One of my favourite parables that I enjoyed as a child was the story of David and Goliath from the Old Testament’s Book of Samuel. Whether or not you had a religious upbringing I am sure you will have come across the tale at some point.
Who can resist the idea of the everyman or woman who is able to take on the giant and come out victorious? And for this very reason, it is a well-used and well-worn metaphor of how the underdog can prevail.
Even though it is likely to be familiar, it is worth unpicking some of the elements of the story as there might be more to it than meets the eye.
Let Battle Commence
In the ancient conflict between the Philistines and the Israelites, according to the agreed rules of engagement, each of the warring sides sent out their champion to battle it out between themselves. Time after time, Goliath was the winner, and the Israelites were running out of options.
Then, a young shepherd boy called David came forward to take on Goliath. The King looked on askance, it is simply not possible that this young man can take on the heavily armoured colossus and have any chance of victory. The concern deepened as David rejected the offer of the King’s armour and the King’s sword.
David was happy in his only weapon, a sling and a few carefully selected pebbles in his pouch.
The rules of the day expected the two champions to face off to each other to engage. When David entered the field, it was clear from the start that this was going to be a totally unfair contest.
Goliath, with his short sword, weighed down by heavy armour could not get anywhere near David to land a killer blow. David, unencumbered by the traditional rules of hand-to-hand combat, releasing him from the need to wear heavy, limiting armour, literally rang rings around Goliath.
As David moved around his opponent, he loaded up his sling and picked his moment. Whoosh. A shot on target, a tiny area of Goliath’s forehead that was left unprotected, knocked him out stone cold.
With Goliath laid out, David could move in for the kill and victory was the Israelites.
A Victory for Technology
Research suggests that in practised hands, a slingshot an astonishing weapon. A more powerful and accurate ranged weapon than the bows and arrows of the day. An expert could accurately hit a small target many metres away with lethal force, and David only needed to keep a few metres away from the slow and blundering Goliath. This really was a victory for technology.
The Competition Problem
The competition problem for many established businesses is that they are set up to fight their battles with equal opponents, following well-known rules of engagement.
New entrants are playing a different game by different rules. This brings two specific challenges to the established business. The first is that the established business is unlikely to be set up to play by the new rules. The Davids are lean, dynamic and agile, the Goliaths weighed down by their past, their installed base, their legacy product range. It makes it much harder for the Goliath to fend off the David.
The second challenge is perhaps the greater problem. The David businesses are going to target the low hanging, often very ripe fruit. They are going to cherry-pick the best bits.
This limits the Goliath even more as it loses its ability to fund the shift to match the increasing army of Davids coming from all directions. Goliaths are set up to compete with equals, to battle with other Goliaths, not an army of smaller competitors eroding their foundations.
A great example of this playing out was revealed by the commentary from Jamie Dimon, CEO of JPMorgan Chase when on a recent call with analysts, he was reported as saying he was, “Scared shitless”, of the rise of FinTechs. Of course, he said that JPMC would ultimately be victorious, but it would not be easy or quick. He sees it as a ten-year battle.
One of the specific observations he made was that the FinTechs were playing by different rules, rules he did not believe were available to JPMC.
Another example of a business changing the rules and using technology to change the game is TransferWise. An ultra-low-cost foreign exchange business. The trick with TransferWise is that money does not cross any borders. It is a transaction matching model in the respective countries supported.
There are a great many examples that are well-used examples of Davids taking on, and in many cases destroying existing marketspaces – Netflix, Uber, Airbnb.
One example in the UK is Ocado. A home delivery shopping service that for many years struggled with losses and slow growth. With its robotic service centres, slick supply chain and carefully curated partnerships, by the end of 2020, its market capitalisation was more than Tesco the supermarket leviathan.
Change the Rules
If there was one lesson in this, the rules will change.
Businesses are used to dealing with head-on competition, it is so much more difficult when the competition is like termites eating away at the foundations, or ants overwhelming the picnic.
If there was a pattern to the Davids it is that they are typically lean, dynamic and agile. Even those that emerge as unicorns still have the advantage of dynamic and agile technologies.
The Goliaths may not be able to beat the Davids at their own game, but maybe they can create their own new rules of engagement.
To do this Goliaths need to identify the technology that are holding them back and adopt the approach of Davids by rebuilding from the ground up. But they should also identify the technology that is fit for purpose and leverage these components as accelerators.
The technologies that can transform the Goliaths are also the same technologies that enable the Davids. Cloud technology and the services that are enabled by cloud dramatically reduce or even remove the barriers to entry for new starters. The need to invest in or build a data processing capability as part of a scalable platform implementation has gone away.
One example of the great Goliaths in financial services adopting this strategy is Goldman Sachs launching Marcus, the retail savings brand.
Whatever the approach that is taken, technology needs to be an enabler and architecture can help ensure this happens. There are some common themes that can help.
- Leverage modern cloud components to provide speed and agility. This requires a large organisation to architect the cloud platform to suit the needs, business outcomes and risk appetite of the company.
- Simplification is essential for large organisations turning to cloud, it is not simply a lift and shift of the existing estate. A critical success factor will be to unravel the complexity of the legacy environment before migrating to the cloud platform.
- Architect and build everything with a “platform” mentality to drive reuse, automation, self–service and ultimately federation across teams.
- Leverage Domain Modelling to architect and design the overall solution and use this model to decide the components that need to be built fresh versus what can be reused.
- Identify the domains with higher rates of change and focus more time and energy to get them right.
- Move from a top–down architecture governance approach to defining guardrails, standards and patterns implemented as code within the platform.
- Becoming more lean, dynamic and agile right through the organisation. This is more than just changing job titles and hoping the culture will follow, this is about deep, sustainable change with the right technology and management skills for success.
If there was one thing to take from this, it is very unlikely that a strategy of “be more Goliath” is going to be a winning strategy. It is time to cast off the heavy armour and find a new way.
David is coming.