Insight

[Spoiler Alert] David was never the underdog

One of my favourite parables that I enjoyed as a child was the story of David and Goliath from the Old Testament’s Book of Samuel. Whether or not you had a religious upbringing I am sure you will have come across the tale at some point.

Who can resist the idea of the everyman or woman who is able to take on the giant and come out victorious? And for this very reason, it is a well-used and well-worn metaphor of how the underdog can prevail.

Even though it is likely to be familiar, it is worth unpicking some of the elements of the story as there might be more to it than meets the eye.

Let battle commence

In the ancient conflict between the Philistines and the Israelites, according to the agreed rules of engagement, each of the warring sides sent out their champion to battle it out between themselves. Time after time, Goliath was the winner, and the Israelites were running out of options.

Then, a young shepherd boy called David came forward to take on Goliath. The King looked on askance, it is simply not possible that this young man can take on the heavily armoured colossus and have any chance of victory. The concern deepened as David rejected the offer of the King’s armour and the King’s sword.

David was happy in his only weapon, a sling and a few carefully selected pebbles in his pouch.

The rules of the day expected the two champions to face off to each other to engage. When David entered the field, it was clear from the start that this was going to be a totally unfair contest.

Goliath, with his short sword, weighed down by heavy armour could not get anywhere near David to land a killer blow. David, unencumbered by the traditional rules of hand-to-hand combat, releasing him from the need to wear heavy, limiting armour, literally rang rings around Goliath.

As David moved around his opponent, he loaded up his sling and picked his moment. Whoosh. A shot on target, a tiny area of Goliath’s forehead that was left unprotected, knocked him out stone cold.

With Goliath laid out, David could move in for the kill and victory was the Israelites.

A victory for technology

Research suggests that in practised hands, a slingshot an astonishing weapon. A more powerful and accurate ranged weapon than the bows and arrows of the day. An expert could accurately hit a small target many metres away with lethal force, and David only needed to keep a few metres away from the slow and blundering Goliath. This really was a victory for technology.

The Competition Problem

The competition problem for many established businesses is that they are set up to fight their battles with equal opponents, following well-known rules of engagement.

New entrants are playing a different game by different rules. This brings two specific challenges to the established business. The first is that the established business is unlikely to be set up to play by the new rules. The Davids are lean, dynamic and agile, the Goliaths weighed down by their past, their installed base, their legacy product range. It makes it much harder for the Goliath to fend off the David.

The second challenge is perhaps the greater problem. The David businesses are going to target the low hanging, often very ripe fruit. They are going to cherry-pick the best bits.

This limits the Goliath even more as it loses its ability to fund the shift to match the increasing army of Davids coming from all directions. Goliaths are set up to compete with equals, to battle with other Goliaths, not an army of smaller competitors eroding their foundations.

A great example of this playing out was revealed by the commentary from Jamie Dimon, CEO of JPMorgan Chase when on a recent call with analysts, he was reported as saying he was, “Scared shitless”, of the rise of FinTechs. Of course, he said that JPMC would ultimately be victorious, but it would not be easy or quick. He sees it as a ten-year battle.

One of the specific observations he made was that the FinTechs were playing by different rules, rules he did not believe were available to JPMC.

Another example of a business changing the rules and using technology to change the game is TransferWise. An ultra-low-cost foreign exchange business. The trick with TransferWise is that money does not cross any borders. It is a transaction matching model in the respective countries supported.

There are a great many examples that are well-used examples of Davids taking on, and in many cases destroying existing marketspaces – Netflix, Uber, Airbnb.

One example in the UK is Ocado. A home delivery shopping service that for many years struggled with losses and slow growth. With its robotic service centres, slick supply chain and carefully curated partnerships, by the end of 2020, its market capitalisation was more than Tesco the supermarket leviathan.

Change the Rules

If there was one lesson in this, the rules will change.

Businesses are used to dealing with head-on competition, it is so much more difficult when the competition is like termites eating away at the foundations, or ants overwhelming the picnic.

If there was a pattern to the Davids it is that they are typically lean, dynamic and agile. Even those that emerge as unicorns still have the advantage of dynamic and agile technologies.

The Goliaths may not be able to beat the Davids at their own game, but maybe they can create their own new rules of engagement.

It could be assimilation, to recognise potential Davids and bring them into the ecosystem. It could be diversification, potentially nurturing their own Davids. An example of one of the great Goliaths in financial services adopting this strategy is Goldman Sachs launching Marcus, the retail savings brand.

Whatever the approach that is taken, there are some common underlying themes: –

  • Technology will almost certainly play a key role (either a hindrance or an enabler)
  • Becoming more lean, dynamic and agile right through the organisation. This is more than just changing job titles and hoping the culture will follow, this is about deep, sustainable change.
  • Reusable assets, not point solutions. Assets can be deployed and reused in multiple contexts.
  • Platform mindset taking the concept of reusable assets to the next level enabling federation of capability and rapid redeployment in multiple contexts or franchises.
  • Instilling a product mindset across the organisation. Legacy thinking is departmental and functional, Davids are always about the product.
  • Technology, or IT, is the business, there is no separation for the Davids. Technology literacy is present in every part of the business, not a separate thing.

If there was one thing to take from this, it is very unlikely that a strategy of “be more Goliath” is going to be a winning strategy. It is time to cast off the heavy armour and find a new way.

David is coming.

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Enterprise Blueprints is a specialist IT Strategy and Architecture consultancy helping clients become less like Goliaths and more like Davids. If you would like to discuss how you can accelerate your transformation then please contact [email protected]

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