We make our living as guerillas – not the bad kind, but more of a
freedom fighter. By using the term ‘guerilla’ I mean EMJ (now a
division of SYNNEX) fights for business against big gorillas (other
distributors) in the field. Our competitors are almost 100 times our
size; EMJ is a Canadian-based, $165 million per year distributor. We
have made an operating profit for the past 80 consecutive quarters. So
even though we are up against the big gorillas as a distributor, we
must be doing something right.
If you are in a business where some of the competitors are much larger,
you may be able to benefit from using guerilla tactics. The principles
of running a guerrilla organization differ from running a gorilla
organization. As a guerrilla, we hide from our competitor; we do not
try to crush them. I even go so far as to examine what they do well and
let them do it. At the same time, I look for under-serviced markets and
get to these markets fast.
A gorilla takes all competitors head on, trying to crush the
competition. Sometimes this takes the form of a price war. Sometimes it
takes major prolonged, drawn-out investment. This works as long as you
are the same size, or larger than the competition. Even then, such a
long battle can sap power and ultimately profits.
Companies that die often believe they were gorillas. It is certain
death for a business to fight gorillas unless they can withstand the
siege. Any time we hire someone with a gorilla-company background, we
watch and coach that person to make sure they are indoctrinated with
the appropriate tactics. We have to make sure they understand out
business model.
My 8 favourite guerilla tactics are:
1 – Act fast. I use my company’s size for my advantage. I can act
lightning fast. In the computer business, this is a huge asset. Things
change so rapidly that moving fast and being first to market is a huge
advantage. Larger companies do not react quickly. Develop a reputation
for being first – it gets the attention of customers.
2 – Welcome smaller opportunities. Gorillas tend to say ‘no’ to
manufacturers who don’t think they can do significant volume with. But
a small opportunity rejected by a gorilla can be a very profitable
opportunity for a guerilla. For EMJ, a million dollar per product line
is an opportunity big enough to get the attention of my first string.
In your business, look for the right-sized opportunity for you.
Frequently, it is the smaller opportunity that has the best promise.
The gorillas will leave you alone. There is always a right-sized
opportunity for a company of any size. Knowing your rightful place in
the market can help you to thrive.
3 – Get focussed. Higher focus means we know more, stock more, and sell
more product of fewer manufacturers. The smaller our product listing,
the more powerful we become. We know a lot about a little. That means
we know the products we sell better than a gorilla, and we become a
sales tool for the reseller, not just an order-taker. Could you become
more focused and specialized in a business area by giving up on a part
of your business?
4 – Be more flexible. We can adapt more easily to our customers and
suppliers. We try not to be ruled by policy. The bigger a company gets,
the more likely they are to have policy and some of it is required. As
a small distributor, we can be more flexible. Are there areas that your
competition is ignoring that by being more entrepreneurial, you can
capitalize on?
5 – Be smarter. This sounds too simple, almost embarrassing to write.
Since we are smaller, we can look at the business we do more carefully
and make sure it makes good business sense. We don’t pick up another
manufacturer just to increase the size of our line card. That’s just
not good business sense for us. That’s the way we have to think – and
so should you.
6 – Lower your overhead. For some reason, most companies seem to choose
more expensive offices and furnishings as they grow. This expectation
tends to increase costs in all areas of the company that distribution,
at current margin levels, can ill afford. At EMJ, we buy quality used
furniture. We are on the outskirts of Guelph where the cost of land and
taxes is less. Our capital base is even high enough that our cost of
capital is less than some of the gorillas. Are there areas that you can
be lower overhead than the gorillas in your field? Costs always add up
on the bottom line.
7 – Foster staff loyalty – one major advantage guerillas have over
gorillas is the ability to attract, motivate, and keep good people.
Primarily this is because guerillas can be more flexible, easier to
work for and give people more of a sense of accomplishment because what
they do contributes more directly the company’s bottom line. I have
always found there to be great power by being smaller and treating my
people with respect and not just as numbers. Gorillas can try to do
this but it is tough for them to copy you.
8 – Just BE a gorilla. We like to enter market areas that we can
dominate and specialize in. We may not be the biggest but in certain
specific niches, we dominate. As long as we are the biggest in an area,
we can act the part. We can under-price and over-service the
competition forever. Anyone who enters our markets learns that it is
expensive and often impossible to unseat us.
9 – Be personal. One thing a smaller organization can do is to be more
personal. People buy from people. You can foster relationships that
will help you sell. Part of the way we are personal is by showing our
customers what markets and products ARE profitable. There is nothing
that cements a customer relationship better than making them money,
because you’ll be making money for them AND for you!
10 – Be opportunistic – to sum up guerilla strategy is simply to be
opportunistic. Take advantage of opportunities that the gorillas cannot
do. There are many companies that remain profitable by being
opportunistic.
In summary, unless you are huge – think guerilla. Appropriate guerilla tactics for your size will win any battle.
