The Swarm Competition phenomenon

“Swarm Competition” is a business scenario whereby the growth and the market share of a large dominant corporation decrease as a result of competition not from another large corporation, but from a swarm of specialized micro-businesses.

Dominant corporations most affected by Swarm Competition tend to be original pioneers in their industries, who were once a disruptive startup themselves. In several cases, dominant corporations protect their position by acquiring clusters of emerging micro-competitors.

Examples include Starbucks vs thousands of artisan coffee shops; large hotel chains vs Airbnb (or charming designer boutique hotels); and multi-national beer brewers vs local micro-brewers.

In the food and beverage industry, Swarm Competition occurs in segments where localism, environmental choices, and artisanship are major factors in purchase decisions, such as in coffee, beer, and soft drinks, and where a dominant corporation has already created enough consumer awareness to take the category out of a niche and into the mainstream.

Swarm Competitors succeed by playing the anti-corporate card and by positioning themselves as a more “artisan” and “caring” alternative, and by taking advantage of relatively low barriers to entry. While it may be nearly impossible for a niche competitor to launch a new car company or a new search engine to topple Google, it is fairly easy in comparison to open a new local coffee shop across from Starbucks and attain similar sales per unit.

A successful small business in a massive cluster of Swarm Competitors may choose a strategy to remain small or to grow and grab an even bigger chunk of the dominant corporation’s market share, at which point it might become itself a target of Swarm Competition.

There is a world of opportunity open to businesses who can identify and join a cluster of Swarm Competitors. On the other hand, a dominant corporation can regain and even increase market share by reinforcing its position as a “legacy” brand and as “an original” who still does things right and better than most. A successful example of such a strategy is Levis’ endearing “Circles” ad campaign, in which people of all ethnicities, ages, and sexual identities are seen dancing with a feeling of freedom and joy ultimately reflected in their choice of jeans. The ad transcends decades and a young brand would be hard pressed to replicate such a campaign with any degree of credibility.

Some dominant corporations may leverage their size to support large scale humanitarian and ethical causes, or to implement admirable labor practices out of reach for a small Swarm Competitor. Examples include Starbucks’ programs to supply cows to African coffee-farming villagers (a milking cow, in some places, is still a lifeline) or to pay college tuition for its baristas.

There’s good on both sides. Swarm Competitors push dominant brands to behave like responsible citizens with a conscience and to cause rapid positive global changes.

Fundamentally, Swarm Competition is value-driven. Dominant corporations and micro-businesses see their prosperity grow in direct proportion to the ethical values they embrace.

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