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Navigating Hypercompetition: Strategies for Disruption in Silicon Valley's Business Landscape

This analysis explores the hypercompetitive nature of Silicon Valley, examining the dynamics that lead to intermittent profits and disruptive competition. It discusses D'Aveni's 7 Ss and how superior stakeholder satisfaction, capability for disruption, and tactical maneuvers redefine market strategies. Moreover, it evaluates the implications of open borders and property rights within volatile markets, contrasting regional networks and firm-based systems. Key insights into effective governance, organizational property rights, and the historical evolution of Silicon Valley's tech landscape further enrich this discourse.

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Navigating Hypercompetition: Strategies for Disruption in Silicon Valley's Business Landscape

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  1. HYPERCOMPETITIONBECAUSE • RELATIVELY MANY PLAYERS AND PROFITS ARE INTERMITTENT • NATURE OF COMPETITION IS DISRUPTIVE & DISCONTINUOUS

  2. MORE ON SILICON VALLEY GLOBAL BUSINESS STRATEGY COB, SJSU & FBSIB, MIIS 2001

  3. D’AVENI’S 7Ss • VISION FOR DISRUPTION • superior stakeholder satisfaction • strategic soothsaying • CAPABILITY FOR DISRUPTION • speed • surprise • TACTICS FOR DISRUPTION • shifting the rules of the game • signaling strategic intent • simultaneous & sequential strategic thrusts

  4. FRUIN’S GOOD FENCES • TRAD THEORIES OF THE FIRM DON’T DEAL WELL WITH OPEN BORDERS & PROPERTY RIGHTS CONFUSION • AGREEMENT THAT OPEN BORDERS ARE NEEDED IN VOLATILE MARKETS AND WITH COMPLEX PRODUCTS • HOW ARE PROPERTY RIGHTS TREATED UNDER CONDITIONS OF OPEN BORDERS

  5. FRUIN’S GOOD FENCES II • JAPANESE FIRMS ARE OPEN WITHIN FORMALIZED NETWORKS (bus groups) • PROPERTY RIGHTS BELONG TO ORG MORE THAN INDIVIDUALS, BUT • higher transfer prices • supplier associations for network governance; multilateral rather than bilateral bargaining • pay for performance

  6. FRUIN’S GOOD FENCES III • OPEN BORDERS ARE FORMS OF PARTICULAR, FORMALIZED TRUST • ORGANIZATIONAL RATHER THAN INDIVUDAL PROPERTY RIGHTS • GOODWILL RATHER THAN LEGAL RIGHTS • IMPROVES ON TRADITIONAL MODEL BUT SUFFERS AGAINST S.V. MODEL

  7. SAXENIAN’S AUTARCHY • ROUTE 128 vs. SILICON VALLEY • DIGITAL COMPUTER, DATA GENERAL (‘Soul of a New Machine’) • BETWN 1975-90, 3x AS MANY NEW TECH JOBS IN S.V. • S.V. HOME OF 39 OF 100 FASTEST GROWING ELECT FIRMS (Boston=4)

  8. SAXENIAN’S AUTARCHY • FIRM-BASED SYSTEMS vs. REGIONAL NETWORK • DURING THE 1980s, MASS MIRACLE RAISED $3 BILLION IN VENTURE CAP • DURING THE 80s, S.V. RAISED $9B • 75% RAISED LOCALLY FOR Rte 128 cos AND 130% FOR S.V. FIRMS

  9. SAXENIAN’S AUTARCHY • DIGITAL’S MATRIX ORGANIZATION vs. H-P’S DECENTRALIZED DIV STR • H-P’S OPENESS TO MRKT TRENDS AND STATE-OF-THE-ART IN S.V. • JOE DeNUCCI, FORMER DEC EMPLOY IN P.A.: “DEC P.A. is a completely diff. world…adversaries are external…far more aggressive and “prove-it” mindset.” (p286)

  10. SAXENIAN’S LAST WORD • COMPARING Rte 128 and S.V. • REGIONS AS NETWORKS OF RELATIONSHIPS RATHER THAN COLLECTIONS OF ATOMISTIC FIRMS • TRANSCEND DISTINCTION BETWN WHAT’S INSIDE & WHAT’S OUTSIDE FIRMS

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