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Home » The One Little-Known Strategy on how to Dominate Niches I Learned from Working With Over 400 Companies

The One Little-Known Strategy on how to Dominate Niches I Learned from Working With Over 400 Companies

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A framework and lessons learned from real-life case studies to dominate a “Winner Takes All” landscape.

I spent most of my career as a strategy consultant searching for the “Holy Grail” of strategic advisory. To me, this meant the ability to help companies develop or launch products/services that dominated their niches and adopt strategies that maintained resilience into perpetuity.

I experimented with many tools, from “design thinking” sprints to startup acceleration programs, and while some were reasonably successful, the outcome remained inconsistent. However, after numerous experiments and repeated trial and error, I finally got somewhere. I was able to refine the concept and simplify it into a step-by-step process that has been applied in dozens of companies across numerous niches with an 85% success rate.

The same approach that transformed a mom & pop furniture business into a fast-growing enterprise with a global footprint worked equally well on a fortune company’s coffee brand. It transformed a mail-order business into the company’s leading brand among thousands of competing products.

In this article, I will introduce several real-life case studies to demonstrate the approach’s simplicity and mechanism.

A Mom & Pop’s Journey to a Global Enterprise

The first case study involves a low seven-figure furniture business heading for permanent closure. The owner inherited the business from his parents, and he had just defaulted on a second mortgage payment intended to save the business. When I met the owner, I could see that stress had taken a toll on his physical appearance; he looked ten years older than he was. A weakness within the business was that the lead product times were sometimes more than six weeks due to high customer numbers. This led to an increase in sales, causing an increase in negative cash flows due to working capital requirements.

The furniture case was a turning point for my company because small businesses were not on our radar. We erroneously believed that their limited resources hindered success. This, and subsequent cases, showed us that flexibility in decision-making within smaller enterprises increased an owner’s chances of success. We determined that our refined process was more effective than conventional methods applied to larger enterprises losing money.

The Approach

The power of the approach lies in its ability to identify the root cause of challenges and weaknesses that are several layers deep.

Rather than fixing these weaknesses, the approach leverages new business models that turn weaknesses plaguing entire industries into a competitive advantage. Let’s unpack how we practically applied this approach to the furniture business.

For the furniture manufacturer, for example, one such strategy meant flipping the order-to-delivery process from being inventory-driven to demand-driven. This new business model cut their inventory and account receivables to sustainable levels that enable the company to grow without the need for an external cash injection. Moreover, production lead time decreased from six weeks to three days, with 90% of the orders being automatically processed.

The cost for this was around fifty thousand dollars. The amount was invested in developing the system, which freed up existing resourced and enabled the company to redirect freed resources towards sustainable and consistent scaling in its niche. The combined effect of efficiency, scope, and scale resulted in the business’s 60% sustainable year-on-year growth.


To understand why the approach works, I would like to introduce a few terms needed to understand its inner workings.

Power Laws

This is also called “Zipf-Laws.” It’s a characteristic that applies to events that occur in various contexts, including business, nature, and wealth. The inventor of modern fractals, Benoit Mandelbrot, was the first to describe how markets exhibited Power Law characteristics, due to fractal-like behavior, in his book The Misbehavior of Markets. Below is a list of other titles and sources which discuss Power Laws.

Image By Sam Schreim from

Long Tails

This term describes the tail end of the Power Law distribution curve. It reflects the rapid growth and complexity of the world and the impact of exposure to global events.

Image By Sam Schreim from

A fractal is an object that is “self-similar” or “scalable.” It is made up of smaller and larger copies of itself. Stock markets are fractal-like because of this self-similarity principle. Individual stocks are self-similar; therefore, business units, supply chains, organizations, and enterprises can be considered as fractals that exhibit Power Law behavior.

Prospect Theory

2002 Nobel Prize winner Daniel Kahneman established this theory through behavioral experiments to quantify the risk-averse nature of human beings. He proved that people despise losing more than they like winning. Therefore, humans are reluctant to innovate because we perceive this to be riskier than maintaining the status quo. Fat tail risks and Prospect Theory can combine to create a dangerous formula for failure, as indicated by further case studies.

Prospect Theory Real-Life Case Examples

By November 2019, COVID-19 had already claimed many lives that could have been saved if leaders had acted sooner to combat the outbreak. This is an example of the combination of Long Tail and Prospect Theory leading to disaster; leaders made decisions believing that the financial loss of economic activity outweighed gains from early lockdowns when the virus was still confined to one geographical area. A miscalculation of payoffs and deciding to keep the economy going for small gains instead of lockdowns resulted in large unexpected losses.

This example can be compared to a project I worked on as a strategy consultant for a leading mobile phone manufacturer, where I managed the customer analysis stream. My analysis revealed significant issues with the new product line-up that began to show signs of weakness due to competing offers emerging in the market. This is similar to the early warning signs of the pandemic that world leaders ignored.

The project focused on growing and improving the existing product line-up by enhancing the product, increasing distribution channels, and improving sales and marketing. This focus would have caused short-term gains by growing the sales network but would have resulted in large, long-term losses. The focus should have been on fixing the product line-up.

This case study is analogous to the COVID-19 pandemic. The losses from lockdowns can be likened to the losses from redesigning a product. Likewise, focusing on long-term gains to the economy can be likened to the long-term payoffs from a new mobile product launch a year after identifying the issue.

During my tenure at the mobile phone company, I presented my findings to the company leaders, who agreed. As a result, the new product line was deferred to the following year’s financial cycle. As a result, that multi-billion dollar division of the company was liquidated five years after my findings.

3D Printer Startup Case Study

Another case study is a 3D printer manufacturing startup struggling to increase sales. 3D printers have existed since the 1980s but were initially used for prototyping. Currently, 3D printing is growing via distributed manufacturing. Business opportunities are being created by making the end user capable of production. The traditional manufacturing model concentrates production in larger facilities and maintains those facilities’ efficiency. The 3D printing industry continues to grow with a competitive manufacturing component. The opportunity, therefore, lies in the application process instead of the manufacturing process.

Opportunities that combined scope and scale for success were identifiable by viewing the industry as a whole, revealing the business’s fractal components. A new business model was implemented to provide a marketplace to create merchandise on-demand and offer 3D printing hardware as a service to allow small businesses to enter this effortless, scalable network. Changing the business model established a growing marketplace for creators and designers to collaborate and sell to consumers on demand.

Antifragility Analogy

In his book Antifragile: Things That Gain from Disorder, Nassim Taleb uses the visuals of a smile and a frown to indicate the meaning of “Antifragile” by the convexity effect below.

Image By Sam Schreim from

“Fragile” companies focus on small gains (concave). They are likely to be negatively impacted by global market events and could easily liquidate. Small gains result from decisions based on lower risk-taking instead of innovation. Focusing on small gains will yield large and hidden losses in the long term.

The opposite is also true: If a company invests in small experiments, it will likely obtain large, long-term gains. Per Kahneman’s Prospect Theory, humans prefer taking no “perceived” risks to keep small gains instead of taking a small risk for a potentially large reward. Unpredictable, or “black swan,” events are not always obvious to business leaders. The potential large losses are not considered, and companies are forced to be reactive, whereas they could have been proactive.

Publicly Listed Companies

The statistics relating to the publicly listed companies in the images below indicate that the global market is edging towards a winner-takes-all distribution, with 0.1% of stocks accounting for 20% of the entire US market cap.

Image By Sam Schreim from
Image By Sam Schreim from

The leading companies on the above lists are well-known for their innovation, risk-taking, and experimentation. Besides Microsoft, none of these companies were on the top list ten years ago. Consider the number of new successful or failed products that these companies have introduced over the past decade. Products that failed include Google Glass, Google Plus, Amazon Phone, Microsoft Zune, MSN, and the Apple HomePod. Mentioning successful products is redundant because you are probably currently using or carrying one of them.

Compared to the technology industry, the print publishing and walk-in retail industries are experiencing a downfall. Numerous companies in these markets have disappeared, such as Sears, JC Penny, and newspaper printers. These companies maintained the status quo, did not take risks and focused on small gains until it was too late.

Key Takeaways

The statistics relating to publicly listed companies illustrate that the strategy to dominate niches that worked for startups, small, and medium enterprises also works in large enterprises. In fact, I argue that it is often easier to dominate smaller niches in a large market than larger niches in competitive markets.

To succeed, you need to experiment and give your startup or company options through experiments, as I discussed in detail in several of my previous articles on revenue portfolio and optionality. This is an important strategy for businesses to have a consistent pipeline of experiments and opportunities. These experiments and optionalities will allow your business to dominate a winning niche that could overtake your existing income streams.


Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision Under Risk. Econometrica, 47(2), 263–292.

Mandelbrot, B. & Hudson, R. L. (2007). The (mis)behavior of markets: A fractal view of financial turbulence. Basic Books.

Taleb, N. N. (2012). Antifragile: Things that gain from disorder. Random House.

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