Remember back to the good old days of the last millennium, when there seemed to be a new company popping up every six minutes or so. The big, traditional “Enterprises” were left in the dust, wondering how they could have been so easily be outflanked.
Then things shifted. Many of these companies—the Goliaths—played it conservatively. They stayed true to their customers and socked away their excess cash for a rainy day.
Well, it's raining now. With few signs that the economy is improving rapidly, these Goliaths are back in vogue, focused intently on expenses and maintaining their customers.
But Goliaths are big for a reason; they need scale and processes to ensure order within. This often slows them from reacting quickly to customer needs or a changing marketplace.
On top of that, the economy has taken a toll on their top line, and many of these large companies have been forced to cut back on R&D, staff and marketing. Some of these big companies are struggling, there's mounting pressure from their shareholders and the competition, and they need new ideas to find “the next big thing.”
Along comes this nimble, responsive newbie—David—who is outmaneuvering Goliath in traditional markets, often with the latest solution or technology.
Many Goliaths try to ignore this dissonance, but many get it. They have formed internal teams to scan the horizon. They want to make sure they pay full attention to protecting their home turf and maintaining as much market share as possible.
Assuming Goliath is somewhat enlightened, let's explore why Goliath needs David's alliance, especially in this economy:
- David can supply that last missing “link” in Goliath's offering.
- David allows Goliath to execute his larger (stealth, yet-to-be disclosed) strategy.
- David's alliance will give Goliath a speed-to-market advantage.
- David gives Goliath access to a team that has a different set of skills.
- David's alliance will cost Goliath less then if he tried to make it himself.
- Finally, David is viewed as a viable competitive threat—and it's always better to keep a close eye on your competition.
But what about David? The first thing for David to consider is… Do you need a Goliath to help get to the next level?
If the answer is yes, then what can Goliath help David with?
- Access to additional resources (in the form of funding, talent, R&D lab time, distribution channels, analysts, etc.)
- A test bed or “sandbox” to run you service or product offering through its paces
- Validation that your service or product is ready for market
- Added “muscle” to get you into the market that much sooner
- An exit strategy (in the form of a joint venture, acquisition or merger)
It is always best to be proactive in approaching your Goliath. It gives you the advantage of time to prepare. In preparing for Goliath, always assume Goliath does not know what you do or how you can help him.
The good news is that usually there is a team within Goliath whose job is to define alliance opportunities. The best entry points are usually the following:
- Internal investment team
- Business development team
- Advanced engineering team (the guys looking 12-36 months out)
- Strategic alliance team
The higher up within the organization, the better. Although CEOs are an obvious target, keep in mind that they probably have appointed someone to be their go-to person on these types of alliances and would prefer to be brought in once the terms have been finalized.
The key is to be persistent, get on their radar, and make sure your deal is getting sign-off from the senior-most person. Get the buy-in early and make sure they stay informed along the way.
- Don't get too focused on the tactics until you clearly define roles and responsibilities and understand the role your service or product will play and the key reason Goliath needs it. (The more valued you are, the better your odds of getting the right attention and resources.)
- The success of the relationship is contingent on the planning and execution. Poor execution will put the alliance in jeopardy.
- Leverage your flexibility and maneuverability.
- Strike while the iron is hot!
Also remember: Pursuing a Goliath can expend a lot of time and resources. David must choose wisely whether to proactively approach Goliath or stay focused on building a better slingshot and letting Goliath find him.
If you do your homework, there's a Goliath out there that needs a David a lot more than you may realize. Remember to always be prepared, since David's presence poses a new set of challenges and threats for Goliath and there is no way to predict how Goliath will react. Will Goliath crush David? (This is always Goliath's first instinct.) Buy David? (Take David out of the market.) Or partner with David? (“Can we get the synergies by combining forces?”)
Be prudent and make sure to anticipate each potential reaction before approaching your Goliath. And remember: Always keep the slingshot ready!
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