HERMAN CAIN'S MAP FOR UPSTARTS EVERYWHERE

This blog first appeared as Steve Wunker’s piece for Forbes
 
By: Steve Wunker

Whatever you think of Herman Cain’s politics, he has had a remarkably fast ascent in the Republican Presidential polls from asterisk to front-runner.  Start-ups of all stripes would love to emulate that kind of success.  What business lessons can we learn from this story?

Cain’s rise holds four take-aways for upstarts seeking to usurp market leadership from better-established and better-financed rivals:
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1.  Be Different -- Cain would have stood no chance had he been just another voice repeating popular positions to the party faithful (just look at the much-ignored campaign of former Senator Rick Santorum).  Cain focused on tax reform.  Because of his distinct message, he won attention from people trying to understand the range of positions taken by candidates, and he was remembered.  Start-ups seldom succeed through providing modest improvements over incumbent offerings.  Rather, they take root by creating something truly distinct, even if the initial offering barely registers along traditional metrics of performance.

2.  Keep It Simple -- If Cain had tried to stake out policy positions on the full range of issues confronting a president, he would have muddied his message and providing openings for attacks.  Had he talked with nuance about the tax code, he would have sent audiences fleeing for the town hall exits.  A company trying to stand out from the crowd needs to do so in straightforward ways that catch attention from casual observers.  Once the firm has won that consideration, it can elaborate on its message in ways that allow comparison with better-known rivals.

3.  Compete Asymmetrically -- Many of Cain's competitors have far more extensive field operations in early voting states such as Iowa and New Hampshire.  With little money or name recognition, he simply could not match those efforts.  So he opted to play by different rules.  Cain emphasized his book, and he nurtured the mass media in politically-irrelevant states such as New York.  While neighbors loyal to other candidates knocked on household doors deep in the cornfields, Cain went straight to living room televisions.  Unless it has very deep pockets or tremendous patience, a company trying to seize the lead from incumbents needs a distinct strategy.  Red Bull didn't create the energy drink market by out-spending Coca-Cola in grocery stores; it first made its name as a mixer in nightclubs.

4.  Winners Create Bandwagons -- Adopters of an innovation often gravitate to early winners.  Those leaders gain attention, and so they are considered more intensively than runners-up.  They also seem to be a less risky choice than a company that might vanish fast.  Politicos initially wrote off Cain because he was unknown, but now that he has become a front-runner he will have an easier time attracting waving voters who have taken only a passing interest in the campaign.  Of course, there is a flipside to all this attention.  Gafffes get noticed, and small openings get pounced on by rivals.  Just ask Howard Dean, or Netflix.

It’s worthwhile to look as well at how early-stage markets and campaigns differ.  There are at least two other principles of success in markets that we may not see in this election:

1.  Find a Loyal Foothold -- Leaders in new markets tend to get their start in footholds, with a well-defined group of customers providing fast feedback to a company and positive references for broader sets of buyers.  Traditional retail politicking has worked the same way, with a small set of avid followers spreading the word about a candidate through their personal networks.  Cain didn't have such a group seeding the ground for a gradual rise.  Although he had adherents who provided a vital breakthrough in a Florida straw poll, his ascent has stemmed more from his charismatic mastery of broadcast media.  Most new markets don't benefit from such intense media attention, so this option isn't open to corporate chiefs.

2.  Avoid Zero Sum Games -- In new markets, competition can be a wonderful thing.  It makes potential customers aware of new offerings, and it provides useful benchmarks that facilitate early buying decisions.  The real battle lies not in one company against another, but in converting casual consideration into real purchases.  Elections don't work that way, and so all the attention paid recently to Cain does little good for the other candidates.  A company in a nascent industry can set back its cause through tearing down rivals, as it creates uncertainty that leads to slower growth for all players.  In an election, negative campaigning can be remarkably effective.
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Cain’s media-fueled rise holds plenty of risks.  The implosion of a candidate makes as good a story as the rocket-fueled ascent of one.  But many companies would love to have such problems.  Whether or not Cain makes it through the coming months, he has illustrated how upstarts can break through against overwhelming odds.