David and Goliath

Photo by Alaskan Dude

I love the story of David and Goliath since I was a little kid. You must admit, it is the basic story of the underdog. Lately, as I was reading other interpretations of it, I understood how loaded with ideas and morals this story is. Then, Last week I read this fascinating article by one of my favorite writers, Malcolm Gladwell, called: “How David Beats Goliath“. And took another spin on the ideas I have already been exploring. In it, Gladwell makes two very interesting points. This is the first one:

When underdogs choose not to play by Goliath’s rules, they win. David can beat Goliath by substituting effort for ability—and substituting effort for ability turns out to be a winning formula for underdogs in all walks of life.

There are so many implications for this idea and many of them are mentioned in the article itself and I don’t want to ruin the read for you. One thing that I thought about immediately is companies’ strategy and some of things I learned and wrote about in the last few weeks.

From all the cases I have been reading lately in my strategy class, one thing is clear. In order to win against the big ones, you cannot try to be like them. You got to be different. You got to create a comparative advantage and then exploit it. Dell, Southwest, SAS, Airborne. All examples of companies who went against the big guys and won. Not because they tried to be better than the big guys. But because they were different. They came up with something new.

This is what I wrote just a few weeks ago:

But this also creates temptations. To imitate and not innovate. To be like somebody else, because it is safe. Because it is easy. This is a temptation we should be careful off.  Do you want to out-Apple Apple? Is that possible? Companies tried to out-Southwest Southwest and failed.

The same logic goes the other way. If you are the big guy, watching the little guy get bigger, your reaction should not be imitating him. You are a big guy. Little guy’s strategies will not work for you. When Dell started with the direct selling model, HP, Compaq and IBM tried it as well and failed. Their structure was not suitable for direct marketing.

The second point is about real time. To fully understand it, you should really read the article, but here is the gist of it. When talking about the Federal Reserve setting interests, one of the interviewees in the article says:

The world runs in real time, but government runs in batch. Every few months, it adjusts. Its mission is to keep the temperature comfortable in the economy, and, if you were to do things the government’s way in your house, then every few months you’d turn the heater either on or off, overheating or under heating your house.

Two thoughts on this point:

The first is a something I have been thinking about a lot lately. It is one of the most prominent things every manager should do. Investigate the information he already has. There is an abundance of information in every organization just lying there because people gather it anyway. You can make a lot out of it.

The second thought is about the challenges facing governments in the future. I think three concepts are important here: real time, transparency and aggregation of information. Governmental bodies which will be able to harness the power of real time and aggregation while keeping and improving transparency will be the most successful bodies for our society.

Elad