When Markets Move Like Armies: Are Incumbents and Startups Fighting the Wrong War?

If You Were a General at Midway, Would You Still Be Protecting Battleships or Betting on Carriers? (The Hook)

You: “Our bank just launched a new app. Our retailer opened a digital lab. We’re not protecting battleships, we’re already on the carriers.”

I answer you as any war historian would.

At Midway in 1942, Japanese admirals sailed with the most powerful battleships ever built, but the real battle happened in the sky, between aircraft launched from floating airstrips. The decisive assets—the carriers—were still seen by many as support units, not as the core of naval power.

You: “So you’re saying our branches, stores, clinics, fleets, campuses… are today’s battleships?”

Not exactly. I’m saying your mental model may still be battleship‑centric.

Because while you talk about “channels,” “digitization,” “innovation programs,” startups are organizing themselves as carrier groups: cloud‑native cores, modular services as squadrons, data as early‑warning radar. Different physics, different logistics, different strategy.

And yet, like in every campaign from Austerlitz to Stalingrad, neither side has the whole truth. Incumbents underestimate the new doctrine; startups underestimate terrain, weather, and supply lines.

So let’s walk your fronts—finance, retail, health, mobility, education—and ask not “who is more innovative?” but a harsher question:

Are you preparing for the war you wish existed, or for the one that is actually unfolding?

If Incumbents Are Fortresses and Startups Are Guerrillas, What Are We Really Comparing? (Overview and comparative framework)

You: “Give me a simple framework: incumbents vs. startups.”

Simple frameworks lose wars. Napoleon had a simple framework for Russia.

Let’s speak in terms a general would respect.

• Incumbents look like fortified cities: thick walls of regulation, brand, capital, and installed base. They hold key crossroads—payments, supply chains, clinical networks, public accreditation. Their doctrine values stability, predictability, and avoiding catastrophic failure.
• Startups resemble mobile guerrilla units: light equipment, rapid movement, high attrition. Their doctrine favors speed, experimentation, and the ability to abandon a valley today to conquer a mountain tomorrow.

You: “So incumbents are slow, startups are fast. We all know that.”

That cliché hides the real asymmetry:

• Incumbents optimize for peace time with occasional skirmishes: budgets, compliance cycles, legacy IT, committee governance.
• Startups optimize for permanent low‑intensity conflict: short cash runways, product–market fit uncertainty, brutal competition for attention.

A battle historian looks at three dimensions: business model, technology, experience of the soldier—or in your case, the customer. Across these, we see not just speed differences but doctrinal gaps.

Let’s map them succinctly before we march sector by sector.

The Winners vs. Losers Scorecard (Across All Fronts)

Now let’s see how these doctrines clash—and sometimes cooperate—on each front.

When Money Changes Hands, Who Commands the Field: the Bank with Marble Halls or the App in Your Pocket?

(Financial services: banking vs. fintech)

You: “Our bank has survived crises. Startups haven’t seen a full rate cycle.”

True—and yet, Robinhood can create a massive user base with commission‑free trades, while your bank debates maintenance fees. Different theater of operations.

Business models: the battle for unit margin

• Traditional banking:
  • Value proposition: safety, full range of services (accounts, loans, mortgages, investments), advice, and physical presence.
  • Revenues: loan interest, service fees, transaction charges.
  • Costs: branch network, legacy core banking, intensive regulatory compliance, staff structure.
• Fintech:
  • Value proposition: extreme simplicity (one or a few core functions), frictionless mobile experience, price transparency.
  • Revenues: transaction fees, premium subscriptions, freemium models, monetization of order flow or aggregated data.
  • Costs: cloud infrastructure, small teams, focus on digital acquisition; lower marginal cost per customer.

You: “But we win on breadth of offering.”

Yes. They win on clarity of purpose. The average user rarely needs your entire arsenal at once.

Technology: Midway in the cloud

• Incumbents:
  • Monolithic core banking, mainframes, on‑prem infrastructure.
  • Point‑to‑point integrations, little modularity.
  • Waterfall projects; large, infrequent releases.
• Fintech:
  • Cloud‑native architecture, microservices, open APIs.
  • Extensive use of AI and machine learning for scoring, fraud prevention, personalization.
  • 100% digital onboarding, KYC with biometrics and online verification.

The tactical result: while your team prepares a big annual release, they run weekly iterations. They don’t win by genius but by repeating learning cycles.

User experience: opening an account as crossing a river

Imagine two river crossings, like in Napoleonic campaigns:

• Traditional bank: long forms, possible branch visit, physical documents, waiting times of days. “Security” is perceived as a barrier.
• Fintech: registration in minutes, ID verification with photo and video, instant virtual card, clean interface. Security is built in, mostly invisible.

Why does the soldier—your customer—sometimes prefer the older bridge? Because in moments of panic (financial crisis, headline fraud), historic brand and perceived solvency tilt the balance toward the bank.

The war is not decided. It’s a long campaign where systemic trust vs. everyday experience remain in tension.

If Retail Is a Supply Line, Who Controls the Corridors: the Hypermarket or the Algorithm?

(Retail and e‑commerce)

You: “We’ve opened an online store. We’re competing with e‑commerce.”

Opening an online store against Amazon is like opening a trench against an air force.

Business models: from store to logistics theater

• Traditional retail:
  • Proposition: broad assortment in a physical store, proximity, tactile experience.
  • Revenues: direct sales, margins eroded by promotions.
  • Costs: rent, in‑store inventory, staff, push logistics to physical locations.
• E‑commerce startups and platforms:
  • Proposition: almost infinite catalog, 24/7 convenience, social reviews, price comparison.
  • Revenues: retail margins + marketplace commissions + additional services (logistics, platform advertising).
  • Costs: large logistics centers, technology, automation; far less need for physical stores.

You: “But we have personal relationships in store.”

They have data on every click, search, and abandoned cart. Their shop assistant is a recommendation algorithm.

Technology: radar vs. binoculars

• Incumbents: ERPs for inventory and POS, fragmented CRM, batch reporting.
• Startups: modular e‑commerce platforms, real‑time analytics, AI for dynamic pricing and recommendations.

A Bitkom study shows that ~53% of German startups already use big data and 49% use AI, versus only 15% and 25% in the general economy. In retail this means a strategic difference: some see the battlefield in real time; others are still looking at last week’s maps.

UX: buying online vs. going to the store

• Traditional chain: corporate website that mimics the flyer, limited filters, multi‑step checkout, inflexible delivery options.
• Startup/platform: intuitive search, behavior‑based recommendations, one‑click purchase, order tracking, varied delivery and return options.

Still, the physical store remains a logistics and brand fortress. Well‑executed omnichannel (click & collect, in‑store returns, real‑time stock) is a bridge many retailers haven’t finished building.

When Health Feels Like a Battlefield, Do Patients Trust the Field Hospital or the Telemedicine Drone?

(Health and healthtech)

You: “Medicine is special; you can’t ‘disrupt’ hospitals like you did taxis.”

Look at Verdun or the 1918 flu: health systems are always an overloaded front.

Business models: physical bed vs. continuous service

• Traditional hospital/clinic:
  • Proposition: comprehensive care, emergency, specialists, diagnostic infrastructure.
  • Revenues: fee‑for‑service (consultations, procedures), insurance, public funding.
  • Costs: facilities, equipment, clinical staff, regulatory protocols.
• Healthtech startups:
  • Proposition: remote access (telemedicine), continuous monitoring, personalized prevention.
  • Revenues: subscriptions, pay‑per‑online‑consultation, software licensing to health systems.
  • Costs: platform development, cloud infrastructure, data‑related compliance.

You: “They don’t carry the weight of an ICU.”

Exactly. They are light reconnaissance units. But they’re changing patient expectations about how the care relationship should begin.

Technology: from paper records to constant surveillance

• Incumbents: electronic health records often fragmented, imaging and lab systems disconnected, heavy admin processes.
• Healthtech: symptom‑tracking apps, wearables collecting continuous data, AI for triage and diagnostic support.

A PwC study notes that only 7% of companies see themselves as true “EmTech Accelerators.” Most invest in emerging tech without an effective deployment plan, frustrating shareholders and clinicians.

Startups fight another war: they adopt AI, big data, even VR or metaverse for clinical training, but the bottom‑up tech approach means 68% of fast‑growing companies regret software purchases, according to Gartner. Many exploration units; few unified supply lines.

UX: booking and receiving care

• Traditional center: phone calls, limited hours, waiting lists, paper forms, explanations often hard to grasp.
• Healthtech platform: online appointment booking, automatic reminders, video consultations, access to records and post‑visit instructions in the app.

In severe emergencies, patients trust the “fortress hospital” more. But for minor issues, chronic follow‑up, or mental health, telemedicine as the first line is becoming acceptable, even preferable.

If Mobility Is the Supply of Movement, Who Designs the Routes: the Carmaker, the Fleet, or the Algorithmic Dispatcher?

(Mobility and transportation)

You: “We build cars / manage fleets; startups just have an app.”

In 1914, generals trusted horses and railroads; they underestimated trucks and tanks.

Business models: selling steel vs. selling trips

• Traditional players (OEMs, transport operators, classic logistics):
  • Proposition: robust vehicles, fixed routes, long‑term contracts.
  • Revenues: sale of assets (vehicles), tickets, transport contracts.
  • Costs: plants, physical maintenance, fuel, staff.
• Mobility/logistics tech startups:
  • Proposition: on‑demand mobility, route optimization, end‑to‑end visibility.
  • Revenues: per‑ride commissions, B2B subscriptions, freight marketplaces, software services for fleets.
  • Costs: routing technology, user acquisition, moderate asset investments in “asset‑light” models.

The 2015 GM–Lyft case shows a doctrinal move: an auto giant invests $500 million in a ride‑hailing startup to learn the art of on‑demand movement. Not a marketing alliance; an attempt to rewrite the tactical manual.

Technology: from printed map to digital twin

• Incumbents: on‑prem fleet management systems, proprietary hardware, limited integration with external platforms.
• Startups: apps with real‑time geolocation, AI for matching and dynamic pricing, advanced analytics to optimize loads and routes.

Openness to APIs and partnerships lets startups integrate with multiple actors—operators, insurers, payments—becoming a coordination layer over inherited infrastructure.

UX: hailing a taxi vs. ordering a ride

• Traditional operator: phone a dispatcher, uncertain wait time, pay with cash or physical card.
• Startup platform: instant request in app, ETA, vehicle tracking, automatic payment, post‑ride feedback.

Yet regulatory terrain is a minefield. City by city, rules on licensing, labor rights, and use of public space decide which models survive. Here, incumbents’ historic relationship with regulators remains a relevant weapon.

If Education Is a Long Campaign, Who Shapes the Cadets: the University Fortress or the EdTech Skirmishers?

(Education and edtech)

You: “Degrees still matter. Our campus experience is irreplaceable.”

So were the cavalry academies before tanks.

Business models: diploma vs. trajectory

• Traditional university/institution:
  • Proposition: official degrees, alumni networks, research, campus life.
  • Revenues: tuition, public funding, donations.
  • Costs: physical infrastructure, teaching and research staff, academic bureaucracy.
• Edtech startups:
  • Proposition: modular courses, bootcamps, lifelong learning, on‑demand education.
  • Revenues: subscriptions, pay‑per‑course, freemium models, B2B deals with companies.
  • Costs: tech platform, scalable content creation, digital marketing.

You: “But our degrees are regulated; theirs aren’t always.”

Correct. You manage institutional legitimacy; they manage immediate relevance to employers.

Technology: from fixed classroom to ubiquitous classroom

• Incumbents: legacy LMS, partial use of online tools, periodic in‑person exams.
• Edtech: cloud platforms, learning analytics, AI for personalized paths and pacing, interactive content.

Emerging tech adoption follows the general pattern: startups as pioneers (using generative AI, VR, etc.), universities advancing more cautiously to protect academic quality and assessment integrity.

UX: enrolling and learning

• Traditional university: long admissions processes, complex forms, rigid calendars, low personalization in curricula.
• Edtech: instant enrollment, short diagnostic tests, modules adapted to student level, continuous feedback.

At scale, edtech turns education into a continuous campaign: not just four years of intense war, but recurring training skirmishes throughout working life.

If All Fronts Show the Same Patterns, What War Are We Actually Fighting?

(Cross‑sector patterns and shared lessons)

You: “So every sector is just ‘more digital, more agile’?”

No. From a strategist’s lens, three structural shifts appear again and again.

1. From product to service, from transaction to relationship

• Banking: from selling loans to managing financial wellbeing.
• Retail: from selling products to managing convenience and selection.
• Health: from treating episodes to managing continuous health.
• Mobility: from selling vehicles to selling trips.
• Education: from granting degrees to orchestrating learning trajectories.

Startups usually build the narrative and interfaces for this transition. Incumbents own the critical assets that make it viable.

2. From linear value chains to orchestration platforms

The same move repeats: legacy players manage physical assets and licenses; startups try to occupy the digital orchestration layer.

3. From economies of scale to economies of data

Data shifts from by‑product to primary ammunition. The Bitkom study shows it clearly: startups use more big data and AI than the average firm not out of fashion, but because their competitive edge depends on learning faster than rivals.

But history shows that those who master only tactical speed without securing strategic supplies (capital, regulation, talent) end up overextended like an army with too long a front.

What If Both Sides Misread the Terrain: Are We Overestimating Tech and Underestimating Friction?

(Risks, constraints, and barriers for both sides)

You: “So the solution is: incumbents must become more like startups.”

That advice has ruined more companies than Trafalgar ruined fleets.

Risks of the fortress‑incumbent

• Technological rigidity: legacy systems slow the deployment of emerging tech. Without a gradual modernization plan, tech debt becomes a drawn‑out siege.
• Strategic blindness: cases like Blockbuster ignoring Netflix’s model show how overconfidence in the current model can be lethal.
• Reverse regulatory capture: using regulation only as a defensive wall delays adaptation and creates social and political backlash.

Risks of the guerrilla‑startup

• Technological disorder: bottom‑up tool buying leads to impulsive software purchases; 68% of fast‑growing firms experience tech regret. It’s the improvised logistics that sink promising campaigns.
• Regulatory fragility: relying on “regulatory sandboxes” without understanding how the framework will evolve. Losing the sandbox is like losing air support.
• Unstable business model: growth obsession without focus on profitability or positive unit economics.

Shared contextual barriers

• Regulatory uncertainty: Brookings highlights that uncertainty slows innovation more than many clear bans. Firms sit waiting, like armies stuck in mud.
• Poorly structured alliances: studies like the one cited by Transforme suggest up to 75% of corporate–startup collaborations fail due to misaligned expectations and faulty processes.

Both armies suffer from misreading friction: some believe technology will evaporate obstacles; others believe their walls are eternal.

If Past Alliances Failed, What Tactical Maneuver Can Turn Rivals into a Joint Command?

(Strategic opportunities, future scenarios, and the “Tactical Maneuver”)

You: “Give me something more useful than ‘collaborate more’.”

In war, alliances work when each side contributes complementary capabilities and a clear joint command is designed. GM–Lyft worked because there were shared strategic goals: GM gained access to technology and a new mobility model; Lyft gained financial backing and industrial expertise.

Let’s design your Tactical Maneuver—one for incumbents, one for startups, and one shared.

Tactical Maneuver I – For incumbents: modernize like Rome, not like an improvised warlord

You: “How do we respond without destroying what makes us strong?”

1. Adopt a theater strategy, not one‑off battles

   • Define 3–5 priority “fronts” (e.g., digital onboarding, dynamic pricing, back‑office automation) instead of a scattered portfolio of pilots.
   • Tie each front to clear metrics: acquisition cost, NPS, cycle time, error ratios.

2. Tech modernization in waves

   • Identify core systems to “surround” with API layers before replacing. Like Rome, build roads around hostile territories before “Romanizing” them.
   • Use cloud and modular architectures for new capabilities; avoid cloning monoliths in the cloud.

3. EmTech with unified command

   • Given PwC’s 7% EmTech Accelerator figure, set up an “emerging tech general staff” with a mandate to move from pilot to scale.
   • Evaluate AI, automation, IoT not for shine but for impact on cost, risk, and experience.

4. Corporate–startup as expeditionary corps, not CSR

   • Be explicit whether you seek exploration (future insight), exploitation (new business lines), or defense (threat reduction).
   • Define tech and commercial integration processes from day one to avoid having 75% of deals end in frustration.

Tactical Maneuver II – For startups: build logistics, not just vanguard

You: “How do we scale without dying from success or regulation?”

1. Unit economics first, narrative second

   • Design unit economics by segment (CAC, LTV, payback) before chasing indiscriminate growth.
   • Accept that in regulated sectors the optimal speed is not always maximum speed.

2. Architecture for the long term

   • Avoid chaotic tool sprawl. Gartner’s software regret figure is a warning: define a reference architecture, even a light one.
   • Document APIs, data models, and security protocols as if you were going to integrate with 10 incumbents.

3. Strategic regulation management

   • Use regulatory sandboxes as test fields, not permanent shelters.
   • Build communication channels with regulators; UK evidence shows that accessible information and lower admin burden can be crucial levers.

4. Alliances that extend you, not absorb you

   • Learn from Blockbuster–Netflix: don’t seek validation at any price; prioritize partners who share your view of the future.
   • Protect critical assets (data, talent, IP) in every agreement.

Tactical Maneuver III – For both: design joint command

You: “And the ideal collaboration model?”

Think combined force:

• Incumbent brings: customer base, licenses, capital, physical infrastructure, regulatory experience.
• Startup brings: product speed, modular tech, superior UX, specialized talent.

Design the alliance like a military campaign:

1. Clear shared objective: cut onboarding time by X%, raise NPS by Y points, open a new revenue segment in Z months.
2. Shared governance: a “joint command” with decision power over product, tech, and go‑to‑market.
3. Defined scaling routes: roadmap for moving from pilot to national rollout, with technical, regulatory, and commercial milestones.

Without this structure, your alliances look more like fragile truces than winning coalitions.

When the Smoke Clears, Will You Be Remembered as a Defender of Yesterday or an Architect of the Next Campaign?

(The big final perspective)

You: “Sum it up: who wins—incumbents or startups?”

History rarely crowns a single winner. After great wars, new hybrid regimes often emerge: old institutions with new doctrines, and new players that adopt the discipline of the old.

Adaptable regulation—well‑designed sandboxes, frameworks that cut uncertainty without suffocating—acts like the postwar congress that redraws borders. Studies from Brookings, CEPR, and the UK government converge on one point: it’s not regulation itself but its ability to evolve with technology that decides whether new winners emerge.

Your real strategic question is not “how to be more innovative,” but:

Which part of your organization must remain a necessary fortress, and which part must become a mobile force?

• A bank will not stop being a guardian of financial stability, but it can move its “carriers” toward interfaces, data, and alliances.
• A startup will not stop needing experimentation, but it must learn logistical and regulatory discipline if it wants to endure.

As a war historian, my warning is simple:

The empires that endure are not those that win every battle, but those that reinvent their doctrine without abandoning their essence.

So when you review your digital roadmap, don’t just ask “what features are we launching next quarter?” Ask, as a high command would after a long war:

Are we redrawing the map itself, or just moving troops on a map that no longer describes the world?

The future of your bank, your store, your hospital, your fleet, your university depends on whether you dare to answer.

References

1. McKinsey & Company – Synergy and disruption: Ten trends shaping fintech.
2. Nivelics – Fintech vs bancos tradicionales: ¿cuál es la mejor opción?
3. Randstad – Fintech vs banca tradicional.
4. PwC – Emerging Technology Survey.
5. Munich Startup / Bitkom – Startups are pioneers in new technologies.
6. McKinsey – The top trends in tech 2024.
7. Gartner – 2024 Tech Trends for Fast-Growing Businesses.
8. EUCVC – Case studies in corporate–startup collaboration (GM–Lyft, Blockbuster–Netflix).
9. Transforme – 75% de las vinculaciones entre empresas establecidas y startups fracasan.
10. Brookings Institution – Regulatory uncertainty is what actually holds back innovation.
11. CEPR – Bringing new digitally enabled products and services to market: sandboxes and the role of policy.
12. UK Government – Regulation, the regulatory environment and support: views from innovative businesses.