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Odds are that your business has benefited from net neutrality. The practice, which was in June 2018, forbids internet service providers from throttling or otherwise limiting bandwidth to particular sites. For example: Hulu is a joint venture owned by Disney and Comcast, so without net neutrality, Comcast could severely reduce the speed afforded to Netflix or Amazon Prime Video in all homes running Comcast internet, instead favoring Hulu and Disney’s upcoming streaming service, Disney+.

Big brands aren’t the only ones relying on net neutrality: Any brand competing with a company owned by a major media conglomerate is in danger of having its website speed neutered or its ads load slowly.

On Oct. 1, that ostensibly benefits the FCC and large monopolies but retains protection for brands of all sizes. A collection of online advocacy groups, along with 22 states’ attorneys general, had filed a case hoping to reverse the 2018 decision to strip net neutrality. They lost on Oct. 1, but the court maintained a state’s right to set its own internet regulations—making it difficult for Comcast and others to enact non-neutrality policies across the board. After all, national companies run into legal challenges when attempting to blanket the country, as each state maintains different rules.

The lawsuits will certainly continue, keeping the fate of net neutrality uncertain. Here’s why brands should follow the progress.

E-Commerce Concerns

It’s difficult enough for small online shops to compete against Amazon. The retail behemoth sells everything and anything for low prices at nearly instantaneous delivery speeds. The loss of net neutrality further inhibits the growth of specialty markets, in that the will be significantly diminished and prone to technical issues. SEO would also be at risk, given that large corporations can directly pay for higher search ranking.

If your brand doesn’t fall under the umbrella of a major telecommunications company, consider revamping your e-commerce site to include smaller-resolution images to aid with load times—so long as they’re not grainy.

Ad Revenue and Metrics

Just as images and videos will load more slowly in a non-net neutrality world, so, too, will . This can be a major issue for brands relying on ads to get the word out, as ads typically load last and customers might have blazed past that particular page by the time the ad is ready to be viewed. And if brands want to advertise on pages that aren’t throttled, they should expect to pay a pretty penny.

Small companies would be wise to start thinking about other sources of marketing—possibly sponsorships or branded content—that venture away from traditional models of online advertising. It may also be worth diving into different metrics to prove the effectiveness of campaigns. If clicks and concurrents become more difficult to measure due to slow load speeds, perhaps social media could play a larger role in your analysis.

Heavily Internet-Reliant Technology

On the other hand, companies breaking into innovative spaces might serve to benefit from a lack of net neutrality. that technology such as self-driving cars or real-time healthcare-monitoring software can rest easy knowing they’ll always enjoy a strong, unencumbered internet connection—for the right price, of course. This stands to create a better brand experience for consumers dipping their toe into the future of web-heavy services.

However, any startup breaking into this space starts at a severe disadvantage, as they’re less likely to be able to afford the same high-speed internet connection. This leads to less competition and, eventually, the same kinds of monopolies that stand to benefit the most from abolishing net neutrality in the first place.

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B-to-B companies have important differences from B-to-C companies. B-to-B companies typically sell complex products and services that are purchased by clients through a systematic purchase process involving multiple stakeholders, such as end users, evaluators and purchase managers. In terms of consumption, B-to-B cycles are long and complex, sometimes lasting several decades and involving hundreds of employees. 

Considering these differences, B-to-B companies can satisfy the needs of their customers by developing customer-based competencies.  (the Collaborative for Customer-Based Execution & Strategy) has identified six customer-based competencies pertinent to B-to-B customers. Unlike functional competencies (technology, finance, innovation or creativity) based on silos—such as manufacturing, finance, technology or innovation—the six customer-based competencies rely on six specific domains of perceived customer value. 

Each of these competencies represents an element of the customer-driven value proposition. Functional competencies are needed to deliver the perceived value associated with these customer-based competencies. However, superiority on functional competencies is not enough, unless they can become inputs to delivering customer value. 

Customer value is linked to the six customer-based competencies. These competencies were developed as part of a research project by scholars at Rice, Iowa State and Texas A&M universities. They are based on in-depth interviews and surveys of more than 600 managers and executives from the supplier and client sides in B-to-B firms. The description of each competency also includes direct quotes from clients of a diverse set of B-to-B companies. 

1. Bidding and Sales Process

Though consumers respond to displayed prices in stores, B-to-B customers typically go through an elaborate bidding and sales process. Customers evaluate suppliers’ understanding of their need to provide accurate proposals, and they evaluate the sales team’s competency. When asked, customers describe this competency as, “We get a lot of work from relationships that our sales force develops,” or, “Salespeople need to do a better job understanding our needs so that the proposals are streamlined to our needs.”

2. Quality of Product and Service

Products and services in B-to-B can be complex, ranging from multiyear service contracts to complete power plants. For B-to-B companies, quality of product and service is based on customers’ perceived performance of a supplier’s core offerings. Customers describe this competency as, “meet(ing) performance specifications for the equipment and the service employees.”

3. Billing and Pricing

This competency denotes customer perception of the extent to which a firm’s pricing and billing processes are fair and competitive. This goes beyond low pricing. Respondents report that they, “don’t like companies that low bid and then issue change orders to jack up price.” They also express frustration when, “accounts payable has to go back over the billing because it is wrong about 50% of the time.”

4. Communication

In B-to-B relationships, communication is a core component which can detract from perceived customer value when derailed. As a competency, communication represents the extent to which customers perceive the firm as being receptive to and sharing appropriate and accurate information in a clear and timely manner. Customers describe companies that excel at this competency as, “providing the attention required to keep accounts happy, especially the large ones.” In contrast, firms with poor communication are described as, “Everything is e-mail. I get zero in-person contact with them.”

5. Safety

As a competency, safety denotes customer perception of the extent to which a supplier assures the safety of the products, customers and employees. Safety is a critical competency, especially in B-to-B contexts involving the oil and gas industry, manufacturing, transportation, nuclear energy and waste management. For example, the  disaster ensnared BP for several years. When asked, customers describe safety as: “Many complex jobs have problems … safety is one of the major problems,” and, “TRIR (total recordable incident rate) is very important.” 

6. Sustainability and Social Responsibility

Sustainability and social responsibility are not merely fads but critical elements of B-to-B customer value. They represent customer perception of the extent to which a supplier voluntarily incorporates societal and stakeholder concerns in its value proposition. In describing the benefits of these competencies, customers state: “I know they are not doing anything dirty—they help us stay on the right side of [the Environmental Protection Agency],” and, “It is important to be a community partner by creating local jobs. We always emphasize local content and training.”

These competencies touch the entire customer journey.  from Rice, Iowa State and Texas A&M universities shows these competencies explain 70% of customer value, as measured by overall customer satisfaction. By focusing on these six competencies, B-to-B firms can satisfy more than 70% of their customers’ needs. These competencies are integral —even after statistically accounting for a variety of customer-relevant factors (e.g., purchase amount and involvement), company-relevant factors (e.g., firm size and firm risk) and industry-relevant factors (e.g., industry competitiveness). Thus, satisfying customer needs through these six competencies also satisfies shareholder goals. Finally, these six competencies cut across a wide swath of B-to-B companies and are key to improving sales and margins by providing customer value to virtually all B-to-B firms.

B-to-B companies should no longer emulate B-to-C companies to develop a competitive advantage. The competitive advantage for B-to-B firms resides in these six specific competencies. Though deceptively simple, they can be difficult to develop. They cannot be achieved by excelling in only marketing, finance, innovation, service or sales. Delivering each competency will require a cross-functional approach to deliver perceived value to B-to-B customers. To focus on these competencies, companies will need to measure them through key processes and metrics, understand the relative importance of these competencies for customers and link them to sales and margins. This can provide a roadmap for achieving meaningful improvements in customer value and shareholder performance for B-to-B companies.

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Steve Jobs seized the moment with iTunes and the 99-cent song. But even downloads have been unable to check the sales decline of music products. Streaming has overtaken the music industry as the engine of growth. Streaming is not another product. It is a business model that uses digital technologies to sell music as a service, meaning access without ownership that is available on-demand and paid for by use or by subscription. The two biggest services are Pandora, a personalized radio service, and Spotify, offering a catalog of music.

Service-based offerings are not new, but technology has made it possible for such offerings to make inroads into categories that have long been exclusively product-centric. Digital disruption does not reward traditional centers of power. It re-channels the flow of industry revenues. Unless incumbent brands give up old ways of operating, new sources of value and growth will elude them because the new flow of revenue will not renew existing streams or automatically redirect new streams to incumbents. Consumers can get the benefits they want in new ways. The old ways aren’t coming back.

As it will in all categories, digital disruption is forcing the music industry to remake itself. There are four critical lessons brands can learn from the digital transformation of the music industry.

1. Look to Experiences for Value and Growth

In music, this is seen in the booming opportunity to build value from live concert experiences. Music festivals have become a worldwide cultural phenomenon, to the point that observers now worry about “.” Clubs, live streaming, awards shows and house concerts are part of this, too. Live music is buoying an interrelated ecosystem of auxiliary revenue streams such as food, transportation, lodging, clothing and other merchandise.

The service-based business model of live concerts offers value and growth that premium music products can no longer command. Historically, music ticket prices have risen faster than inflation. This continues, even as the value of recorded music products is falling. In 2015, the average live music ticket price hit an all-time high. Technological innovation in virtual and augmented reality will add even more value to live experiences.

Brands in all categories can include an experiential layer, even for low-involvement products that are purchased habitually. This could entail things like personal curation or concierges, instruction, insider access, collaboration or technology enhancements. Brands must look at the future differently and think about how to use experiences to build more value.

2. Relationships Win Out Over Branding

This is obvious in music, where the shared experience has always been powerful. But music is not the only thing that people want to share. People rely on social guideposts for everything. Digital disruption brings relationships to the forefront in all categories.

In fact, building closer, stronger relationships with customers is critical for brands that want to compete for experiences. In the world of digital platforms, it’s all about winning the competition for relationships, which is why Amazon has a soup-to-nuts ecosystem of customer engagement. Amazon uses brands to build its own relationship with customers. No brand is safe unless it secures its own relationships.

3. Small Brands Have a Bigger Opportunity in a Marketplace Upended by Digital

The prevailing narrative about digital is that it is winner-take-all. Indeed, this has been borne out many times. Network effects are the reason. They create natural monopolies. The more people in a network, the more value it has to people. So people migrate to the biggest networks, which makes them even bigger and thus even more valuable, which in turn, attracts even more people. Pretty soon, almost everybody is in one network.

But network effects matter only when networks are essential to the value of the brand, which is not the case for most brands. Music demonstrates this because digital disruption has opened up the industry rather than narrowing it down.

More artists, not fewer, can get a share of the business nowadays. In 2000, the top 100 tours commanded almost 90% of annual concert revenues. In 2014, this figure was halved to 44%. Certainly, the biggest artists still command the lion’s share of revenues from music product sales and streaming. But artists are more likely nowadays to see more types of opportunities to build a steady, long-term career, rather than having just one long shot at success.

The transformation of categories by digital has shaken loose a lot of new opportunities for brands and companies willing and able to pursue value and growth in new places.

4. Brands Must Get Outside of the Data

Streaming services and other digital music platforms use algorithms to classify people’s tastes and then predict what people might like to hear. Such algorithms are not unique to music. Recommendation engines, to mention one example, are commonplace.  

One criticism of algorithms is that they lock people into echo chambers of existing tastes, thereby shutting people off from new or different things. In fact, this is exactly what digital delivery and distribution platforms are trying to achieve. To survive, brands need to get outside of the data.

This is the paradox of the digital era. Old-timey analog or non-digital connections have become more, not less, important. Analog is critical to mastering digital. Brands want to drive algorithms, not be driven over by them. The good news is that brands have many options for doing this, some of which are already familiar, like traditional media, sponsorships, partnerships, placements, apps, tie-ins, opinion leaders and personal solicitations. Digital makes these more important, not less, as it ushers in an era of algorithms. Brands must find ways to escape the commoditizing pull of algorithmic modeling.

The music industry is learning as it goes. The marketplace of music as a service is a work in progress, but it is the future. Brands in all categories must rethink their propositions and business models. Music offers some lessons and guidance, but brands must approach the digital future with a willingness to experiment and a commitment to reinvention. As every musician can attest, perfection takes lots of practice. That is perhaps the biggest lesson that music has to teach brands.

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Growth looks small these days. Most large, multinational brands are finding it difficult to grow not because growth is unavailable, but because when growth looks small, big brands struggle to see it. This shift is here to stay.

An analysis by the Financial Times Stock Exchange reported that profits for its more than 700 global firms located in developed markets declined by a jaw-dropping 25% in the five years prior to 2017. Yet at the same time, profits of smaller, national firms rose by 2%. Admittedly, profits aren’t the same as revenue, but this pattern of profitability is illustrative of the shift in the marketplace.

More to the point, an analysis by the competitive intelligence firm Craft found that the combined sales of Fortune 500 firms dropped from 2014 to 2016, largely due to poorly performing large companies, which have a disproportionate influence on aggregate results. When individual firms were broken out and assessed, nearly twice as many grew as shrank. Growth was occurring, just among the smaller firms, not the large ones.

From 2013 to 2015, Kantar Worldpanel tracking of fast-moving consumer goods (FMCG) categories worldwide showed a shift of nearly two points of aggregate share from global brands to local and regional brands. Boston Consulting Group has estimated that from 2011 to 2016, the shift of share from large to small or midsize FMCG firms in North America totaled $22 billion in topline sales, and Europe experienced a similar shift.

The mounting clout of local brands is visible in the WPP/Kantar Millward Brown BrandZä Power Index as well. For example, the power of local Chinese brands has been growing. In 2016, for the first time, the average power of local Chinese brands exceeded that of multinational brands; 15 domestic brands are now in the Chinese Top 100 ranking, up from seven in 2010 and just one in 2006. Similarly, in India from 2014 to 2017, there was an increase in the number of local brands in the Indian Top 50.

Across the board, the big propositions that dominated the marketplace in years past are now behind the curve when it comes to the future. Certainly, big firms still earn most of the revenue, but they no longer dominate growth opportunities or command much, if any, of the growth. Smaller brands are producing most of the dynamism that is churning the marketplace. Globally, this is compounded by the fact that in emerging markets—which will account for the bulk of growth in future demand—the consumer preference for smaller brands over big brands jumped from 46% in 2016 to 54% in 2017, according to Kantar Consulting Global MONITOR.

Shifts in demand are not new; companies have dealt with them successfully before. But this time, shifts in demand are part of an historic pivot in the marketplace. Big, established companies have built their position by mastering a particular confluence of macro forces, consumer lifestyles and competitive situations, but those forces have shifted, and lifestyles and market demand have changed as consumers have adapted to new conditions. Big companies entrenched themselves in the old environment, embedding their outlook and operations to monetize it at scale, but competitors have moved into this evolving configuration and found growth outside the boundaries of the previous environment.

When change is contained and uncomplicated, big companies can migrate in measured ways that sustain their dominance through the barriers to entry they have erected. But change doesn’t look like that anymore. Incumbents now find themselves a step behind new, smaller competitors that move with greater agility and speed. The advantages of size have been lost to outsourced production, expanded retail options and digital marketing channels.

Going forward, mass markets will not be available. Every brand knows this, but the imperative of scale keeps big firms from following the ongoing shifts in demand. The first requirement of growth is to identify an available market large enough to scale. Conventional metrics favor a big, cohesive opportunity, so the comfort zone in which most companies have operated is to scale mass markets into big brands. Even strategies like segmentation that divide mass markets into smaller pieces are just tools to give companies manageable entry points into mass markets.

Nowadays, growth opportunities are coming more from the edges than the center. In accordance with the insights surfaced by Kantar Worldpanel and others such as Byron Sharp (author of How Brands Grow), companies are adopting penetration strategies on the notion that brands are built by growing the number of buyers, not by deepening the loyalty of buyers. Inherently, this means achieving scale by adding up small, disparate niches.

The standard operating procedure of scaling one product for everybody is not transferable to a marketplace that requires customization for niches, particularly personalization for niches of one. Scale is still needed, but the available market will be an ensemble of individualized, granular pieces, not a single, unified base. Success will come from scaling small niches into big brands.

Some experts have characterized the scaling of niches as a “conglomerated niche” strategy in which production, delivery and marketing have to be done for an aggregation of small batches. Companies that have begun to make this transition are finding that it requires relocating production facilities closer to buyers, digitizing supply chains, utilizing predictive technologies, adopting faster learning systems that guide production and employing greater flexibility in procurement and hiring. In effect, a whole new way of working.

Brands will have to master “reverse segmentation,” which is to say, putting lots of small things together rather than breaking one big thing apart. In the past, mass markets were segmented from the top down into smaller pieces. Going forward, niches will have to be aggregated from the bottom up into bigger pieces that give companies a sizeable enough platform on which to scale niches into big brands. Many of these new segmentations will be problem-specific, and all of them will require rich, integrated data sources.

Companies that are growing nowadays are not encumbered by the weight of expensive assets or large investments; they can innovate and adapt at speed. They thrive by trying new angles. This is the only way to win at a small scale.

Big brands are lumbering giants that have always relied on a large footprint to keep erosion and irrelevance at bay. In today’s environment, big brands must make a conscious effort to fight off the risk aversion inherent in large organizations. Innovation scholar Clay Christensen once said that mustering the resources it takes to compete outside a company’s comfort zone is like flapping one’s arms in an effort to fly because it runs contrary to the ingrained ways in which big companies work. But big brands have to do better. Otherwise, they will not measure up to the challenges or enjoy the opportunities of a marketplace in which growth looks small.

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Stengel, a former global marketing officer for Procter & Gamble, says, “Upstarts such as Google in its early days reminded me of what life must have been like in the earliest days at the biggest and oldest corporations.” He continues, “P&G, IBM, Levi Strauss, Target, Toyota, Wells Fargo and Motorola Solutions started with a dynamic founder, a brilliant idea and a determination to deliver something extraordinary and transformative.”

Despite these exciting beginnings, as companies grow, Stengel writes, they lose their original excitement, purpose and drive.

Why do these leading global enterprises lose their mojo? According to Stengel, “They become more concerned about how to maintain market share or survive in their space than about how to transform the world. In a word, they go from bold to old.”

Stengel describes how he led a personnel and culture exchange between P&G and Google in 2008, literally swapping staff with Google to see if he could rekindle the fire of nimbleness at P&G while coaching Googlers on P&G’s processes. 

Members of his P&G marketing team were embedded at Google while Googlers came to Cincinnati to live and work at P&G. The impact of that partnership and personnel exchange loom large in Stengel’s mind and in his book.  

Though he retired from P&G shortly after the experiment, he saw the personnel exchange as a microcosm of how established firms and digital transformers can partner and mutually benefit each other. P&G could teach Google about brand management and Google helped the P&G team loosen up and experiment. 

Stengel, now a management consultant and author, sets out in Unleashing the Innovators to explore lessons learned from the mutual engagement of startups and established players. 

Over the course of two years Stengel interviewed leaders at multiple enterprises to form the basis for his insights in the book.

 It is a must-read for any marketer or business executive who wants to catalyze change in an established organization and initiate partnerships with startups.

What I like about Stengel’s book are the anecdotes of the executives he cites.His stories about GE and the failure of its partnership with Quirky and its founder, Ben Kaufman, are instructive. It is helpful to know that Beth Comstock, then the vice chairwoman of GE and president of GE Business Innovations, went into the deal with her eyes open. 

“Ben is just fearless,” Comstock told Stengel. “He trained some of our guys to just think faster and figure it out as you are going forward.” 

Comstock had her doubts. “It may end up being a black eye for GE that we backed something that is not going to work,” Comstock is quoted.

Six months into the partnership Quirky was bankrupt, Stengel writes. Customers were furious at the lack of support for the products the two companies had introduced. In court papers, GE charged that Quirky’s demise “caused substantial damage to the reputation of GE and to its trademark.”

“Not just a black eye,” Stengel writes, “a complete orbital blowout.”

Stengel reminds us of the need for CEO leadership in his discussion of Motorola Solutions, where he was once a corporate director. Unlike many CEOs who strive to deflect hostile investors who have innovative ideas for transforming an established company, Motorola Solutions CEO Greg Brown is known for embracing them and embracing innovation. “None of these [innovative] ideas can take root, much less flourish, without unqualified support from the CEO,” Stengel writes of the communications firm. Stengel’s description of how Brown embraced corporate raider Carl Icahn and investors such as ValueAct Capital Management and Silver Lake Partners is instructive, yet too short. That’s the problem with Unleashing the Innovators—it is wide but not sufficiently deep.

 If you need a roster of the leading actors in the corporate drama of established firms in the face of digital disruption, you’ll find it in Stengel’s book. You won’t find a deeper understanding of why these established enterprises are stuck and what it takes to free them. 

Stengel’s book is a terrific addition to the literature on unleashing innovation. It is an important read for marketers who want to partner with an entrepreneurial entity to create constructive change.

However, if you are a marketer striving to become a CEO, pick up Microsoft CEO after reading Stengel’s book. Nadella’s book details the necessary cultural and management changes required to unleash innovation in a gridlocked enterprise.

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Mid-size companies are something of the middle child in the business family. The youngest children, entrepreneurs and startups, are doted on. The oldest, large, established companies, are first in line for resources or acknowledgement.

As many middle children would likely attest, the mid-size market role can feel a bit invisible.

The  identified this out-of-sight, out-of-mind quality as a key reason the sector has struggled with workforce challenges. NCMM Managing Director Doug Farren says talent is consistently one of the top challenges identified by the 1,000 C-suite executives polled in the center’s quarterly middle market indicator survey.

The report, notes that middle market companies create more new jobs than any other sector of the economy, but it’s this exact appetite for employees that makes the lack of access to candidates rather painful.

“Middle market companies in general struggle with an identity crisis,” Farren says. “[Job] candidates simply don’t know of them and certainly don’t know to look to them as a first choice when thinking about a place to work.”

���������t 85% of middle market companies are privately held, and many operate in B-to-B formats, hidden from the view of many job seekers. While the average consumer or general public may recognize big brands or businesses, middle market companies often don’t have much brand recognition. Many well-known companies tend to be more active in the recruiting space on college campuses, offer internships and run other recruitment programs.

The second issue the National Center for the Middle Market identified—and noted in previous research as well—is the lack of available personnel at mid-size companies to run workforce search, support and development efforts.

“Their structure, particularly at the leadership and management level, tends to be pretty thin,” Farren says. “They don’t have large staffs or deep leadership teams, and that would certainly apply to the HR function. It limits their resources and their ability to get deeply involved in a lot of what we would consider more traditional workforce recruiting and development activities.”

It’s not uncommon, he says, to see an HR department at a middle market company that consists of one or two people, and sometimes the head of HR also leads other departments. The report also found 46% of survey respondents say their HR department is primarily operational, rather than strategic.

Working with the  under the Brookings Institution, the center presented two approaches for the solution: what middle market companies can do themselves and what the institutional environment can do.

Company-controlled and Private Sector Solutions

Farren says middle market companies should think less operationally and more strategically in their talent-planning activities.

“That could mean putting certain strategies and programs in place, like an internship program,” Farren says. “I can’t tell you how many middle market companies we’ve talked to on a regular basis that just don’t have those types of things.”

An internship program is relatively simple to implement, Farren says, but does require an investment of time: determining where an intern would make the most sense or how to effectively structure the program so both sides benefit, for example. A particular upside for the company is the opportunity to expose younger talent to middle market culture and what it’s like to be part of this economic sector.

The “Help Wanted” report also found only 41% of survey respondents say they have set, ongoing outreach efforts in place, compared with 59% who say they wait until a specific position needs filling. In addition, 35% of middle market vacancies are filled from within because middle market companies tend to seek fully qualified candidates from outside instead of looking for someone within the company to advance. Companies also have the opportunity to work among themselves to problem-solve. Firms can develop stronger relationships with professional organizations, trade groups or other such associations to encourage talent planning. The goal would be to solve a talent issue shared by members of the group.

“If I’m a middle market company, and I want to hire three or four really skilled welders, I can’t necessarily go to a community college and have them customize a program for that,” Farren says. “But if I could collaborate with five, six or 10 other companies that also need three or four welders, now you’ve created a need for 30 or 40 welders and that becomes a more appealing proposition for a trade school or a community college to then develop a custom program that trains 40 welders to be placed at those companies.”

Public Policy and Intermediary Solutions

Farren says many public policy programs have a tendency to ignore the middle market and focus on startups or where the largest resource needs are, which often overlooks the middle market.

The training organizations within the public sector need to develop programs specifically for middle market companies, Farren says, or consider how they can make adjustments to provide resources that are a better fit for mid-sized companies. Martha Ross, a fellow at the Metropolitan Policy Program, says educational, training and job placement organizations offer great resources, including public or publicly funded entities (for example, the network of ), two- and four-year colleges, high school career and technical education programs and nonprofit training organizations. The problem, she says, is that it’s a system characterized by decentralization and multiple actors, which can be tricky for companies to navigate.

“One environmental-focused solution is to develop intermediaries that serve as a bridge between employers, educators and workers,” Ross says. “This could take the form of a workforce development board, a nonprofit, a chamber of commerce, a loose collaborative, etc., but the goal is to identify the skill needs of area employers and help align education and training programs accordingly.”

Ross says effective intermediaries allow educators and employers to avoid the inefficiencies of individual engagements by aggregating employer needs across a given sector. These intermediaries also set up forums for small and medium-sized firms to join forces with larger employers for economies of scale in training investments. Ross points to one example, , or the Federation of Advanced Manufacturing Education consortium. An executive from a middle market firm participating in Kentucky FAME reported in “Help Wanted” that the program was especially beneficial to companies of his size, as he doesn’t have the staff to do outreach to educators and potential students.

Another solution, Ross says, is for public entities to better tailor their services to meet labor market demands in their area. One example highlighted in the paper is Skill Up in Cuyahoga County, Ohio, which exists within the Department of Economic Development. The program helps employers address their skill needs by providing resources and expertise. More specifically, Skill Up offers assistance with defining and documenting job duties and skill requirements, custom roadmaps for training employees to industry standards and evaluating their skills and a list of providers for technical instruction and credentials.

“Small companies may not even be at the point where they need to access these resources and big companies have probably been using these resources for years, and in some ways that may have influenced the design and delivery of some of these public sector programs,” Farren says.

Middle market companies would need to better define their specific needs, such as a more qualified sales force or skilled trades in a specific area to support growth. There’s a burden that would be placed on the middle market to gain a clear understanding of where there may be gaps in processes, and then to articulate those needs.

The solution to middle market talent gaps—whether internal or in the public or private sectors—may rest on companies’ ability to collaborate; however, many don’t define themselves by their size.

“When you talk to a company, they’re more likely to identify by their industry, by their location or by their ownership type, rather than to say they’re a mid-size firm,” Farren says. “They need to recognize that they’re not a start-up, they’ve outgrown that phase; but they also know that they’re not General Electric or Procter & Gamble or Nationwide. Intuitively, they may realize that, but the term middle market is something that we see get used without the companies themselves identifying into that segment.”

Farren says the challenge is in getting middle market companies that are used to working within their industry to instead collaborate with like-sized companies to solve talent needs. Whom this task falls to is unclear.

“It’s easy for us to sit here and say that’s a good solution, but I don’t see a lot of those firms initiate that and do it on their own,” Farren says. “There has to be some type of ignitor or convener. It could be a chamber of commerce or another natural convener like a trade group or organization, but somebody that can bring these companies together and say, ‘Look, you all have a common need, and here’s how we can solve that.’ It’s by working together and coming up with solutions that can benefit everyone.”

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Amazon disrupted retail. Uber disrupted cabs and limos. Twitter disrupted an entire presidential election. Disruption has societal implications, forcing businesses to change from the outside-in to meet consumer needs and keep up with competition. 

The middle market is no exception, says Geoffrey Moore, an organizational theorist and author of . Manufacturers, doctors and lawyers will be disrupted by technology just the same as bookstores, New York cabbies and the American electorate. 

The disruption of digitalism is akin to the move from the Agricultural Revolution to the Industrial Revolution, Moore says. Instead of new farming techniques bolstering a larger and healthier population, the Digital Revolution is increasing business efficiency, easing communication and giving consumers push-button gratification. 

“You just can’t imagine any industry not eventually having this digital layer built into it,” Moore says. “It’s probably a 50-year journey for the entire economy, but there’s no going back.”

Midmarket executives know disruption is coming, per Capital One’s report. Nearly three-quarters (73%) of those surveyed say they expect to experience disruption in the next three years, pointing to Big Data analytics and the Internet of Things as the main culprits. However, many executives don’t see their businesses as being susceptible; although 43% say their industry is quite or extremely vulnerable to disruption, only 18% see their own company as vulnerable to disruption.

“One reason for this discrepancy is that an overwhelming number (79%) view disruption as an opportunity, not a threat,” the Capital One report finds.

Is Disruption an Existential Threat?

Midmarket companies must first know what disruption is before understanding if it presents a threat or an opportunity. , says he defines disruption as an event that can impact a company’s client base; he believes the Digital Revolution is the main disruptor. Moore, however, says disruption goes deeper: “[It’s] when a new technology takes the marginal cost of something that used to be expensive and hard to deploy and makes it virtually free and trivial to deploy.” 

Businesses may be able to take advantage of this new, virtually free technology. However, Moore says that when a business model is based on an older, expensive version of technology that is now nearly free, disruption can be a big threat. In most cases, newer technology can’t simply be plugged into the old model, so companies either become an early adopter of the new model and scrap the old technology or keep using the old model. The problem with the latter case is that companies based in this new technology and entering the market for the first time will have an advantage and immediately attack old-model businesses. 

These attacks, Moore says, can be an “existential threat” that midmarket companies cannot ignore: “A disruption creating an existential threat to our business, meaning if we don’t get out of the way, we are going to get run over and there’s no defense against it,” he says. “You have to figure out some way to work around it.”

​​“Existential threats” may be a reason why so many executives in smaller companies resist disruption. Capital One’s report finds that companies with annual revenue between $2 billion and $3 billion are more likely to see disruption as an opportunity and pursue disruptive strategies of their own, while midmarket companies in the $100 million to $499 million range tend to see disruption as a threat to avoid.

Financial resources may be the biggest factor in how midmarket companies react to disruption, McCarrick says. The Capital One report says 75% of executives believe they’ll need additional capital to stay competitive in the heat of industry disruption, which means they’ll need to find funding for R&D or digital adoption. However, Moore says middle market companies are more likely to divert funding from one operating expense to another. Both Moore and McCarrick agree that it is essential for midmarket executives to assess their company’s capital resources before planning for disruption. 

How the Middle Market Can Prepare for Disruption

The least companies can do to prepare for disruption, McCarrick says, is habitually think about it by asking questions like: What’s disruptive in their market? What could ruin their company? How could the company get left behind? Retailers, for example, should be thinking about how they can sell products online like Amazon. Many midmarket businesses seem to be OK with “the least” they can do, as Capital One’s report shows 89% are taking one or more measures to defend against disruption, but only one-sixth of midmarket executives feel quite or extremely unprepared to deal with a disruptive event. 

“Maybe the strategy is to do nothing right now and then see how this morphs because you think the demand for your particular product is not strong enough,” McCarrick says. “But if you’re not thinking about it at all and you don’t have some dedication to try to figure out what’s happening in the market, you’re at a much higher risk of being disrupted.”

Even though many executives feel underprepared for disruption, Moore says midmarket companies have an advantage to dealing with it because they can “dodge faster” than Fortune 2000 companies. Midmarket companies serve a smaller customer base, which can offset technological disadvantages. However, Moore says midmarket business owners need to start a piecemeal move toward the Digital Revolution if they hope to keep the doors open.

“The thing you can say is, ‘Look, we don’t have to outperform Amazon or Apple or these incredible disruptors. All we have to do is show our customers and our future prospects that we’re on the same path,’” Moore says. “‘We will listen to and observe what these people have done and we’re trying to absorb those lessons in a way that we can afford and that doesn’t throw our business into a tailspin.’ ”

In other words, companies should adopt disruptive technology according to what makes the customer’s experience easier and better. Moore suggests taking two or three tasks that both make the customer experience more attractive and move the company into the Digital Revolution. 

When to Be Disrupted 

Thus far, 15% of middle market companies have faced a disruption that sapped finances, per Capital One’s report. These companies likely didn’t have a choice, but others may. Moore says a business may find competitive advantage in adopting new technology early. However, midmarket companies also have a difficult time hiring high-quality talent for digital transformations, increasing the chance that a technological overhaul will fail. 

“My advice to most middle market companies is, don’t try to go early,” Moore says. “Then the question is, do you go when you have to go?” 

Companies in sectors under “direct digital assault” of disruption should do what they can to adapt to changing times, he says, as waiting to adopt new technology in these cases can put a company out of business. Dealing with disruption becomes a balancing act of not moving too soon, but certainly not moving too late, either. Most middle market companies, Moore says, are trapped in the middle. “One dramatic failure in a mid-market company is usually catastrophic.”

No matter which way a company moves into the Digital Revolution, it must stick with a single adoption strategy. Moore wrote in a 2016 essay for the National Center for the Middle Market, titled that picking one strategy and sticking to it gives midmarket companies a better chance of survival than trying to juggle two or more strategies.

Even when disruption goes well, midmarket companies may find themselves in a conundrum: New efficiencies may mean eliminating old jobs. Moore says this is something every middle market executive will need to think hard about, as they are likely very familiar with their employees.

“You have to be very thoughtful about what that means,” Moore says. “Many companies don’t lay off [at all], then they shut their doors because they just couldn’t make ends meet. You have to be very thoughtful by saying, ‘If that’s the situation we’re in, laying off some people in a timely manner is better than shutting our doors and laying everybody else off.’”​

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