Bigger, wealthier rivals can and will stack the deck against you. And they will involve lawyers. How will you respond?
I recently re-read Wharton professor G. Richard Shell's book, Make the Rules or Your Rivals Will. For the second time it terrified me—and inspired some pretty vivid Lord of the Flies/Dr. Suessian dreams.
Whether you like it or not, argues Shell, bigger competitors can and will bully you and try to gain an advantage through laws and litigation.
U.S. businesses and industries have lobbyied for special treatment and to gain a competitive edge for centuries. Benjamin Franklin famously had a bill passed to name his print shop the place where money would be printed. When margarine first entered the marketplace, the dairy industry convinced a number of states to create laws mandating the inclusion of pink dye into the butter substitute, effectively "margarinalizing" it. And more recently, in the mid-nineties the pizza industry successfully lobbied for a $6 million tax credit for fast food restaurants that offered home delivery (Domino's founder Thomas Monaghan takes much of the credit for that one).
If you're like me, all of this makes your stomach turn. I find it frustrating that competitive advantage can be determined by factors that have nothing to do with competence; instead companies leverage a "bully advantage" they've acquired through the manipulation of the legal and tax system that give them dominance over other organizations.
I asked Shell for his perspective on the bully advantage. He said, "There is no way out. Someone is going to make the rules (an oligarch in Russia, a pirate in Somalia, the U.S. Congress). You don't get to opt out. You have to have an attitude and strategy for dealing with this."
So what's a small business owner to do when up against a bully advantage?
1. Embrace it. Think about ways you can innovate to render the bully advantage obsolete. If you have to put pink dye in your margarine, sell it like it's the most amazing invention on the planet and that eating "pink" makes you a superhero.
2. Take over the environment. Fighting a bully advantage through the courts may wipe you out. Instead, go deep into the associations, friend networks, and environments in which the bully lives. Long ago The FruitGuys dealt with a delivery zoning issue in San Francisco brought about by an organization that wanted more space for larger trucks. It would have effectively limited access for our small delivery vehicles. By getting to know the folks who handled the zoning and working with our local chamber of commerce we became part of the discussion and found compromises that were better than the initial proposals.
3. Fight it outright. This is never fun and costs a lot of money and time—both things that get you away from doing what you need to do to grow your business. However, when push comes to shove sometimes you have to stand up for what you believe is right.
4. Make the rules or your rivals will. As Shell's book suggests, sometimes you must accept that this is the way the world works and jump in. Now, lobbying for personal gain doesn't sit well with me; I'd prefer a strategy that leveled the playing field. But if nothing else works, know that this option will also require time, money, and a whole lot of effort. Depending on the nature of the issue at stake, do all you can muster: speak to your representatives, hire your own lobbyist, start a movement of community support.
And because I haven't been able to shake those vivid dreams just yet, here's a Seuss-inspired rhyme for all the underdogs out there fighting the good fight:
The Tale of the Bully Advantage
There once were some kids who were bigger than most They'd play king of the hill and stand and boast: "You can't throw us off, we're big, rich, and strong!" But they weren't so big when some smart kids came along.
Those smart kids were smaller and they'd sneak from behind And although they were poorer they'd innovate all the time Until the big kids were down at the bottom of the hill And the small ones had taken the mount with a thrill.
But the big ones they were, well, big, you see. And money and strength provided a key, That opened a hole known as "loop" in this hill And the small kids tumbled down against their will.
Soon the big kids began to throw rocks that all read, Words like: "litigate," "lobby", and "dead." And the small kids scrambled to avoid their aim, Wond'ring if this was fair or a bully-rigged game.
This "bully advantage" made from rocks galore Wore down the small kids til they wanted no more. And the big kids cheered, "we won, what a thrill! Let's make it official and call it a bill."
And the moral? We must fix this piece of earth On which the same game is played for gain and mirth. The kids must decide when it's best to keep out, The loops and rocks and things that are about The influence that crowns a king of a hill Rather than the success of innovation and skill.