Rise of Good Smalls: A "Pattern"

When Shah Rukh Khan in an interview with Anupam Kher said, “Nahi, aisa hoga nahi. Main modest hoon but I’ll tell you honestly? I am the last of the stars.”?(No, it won't be like that. I'm modest, but I'll tell you honestly? I am the last of the stars.)?

Hearing that, I recalled the communist and capitalist political situation of 50s & 60s.?Gone are the days dominated by singular giants like Amitabh Bachchan or Dilip Kumar. Today, a diverse array of stars shines in film, TV, and streaming. Each brings their own unique brilliance to the industry, making stardom more inclusive and vibrant than ever before. Khan's humility acknowledges this shift, recognizing a new constellation of talent lighting up the entertainment sky?who carved their own niche be it on TV, films or OTTs.?

In the political arena, the Cold War era of the 1950s was characterized by the bipolar world dominated by the capitalist-communist rivalry between the USA and Russia (then USSR). This period was marked by the presence of two major powers and a lack of significantly smaller players. However, in recent times, the landscape has evolved, with smaller nations and non-state actors playing increasingly influential roles in global politics.

Emergence of many GOOD SMALLS

The narrative of "big is better" has long dominated the fields of politics, economics, and across industries, with a few major players holding significant power and influence.

Think of any industry & you see this pattern. Be it FMCG, pharmaceuticals, automotive, entertainment or in many sectors were once dominated by a few big companies or brands, leaving limited room for smaller players to thrive.

However, this pattern has shifted over time and the pattern shift is not in one or a few sectors but in many as one can recall. Today, there are no longer just a few big players; instead, numerous small but impactful entities have risen to prominence, challenging the dominance of their larger counterparts. A paradigm PATTERN shift is seen, reshaping the dynamics of various sectors. The emergence of many 'good smalls' has quietly disrupted traditional hierarchies, leading to a more diversified and competitive environment.

Some Good Smalls

In the automobile industry, Tesla has challenged the dominance of traditional automakers like General Motors (GM). Tesla's innovative electric vehicles and focus on sustainability have captured the market's attention. In the third quarter of 2021, Tesla delivered over 240,000 vehicles, showcasing its growth and market presence. In comparison, GM delivered approximately 2.5 million vehicles in the same quarter, highlighting the continued strength of larger players but also the significant impact of smaller players like Tesla.

In the tech industry, Slack has challenged the dominance of giants like Google in the collaboration software market. Slack reported over 12 million daily active users in the third quarter of 2020, highlighting its popularity and widespread adoption among businesses. While smaller players like Slack are making significant strides, some larger companies across industries like Google continue to maintain their dominance through their vast resources and market reach.

Zoom, a relatively smaller player compared to tech giants like Microsoft, saw exponential growth during the COVID-19 pandemic due to its easy-to-use interface and reliability for remote work and virtual meetings. While Microsoft Teams also experienced growth, Zoom's simplicity and focus on video conferencing captured a significant portion of the market share, challenging Microsoft's dominance in the collaboration software space.

Everlane, a direct-to-consumer fashion brand, has disrupted the traditional retail model by prioritizing transparency in pricing and supply chain practices. With a focus on sustainable and ethically sourced clothing, Everlane has attracted a loyal customer base, challenging established retailers like Gap by offering high-quality products at competitive prices.

In the film industry, smaller production and distribution companies like A24 and NEON have challenged the dominance of major studios like Warner Bros. Pictures. A24's film "Moonlight" won the Academy Award for Best Picture in 2017, highlighting the critical acclaim and success of independent films. Warner Bros., on the other hand, has had to adapt by investing in more diverse and innovative projects to appeal to a changing audience.

In the pharmaceutical industry, there are many new players making waves in their own ways and segments now and gone are days where a few majors operated decades back. Moderna has challenged the dominance of larger pharmaceutical companies like Pfizer. Moderna's COVID-19 vaccine, has been highly successful and has positioned the company as a major player in the vaccine market. Moderna generated over $18 billion in revenue in 2021, driven by sales of its COVID-19 vaccine.

These and many such examples illustrate a PATTERN on how smaller players in various industries have been able to innovate and deliver value in ways that challenge the dominance of larger, traditional companies.

Some Takeaways

Firstly, the rise of smaller players provides consumers with more choices. Behavioral economics indicates the way choices are presented (choice architecture) influences consumer decisions. The presence of smaller, innovative companies can change the choice architecture. Secondly, consumer preferences are not static; they can be influenced by various factors, including product quality, pricing, and brand image. The success of smaller players indicates a potential change in consumer preference formation towards factors such as sustainability, transparency, and innovation. Third, it indicates how market dynamics influence consumer decision-making, including factors such as market competition, information asymmetry, and consumer trust. Fourth, the success of smaller players can also be attributed to shifts in social norms and influences. Consumers may be increasingly valuing brands that align with their values which can be regional too.

The rise of the good smalls heralds a new era of competition and collaboration, where innovation thrives and diversity flourishes. This global phenomenon spans across sectors like brands & companies presenting both opportunities and challenges for established corporations and smaller companies alike. Artificial Intelligence (AI), digital world, machine learning (ML) will also see the same pattern. ?

The era of the 'good smalls' has already begun, signaling a future where innovation thrives and diversity flourishes in industries across the globe.

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