It's David and Goliath in the global business ring---and guess who's winning many of the rounds? In a world in which startup Amazon.com can outmaneuver Barnes & Noble online, it's clear that size is no longer a prerequisite for success, particularly in the virtual world of cyberspace. We're seeing this trend play out offline, as well, as small businesses take advantage of cutting-edge technologies and streamlined processes to beat out more established competitors.

Think Small

Why is the Netherlands, a country the size of the tiny state of Rhode Island in the U.S., now considered one of Europe's economic superstars? (The International Institute for Management Development recently ranked it as the fourth most competitive nation in the world.) The Netherlands is succeeding in such areas as global banking because small is the new big. That is, smaller entities (whether countries or companies) are finding that they can have as much if not more influence in the global marketplace than larger competitors, despite having far fewer assets and resources. Many large conglomerates have lost sight of their guiding vision, while pint-sized upstarts have the foresight and agility to overcome such handicaps.

Apple Computer, though not a tiny company by any stretch of the imagination, is dwarfed by such companies as IBM and Microsoft. The giant PC makers have taken a huge bite out of Apple's market share over the past decade. But with the return of co-founder Steve Jobs (who cobbled together the first Macintosh in his garage) and the recent introduction of the iMac, Apple is staging a comeback. The company sold 278,000 iMacs in the first six weeks following its launch, increasing company sales by 28% over the previous quarter. As important, 30% of iMac sales went to first-time computer buyers, an impressive figure given Apple's prior dependence on Mac loyalists. Leave it to a smaller company to come up with a plug-and-play solution for an untapped market.

Qwest Communications is another small success story--a telecom startup that jumped light years beyond such megacompetitors as AT&T and MCI WorldCom. Because it had no preexisting structure to work around, the company started out by building an 18,500-mile-long fiber-optic telecommunications network that will service the 130 cities from which 80% of U.S. data and voice transmissions is initiated. Being small hasn't curtailed its plans for worldwide domination. Qwest owns transatlantic submarine capacity that will link the U.S. to Europe and jointly owns a transpacific submarine system that will link the U.S. to the Pacific Rim.

Virgin Atlantic Airways, only a blip on the radar not long ago, has hustled its way through the ranks, as well. Founder Richard Branson's vision was one of total customer satisfaction--offering limousine rides to and from the airport and 21 video channels in coach class. Through perseverance alone, his small airline has captured 18% of the U.S.-U.K. market, giving the much larger British Airways a fight for its money.

Giants who stand on the shoulders of little guys are making strides, as well. In the U.S., Kinko's and Staples are two such companies that manage to offset their size by localizing power into niche markets. Their target (and lifeblood): businesses with 20 or fewer employees.

Of course, with today's technology, a small fish with an Internet connection can pose as a shark in a small pond. Amazon.com and Dell Computer Corp. both built up their businesses from nothing on the strength of direct sales and an exclusive online presence. Dell now sells approximately US$3 million of computers a day.

Who will be the next generation of Internet leaders? Companies such as FieldWorks, a two-person management and consulting business that is currently hauling in US$2 million a year. How do they do it? Like many virtual companies, FieldWorks has the advantage of few operating expenses and low overhead. Many Internet-based companies are run on a shoestring out of home offices and outsource for any needs that cannot be handled by employees. Travel costs are kept to a minimum, as well, with email, private chatrooms, and videoconferencing now the norm.