Stephen Denny on Squashing Giants in the Business World
Although Stephen Denny helped shape big brands like Sony, OnStar, and Iomega, the marketing guru also champions small businesses. In his first book, Killing Giants: 10 Strategies to Topple the Goliath in Your Industry, he tackles million-dollar questions, such as: How do you compete against a giant brand (and a company with deep pockets) that can afford unlimited advertising? How do you get consumers to try your product when there are shelves upon shelves of alternatives?
The Intuit Small Business Blog recently caught up with Denny at his home near San Francisco to pick his brain about how small-business owners and entrepreneurs can seize opportunities — even when money and other resources are limited.
ISSB: What inspired you to write Killing Giants?
Denny: An email, of all things. A former colleague of mine made the mistake of telling me she was “stuck between two giants” in her new job. Being a former boss, I felt compelled to give her some input, which before I knew it ran to more than 500 words. It would have been rude to hit “send,” so instead of crashing her BlackBerry, it simply germinated into what became Killing Giants.
We all come from cultures where the “hero myth” is alive and well, but the David versus Goliath story resonated with me personally, because I’ve found myself in that role a few times in my career. So little has been written for the businessperson in the trenches with real competitors and not enough ammo. Instead, we see a lot on reinventing/reimagining your brand or company or industry – which, to be honest, is great material for brainstorming, but often not in the cards for the person who has three fires raging on Monday morning and a massive competitor threatening to put them out of business. These “heroes” need inspiration and thinking tools that can be quickly tried on, adapted, or discarded as they see fit.
“Underdog” is often a dirty word in business. But you believe that it’s a cushy spot to be in, with lots of potential. Why?
Fred Smith (founder of Federal Express) once told us in a crowded auditorium at Wharton that FedEx couldn’t have been born had UPS not existed. “Underdog” isn’t a dirty word; it’s a rare opportunity to use the market leader as a springboard and a foil. What many small-business people don’t fully understand is that giants have different problems than they do. They have different reward structures, attention spans, and ideas of what constitutes competition of their own. When the market’s frame of reference is clearly anchored on the giant’s offerings, you have the opportunity to contrast yourself without much fear of reprisal. You can polarize your market on purpose, essentially forcing your customer to make a meaningful decision. Think of how Jim Koch of the Boston Beer Company accomplished this. He gave me a great interview and a series of big insights in Killing Giants.
Think of how hard that would be if all your competitors were your size. It would be a dog fight. Everyone would be just as fast, just as aggressive, and likely just as competitive. Sometimes, it’s just easier to face a giant.
Walk us through what you call the “thin ice” argument.
Dr. Conrad C. Crane of the U.S. Army War College told me, “There are two kinds of warfare: asymmetrical and stupid.” These are words of wisdom for any small business. You never want to fight the giant’s fight. You always want to seize the strategic high ground of your own choosing. In our terms, we want to control the narrative — we want to lure the giant out over the “thin ice” of our own creation, where they fear to tread.
A “thin ice” argument frames the argument in a way your giant can’t win. Look at how Baidu positioned not only itself, but also its primary competitor, Google, in the local Chinese market. Their “We speak Chinese better than those American brands do” argument was debatable on its technical merits. But when the majority of new internet users in the booming secondary and tertiary markets away from the coast couldn’t even spell “Google,” it was an argument the giant couldn’t successfully counter. Baidu now accounts for more than 70 percent of all search traffic in China.
Defining where you win — and where your giant can’t — is a critical step in controlling the narrative. There are other steps important to take first, but this is an important one.
You talk about “the last three feet” as the place where you want to win. Is there a recent example in the business world where this was successfully applied?
Examples of brands successfully “winning in the last three feet” are all around us, and the methods they use continually evolve with technology and ingenuity. Look at Amazon’s price-checker app, allowing shoppers who are physically in their competitors’ stores to quickly check the price on Amazon and buy with one click. That’s the ultimate “snatching victory from the jaws of defeat” app. The ability to activate your fan base with the click of a button, no matter where they are, works as well in politics as it does in business, just so long as you’ve spent the time and energy wisely in cultivating your community.
But beyond the flashy technological advances that give us the new tools to win in the last three feet, there are still ample opportunities for “low tech/no tech” solutions, too. Face-to-face evangelism still works, often better than its more modern alternatives.
In what ways is the current economy set up for the growth — or the founding — of small businesses?
The current economic mood is sending us complex signals. We’re distrusting of our institutions, trading off purchases in one typical category against another, and giving more attention to “smart consumerism” than in years past. We’ll delay buying a new car almost indefinitely, but we won’t hesitate to buy the iPad we clearly don’t need. We’re looking to make smart decisions that we feel good about, ones that fit our psychological needs as well as our wallets. Brands that fit this profile — like Zipcar, a company I discuss at length in Killing Giants — are gaining ground.
On a more granular level, launching a company in a time of great economic (and social) upheaval means razor-sharp messaging, the careful stewardship of budgets and smarts over brawn — all good proving grounds for the future success of your venture. Method, the San Francisco-based soap and detergent brand, launched during a recession, as did many other iconic brands we look to today.
The real key isn’t so much under what economic circumstances you launch your company, but in how you view your battlefield and what you see that your competitors don’t. It’s here that new companies either win or lose.
Small businesses are often plagued with few resources and a limited budget. What are some unconventional ways to network that might help broaden their reach and scope?
Coming out of the Super Bowl season, it’s important to note that not everyone can be a Go Daddy. Fortunately, broadening reach and scope isn’t just a case of spending that extra $5 million in the petty-cash drawer. Here are three examples of extending your reach that involve smarts more than overwhelming expenses:
Searle Canada decided that spending millions on an integrated marketing assault on the medical community would take too much time and money; instead, they tapped into the community’s “social glue” with a grant, offering a cash reward to anyone who could identify early warning signs of ulceration caused by prescribing the old drugs Searle sought to leapfrog. Changing the interactions in the market changed the rules, turning everyone into an evangelist.
Jet Blue believes that if you try them, you’ll become not only a fan, but a walking spokesperson for the brand — so they price their empty seats accordingly. When the variable cost of adding one more person to a flight that isn’t going to be full anyway is minor, there’s nothing wrong with giving it away, just so long as the experience is word-of-mouth-worthy. Theirs is, so the strategy is brilliant.
Oslo University was getting seriously out-spent in its local market, so it decided to leverage its giant’s spending, keying its laser-focused pay-per-click campaign only on its larger competitor’s curriculum name. If you wanted to research their competitor, you found them — turning a slam-dunk into a jump ball. Enrollment increased 500 percent, all with a budget of less than $10,000.
There are a good number of others — look at South African cosmetics firm Black Like Me for more inspiration.