Brought to you by the NU School of Technological Entrepreneurship

Tip #20:

Being small is a bigger advantage than most small companies realize

Cullinane Corporation made the audacious decision to take on IBM in the database software arena with a product called IDMS (Integrated Database Management System) that we acquired from B.F. Goodrich & CO. Chemical Division in Cleveland, Ohio. With only 15 people, the question was how to maximize our resources in sales and marketing? The solution was to employ our top technicians in sales. We did so by organizing seminars in major cities around the country by having our technicians make the sales presentations, which were very technical in substance. Some became very skilled at it.

There were always a few strong technicians in the audience who would become very intrigued with IDMS. One Texas prospect included IDMS at the last minute in their database study, figuring that it couldn’t hurt, and would be eliminated, quickly. Yet, the more they studied IDMS, the more they liked it and, in fact, finally had to recommend it over IBM’s product. The challenge, at the time, was just to get included in such evaluations.

We lost many situations like this, though, because IBM always sold at a higher level. IBM salesman’s message to senior management was, “Do you want to trust the very life of your company to something called Cullinane Corporation, when IBM will always be with you? Don’t let those technicians make another dumb decision.” This is called “fear, uncertainty and doubt”, or the “FUD” factor, and it usually worked.

However, being small had its major advantageous. We could turn on dime and IBM couldn’t. This was true of other competitors, as well, regardless of size. One reason was that I, along with other members of our management team, was always meeting with prospects. As a result, we were able to commit, on the spot, to do something of particular importance to them. Sometimes we worried about whether we could deliver on the promise but we always did. In other situations, we changed our main message in a matter of days that, once again, put the competition on the defensive. This was very frustrating to them because just as they seemed to be catching up we changed the playing field. Other times, before a prospect would sign a contract, they insisted I pay a courtesy call on senior management, which I was more than happy to do. These included organizations such as Aetna Life Insurance in Hartford, Connecticut and the Strategic Air Command in Omaha, Nebraska.

As a result, we found enough companies to grow 50 percent a year off a small base but we still hadn’t learned how to cope, effectively, with IBM in a head to head battle when IBM had the ear of senior management. One reason is that we always seemed to be involved in subjective comparisons with IBM’s database management system. Senior management would often opt for a study, and the results were frequently close. I can remember one study that resulted in 5,280 points for IDMS and 5,260 points for IBM’s product. There was no way a president, or chief financial officer, of a prospect would go with our Company vs IBM for 20 points. As a result, we lost a lot of business. However, as a matter of survival, IBM would, eventually, force us to solve the problem.

See another tip of the day:

Don't miss out – check back for a new tip daily...