The Hindu Business Line : Small can be beautiful

Big bite: Apple took on the might of giant IBM and made it big eventually. Its guiding philosophy has been one of thinking differently and being aggressive. In pic: Steve Jobs, CEO, Apple Computers.

Remember the movie You've Got Mail starring Tom Hanks and Meg Ryan? Let me refresh your memory. Meg Ryan runs a small bookstore that the local neighbourhood loves. She is an expert on books, she can tell you where to find the book, recommend what to read, ask about the welfare of your family ... get the picture? Tom Hanks runs a huge retail chain that normally gobbles up establishments like these for breakfast. The film ends happily ever after as one would expect, after a lot of twists and turns.

And yet, from a business perspective, it does seem that small business generally has endings that are far from satisfactory. The large behemoth is just around the corner waiting and not merely watching. What must small business and small brands do? Is there hope for them? Or must they merely pack up and leave?

Bourassa Hardware store in Massachusetts took on Home Depot with its personal touch. It found a niche market that the biggie could not enter and simply drenched its customers in kindness. So, what are you doing to keep the biggie at bay?

State of mind matters

I have a number of companies that suffer from this `small brand' syndrome. There is no substitute for size, make no mistake about that. The law of dominance says: One is wonderful, two is terrific, three is threatened, and four is dead. So, what does the fifth, sixth or seventh brand do? Merely lie down and die? Hardly. It must remember that it's small. And yet not let its size constrain its thinking, strategy and consequent action.

Let me give you an example of `small thinking' from clients who wish to advertise. Let's assume that he has a budget of Rs 1 crore. What does he do? He skimps on the production cost of making the film, saves a few lakhs, thinking that he has been really smart as he has stretched his advertising budget to buy a few more spots. But what has he done in the bargain? He has compromised on the quality of the film, probably avoided the agency, gone directly to the producer ... This to my mind is neither smart nor street-smart. "Mere parsimony is not economy." Thinking small has induced our friend to make a strategic error and end up with a cheap film that no one wants to see. He is not alone. Quite a few of us suffer from the same strategic malaise. And yet you need not commit the mistake that some companies do. An unnecessary desire to travel business class in domestic flights for instance. As though the front section of the aircraft reaches half-an-hour earlier!

Thinking different, not small

How did Apple, a small company, compete with the giant IBM? "If we are going to build and market computers, we can't compete with IBM," said Steven Jobs and Stephen Wozniak. Instead of making and marketing computers to the business community where IBM was well-entrenched, a giant and a leader by far, Apple built a computer that would cater to children and young adults. Jobs was clear that the potential customers in this market may have never heard of IBM and even if they had, they would have no loyalty to IBM.But they did not suffer from "small thinking." `Think small' may be a wonderful advertising line but can hardly be a business philosophy if you want to make it big. Apple made it big eventually. But its guiding philosophy has been one of thinking differently and being aggressive. When IBM launched its first personal computer, Apple (yes, Apple) released an ad welcoming competition. `Welcome, IBM. Seriously' said the headline of the Apple ad. IBM was much larger, a giant if you will, but Apple conveyed the impression that it was a leader welcoming wholesome competition to enhance individual productivity! So the lesson is pretty simple. Don't let your current size constrain your thinking. Think differently.

Must you compete?

Competition is daunting more so if your company is small. And here is what a large company did. Unilever. Unilever joined forces with non-competing companies to pool their consumer data. The rationale behind this was as follows: "If I know what videos you rent, where you holiday, what books you read, what music you listen to ... I can make a reasonable prediction of what fragrance you will wear." Now, why can't other companies, irrespective of their size, look for allies? Why can't small companies barter products or services to each other so that they spend less and actually gain in the bargain?

And what about other allies?

There are other allies too, in the fight with the biggies, if we just look around the horizon. Let me give you a live Indian example. N. Ranga Rao and Sons (NRR), part of the Mysore-based NR group, which makes the hugely popular Cycle Agarbathies, is the market leader in that category. ITC, which is a giant in the Indian context, entered this Rs 1,000-crore category, by launching a brand of agarbathies called Mangaldeep `Five-in-one' to compete with NRR's Cycle `Three-in-one', the largest selling brand in India currently.

While that was fine, what was not fine was that the Mangaldeep commercial implied that its product was superior. NRR filed a case with the Advertising Standards Council of India (ASCI) against ITC Agarbathies and ASCI ruled in favour of the smaller company asking ITC to pull its commercial off air. So, there can be support for smaller companies from other bodies as well.

Have you scanned the environment? Do you understand the options, choices and allies available? Somebody once said: "A successful person learns all the rules and follows them to the letter. A super successful person learns the rules and then breaks them, one by one." Let not your current size deter you. It's where you are going, and how soon you can get there that matters.

(Ramanujam Sridhar is CEO of Brand-comm.)

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