"Fantastic! Not bad for a number two driver". The famous words from Mark Webber, the Red Bull F1 driver after winning last year's British Grand Prix.
Of course in F1, being a number two is not good. But that is not the case for all industries. There is a time when being number two is very desirable.
Up until the '80s, Pepsi was contented at being number 2 in the billion dollar cola industry.
Adidas is number two in the global sports wear industry. From most perspectives, they are pretty happy with being number two. Take their marketing spend for example. Nike the number one in that industry, spends £700 million more, in marketing, than Adidas. That shows how contented Adidas is in their number two position. To put this into perspective, Pepsi, in the early '80s, had a comparable marketing spend with the number one in the industry, Coca-Cola.
The reason I give these examples is because of a trend I see in many businesses, especially SMEs. Many people starting out in business always aim to be number one in their industry. There is nothing wrong in aiming high. Aiming to be number two can be a realistic, as well as a highly profitable, goal. Aiming for number two should be seen as the first step in your growth strategy. Cue Microsoft, makers of Xbox game console. They entered the market and went straight to number two just behind Sony Playstation. Leaving the almighty Nintendo in the shade until they bounced back with the Wii in 2006.
The second and final step is to aim for number one when you have reached number two. Having these two step approach is like aiming for number without the added pressure and difficulties associated with it.
A good example is Basecamp. Basecamp is one of the products (applications) in the stable of 37signals, the online provider of collaboration tools. Basecamp, started in 2003, worked itself up to number two in the online collaboration industry for small business. he guys at 37signals did not go into over-drive in becoming top. In fact nothing changed because they knew they had the product and the business model to compete. Fast forward to 2010, they had become number one. The number one product in that industry later folded up in April 2011 because 'it could not innovate' fast enough.
If Basecamp had rushed it, they could be on the decline now. But instead, they employed the two-step approach of aiming for number two and when you get there, aim for number one.
A more recent example is the sunday papers section of the newspaper industry. For decades, News of the World had been the runaway leader and the Mail on Sunday had been a steady number two. Fighting off Sunday Times and the Sunday Express for this position. With the demise of News of the World, comes a new position for the Mail on Sunday - number one sunday newspaper.
Business is not F1, so being number two is desirable and can act as a credible launch pad to the top position.