In the story of David and Goliath, David defeated a much taller and stronger Goliath -- not by fighting the giant in hand-to-hand combat, but by using technology, a Slingshot. The Slingshot allowed the smaller David to attack from a distance that minimized the advantages that Goliath had over the smaller David. In my book Guerrillapreneur: Small Business Strategy For Davids Wanting to Defeat Goliaths, I define the term “Guerrillapreneur” as a business that integrates sharing and circular loop economics into their business design with the goal of generating incremental profits to invest in “disruptive technology.” For example, Henry Ford deployed circular loop economics in his business when he sold wood scrap (previously considered waste) from the Model-T assembly line as charcoal under the brand Kingsford. The incremental profits from Kingsford Charcoal were re-invested in improving Henry Ford’s disruptive assembly-line innovation.
Disruptive technology is an innovation that displaces an established technology and shakes up the industry. As a Guerrillapreneur, I go one-step further. I define “Slingshot” technology as an innovation that shakes up the industry by enabling startups to profitably capture niche markets and deliver products and services at a price equal to or better than the corporate Giant. Why call it “Slingshot” technology? I call it Slingshot technology in honor of the innovation that David used to defeat the giant, Goliath. Accordingly, I believe that motivated startups and small businesses can develop disruptive Slingshot technology and defeat the corporate giants that dominate their industries.
Founded in 1962, Walmart represented the ultimate David, and Kmart and Sears represented Goliath by dominating discount retailers during that period. Founder, Sam Walton, realized that if he could provide “Everyday Low Prices” to all customers (in rural and urban markets), they could displace the two dominate players. In 1991, when Walmart was still a relatively small player, they invested $4B in a retail link satellite system to aggregate data from its stores and improve the efficiency of its supply chain. The retail link system also networked all its suppliers and provided them with real-time sales and inventory data. By providing this information to its suppliers, Walmart could respond more rapidly to purchase requests and better forecast demand. The cumulative impact of Walmart’s investments was: (i) a 200 basis points reduction in distribution and shipping costs; (ii) a 500 basis point reduction in operating expenses; and (iii) an increase in the inventory turns from above the industry average. Walmart had built Slingshot technology that allowed them to provide products and services at prices equal to or below what was being provided by Sears and Kmart while operating as a smaller player in the industry
Kmart tried to fight back by matching Walmart’s low prices. However, Kmart did not have Walmart’s retail link inventory management system, and as a result, they suffered stock-outages and declining profits. In an attempt to stave off bankruptcy, they merged with a bloated Sears. The combined companies lacked Walmart’s retail skill and technical infrastructure. Kmart has all but disappeared from the face of the Earth, and Sears divested most of its retail and financial services assets. David has defeated Goliath once again.
In my podcast, Guerrillapreneur: The Art of Waging Small Business Warfare – Episode 2: What is Slingshot Technology and How Can Startups Use It To Defeat Corporate Giants, I discuss Slingshot technology in greater detail and provide more case studies of startups that vanquished the giants of their industry. Click HERE and subscribe to Guerrillapreneur: The Art of Waging Small Business Warfare podcast.