Big Ah-ha #1 in The Alpha Factor says, “You don’t have to be the biggest to dominate decisions in your category.” This is even more true right now as big companies are pulling back. As they undermine their future, smaller competitors have a unique opportunity to leapfrog upward.
Throughout the Alpha Factor Project research, we discovered that many product categories are actually dominated by smaller competitors. No, that’s not contradictory. Dominance does not always correlate with dollar volume. Dominance is how much influence a company or product has in controlling 1) buying decisions among customers and 2) business decisions among competitors.
Much of the reason for this dominance driven by smaller companies is the fact that most larger companies have a hard time innovating in any meaningful way. Even though many larger companies have product lines and distribution that are the envy of smaller competitors, their innovation is heavily skewed toward “function” – meaning product features, performance, and quality.
Smaller companies often combine some functional innovation with innovation in the areas of ego-satisfaction: the two critical Alpha Factors of self-satisfaction (how we feel about ourselves when we buy or use a product) and personal significance (how we believe others perceive us when we buy or use that product). Where larger companies typically focus most heavily upon functional innovation, smaller competitors (perhaps out of desperation with their inability to compete on functional innovation alone) often do exactly what the market really wants by innovating with ego-satisfaction.
That’s how Ben & Jerry’s ice cream became the Alpha of the ice cream category in the 1990s. It’s how Harley-Davidson took back the motorcycle industry in the mid-1980s, making their product the most desired product in the world according to some research done in the mid-1990s. It’s how Apple has finally increased its influence in the personal computer category and how it has made its iPod and iPhone the products that people aspire to own.
There is so much focus upon large businesses in the business press that it is no wonder that few marketers recognize the real power of smaller businesses to create dominant influence, which translates into greater price leverage, more competitive control, and greater ability to weather tough times or bad mistakes. There is all too little recognition, however, of the great weaknesses of these large companies, who have become more interested in what is going on inside of their walls than what is needed outside of them.
The real weakness of larger companies – 1) their inability to innovate sustainably or meaningfully and 2) their internal focus upon perfecting process rather than fulfilling customer needs – is what creates the tremendous opportunity available to smaller competitors right now. These weaknesses are only exacerbated and magnified, when times get tough.
For instance, here’s what I have been seeing more and more among larger companies:
- Isolation from the help they desperately need: It has become more and more difficult for an outside supplier to find their way in to help a larger company. Many larger companies actually won’t give employee names or even connect a salesperson with the person whose responsibility it is to buy what they offer. That means that employees in that company who are facion from the largest marketer in any given category. The design aspects of new products from larger companies seem to lack any inspiration. The differentiation being created by these innovations is all but non-existent. Even their functionality is only minimally superior to existing products. It’s as though they are just throwing things out there because they believe they have to without regard to the damage such weak introductions might do to the credibility of the company they have worked so hard to build.
Smaller competitors have typically been the source of innovations that drive new and higher customer expectations (a critical strategy in creating Alpha dominance). Small companies have always been the real lifeblood of American business. In good times, larger competitors often play off of those inspired innovations and intimidate the smaller company into submission.
Since times have gotten a lot tougher, the process just got a lot easier for smaller innovators. While the giants sleep, the real innovators have much more room to play unencumbered. Customers are no less in need of having their functional and ego-satisfaction needs fulfilled. But now the confusing clutter has been reduced to give smaller, more innovative innovators a real chance to drive dramatic growth.
What’s your excuse for holding back?
If you don’t already have your copy of The Alpha Factor, you are missing the secret to creating dramatic, sustainable growth even when the economy is as slow as it is today. You will learn what took 15 years of research and testing with real companies to uncover: the secrets that turn even small companies into dominant Alpha companies who generate more profit, greater sales, and more marketplace influence than they ever expected. Your can get a copy today at www.ballgroup.com or www.thealphafactor.com.
