Protect This House

The ad needs a shot of adrenaline, a killer riff. "Right there," says Marcus Stephens, watching the commercial for the umpteenth time. He breaks into air guitar: "Wherrrrrrrrrng! Loop it there a few times. Wa-wa-wherrrrrrrng!" The creative team from Under Armour is working overtime to fine-tune a new 30-second spot. The company makes premium athletic clothes that stay remarkably dry and light when you sweat and sell as fast as Under Armour can sew them. The ad is scheduled to air in two weeks, during the pre-Oscars hype, but the latest version is due tomorrow. "It's always crunch time," says Stephens, the creative director.

Maybe so. But this crunch is like no other in the life of nine-year-old Under Armour. The new commercial is aimed at an entirely new audience: women. It could catapult what has been until now a testosterone-driven brand to the next level. The company is an unlikely would-be giant killer in an industry in which Nike, Adidas, and Reebok are so dominant that it seems inconceivable that a new brand could get noticed, let alone thrive. But Under Armour has done both. Much as JetBlue snuck up on the airlines, Under Armour snuck up on the sports giants. If you haven't heard of the brand (it helps to be a male jock in high school or college), you will next time you shop for exercise clothes.

Founder and president Kevin Plank, 32, almost single-handedly launched a new sportswear category out of whole cloth -- specifically, out of sweaty undergarments. Plank, a former college football player, worked with manufacturers to create a comfy shirt to wear under football pads. Cotton absorbs sweat, but he found that a polyester blend wicked perspiration off the skin. The moisture evaporated quicker. The fabric stayed light. It made athletes feel faster and fresher, Plank says, which gave them a psychological edge. It didn't hurt that his football shirt was as silky and snug as Superman's suit.

Performance apparel may be a small category compared with, say, the $9 billion sneaker market. But it's now the industry's fastest-growing sector. During the past four years, annual retail sales have jumped nearly fivefold to more than $400 million. Under Armour, one of the country's fastest-growing private companies, has developed apparel for various sports, climates, and settings -- loose-fitting shirts, sweats, batting gloves, even sports bras and boxers -- available at more than 6,500 stores worldwide. The brand dominates the category so much -- with around 75% market share -- that the name has become synonymous with the product. Under Armour is like Kleenex or Band-Aid.

And therein lies the trouble. Plank may have caught the megabrands snoozing, but now they're wide awake, and his company is under siege from Nike Dri-Fit, Adidas ClimaLite, Reebok Hydromove, and others. "We're not taking this lying down," warns Ken Barker, director of apparel at Adidas America. "It's a war."

Under Armour is facing what might be called the "disrupter's dilemma," the exhilarating and perilous "what now?" moment that upstarts dream of -- and fear. It's the mirror image of the "innovator's dilemma" famously formulated by Harvard Business School's Clayton Christensen, who explored how dominant companies can be upended by disrupters bearing new technologies. But if the established players respond nimbly, it can be the disrupter that comes under pressure. Innovators that have stirred sleeping giants recently include Netflix, after its mail-in DVD-rental service took off; TiVo, after it launched an easy-to-use digital video recorder; JetBlue, after it made flying less expensive but more enjoyable; even Apple, after the iPod became an icon. In each case, the hunter becomes the hunted and tries to avoid becoming another cautionary tale -- the next Netscape. That Web pioneer introduced its hot browser and was subsequently crushed by Microsoft's Internet Explorer.

To survive, a disrupter has to grow beyond its niche, developing new products and innovations that reach new customers. At the same time, it has to protect its turf, differentiating itself from an increasing number of copycats. Other than the harrowing years of launching a business, this maturation ranks as one of the most challenging periods for companies, says Adrian Slywotzky, managing director of Mercer Management Consulting and coauthor of How to Grow When Markets Don't (Warner Books, 2003). It puts everything that worked up until then to the test: the business model, the leadership, the customer connection, the brand.

Companies need to branch out in a way that makes strategic sense and at a pace they can manage. For instance, Starbucks built on its early success by saturating a local market with multiple locations. It dominated Seattle before it applied the same strategy elsewhere, one city at a time. "You have to ask, 'Which are the segments where my model gives me an advantage?' And, 'What will it take to establish a leadership position?' " Slywotzky says. "For every Starbucks example, you have, I don't know, 30 more companies you've never heard of because they didn't ask the right questions and didn't make it."