What if Goliath became David?

The biggest lie the devil tells you is «not now, you still have time»

1. During one of my last Trips

I chose Malcolm Gladwell’s book «David and Goliath – Underdogs, Misfits, and the Art of Baffling Giants» as my traveling friend.

In the first chapter of his book, Malcolm describes the battle between David and Goliath, leaving the reasons why Goliath was defeated in a totally unexpected way for the Philistines.

Without going into great detail, if we get into the Philistines’ heads, we easily conclude that by sending their best warrior Goliath(1) to fight, they would never expect the Israelites to choose a warrior with the profile of David(2). This surprising effect, perhaps, was the only option available, resulted in an outstanding victory that has prevailed as one of the most famous in history.

Against a giant warrior, heavy and slow, David used the agility of movements and an unexpected weapon (a sling and a stone) which with a single blow he defeated his enemy.

This could be the story of many of the companies from the end of the last century to the present.

1 Goliath was more than 9 feet tall. He wore a bronze helmet and a bronze cap weighing sixty pounds; on his legs he wore bronze leggings and had a bronze dart hanging from his back. His spear had an iron tip which weighed seven pounds and two hundred grams. In front of him he has a guide to help him walking in the battlefield.

2 David was a young man with a weight less than the quota Goliath wore. And he came to battle only with 5 stones in his pocket and a sling.

2. During the last decade

Of the past century and part of the first decade of this century, photography was synonymous of Kodak and vice versa.

In spite of everything, we all know how ended the story of this giant named Kodak, founded in the eighties of the nineteenth century, which gave employment to more than 120 thousand people and had an annual income of more than 10 billion dollars. Simultaneously with the end of Kodak, propagated the digital cameras (an idea that had already been invented by Kodak and later abandoned for discrediting this technology), the first smartphones.

Also during the early years of this decade, we witnessed the birth of a small company, resulting from an idea of two students of Stanford that had the purpose: «to make mobile photographs» fast, simple and beautiful «. Their app was released on the Apple App Store on October 6, 2010.

In April 2012, this small company with 13 employees was bought by the giant Facebook for a value of 1 Billion Dollars (10% of the maximum revenues of Kodak). Now you know for sure that I’m talking about Instagram (name is a result from the combination of the words «Instant Camera» and «Telegram»).

There are many other stories like Instagram, such as Waze that was bought by Google (for a value of 1.3 billion dollars, having 89 employees according to Linkedin source), or Whatsapp bought by Facebook (for a value of more than 21 billion dollars, with only about 60 employees).

3. this type of companies

I like Instagram, Waze or WhatsApp, are denominated as «Exponential organizations».

Salim Ismail, author of «Exponential Organizations» and a leading expert on the same subject, explains in a very simple way why this new concept of companies are better, faster, more agile and efficient than traditional companies.

Let’s look at the definition of «Exponential Organizations» according to Salim Ismail: «An Exponential Organization (ExO) is one whose impact (or output) is disproportionally large-at least 10x larger-compared to its peers because of the new organizational techniques that leverage accelerating technologies.»

Which is the common denominator of all these companies that I mentioned and many others that appear every day around the globe? Massive use of technology, considered as part of its core business. All of them are digital native companies.

The «magic potion» of these exponential or digital native organizations is the combination of the following ingredients: Culture 4- organization -i- technology.
Some of the biggest icons of exponential organizations are companies like for example: Uber, Airbnb, GitHub, quirky, among others.

These exponential organizations are different from traditional companies in the sense that they are digital native.

The market research firm Gartner defines digital native companies as: «organizations founded after 1995, whose operating model and capabilities are based on the exploitation of information from the internet and whose digital technologies are considered a main competence.»

4. As digital native companies

The main difference comparing to traditional companies is that their business are based on information (as a consequence of the massive use of technology), unlike traditional companies that come from less agile and inflexible organizational and business models which are based on a more physical and analogic world.

This small big difference was exactly the main reason why Kodak disappeared from the market in such a radical way (transition from analogue to digital photography).

Market sectors such as Finance or logistics, which in the past decade never thought they could be threatened, are today at a real crossroads, running against time to be able to defend themselves against the constant attacks by this new concept of companies that specialize in market niches, operating in a much more efficient, agile way, and also more adaptable to the new style of consumer behavior.

One of the biggest challenges, traditional companies are facing, lies in this difference between becoming versus being digital native. And I say challenges, because they are really just that, since an important advantage that traditional companies have for now, is the financial and non-financial resources to be able to ensure the success of this transformation.

5. As an active part

Of this digital transformation, more than the speed at which traditional enterprises are making their transition, my concern is about what kind of strategy they are following.

In the present, «digital transformation» still is a concept with a lot of questions without the right answers for most of the traditional companies.

I see many of them assigning huge budgets in a sign of despair. Hiring a large number of vendors to help them implement a large amount of new software, passing on the idea that the success of this same digital transformation is measured by the number of new applications that are deployed and made available to their customers or employees.

Digital transformation is much more than that. In my opinion it’s a paradigm shift in terms of business culture and organizational models with consequences in the use that we give to all the available technology.

There are many cases of success in this type of transitions, which proves that it is possible to do it and somehow be prepared for this new reality of competition that arrives every day without notice. Two well-known cases that overcome with maximum success this challenge are, Amazon or Google, companies that were already on the market before the emergence of digital native companies and are a case of transformation success.

My idea with the sequence of articles that I will present, is to give an idea of the way traditional companies can adapt and transform with success to this new world where technology is much more than a support to the business. Technology is already part of the business.

In my opinion, it is still possible that the «Goliaths» can transform themselves and be able to fight face-to-face the Davids in this new concept of economy, where adapting is the new rule.

By Pedro Gomes Santos