How to be a challenger, then a market-leader

“Regardless of size, a challenger mindset is becoming key for organizations to establish a competitive advantage."
14 October 2019

What happens between startup and market leader? Source: Shutterstock

There’s a fabulous Gary Larson cartoon that depicts a poor confused soul sitting on the end of the bed staring at a sign on the wall. The sign reads First Pants, THEN Your Shoes.

The joke is obviously supposed to convey the notion that the poor chap is so confused by life that he needs some basic instruction to know which order he should put his trousers on. But there’s another subtext we could take from this, i.e. the ‘natural order of things’, which also plays out in the enterprise technology business.

Ignition for garage startups

Many tech startups start in somebody’s garage, shed or makeshift office. Whether they flourish or fail, that initial startup phase is pretty much always necessary. Some become tech giants (some would say ‘monsters’) and the rest is history.

Except it isn’t.

There is an in-between phase that the industry doesn’t usually talk about. All we hear about these days are firms ‘coming out of stealth’ in startup funding phase, or flexing their corporate muscle as they claim to be ‘market-leaders’. The period betwixt the two doesn’t garner discussion, but this spell is arguably the most interesting.

As tech firms develop in their late adolescence, they take on ‘challenger’ status… and it is a term being popularized across the industry right now by both vendors and analyst commentators alike.

If you’re looking for a list of big-scale Enterprise Resource Planning (ERP) vendors then your ‘usual suspect’ list might include SAP, Oracle, and Microsoft with its Dynamics brand. But then there’s IFS.

Not as large as the others, IFS says it is in the challenger brand zone right now and the company claims to be winning an increasing number of sales opportunities when it goes head to head with the larger vendors.

IFS CEO Darren Roos explains that his company has recognized its own challenger brand position and fought to fuel its engine so that it can realize its full market potential.

For The Challengers

“We see that many of our customers are not always number one or number two in their industry; instead, they are the up-and-coming firms that are looking to truly disrupt. Because of this, we hinged our recent annual convention this year around the theme of ‘For The Challengers’ because it embodies not just our customers’ positions, but also our own, as we now grow to be more of a force in the tech industry,” said Roos.

Chief Marketing Officer at IFS, Oliver Pilgerstorfer, added: “Regardless of company size, having a challenger mindset is increasingly becoming the key for organizations to establish a competitive advantage. Even if you’re number one in your industry, you cannot afford to be complacent— if you’re not challenging the status quo, questioning how you do things, or looking for ways to get value from new innovations… someone else will be. It’s for this reason that people connect and gravitate to this message.”

So do challengers try harder than the tech behemoths who might sometimes be tempted to sit back and rest on the laurels of their big-brand strength? It’s an open argument that’s tough to call. What we can say is that this is a newly defined growth zone that customers themselves may actively seek out for better prices and what might be more conscientiously delivered support services.

Catalysts for change

Founder of job search website Global Career, Mike Swigunski agrees that this is a new category for enterprise tech customers to be aware of potentially bringing into their commercial mix.

“Challenger brands are often the catalysts for change within an industry. They look past convention and seek to do things differently in order to one day be the market leader. The main way to achieve this moniker is to innovate and provide solutions that are missing in your sector.”

Swigunski echoes IFS CEO Roos in that both men agree on the importance of committed talent as a key enabler for challenger status success.

“To become a market leader, after being a challenger, you need to deliver added value, i.e. offer the same or better than the opposition. On top of that, have the best people on your team to give confidence to the market and consumer, and to attract even more talent to your team to continue the innovation. Long gone are the days when people stay at the same company for life,” said Swigunski.

Christine Telyan is the CEO and co-founder of London-based tech company UENI, which builds over 3,000 business websites per day. Telyan says the journey from challenger to market leader has to involve taking risks and making bold moves, but always working to create a product your customer loves and making sure you have scalable technology and processes.

Fail fast & fail forward

“As a challenger, be prepared to make mistakes. Any great, market-leading product or business does not come by taking guarded, baby steps. Time and money are scarce, talent wants action and the market moves on. You need bold moves and you often won’t get it right. Just make sure that you get the big things right and can course-correct quickly when you’ve got it wrong,” said Telyan.

“To become a market leader, your customer needs to love your product, not like it. The tech does not need to be revolutionary and it doesn’t need to be the most beautiful thing you have ever seen, but the product does need to do something for the customer that they could not do previously, for whatever reason. You need to change the game for your target customer in some way.”

Telyan advises that, additionally, successful challengers must ensure that their technology and processes are scalable. There’s no point in positioning yourself as a challenger on the tipping point of mass-market penetration and/or viral adoption if you’re not ready to turn the volume up to 11 when the time comes.

Just remember everybody, first pants, then your shoes… the first challenge, then scale, then lead, but don’t forget to tie your shoelaces.