How to give Goliaths a hard time

Posted: June 22, 2011 by maxsc21 in environment

In my last post I told you about all the business Goliaths hanging around, sometimes capturing whole markets. They usually are excellent in certain aspects – only for that reason they could become a Goliath. But in most cases they are annoying clients as well as rivals with their unappealing dominance.

In this post I will tell you how exactly even the tiniest David-Companies can succeed in their seemingly hopeless fight against superiority. But due to the fact that this is my last post of the Bloglink Odyssey announced in post two I will seek to end up this entry telling you a story about Flying Childers, the lovely 18thcentury racehorse. If you think “What the hell is he doing?” please read my second post again.

But first things first: The biblical myth of David versus Goliath teaches us that you cannot challenge the giant by using the same weapons that he does. So the economical David will also make use of tricks to survive; he will have to find ways to get around the threat – but he would never dare to provoke the colossus in his core area.

The weak point

So there is few to discuss: In this fight creativity is the key to success. Creative entrepreneurs find niches in which they are almost inaccessible for Goliaths, which usually try to cover a wide range of products. One possibility to find a niche is to concentrate on well-defined fields of the total market. Today’s energy companies are oligopolists in a classical sense: They are able to set prices, even though the antitrust agency tries everything to fight these agreements. Another fact is that marginal costs are close to zero in this business (remember our micro-lessons) – in contrast fixed costs are huge, disabling smaller companies to take part in the market.

But there is a new tendency developing nowadays: Rather medium-sized, David-like companies start to achieve success. The key to victory again is specialization – in basics nothing else than in the biblical myth. The weapon of those companies is eco-friendly energy. They collect portions of energy from different renewable energy sources; selling these bundles as “100% green”. They are doing quite well with that and managed to take considerable market shares from Goliaths like Eon, Vattenfall, RWE and EnBw.

Finish line

And that’s the point where our racehorse comes into play: The glorious career of Flying Childers found a disreputable end in 1735. After a lifetime without any defeat on the racecourse he should retire by winning the Devonshire Crown Cup. But the sensual whinny of a competing mare deranged poor Childers in such an extent that he refused to start galopping. Guess who won the race? Right, that unknown mare. That anecdote is said to be more a myth than reality. But the message is clear, isn’t it?

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Comments
  1. Hey Max,

    I was so excited to find out how you find a way to include Flying Childers into your last post. I have to say: awesome! You used a really good methaphore.

    The niche markets are really interesting. In times of internet and technology the possiblilities are endlessly. But there are some rules one has to consider when starting to work in a such an area. Check out the 3 main rules a found for opening a business in a niche market: http://www.entrepreneur.com/marketing/marketingcolumnistkimtgordon/article49608.html
    One has to have a really unique idea and maybe be a little bit crazy in order to find the right idea. Style-your-garage (http://www.style-your-garage.com/eu/index.php?id_lc=22) is a really good example. The company settled in Munich sells reall crazy window, door and garage themes in order to create unique decoration. http://www.youtube.com/watch?v=TooryvQU_Zc&feature=player_embedded

    All you need might definitely a good idea and you can make lots of profit! Thanks for your really good post. 🙂

  2. PhilBart says:

    Hey Max,
    an awesome post! I did not read your second post yet and just found it hilarious you held out the prospect of writing about a racehorse! I have to agree to Steffi and say: good job on that one! The David vs. Goliath metaphor is well chosen and also well described. I could see you had a clear structure in mind when you started writing this post. There are stunningly many great links to pages providing further information. Even if Flying Childers did not, I would say you crossed the finish line successfully! 😉

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