Niching for a fight – and ending on a high note

It’s year-end, a time when many companies are crunching the numbers to report earnings.  For some, it’s been a good year and the business that comes in the last few days of the year are just icing on the cake.  For others, it’s been a difficult year, and the waning days of December are spent striving to close a deal that will take some of the sting out of the business results.  Companies in both positions are looking forward to better times next year.

Let’s look at a case study of a year in the life of a startup organization to understand how it positioned itself for future success with a bold year-end move.  This particular organization was formed when a group of visionaries boldly decided to split off from the parent organization. It had access to a large and promising market territory, but like many startups, lacked the resources to fend off the competition, which was also attracted to the same territory.

The startup began the year filled with hope and promise, but setback after setback occurred. The former parent organization was now a formidable, scorned competitor with no plans to yield the rich and promising market to an upstart.  As a result, the startup was driven out of key market segment after market segment and by year-end, found itself out in the cold, trying to figure out how to survive into the new year.  Literally.

The startup in this case study is the United States in 1776.  Having boldly declared its independence in July, by December 1776 the euphoria was gone.  The British had routed the Americans in several strategic battles, one of which forced General Washington and his forces out of New York.  While the British and their Hessian mercenaries were quartered in warmth and comfort in cities and villages, Washington and his troops had fled to the south of the Delaware River.  David McCullough in “1776” describes how this pivotal year in the history of the United States unfolded, leaving many by December to believe hope was lost.

Morale was poor, and soldiers in the Continental army weren’t reenlisting.  Desertions were thinning the ranks of Washington’s ragtag army, and supplies were woefully inadequate.  The military outlook for the fledgling nation was grim, and it was in these circumstances, or perhaps because of them, that Washington planned a bold stroke: he would attack the Hessian force at Trenton, New Jersey.

Washington_Crossing_the_Delaware

On Christmas day, Washington ferried his force of 2,400 men across the icy Delaware River as rain turned to snow.  He marched his troops in the cold and dark nine miles to Trenton where he attacked on the morning of the December 26th.  Even with the element of surprise, Hessian resistance was fierce but brief, ending with the capture of two-thirds of the 1,500 Hessian troops.  In terms of just numbers, the Battle of Trenton was insignificant, but in terms of implications, it was enormous.

Trenton wasn’t a strategic military objective – at the time of the Revolutionary War, it was just a small village, and the conflict was more of a skirmish than a battle.  What the victory did was provide the nation a morale boost and momentum.  It allowed the nation and the soldiers fighting for it to believe the dream again.  Those who know history understand that difficult years of fighting – including more military setbacks – were ahead, but victory would eventually come.

Washington’s victory at Trenton illustrates a brilliant competitive strategy for a small or startup organization that finds itself competing with an industry giant.  Going toe-to-toe with the market leader almost always results in failure.  A smaller competitor simply doesn’t have the resources to spend and cover the market the way the market leader can.  What it can do, however, is attack a niche by optimizing its entire approach for one specific segment of the market.  A singular focus on a narrow part of the market, one to which it is completely dedicated to owning, allows the startup to gain a valuable toehold in the market.

Success in just a single niche can propel a startup to a position of market leadership. Conquering the first niche is the first domino to fall in a strategy that can lead to penetrating an entire market, niche by niche.  For Washington, in 1776, that first niche was Trenton.  How should a startup determine which niche to pursue?  Here again, history shows the way: choose a niche that is overlooked by the competition, one you can access and serve effectively, and one where you can win.

The Battle of Trenton shows how a small victory is the springboard for a larger one.  The Continental Army would go on in 1777 to taste victory more than once and in battles that were strategically more important. All the corporate giants that are pillars of today’s economy were once startups, but despite their success, their futures are far from secure.  Somewhere in the world is a hungry startup with extremely limited resources but an inexhaustible supply of determination, looking for its Battle of Trenton.

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About Jerry Rackley

An avid reader, mostly non-fiction, I read great books and think how the lessons of history have contemporary application. Most of these thoughts are work related, but sometimes about faith or family. This blog is my first attempt to allow some of these thoughts to escape the rather thick skull in which they were born.
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