For years, being big has mattered. Scale created advantage across all aspects of the business. Become the biggest — so the logic went — and you would have unrivalled access to capital, global reach, expansive networks, and a powerful ability to spend – on the best in R&D, technology, marketing, sales, facilities, and people.

For years, it really was good to be the king.

Today though, the balance of power has irrevocably shifted. This is being driven by competitive market changes as well as significant new dynamics in consumer preferences and behaviours. Commercially, big businesses are facing new market dynamics that favour the underdog.

Technology has given small companies the ability to punch well above their weight

They can now conceptualise, fund, develop, market, and sell their goods/services at a pace and cost base the big companies simply can’t match. One look at the Pebble smartwatch reveals how the nature of competition has changed.

After surpassing their Kickstarter fundraising goal of $500,000 in just 17 minutes, they went on to raise $22 million for their latest watch, Pebble Time. The truth is that Kickstarter, in addition to being a fundraising platform, has also become a mega marketing platform for product companies.

Across many industries, access has begun to supersede ownership

Companies ranging from Uber to AirBnB to Spotify have shown how businesses that enable the sharing, borrowing, and “renting” of goods and services can create major competitive advantage in markets where the established leaders are burdened by high fixed costs, legacy technology, and organisational structures designed for the traditional competitive dynamic.

A now classic example is Netflix. As late as 2008, former Blockbuster CEO Jim Keyes stated that Netflix was not “even on the radar screen in terms of competition.” And yet within 2 years Blockbuster was bankrupt and Netflix was on pace to acquire over 65 million global streaming subscribers.

Modern business models are based on borrowing and sharing, not owning

Today’s consumers are more willing to embrace the smaller, local, and unique products and services that are tailored to their tastes.

As digital services as varied as Google Now for intelligent recommendations, Flipboard for tailored news, and Glow for data-driven fertility advice all enable increased personalisation, consumers have come to expect the companies they interact with to know who they are and what they prefer.

It’s a move back to the day of the local shopkeeper that knew your preferences, powered by digital and the troves of data available on us.

Given this dynamic commercial and consumer environment, it is little surprise that big companies are facing a situation in which their scale has been transformed from a killer asset into a real liability.

Here are seven practical steps that companies can pursue to redefine the competitive dynamic.

1: Identify meaningful growth opportunities

It’s imperative to identify growth opportunities that meet two equally important criteria. Firstly, they should be big and sustainable so that scale can be leveraged as an advantage. Secondly, they need to be winnable. Chasing an opportunity simply because it’s big or “wide open” can be a fool’s errand.

2: Develop a strategy that provides real competitive advantage

Once you know where you can win, it’s essential to develop a strategy that will give you a distinct advantage. Although this seems intuitive, it’s often over-looked. Companies often chase growth for growth’s sake without thinking about ways to create defensibility.

And in today’s hyper-competitive marketplace, that’s a counter-productive exercise because you’re simply providing the road-map for fast-followers.

Growth for growth's sake isn't always a good thing

3: Create discrete but complementary platforms

In order for big companies to create internal alignment and support, the strategy needs to translate into evergreen platforms that become the foundation for innovations over time.

Every innovation should be a new manifestation of the strategy that deepens and expands the relationship with your customers, like the unfolding chapters in a book.

4: Apply a portfolio approach to funding

Often times, CEOs hesitate to fund innovation because it’s perceived as a very bad bet: it’s unpredictable, requires investment in initiatives that sit outside the core of the business, can become a distraction, and the vast majority of innovations fail within the first two years of launch.

5: Create innovations that solve a two-sided problem

Once you’ve defined the growth opportunity areas, competitively defensible strategies, and the funding levels, it’s important to create innovations that delight the consumer and the business simultaneously.

Run a two-sided methodology that from day one looks at the problems of both constituencies that count — the consumer and the business — to build ideas that marry up an answer for each.

6: Appoint a champion

As any entrepreneur knows, developing a successful innovation requires total commitment. Therefore, it’s essential to appoint a champion to lead any new innovation project.

The more tightly aligned the innovation champion’s personal and professional aspirations are with the success of the innovation, the more likely it is to succeed.

7: Recognise innovation for the experiment that it is

By definition, real innovation pushes outside the core business. Therefore, it can’t accurately (or effectively) be measured using the traditional metrics. The system should be based on the measurement of KPIs that reflect the strategic role within the portfolio.

Learning fast — from successes and failures—gives you the ability to course correct the innovation’s development; as well as to provide insights that can help strengthen the core business and translate it across the company.