If the stock market has got you down, consider this: The conceptualization and launch of new companies, as well as the contraction and consolidation of existing businesses, are tenets of “economic dynamism,” a concept that illustrates the ebb and flow of financial progress needed for economic stability and progress. In a nutshell, fluctuations are necessary for growth.

Yet with the number of new businesses introduced to the market each day, why do 92 percent of startups fail within the first three years? Many say scaling too quickly is the culprit, while others say it’s entering a crowded marketplace. While this varies across industries, company success typically boils down to three things: company innovation (IP), category leadership (positioning), and expected growth in revenue and customer base (valuation). Companies should consider these factors as they look to differentiate themselves from established competitors, not only to steal market share, but to carve out niche markets that properly position them for growth.

Differentiate & Position Your Company for Category Growth

Before a company considers whether or not to develop products or innovate within an established category, it is important to consider the current competitive landscape and the nuances of each player. Will the company be going up against large, established companies with several lines of business and a diversified product portfolio? If so, one option is to introduce technologies or innovations that capture a relevant yet parallel market need, one that will make the new company so valuable that people will be willing to pay a premium for that additional functionality and make the company an attractive acquisition target in the years ahead.

While we associate innovation with major companies such as Apple, Microsoft, Amazon, and Google, large multi-national corporations typically don’t have the luxury of innovating from within since they are publicly traded, under shareholder scrutiny, and focused heavily on operating efficiently to meet the current market need. Innovation takes creativity and time, and that’s why corporations partner with or develop their own think tanks or incubators to develop and explore new ideas and products. As a way to quickly differentiate, many corporations often take the approach of innovating through acquisition, to purchase smaller companies in the hopes of bringing in fresh ideas and IP into their existing service lines for further development and implementation. For this, they look to the nimble startup world.

For example, take the company Relate IQ (acquired by Salesforce), a company that launched in 2011 as an intelligence layer on top of CRM database and campaign technologies. The company focused on extending the functionality of traditional CRM platforms by providing additional data insights around how often people from within organizations collaborate with each another both internally and externally with sales prospects. Relate IQ aimed to solve the problem of tracking communications from one domain to another so that sales professionals could better understand who last contacted a potential customer, keeping all team members informed about the sales process. This technology was novel, relevant, and complimentary to Salesforce.com, which acquired Relate IQ for $390 million in July of 2014. Now the technology is being offered as Salesforce IQ to help teams manage their business development activities.

Now take former Communiqué PR client VoloMetrix (acquired by Microsoft), a company founded by Bain executives who based their technology on established time-and-motion studies utilized in the consulting world. By understanding people’s roles within a company and how they spend their time, consultants could be armed with valuable information to present strategies for organizational alignment and process improvements. In creating VoloMetrix, the company utilized the backbone communication channels for today’s businesses (email trends to inform business decisions), and helped create the category known as “People Analytics.”

By attaching itself to the Exchange email servers within corporations, VoloMetrix’s technology could anonymously extract the metadata associated with email and calendar items to reveal, in aggregate, who communicated and met most frequently with others internally and externally around parameters like time of day, geography, and within departments and divisions. This new dataset could then be used by consultants to identify correlations about qualities that defined a successful sales person, like the size of internal networks and the frequency at which these individuals contacted prospects. This approach caught the attention of Microsoft, which acquired VoloMetrix last year in September of 2015.

So what does this mean and how can it inform your business decisions?

Well, we know that Microsoft has been moving toward cloud-based technologies with Office365 to compete with Google and desired a way to create a communications intelligence layer, most likely to arm its consulting and data insights practice. Salesforce is investing heavily in data intelligence technologies and clearly has a competitor in Microsoft Dynamics for sales analytics, since their People Analytics technology (acquired through VoloMetrix) can extend both within and outside an organization. Traditional consulting firms like McKinsey and Bain will also be looking to partner closely with Microsoft lest they miss out on this very valuable data set already being used by companies around the world.

When examining this mini case study, key takeaways for companies are to anticipate the market shifts within a particular category – in this case, toward analytics and insights for sales and CRM, and innovate in this domain. As companies work to enter a new category or market, they must first understand how third-party analyst firms like Gartner and Forrester are defining the space. Next, they must pinpoint larger companies within the space, understand their offerings inside and out, and then position their companies well for future growth through differentiated products and services that could easily snap into existing services but are necessitated by proprietary algorithms and datasets.

In many cases, when and where these companies enter the market will ultimately determine their success.