Rex vs. Raptor – Using Scale to Your Advantage

Any 90’s kid will tell you how great dinosaurs are. Well, not all kids – pretty sure my sister was permanently scarred by Walking With Dinosaurs at the age of 5, but most kids know dinosaurs are the best.

I used to love the T-Rex more than anything. I had T-Rex stickers on my wall, little plastic models, t-shirts, movies, books. I loved them, and still do, for so many reasons. The T-Rex was an apex predator. They were the strongest beasts around, the most efficient hunters, and, according to recent research, some of the smartest too. They also had excellent eyesight and a ruthless, cannibalistic edge that helped them to dominate our planet in an age of intense competition for survival.

As an innovation consultant, I work with some of the world’s biggest companies. I’ve recently found myself thinking that many of these businesses are just like the T-Rex. They are, for the most part, rather less scaly than our cretaceous friends, but they share many of the same key strengths:

– They’re big, with distribution networks unrivaled in history

– They’re strong, with untold spending power

– They’re smart, managed by the best and brightest, equipped with the most cutting-edge insights and data

– They have excellent vision, capable of taking a long-term view of their categories

– They’re cannibalistic, locked in intense competition with each other every day

Similar to the T-Rex, strength and size in particular has served the world’s biggest businesses well for years. They created high barriers to entry, they could always outspend the competition, and they could generally hit a lower price point. Also similar to the T-Rex, these big businesses are rapidly being taken on by new, youthful, precocious upstarts. Let’s call them the Velociraptors. Velociraptors are scary because they’re so incredibly fast (just ask the countless raptor victims from the Jurassic Park films. You think you know where the raptor is, you think you’re safe, then BAM! They’ve got you. I used to have nightmares about raptors, they’re terrifying).

This is mirrored in business today – almost alarmingly so. Smaller, more agile businesses that operate in a state of “forever-beta” are able to change the game too fast for big businesses to keep up. These “raptors” are built for speed and agility. They’re happy to fail fast and fail cheap in an effort to bring constant disruption to long-established categories.

And they are starting to close in. Most big businesses have responded by beginning to adopt agile ways of working, but this is a huge transformation that requires more than a few post-it notes, foamcore boards and a foosball table. It requires disruptive organisational change, flattened hierarchies, distributed decision-making and digital transformation. All of that takes many dollars and a few years to realise. But what many big businesses don’t recognise is that in the absence of overnight agility, there are ways they can use their scale (pun intended) as an advantage when innovating.

Three tactics I recommend:

Lay strategic bets

One advantage most large businesses have over smaller competitors is spending power. As a large business, making clear, conscious, considered choices about where and how to play allows you to use that spending power effectively. Make sure you know why you’re doing what you’re doing, and stage your investments to de-risk the process. Amazon does this phenomenally well, staging investments and learning quickly to either kill an idea early or to gain sufficient confidence in it to place the full financial and operational weight of their business behind it.

Use your ecosystem

Big businesses typically have huge ecosystems of suppliers, retailers and partners, and these are often more extensive than those of their smaller competitors. Innovation that benefits the large ecosystems tends to be more successful, more sustainable and more defensible. Coca Cola’s Freestyle vending machines demonstrate this in action. Consumers get to create their own drink, and Coca Cola sells more product, but they’re also creating a key point of difference for their retail partners who in turn benefit from increased footfall. Everybody wins.

Use your biggest asset: your customer base

The penetration rate of some products and services is higher than the turnout in recent elections, and yet there is often no benefit to each individual for being part of a bigger whole. Brands can use this scale to bring advantages for consumers and for the business. Spotify have mastered this in recent years. They take the collective listening data of their total user base and leverage it to create personal recommendations for each individual. This has elevated them to become the biggest paid-for music service in the world in just 10 years.

The interesting thing here is that smaller challenger businesses are rarely able to deploy these tactics. They often lack the organisational scale or budgets to make large strategic bets, their ecosystems are often more limited and they tend to be a smaller part of that ecosystem, and they frequently lack the customer base that more established businesses boast.

And yet so many big businesses get spooked into abandoning these key strengths and end up playing the Velociraptors at their own game. Pace and agility are important, never more so than in today’s fast-moving, digital world, but the things that made big businesses dominant for so long are still hugely powerful. Big businesses must be careful not to abandon their heartlands too readily.

So if you’re a T-Rex and you’re feeling the beady eye of a Velociraptor on your category, never fear. Just be more Rex.