In today's business world, the technology-smart newcomer can topple the stodgy giant
James Martin
The cybercorp revolution will bring many David-and-Goliath stories. Small and nimble companies can attack old and arthritic corporations and win. The old corporation, like Goliath, often reacts with scorn to the newcomer rather than with appropriate caution. There are many opportunities for entrepreneurial Davids.
In the Bible, David took a major risk that would not have looked good in the strategy meetings. A cybercorp newcomer needs less raw heroism than that exhibited by the biblical hero; it can use new ideas to exploit an old company's weaknesses. It can use newer technology, virtual mechanisms, and electronic marketing. Because of its size, it can build a cozier rela
tionship with customers. David can win in many corporate situations because Goliath is loaded down with the baggage of an earlier era.
Old corporations often have old cultures, inappropriate to the mercurial cybercorp age. They have cumbersome structures and politics. Their computers are snarled up in spaghetti-like software that is murder to change. They pay lip service to reengineering themselves but make only mechanical changes within the present structure -- when that structure ought to be scrapped.
Is there a better Goliath analogue than IBM in the 1980s? That was when IBM was confronted with a fabulous opportunity. Personal computers would be on every desk and linked with networks. OSes and office software would sell in huge numbers. Customers needed a leader to set the standards. We know how the story turned out. Goliath was outmaneuvered and outmarketed by David: Bill Gates and Microsoft.
Some corporations in the 1990s have grown at a rate that's never seen before. Netscape, which ma
kes the popular Internet browser software, went public when the company was only 16 months old, with a valuation of $2 billion. Marc Andreessen, the 24-year-old who originally programmed the software, had shares worth $58 million.
New corporations are evolving with radically new types of organization. They grow from the start with virtual-office space, E-mail -- not snail-mail, a boundary-less culture, Internet connections, World Wide Web pages, and electronic links to trading partners. They are cybercorps from the beginning.
Today's technology makes possible virtual space and virtual operations. A small company does not need expensive offices; some employees can work at home. Key players may live in different cities but be linked electronically. A small company can be a virtual company.
A start-up may want to build something unique and interesting but cannot do it all. It may outsource part of the design; it may work jointly with component suppliers; it may use students to create brochures
or software. The founders try to hire only the brightest, most dedicated people, with unique talents, and outsource everything that does not need much skill. The company focuses on what it is brilliant at. It should have a policy of owning everything with a high return on investment and outsourcing everything with a low return on investment.
Start-ups often have a turbulent ride. They don't do the right thing first time and may need to switch direction fast. They may plan for this by avoiding fixed or expensive resources.
The David corporation may be a start-up or a spin-off of an old corporation. Where an established corporation is proving resistant to business reengineering, its best chance of moving into the cybercorp age is to start new units. The dog may be too old to learn new tricks -- but it can have puppies. A spin-off sometimes has major advantages that a start-up does not have, including access to money, services, specialized skills, and existing customers.
In his 1993 book Managi
ng to Survive, Sir John Harvey-Jones, ex-chairman of the giant chemical company ICI, reflects on a lifetime of beating organizations into shape: "Although everyone complains of overmanagement and obsolete controls, it is extraordinarily difficult to fight free. Over time a sort of cat's cradle is devised, so that as one frees oneself from one entanglement, it is only to find oneself in another."
It is much easier to start new David operations than to change Goliath.
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James Martin is a consultant and writer on information technology. He spent 19 years working for IBM and then went on to fo
und James Martin and Co. Known as "the father of CASE," he has written more than 80 books, including The Wired Society. You can reach him on the Internet or BIX at
editors@bix.com
.
CyberDavid Rocks Goliath
