{"id":558,"date":"2009-07-24T14:29:27","date_gmt":"2009-07-24T20:29:27","guid":{"rendered":"http:\/\/workingknowledge.com\/blog\/?p=558"},"modified":"2023-03-02T21:28:40","modified_gmt":"2023-03-03T03:28:40","slug":"how-to-out-compete-a-larger-company","status":"publish","type":"post","link":"http:\/\/www.workingknowledge.com\/blog\/how-to-out-compete-a-larger-company\/","title":{"rendered":"How to Out-Compete a Larger Company"},"content":{"rendered":"<p><strong>Point<\/strong>: Use friction to your advantage<\/p>\n<p><strong>Story<\/strong>: <a href=\"http:\/\/www.mcguckin.com\/\">McGuckin Hardware<\/a> is a family-owned store in Boulder, Colorado, long known to any do-it-yourselfer as <em>the<\/em> place to go for supplies.  The store has knowledgeable, friendly staff, many of whom have worked at the store for years over its 54-year history.<\/p>\n<p>A few years ago, Home Depot opened a store in Boulder, with twice the space, offering lower prices.  Can McGuckin&#8217;s survive against giant Home Depot?  Or will it become another mom-&amp;-pop store shuttered by behemoth retailers with economies of scale in supply chain and large marketing budgets?<\/p>\n<p>According to recent research by Wharton&#8217;s <a href=\"http:\/\/www-management.wharton.upenn.edu\/chatain\/Default.htm\">Olivier Chatain <\/a>INSEAD&#8217;s <a href=\"http:\/\/www.insead.edu\/facultyresearch\/faculty\/profiles\/pzemsky\/\">Peter Zemsky<\/a>, McGuckins has a good shot at success due to a concept that Chatain and Zemsky call &#8220;friction.&#8221; As they define it, a friction is any force that makes it difficult for buyers and sellers to connect.  For example, a poor location is a friction if it makes it harder for customers to get to the store.  A complex website or a confusing store layout is a friction if it&#8217;s hard for customers to find the products they want to buy.<\/p>\n<p>Smaller companies can out-compete giants by exploiting frictions. For example, McGuckin&#8217;s can use its loyal, knowledgeable staff to help customers quickly find what they need or give them sound advice if they&#8217;re embarking on a new project or product purchase.  Long-time loyal employees are more likely to go the extra mile to help a customer. McGuckin&#8217;s loyal staff also know the local area, so they know which paints withstand Colorado&#8217;s intense sun and which garden plants thrive in the local climate. McGuckin&#8217;s local knowledge reduces its distance to its customers, which reduces friction.<\/p>\n<p><strong>Action:<\/strong><\/p>\n<ul>\n<li>Document the time, costs, knowledge, hassles that customers face in finding your business, buying from you, or using your products<\/li>\n<li>Compare the frictions in your business or products with those of your competitors<\/li>\n<li>Adjust or redesign your business to minimize your friction<\/li>\n<li>Emphasize your low friction in your marketing and advertising<\/li>\n<\/ul>\n<p>For more information:<\/p>\n<p>Olivier Chatain and Peter Zemsky, <a href=\"http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=1424950 \"><em>Value Creation and Value Capture with Frictions <\/em><\/a><\/p>\n<p><a href=\"http:\/\/knowledge.wharton.upenn.edu\/article.cfm?articleid=2293\">How a Little &#8216;Friction&#8217; Can Change a Competitive Landscape <\/a><\/p>\n<p><a href=\"http:\/\/www.mcguckin.com\/\">McGuckin Hardware<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Use friction to your advantage to out-compete a larger company or incumbent.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[71,81,5,3,34],"tags":[377,170,365,169,375],"class_list":["post-558","post","type-post","status-publish","format-standard","hentry","category-case-study","category-growth","category-how-to","category-opportunity","category-strategy","tag-case-study","tag-friction","tag-how-to","tag-retail","tag-strategy"],"_links":{"self":[{"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/posts\/558","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/comments?post=558"}],"version-history":[{"count":4,"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/posts\/558\/revisions"}],"predecessor-version":[{"id":2275,"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/posts\/558\/revisions\/2275"}],"wp:attachment":[{"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/media?parent=558"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/categories?post=558"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.workingknowledge.com\/blog\/wp-json\/wp\/v2\/tags?post=558"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}