During the 1990's as the power of the internet became clear, every web entrepreneur thought of him/herself as a technology revolutionary - a type of David with his slingshot - out to kill the establishment or incumbent. Some of these David's broke through, and have become high-growth David's. Some were acquired by Goliath.
Most died or hibernated. Very few Goliaths became nimble as David or recreated themselves - although Apple is a notable exception as its original David came back into the cockpit. Most Investment Bankers just tell Goliath - whether the retail shops, telcos, energy companies, or media firms - to just buy companies. The big consultancy firms project their theories at Goliath about how to "fix their strategies" but don't hang around for the implementation as "things can go wrong"! What Goliath needs to do is to think hard about its assets as a firm - typically these include distribution/customers, brand, billing relationships and consumer habits. Goliath needs to learn as well - build his own muscle - not just listen to others or buy companies like a patchwork quilt.
In short, Goliath needs to open himself up to the "digital enablers". If he is Kodak or Polaroid with hundreds of millions of customers buying film and cameras, how can he leverage that distribution for a young Instagram bubbling up from the start-up world? Kodak and Polaroid weren't set up to dance with Instagram, and therein lies the problem. Digital entrepreneurs go to the dominant "anthills" for their distribution today - Facebook, Google/Android, Microsoft/Bing, Apple/ios and Amazon. These platforms are software-centric, and open to consumers digitally. More Kodak's and Polaroid's will fail unless they refashion themselves fast as open enterprise platforms, moving their company infrastructure and product development wholesale to the cloud.
The second thing that both David and Goliath must do as they go to market is to identify their natural allies in the market, and create a set of economics which work for the ecosystem. In a networked world, you cannot operate like a bullet. You need to create pull into the market by working with allies in whose interest it is for you to be successful. You must think like a business model architect. That takes deep thought, careful market analysis, clever deal-making and digital, cloud-based infrastructure.
David understands thing about the future that Goliath doesn't. If David is good, he builds strategic value for his industry in his first couple of years. But there is a profound vulnerability inherent in a networked world where a David must align the economics across multiple stakeholders - at the beginning. At the beginning, he can hit a wall easily. But if Goliath doesn't pay attention, and so frequently they don't, David crosses over to creating network effects in the ecosystem in which he operates. His strategic value at that point becomes financial value. Those network benefits will not accrue to Goliath at this point, but to David himself as he/she becomes the operating system to his market space.
Close to home we can see how Monitise has become just that in the world of mobile money, now servicing 250 financial institutions, backed by VISA, and operating on 4 continents. Where were the players who should have taken notice? Western Union? Misys? SAP?