I had the pleasure of moderating a conversation with Malcolm Gladwell at a breakfast for top tech executives attending Gainsight's Pulse 2014 conference in San Francisco.
Gladwell said that over the years he has come to appreciate the importance of Geoffrey Moore's classic marketing book "Crossing the Chasm" because he has come across many companies that have been unable to move beyond their older product lines and ways of doing business.
His latest book retells the story of David and Goliath and I think there is a sea change in the works and that the Goliaths of the world are in trouble. The large incumbents are vulnerable to a new breed of competitors that I've labelled "new rules enterprises."
The first rule of a new rules enterprise is that it is new — there's no reason to convince colleagues or bosses of the right strategy — you work with a team where everyone is on the same page. (I have nine additional rules that define a new rules enterprise — drop me a line if you are interested in finding out more.)
Pivots are very rare and only with young companies. Large organizations can't change at all. IBM is an exception but it took CEO Lou Gerstner nearly 10 years to transform it from the world's largest computer company to the world's largest computer services company and it barely survived intact.
The new "dotcoms"
A new rules enterprise is a very serious challenger to large corporations. It doesn't yet have the same brand value or distribution networks as a large company but it is extremely agile and extremely focused.
In his most recent book, "David and Goliath" Gladwell tells the familiar biblical story in a new way, pointing out that David managed to kill Goliath because he was not the underdog by any means: he was extremely well armed and he disregarded the accepted rules of combat. Goliath was at a tremendous disadvantage.
A new rules enterprise is very much like "David" — it fights very differently and isn't bound by the accepted ways of doing business. Large companies are stuck in their ways and are very vulnerable.
I'll make a prediction that we'll see some spectacular business success stories as competition moves into a new realm, and a new format for the David and Goliath story.
Gainsight, now with its second Pulse conference, is doing a good job educating the marketing world about "Customer Success" technologies. More than 5300 companies employ Customer Success Managers — a new position. It's an education for me, too.
Customer Success technologies can be described as helping businesses track their customers' use of their services and flag the ones that are ripe for upsells, or might be leaving. Gainsight estimates that a lost customer means lost revenues of as much as six times the customer acquisition costs.