Dr. Dileep Rao: 8 Strategies to Build the Untouchable Lead and Dominate an Emerging Industry | Technological Leadership Institute

Posted on
July 14, 2017
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What is common among business giants such as Intel, Walmart, Microsoft, Google, Apple, Facebook, Chipotle, Whole Foods, Uber and Airbnb?

They were first dominators in an emerging industry. Some were first movers. Some were not. The ones who won and dominated the emerging industry built such an untouchable lead that the others could not catch up. And they mainly did it by being improvers, not first-movers.

In an emerging industry, there are usually many entrants, each trying to grab the lion’s share of the market. The first-mover identifies the opportunity. But improvers wrest the lead from the first-mover. First movers don’t always end up dominating. In fact, only about 11 percent did so.

Dominators win when they build an insurmountable lead. Sometimes during the initial land rush, no one has a dominating advantage. The first one to find and build a dominating advantage gets a head start towards building the untouchable lead.

Here are a few strategies that have been used by billion-dollar entrepreneurs to find the dominating advantage and build the untouchable lead:

1) Become an early-mover: Most of the dominators were not first movers, but they were early movers. They got in soon after the industry emerged, but before it took off. They found the key unmet need of the market during the emerging phase and dominated when it took off. Most dominating entrepreneurs, including the founders of Intel, Walmart, Microsoft, Google, Apple and Facebook were early movers before the leaders were entrenched.

2) Control the core technology: Microsoft became the leader of the PC industry by controlling the operating system. For some unfathomable reason, IBM handed this opportunity as a gift to Bill Gates. This allowed Microsoft to control the direction of the PC industry and demolish its competitors. It then added the suite of office products and became a behemoth.

3) Find the right business strategy: By finding the right combination of product and market in his second stint at Apple, Steve Jobs showed that he was perhaps the greatest entrepreneur of the last 50 years. He managed to build one of the world’s great companies by building platforms with the iPod, the iPad and the iPhone.

4) Seek many small improvements unless the major one is a blockbuster: Many examples suggest that domination was mostly achieved not with one great advantage but a series of small advantages. Lee Schafer points this out with great clarity in a column about Polaris and Arctic Cat — two of the biggest snowmobile companies. But when the major improvement is a blockbuster (as in the case of Xerox, Medtronic or Genentech), run with it.

5) Satisfy the unmet need: When the Internet first came on the scene, many search engines vied for dominance. Brin and Page found a rational way to rank the search results based on their popularity, and search users found this method was credible. Google has dominated search since.

6) Focus on the right segment with the right strategy: Sam Walton focused on the underserved rural market with his big-box strategy. While his competitors, such as Target and K-Mart, were busy seeking to dominate the urban market, Walmart focused on the rural market. After dominating this market, he then turned his attention to the urban market and became the largest company in the world. Jeff Bezos focused on the segment that was initially comfortable buying online. And he used the right strategy to dominate the cloud.

7) Find the right alliance: Michael Bloomberg built his company by forming the right alliance with Merrill Lynch. By using an industry leader rather than a venture capitalist as his investor, he kept more than 80 percent of this business and dominated his industry.

8) Get the right skills: The history of highly successful entrepreneurs shows that they grew with their venture. As the venture grew, so did their skills. The good ones know that they have to build a great team. And develop great leaders. Otherwise, they fail.

MY TAKE: There have been many ways to build the untouchable lead. Find the one that is right for you to develop your long-term advantage based on an analysis of the unmet need and your skills.

Dr. Dileep Rao has more than 20 years of experiencing financing businesses and ventures using venture capital, leases, debt and subordinated debt. He also bought and turned around several companies. Since retiring, he has been writing, teaching, and hopefully thinking. He has also interviewed extremely successful entrepreneurs such as Glen Taylor and Bob Kierllin. Currently, he is writing books about how to build giant businesses without capital. Dr. Rao teaches in the Master's in Management of Technology degree program. 

This article was originally written for Forbes, and republished with the author's consent.

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Dileep Rao, PhD

TLI Faculty

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