How a Judo Strategy for startups gives them advantage

Startups have little choice but to stand and flight using their limited resources, they don’t just tuck tail and run when they they’re up against a large competitor.

The passion and focus of a bootstrapped startup is difficult to replicate within a big company and it’s this spirit, which sees them through. We see the potential, the creative spirit in younger companies, this little v big scenario is played out time and time again in business, a real David v Goliath.

In any market the little guys can quickly dominate by using their opponent’s size to their advantage. That’s because giant-killers can afford to shake things up and take bold steps. A small, new player in any industry can topple the industry leader through a combination of brains, and underdog street-fighting agility.

Giant killers can launch surprise attacks, pick unfair fights and hijack the conversation, stealing the customers out from under the giant’s nose. Underdogs who win refuse to compete by the same standards as their opponents, instead they use an entirely different strategy that exploits their stronger opponent’s weaknesses.

The mouse fears the elephant, but the elephant fears the mouse — each look at the battlefield from their own, different perspective, and that can make all the difference.

The ‘Judo Strategy’ is a way of disruptive innovation, enabling smaller competitors to fight the more powerful industry players. The idea is to use skill to defeat size. Here are the ten techniques of ‘Judo Strategy’, as defined by David Yoffie and Mary Kwak of Harvard Business School that may help your startup, underdog business:

1. Keep a low profile initially Over-aggressiveness can kill you early on, but by staying out of view you aren’t seen as a threat to bigger rivals that could easily crush you if they devoted the resources to taking you head on.

2. Excel at a few key things Don’t try to match what the bigger company does. If you try to compete at the same thing they already excel at, you’ll always lose. Invest in your own core strengths to develop uniqueness.

3. Move quickly Small businesses have to execute quickly while they have a window open, but not to the point where they become obsessed with speed ahead of quality.

4. Make it unnecessary to fight Build positive relationships with your larger rivals. This will create less incentive for them to fight back. Forming strategic partnerships and joint ventures may seem like a win-win situation for everybody, when it’s really a way to defend your position.

5. Don’t respond to everything head-on When the bigger company makes a move against you, don’t try to match it. Instead, respond with a counter that plays on the strength that you’ve developed. Do something different.

6. Use your competitor’s force to your advantage Giant companies have momentum, and it’s harder for them to halt and change a strategy once committed to it without it taking time. So if they get caught in a strategy that is hurting them, use their inability to change and be agile yourself.

7. Accept the inevitable losses and minimize them You’re going to lose some battles, so accept this. It takes a level of discipline to be able to retreat, reload, and head back into the fray from another angle. Emotional responses can be devastating if you let a loss take hold of you — instead, just try to minimize the loss and continue.

8. Leverage the big company’s cultural barriers to change Big companies have invested into building up their assets and processes, but they’re also limitations. Sometimes they can’t shift their culture enough to respond adequately to an agile, small company.

9. Exploit differences between your opponent and its customers Even a company’s most loyal customers will always look out for themselves, so create situations that makes these customers curious, it weakens the relationships. It’s the old tactic of divide and conquer.

10. Let other competitors wear them down It’s not all down to you, a small company can actively use its other small competitors to take on a common enemy. Find a way to complement your competitor’s products with your own, and ‘gang-up’ on the larger company.

The ‘Judo Strategy’ is about making the bigger player compete on ground where its size and relative strength no longer matter. It’s where giants fear to tread, they are too big to venture far from the relative safety of familiar ground — they compete on their terms based on their strengths.

From our own experience in working with startups at Cake Invest, another set of thinking is about moving the customer dialogue to a place where the bigger player is unprepared to go and rather than risk losing the fight, it may well choose not to fight at all.

Winning in the last yard Winning in the last three feet is a reminder never to assume that a customer has made up their mind. It’s not over until it’s over and the last three feet is where giant killers find success. There’s a gap between when the giant thinks it’s got the sale and when the customer hands over the cash.

Giants are giants because they get the attention of lots and lots of people, but here’s the flip side — win with a strike just when the giant thinks it’s done its job and has moved onto the next item, you’ll catch them off guard and its all too late.

Eat the Bug This exactly what it sounds like, doing what is taboo and unthinkable to the giants in your industry. Much of what giants do is given, they do things this way and never like that. What they consider taboo, is where opportunity resides for the underdog. Be willing to do what they aren’t and you can build a business out if it. Senior managers in large companies are paid to say no to risky ideas – they fear change and resist it at all costs. Think of things that only the underdog can do.

Inconvenient Truths Make customers think for a moment, get them to realise that your offering makes more sense than the giant’s. We call this ‘making the inconvenient argument’, it comes down to your ability to move customers off their established anchor point and allows your argument to be heard.

You have to flip the emotional polarity of your customers. Some have to move from the emotional to the rational, others from the rational to the emotional.

Seize the Microphone Being nimble gives you the advantage of being the only one talking to customers and anticipating their next need while the giants rest on their marketing laurels. Take up all the oxygen in the room. Your competitors may be big, but that does not mean they have to lead the conversation.

Size, revenue and market share do not equal personality and emotional connection, so don’t be afraid of grabbing the microphone. Being polite and standing back will not get you anywhere. The right ideas will set your audience on fire, put forward ideas that make you the conversation. This takes meaningful interaction over a long period of time, but the results can be remarkable.

The value of an individual customer is always greater for small businesses than for large corporations, and understood as such. Your business is important to me. The stores, restaurants, and other small businesses that we use are more in touch with our needs. The primary reason is that small businesses are able to feel their own pulse.

Take your own pulse The pulse of a business is the stream of day-to-day events as they occur. In a small business, you feel all of these things as they happen. If a customer complains about something, or a competitor does something out of the ordinary, you notice. This high level of sensitivity is unique to small businesses. The pulse gives you a sixth sense for change and how to retain your customers.

Startup founders perpetually play the role of David against their Goliath corporate competitors, and, just like their biblical counterpart, small businesses defeat their large competitors by outmanoeuvring and out-imagining, and then outperforming them.

Large companies expect to confront competitors. They build enormous corporate strongholds in anticipation of large-scale engagements. But, despite their size and strength, these lumbering companies are rarely prepared to confront nimble and fast-moving adversaries that refuse to challenge them on the battlefield of their own design.

Startups are perfectly positioned to operate as insurgents against their entrenched corporate competitors, because they’re more willing to take risks, challenge the conventions about how commercial battles are supposed to be fought, and more alert, hungry and agile.

The business lesson is this: when startup underdogs choose not to play by Goliath’s rules, they win.

About Cake Invest

Cake Invest is obsessed with helping tech start-up entrepreneurs realise the potential of their ideas, providing technical and commercial guidance on the start-up journey from idea to customer.

We guide and mentor exceptional tech start-up entrepreneurs, helping them to turn their innovative ideas and disruptive technologies into great products, and high-growth businesses. But it’s not just about ideas, it’s about making it happen. We work with entrepreneurs who have a vision for something and want to create it. We help turn great ideas into great software products. We also work with investors to explore and exploit the potential of a start-up, helping to manage the technology and financial risk.