How Chimp-sized Software Companies Can Survive Against Gorillas
A look at technology battles of the past can provide insight into how smaller software vendors can compete against the megavendors of today.
By Steve W. Martin
Oct. 20, 2005
In a meeting last year, Jonathan Schwartz, president and chief operating officer of Sun Microsystems asked George Colony, CEO of Forrester Research, what he thought of Sun. Colony replied, "Sun risks becoming the Data General of the decade. The company could easily slide toward becoming a 'zombie'- a lot of cash but no life, staggering and lurching with a fading heartbeat at each step." Like many other hi-tech companies, Sun's battling for survival against an eight-hundred pound Gorilla- IBM.
Whether it's IBM, Microsoft, or Oracle, every marketspace has a dominant vendor also known as an eight-hundred pound Gorilla. So how can smaller chimp-sized companies survive against Gorillas? A look back into Silicon Valley history actually provides part of the answer.
In 1991, Informix Software was just one of many database suppliers in a market that included companies such as Sybase, Ingres, and Progress. Together, they were competing against Oracle, the eight-hundred pound Gorilla. In only four years, Informix was able to challenge Oracle's dominance, moving past all these other companies in the process. This was a truly remarkable feat and provides seven business lessons that are applicable to surviving the battle against Gorillas today.
1. Change the Measuring Stick of Success. From 1991 through 1996 Informix Software's stock was ranked number one top performer by the Wall Street Journal. The reason behind this impressive feat was not solely revenue growth, but equally important, revenue-per-employee growth (calculated by dividing total revenues by the number of employees). Measuring financial success based upon individual employee contribution is critical for long-term survival. While its doubtful you'll catch up to your gorilla's top-line revenue, you can beat them financially by staying lean and mean. Like boxers in a prize-fight, a well-conditioned challenger is able to last all fifteen rounds and sometimes even defeats the bloated champion.
2. Don't Fight the Battle Alone. When understaffed and technically outclassed, you must carefully choose the battles you fight, and it makes no sense to fight them alone. You need to surround yourself with partners who have a vested interest in your winning. Unfortunately, many software companies today practice "partnership by press release" that is totally disconnected to the sales force's actions in the field. However, this was not the case at Informix. The sales compensation plan and field promotion programs encouraged partnerships. Informix truly believed in partnering because it was the only way to compete with the super-sized Oracle and technically superior Sybase.
3. Create an Internal "Tipping Point."
After Informix had won a $28 million deal against Oracle in 1992, every employee, more than 1,300 at the time, from receptionist to vice president, were given a check for $1,000. The gesture electrified the entire company, created an esprit de corps, and fostered a new "anything is possible" culture within Informix. It was Informix's internal tipping point and the company took off. A company's most powerful competitive weapon is its employee's energy and enthusiasm.
Whether it's IBM, Microsoft, or Oracle, every marketspace has a dominant vendor also known as an eight-hundred pound Gorilla. So how can smaller chimp-sized companies survive against Gorillas? A look back into Silicon Valley history actually provides part of the answer.
In 1991, Informix Software was just one of many database suppliers in a market that included companies such as Sybase, Ingres, and Progress. Together, they were competing against Oracle, the eight-hundred pound Gorilla. In only four years, Informix was able to challenge Oracle's dominance, moving past all these other companies in the process. This was a truly remarkable feat and provides seven business lessons that are applicable to surviving the battle against Gorillas today.
1. Change the Measuring Stick of Success. From 1991 through 1996 Informix Software's stock was ranked number one top performer by the Wall Street Journal. The reason behind this impressive feat was not solely revenue growth, but equally important, revenue-per-employee growth (calculated by dividing total revenues by the number of employees). Measuring financial success based upon individual employee contribution is critical for long-term survival. While its doubtful you'll catch up to your gorilla's top-line revenue, you can beat them financially by staying lean and mean. Like boxers in a prize-fight, a well-conditioned challenger is able to last all fifteen rounds and sometimes even defeats the bloated champion.
2. Don't Fight the Battle Alone. When understaffed and technically outclassed, you must carefully choose the battles you fight, and it makes no sense to fight them alone. You need to surround yourself with partners who have a vested interest in your winning. Unfortunately, many software companies today practice "partnership by press release" that is totally disconnected to the sales force's actions in the field. However, this was not the case at Informix. The sales compensation plan and field promotion programs encouraged partnerships. Informix truly believed in partnering because it was the only way to compete with the super-sized Oracle and technically superior Sybase.
3. Create an Internal "Tipping Point."
After Informix had won a $28 million deal against Oracle in 1992, every employee, more than 1,300 at the time, from receptionist to vice president, were given a check for $1,000. The gesture electrified the entire company, created an esprit de corps, and fostered a new "anything is possible" culture within Informix. It was Informix's internal tipping point and the company took off. A company's most powerful competitive weapon is its employee's energy and enthusiasm.
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