Small Business Innovation Lessons from Salesforce.com

3 Ways to Leverage Your Innovation Advantage

Because it’s more difficult for larger companies to innovate, if expansion-stage companies are able to focus on the right opportunities and execute against them they can create a significant innovation advantage . That starts with hiring top talent, but expansion-stage companies must also do the following:

1) Focus on innovations that conflict with the large companies’ decision making process

The fewer facts available, the more difficulty larger companies will have performing the fact-based analysis they often rely on. For instance, you might explore new technologies for larger companies’ existing products, customer segments not addressed by the large competitor, or completely new distribution channels and customer service models.
In Salesforce’s case, it was one of the first companies in its market to ditch the software model and embrace the cloud. Additionally, Benioff made the decision early on to focus most of the company’s energy on smaller businesses, a market segment that was largely underserved by Goliath enterprises.

2) Make it difficult for larger companies to incorporate your innovation into their core business

That might include developing technology that larger competitors would have difficulty building into their current platform, or executing an approach that would require significant change to one or several of a larger business’s departments.
Remember, if you aim directly at a large company’s core business, you’ll need to create an innovation that completely disrupts its business or economic model. Rather than doing that, you should choose innovation opportunities that have a long runway. That will allow you to continue innovating while larger companies attempt to catch up.
Salesforce has done this from day one, first by embracing cloud computing and a SaaS model, and then by executing a series of strategic acquisitions (most recently, Radian6 and Buddy Media) that have turned the business into an enterprise software powerhouse.

3) Build the best network possible to help guide you

There is a tremendous ecosystem of potential users, senior managers (both retired and active), VCs, consultants, accountants, and lawyers who are all interested in helping emerging companies ascend the innovation curve and build their businesses. The more you build your network, the more it will help your innovation.
Benioff, who was an Oracle executive before co-founding Salesforce, certainly leveraged his healthy network to build Salesforce.com. In fact, Benioff’s former boss, Oracle CEO Larry Ellison, was an early investor in the company, and many of the business’s early employees were recruited from Benioff’s and his co-founders’ personal networks.
If done right, expansion-stage businesses can have a significant innovation advantage over their far less nimble large competitors. The key is to understand your leverage points and use them to maximize impact.
As Benioff writes in his book, Behind the Cloud, for smaller companies to succeed, they must have the courage to pursue their innovation — before it becomes obvious to their market. Salesforce certainly did that early on in its development, but it continues to do that today, even as its grown into one of the Goliaths that it once set its sights on.
Editor’s note: For more examples and insights into how your company can defy the odds, disrupt large markets, and turn the tables on your more established competition, download OpenView’s free eBook, Slaying Goliath: How Small Companies Can Compete Against Their Large Competitors.

What are other ways small businesses can use their natural competitive advantages to get disruptive and topple larger competitors?

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