How market leaders can become challenger brands once more

Warren Buffett recently revealed that when he plays online bridge against Bill Gates, the founder of Microsoft assumes the nom de guerre of 'Challenger X'.1 Now we see Microsoft, after years of being a hugely successful product-led market leader, having to stir itself to think like a challenger again to face up to the new threats posed by Google, Apple and the gaming giants. So it is striking to see how some of the largest and most significant leaders around us are living up to the belief of Phil Knight of Nike about how to retain market leadership, by still continuing to think like the challengers they once were.

Look at Dell. Until a year ago, Dell was 40,000 strong with $57 billion in sales. With Michael Dell's personal fortune worth $17 billion, it would be natural to assume a maturation of his mindset at the peak of his extraordinary success. Yet what Dell himself says is quite the opposite. 'I still think of us as a challenger,' he says. 'I still think of us attacking.'1 He has himself, and still wants Dell to have, the big appetites and sharp teeth of the hungry entrepreneur he started as in Austin, Texas. He is fighting against the complacency that naturally sets in as you become number one.

Historically, we have seen market leaders seeking to maintain leadership by thinking like the number two they once were in a number of different ways. Phil Knight, for example, tries to make Nike appear smaller on the outside than it is in reality on the inside. The CEO of EA, number one in the sports game market, has redefined his ambition – to be the biggest sports brand in the world – giving him an entirely new brand neighbourhood. It's a neighbourhood in which he now competes with Adidas and Nike, making him again (in his own words) still a challenger company.

A NEW STORY: BIG IS BAD

The digital age is illustrating a new reason why market leaders need to be very careful not to be seen as Goliaths, and is providing a new strategy to avoid that threat.

Consider the change represented in the following juxtaposition. In 1963, the DDB account team had misgivings in presenting the 'We Try Harder' campaign to the Avis client for the first time, to the point of not wanting to take the work forward. They felt that celebrating the idea that one was anything other than a winner was almost 'un-American'.

Cut to 45 years later, and an interview in Time with John Grisham2 – the most commercially successful global storyteller of the 90s and, as such, a man with his finger on the pulse of how to appeal to a mass audience. Asked why he always writes from the point of view of the individual challenging the establishment (often in Grisham's case a large corporation of some kind), he observed with amusement that it was now 'the American way' to look for the person at the top to fail.

That simple narrative – big is bad – is an idea that has kept Grisham's readers enthralled for many years. We are drawn to the individual or small group crusading to overcome the big bad Goliath, and in this we are seeing an important social narrative forming in the idea of new kinds of community.

Much has been written about the 'rediscovery' of community. In the physical world we can see strong and resilient communities forming against specific commercial monsters – Tesco being the most recent example. Indeed, this is one of key ways that such communities form their identities and recruit like-minded others.

Another example, is the 'slow food' movement's enlistment drive against the monster that is 'fast', precipitated by the opening of a McDonald's in Rome. Or the resistance to the monster that is retail homogenisation exemplified by the 'Keep Austin Weird' protest campaign in Austin, Texas, fighting for small local shops in the face of expansion by national chains such as Borders. Or the London Evening Standard's, 'save our shops' campaign.

These new communities are obviously less about real neighbourhoods where people know each other personally, and more about virtual communities. As such, they rely on new kinds of glue to bind them together; one such glue is a monster.

The threat of the monster, this desire to identify and topple Goliaths, seems to be becoming more central to the ever-skeptical and combative dimension of our media and social culture. A recent commentator on what drives social networking noted that unity against a perceived corporate Goliath is a characteristic of a relatively high amount of activity on sites such as Digg or Reddit: 'On many sites… and in many social media savvy communities … the key motivating factor is often an 'us versus them' approach, with the users as the underdog battling a giant corporation or politician or social structure.'3

If we look at the large brands and companies around us, we can sense that shift. While shareholders might like Tesco's dominance, its concomitant status as Goliath makes it a clear target for consumer and media activism. It is only a small step in the eyes of a storytelling community with a strong point of view, from Goliath to monster. Microsoft's sheer dominance – perhaps the ultimate Goliath of our times – still leaves it unpopular, despite the many ways in which it has transformed the average office workers' daily productivity, and in spite of Gates' extraordinary philanthropy.

One wonders, too, about Google – still for many the darling of the internet. Yet try googling 'Google hate': the search engine returns 64 million hits of people against it, in 0.36 seconds. How long before we turn the one we love into Goliath? And Goliath into a monster? And what can a dominant leader such as Google, or Microsoft, or Tesco – or perhaps even an HSBC – do as a leader to stop itself becoming this kind of target?

CREATING A MONSTER BIGGER THAN OURSELVES

The evidence suggests that if a market leader finds itself turned into a monster, the best immunity is to identify or create a monster larger than themselves – something that transcends the market or category, something that becomes a bigger issue for the community – one that the company, as champions of that community, can stand up to.

The market leaders companies can learn most from here are successful media personalities. Oprah Winfrey was a startlingly successful challenger. As the leading U.S. daytime talk show, her show's ability to overturn Donahue and a host of other talk shows also run by white males is a fascinating challenger study in itself (by adding new emotion, a genuinely warm and personal empathy, into the category).

It would be natural for Oprah, as for all the other talk show hosts, to have her hour in the sun and then fall to a more recent challenger. But she hasn't. When briefly threatened by a new challenger in Jerry Springer, whose new agenda for talk shows cheerfully and theatrically plumbed the depths of human interactions and prompted a host of rivals to follow suit, she could have responded by going the same way. But she didn't: she responded by being the change agent, and elevating the ambition and spirituality of her show.

She introduced new forms of media (a magazine), new 'applications' (Dr. Phil), and new ways for her community to participate with her (a book club). And she has gone on to become a billionaire, with a show that still tops the ratings, by continuing to challenge. But her challenges are now not to the other talk show hosts; her challenges are to the bigger monsters she sees threatening her community (American women) – notably domestic violence, child abuse, and weight loss and selfesteem issues among women.

Oprah is not a Goliath, because she is both smaller and visibly vulnerable to these monsters. But she nonetheless uses her strength and size to fight them on her community's behalf. And her community eternally loves her for it.

The United Kingdom, on a smaller scale, has seen the chef Jamie Oliver go from lovable challenger to overvisible market leader, but recover his relationship with the British public by identifying and fighting two monsters: the poor nutrition of lunches for schoolchildren and then intensive chicken farming.

Channel 4, in fact, has an eye for harnessing communities against monsters – their programme 'Lost for Words', an initiative specifically targeting child illiteracy, is one we see echoed in the ten-year-old initiative by Gandhi – the largest book retailer in Mexico – campaigning against Mexican indifference to reading. While Cubans, for instance, read seven books a year, Mexicans on average read less than one. So the largest bookseller has successfully crusaded against a monster it has brought to the public's attention, and appears to have successfully influenced sales as well as public debate around the issue.

FIND AN EVEN BIGGER MONSTER

More than ever, market leaders need to be beware of finding themselves positioned as Goliaths. To combat this, they need to turn themselves into challengers again. They need to find monsters bigger than themselves to challenge on the community's behalf. In Oprah's case, her monsters are usually, of course, anything but manufactured – they are often issues that are meaningful from her own past life.

We clearly should not be faking our concern about these monsters, especially if they are social issues or environmental issues (and at one level the environment is the entire world's Big Fish). But they do not have to be this important or this global – monsters deserving of attack could obviously include practical, everyday issues such as Windows usability (for Apple) or the daily over-immersion of one's children in digital life at the expense of real life and real experiences.

Two final points. The first is to do with magic and monsters. The secret of magic, famously, lies in misdirection: if I focus your attention on something very visible over there, you don't notice something that is happening over here. Monsters do offer the ability to focus the individual's attention on some very specific advantage, and distract them from what they might regard as other potential shortcomings. So, for instance, the US film club Netflix, loudly campaigned against 'Late Fees' as a monster – they had no fees for late return – which was true. But this distracted from the monthly membership fee they charged (unlike a DVD store), and the fact that the ordering process denied you the instant gratification your local store offered.

Second, one of the key benefits for a brand in having a monster larger than itself is that it unites the entire company (not just its consumer base) around the challenge it faces. This is never clearer than in Hollywood. Think of Jaws: what unites those three very different characters in the boat, initially so hostile to each other, is the threat posed by the bigger monster they are fighting.

More than three people in your company? Go and see Watchmen, the blockbuster released a month or so ago, in which the protagonist (warning – spoiler alert) manufactures a monster whose threat to the entire world is so large that the competing nations of the world agree to nuclear disarmament. The more people you need to unite, it seems, the bigger the monster you need.

NOTES

1. Adler, S. J. (2006) 'Strategy Power Plays: How the World's Most Strategic Minds Reach the Top of their Game', Businessweek. McGrawHill.

2. '10 Questions,' Time, February 25, 2008.

3. http://danzarrella.com/thegoliatheffect.html

ABOUT THE AUTHOR

Adam Morgan is founder of eatbigfish and author of Eating the Big Fish, John Wiley & Sons. This article is from the revised and expanded Second Edition.

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