative companies acted like Davids and created new markets. Though in these markets, a few of these companies have become Goliaths in terms of market share, but Apple continuously innovates like David and gives them strong competition in terms of profit share. Ex: Computer Operating System - Microsoft Windows vs. Apple Mac OS, Mobile Operating System - Google's Android vs. Apple's iOS, and Tablets - Amazon's Kindle & Samsung's Galaxy vs. Apple iPad etc.
3. Davids became Goliaths, but act like Davids in new markets: Amazon is one of the largest online retailers in the world and Uber is one of the largest taxi companies in the world. At global level, these organizations are Goliaths and have among the best technologies, processes & resources. But when they enter into different markets (countries/cities) they act like David and win market share from their competitors (Goliaths in respective markets). Let's take example of Indian market. When these companies entered India, their well-funded competitors were already present. But with time, they have been able to win substantial market share and have been giving tough competition to Indian giants in respective categories.
4. David became Goliath and then created new Davids: Even before Google existed, there were many Search Engines in the market such as Yahoo, AltaVista, Excite, Lycos, Inktomi, Ask Jeeves, etc. Google entered in Search Engine industry as a David with its unique Page Rank algorithm technology, achieved rapid growth and became Goliath.
After achieving dominant position in internet businesses such as Search, Ads, and Videos etc. Google entered into many other businesses such as self-driving cars, biotech, smart home products, Venture Capital etc. Recently, it restructured itself into Alphabet and has separated established businesses such as Search, Ads, YouTube, and Android etc. in Google (Goliath) from emerging businesses (Davids).
5. David became Goliath in its specialized category, but remains David in its industry: In 2004, when Goli Vada Pav (GVP) started its first store in Kalyan, Mumbai there were many established Vada Pav players (Goliaths) in various areas of Mumbai. GVP faced external challenges such as tremendous competition and internal challenges related to pilferage, standardization and wastage of food.
To overcome these challenges, GVP thought different like David and in 2007, collaborated with Vista Foods, Indian subsidiary of OSI Inc. that manufactures patties for McDonald's (Goliath). Due to this partnership, GVP's standardized vadas are prepared in fully automated plant. In less than a decade, Goli has become the largest Vada Pav chain in India with over 350 stores.
Though Goli has become national Goliath of Vada Pav category, in the fast food industry, it is surrounded by many international & much powerful Goliaths such as Dominos, McDonald's, KFC, etc. But as compared to international Goliaths, opening GVP franchises require low cost & less space. With its innovative marketing strategies, strong technology, and outsourcing based model, GVP is expanding rapidly and has been able to add Vada Pav, fast food native to state of Maharashtra in fast food menu of close to 20 states.
In today's world - market conditions, competition, customers' expectations, and technologies are changing fast; similar ideas and business models emerge rapidly; and thousands of businesses are not able to attract & retain customers. In this hypercompetitive environment, it has become very important for organizations to think & act like both David & Goliath. Like a David (Startup) - figure out new ways to solve customers' problems, overcome competition, gain customers, increase revenue and build partnerships. Like Goliath (Market Leader) - implement systems and processes to execute, track, review and improve day to day repetitive tasks; provide proper services to customers; and manage expansion.
The author, Harsh Pamnani, is former Senior Manager of TiE Mumbai and an Alumnus of XLRI, Jamshedpur
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.