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In a David and Goliath-like scene, Vancouver's Aquatic Informatics targeted their competition's weaknesses.

How to crack a market by finding the dominant player’s weakness.

Life can be difficult when a young company enters a market dominated by one large competitor. It’s a David-and-Goliath scenario. However, a Vancouver scientific company managed to thrive by finding the giant’s soft underbelly.




The Problem


In 2005 Vancouver’s Aquatic Informatics Inc. developed software to crunch data supplied by new water-monitoring technology. But Kisters AG, a giant international engineering company from Germany, was the only supplier of similar software and had the market sewn up.

 

The Solution


Aquatic Informatics founder and CEO Edward Quilty, a former river ecologist who developed the software with a staff of only five people, decided that the only way to beat Kisters was to provide software to the U.S. Geological Survey (USGS), the largest user of water- quality monitoring equipment in North America.He reasoned that other organizations charged with monitoring water would follow the U.S. government’s lead. So Quilty began looking for a chink in the giant competitor’s armour. 


He found it in the way Kisters dealt with its customers. Their image was of a large multinational that routinely played hardball with American customers. Quilty reports finding that many of its target clients “didn’t actually like them.” The USGS was among them and was willing to listen to the little company from Vancouver. 


Quilty’s solution was to launch what he describes as a “lots-of-love” campaign, in which he worked closely with the U.S. organization to tailor the software specifically to its needs. For two years, Aquatic Informatics talked with the USGS engineers almost daily, listened to their concerns and responded by regularly developing its software to new specifications. 


It was a painful period because the USGS was not funding any cost for the software development. Aquatic survived by selling small contracts, obtaining funding from the Canadian National Research Council and continually pretending it was much bigger than it was. 


Eventually the USGS adopted the software for its 1,000 users. The software became the monitoring standard and soon Aquatic Informatics became the safe decision for many smaller operations. Business picked up significantly and Aquatic is now the de facto leader in the North American market. 


Next in line was the Water Survey Canada, with 250 users, including a large international following. Aquatic Informatics used the same lots-of-love technique to tailor very robust and deep software specifically for its needs. The software was a game-changer and led to customers in Europe and Asia. 


Today, Aquatic Informatics is a global supplier with partners among water-quality consulting operations in North America, Europe and Australia. Its revenue is “in the millions,” according to Quilty (the private corporation is not legally obliged to report its revenue), and it has ambitious plans to double revenue annually. 


Better yet, its competitor is now focusing less on the water-quality monitoring market and is concentrating more strongly on energy. Goliath decided that David was just too nimble and competitive.



Lessons


• Dissect your competition. Aquatic Informatics studied the market and researched its competitor until it found a weakness it could exploit.


• Look for conservative markets. Markets such as government or very large organizations are difficult to penetrate, but if you can crack them, you become the go-to supplier and arbiter of standards.


• Find the right partners. Aquatic had to try several partnering options before it found the one best suited to be a partnership sales channel.