“Amazon is not too big to fail… In fact, I predict one day Amazon will fail.” — Jeff Bezos, CEO of Amazon[1]
Disruption. It’s a game changer.
And, whether they’re creating or capitalizing on it, underdogs have historically used disruptive practices and technologies to win contests against giants—both living, breathing and corporate ones.
The Original Underdog
You hear a lot about underdogs in business: Ben & Jerry’s, Apple, Home Depot, Life Is Good, Netflix, Samuel Adams, Tesla. They all started small. In renovated gas stations. In their parents’ garages. In vans. They all challenged big, well-established brands. And they all prevailed.
What set these startups apart from the rest?
Let’s look to the original underdog for answers: David. The unlikely victor of one of history’s most famous battles 3,000 years ago in the Valley of Elah. The shepherd boy who, to the Israelites’ disbelief, volunteered to fight the giant Goliath.
Standing 6’9” tall, Goliath was the Philistines’ greatest warrior. On that fateful day, he wore a bronze helmet and full body armor. He held three weapons: a spear, a sword, and a javelin. He stood at the edge of the ravine separating the two tribes and shouted at the Israelites, ‘Choose you a man and let him come down to me!’
Refusing Saul’s sword and armor, David picked up five stones and placed them in his shoulder sling before running to Goliath.
Surprised and insulted to see a mere shepherd boy with his staff instead of a seasoned warrior, Goliath yelled, ‘Am I a dog that you should come to me with sticks?’
David swiftly fired one of the rocks from his sling at Goliath’s exposed forehead, felling the giant. Then he grabbed Goliath’s sword and cut off his head.
The Underdog’s Advantages
How did the shepherd boy conquer the giant? He broke the rules.
Goliath expected David to honor the ritual of single combat. So, he just stood there, an unsuspecting and easy target, waiting for David. Goliath assumed, because David was small and he was big, he would win.
His size, however, was the source of his greatest disadvantage: blindness. In his book, David and Goliath: Underdogs, Misfits, and the Art of Battling Giants, Malcolm Gladwell reports that medical experts now believe Goliath suffered from acromegaly, a condition that causes an overproduction of human growth hormone. Vision impairment is a side effect.
Goliath’s size prevented him from seeing the threat that would ultimately cause his demise: David speeding toward him armed with his sling and rocks.
The story is an apt metaphor for the lifecycles of businesses. Many start out small. Fast and agile, they adapt to the ever-changing marketplace. They innovate, creating new and better solutions. They displace industry giants. They dominate in their space. Until the day comes that a startup—an underdog—displaces them.
You can see this cycle play out time and again in business…
The Underdogs of Retail
“The Cheapest Supply House on Earth”
Retail was for the rich in the early 19th century, and local merchants its arbiters, determining the availability and prices of goods at their discretion. Until they weren’t.
A young, scrappy upstart changed everything, ushering in a new era of commerce with, ironically, a watch. His name was Richard W. Sears. And his revolutionary idea? The discount.
As authors Peter H. Diamandis and Steven Kotler explain in their book, The Future Is Faster Than You Think: How Converging Technologies Are Transforming Business, Industries, and Our Lives, Sears’ disrupted the dominant business model of the 100% markup. He sold watches for $14 a piece, just $2 more than he paid for them.
But this novel idea alone was not what catapulted Sears and his hundreds of wares into urban and rural American homes across the country via the “Cheapest Supply House on Earth”: the Sears catalog.[2]
Technology was on Sears’ side. And he harnessed it. Distributing his catalog to remote hamlets and homesteads with the United States Post Office’s new Rural Free Delivery service. He delivered everything from hubcaps to kit houses with the help of cheap Texas oil and Model T vans.
“The Everything Store”
In 1974, with department stores dotting the country’s cities and suburbs, Sears built the tallest building in the world in Chicago. More than a testament to the bargain behemoth’s decades-long dominance over American domestic trade, the eponymous tower proved, within just a few short years, a monument to its former glory.
Because new players, with new technologies and new ideas, were usurping the retail thrown.
First, Walmart beat Sears at its own game, slashing prices by bringing the customer to the warehouse instead of the warehouse to the customer via mail-order catalogs. And using communication technologies to track customer demand and streamline product ordering based upon it.
Then the paradigm shift came, paradoxically, from the same concept that propelled Sears into the homes, hopes, and dreams of every American over a century prior: the Consumer Bible. But digital. Fast. The everything store for anyone with an internet connection: Amazon.
Amazon the Giant
From 2006 to 2018, Amazon’s worth ballooned from $17.5 billion to $800 billion, far eclipsing Walmart’s growth from $158 billion to $243.9 billion. And Sears? Gone. Bankrupt.
Capturing 75% percent of the ecommerce market in the U.S. in 2020, Amazon, along with Apple, Facebook, and Google, are currently the subject of Congressional antitrust hearings.[3]
Amazon is now the retail giant.
And its leader, Jeff Bezos, knows the fate of many giants. He acknowledged the company could one day fail during a 2018 meeting with his employees. In response to the question of what he’d “learned from the recent bankruptcies of Sears and other big retailers,” Bezos said,
‘If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years,” explained Bezos.
Accelerated Disruption: the Future of Business
“Digital disruption will wipe out 40% of Fortune 500 firms in the next 10 years,” indicated 53% of c-suite executives in a 2017 survey.
The lifespan of big companies may be shrinking even faster than that. Because a disruptive force few anticipated has suddenly and drastically changed the landscape for businesses around the world: COVID-19.
How we work. How we learn. How we shop. Everything’s changed. Within a matter of weeks.
Entire industries may be gone forever. Movie theaters and department stores could become a distant memory.[4]
Meanwhile growth in sectors with already massive potential has accelerated.
The popularity of online education had been increasing in recent years, but the pandemic prompted a sudden and near 100% conversion to virtual learning across the country. Searches for “virtual school” soared 238% from March 1 to August 1, 2020.
E-commerce, an industry that more than tripled from $34 billion to $115 billion from 2009 to 2017, has made a 4- to 6-year leap, found a recent Adobe report.[5]
And these two industries stand to double in size in the coming years as the other half of the world’s population comes online.[6]
Just imagine the day when all that stands between your business and the world’s nearly 8 billion inhabitants is a screen—or a voice command or augmented reality or whatever technology displaces those that came before it.
It’s coming. Within the next few decades.[7]
As dystopic as the coronavirus pandemic is, it’s upending the already intensively disruptive business environment digital technologies have created.
Businesses with the speed and agility to adapt to the dizzying pace of change—to harness disruption—will carry us into the future.
Will you be one of them?
See how to shift to a digital-first strategy and start connecting with your customers today. Book your FREE consult now.
Written by Auroriele Hans
Sources
[1] https://www.cnbc.com/2018/11/15/bezos-tells-employees-one-day-amazon-will-fail-and-to-stay-hungry.html
[2] https://www.history.com/news/sears-catalog-houses-hubcaps
[3] https://venturebeat.com/2020/07/29/antitrust-hearing-amazon-facebook-google-questioned-more-than-apple/
[4] https://www.forbes.com/sites/stephenmcbride1/2020/05/11/coronavirus-will-wipe-out-these-three-industries-for-good/#6e01f1fc586b
[5] https://www.forbes.com/sites/johnkoetsier/2020/06/12/covid-19-accelerated-e-commerce-growth-4-to-6-years/#94e5fa5600fa
[6] https://news.un.org/en/story/2018/12/1027991
[7] https://www.theguardian.com/technology/2019/jan/10/universal-internet-access-unlikely-until-2050-experts-say-lack-skills-investment-slow-growth