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Hypercompetition

Hypercompetition. In hypercompetitive markets, firms are unable to establish sustainable advantage. Instead, they aggressively work to create temporary advantages.

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Hypercompetition

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  1. Hypercompetition • In hypercompetitive markets, firms are unable to establish sustainable advantage. Instead, they aggressively work to create temporary advantages. • Additionally, incumbent firms can no longer create substantive value by focusing on incremental changes. They need to boldly redefine themselves and their strategy, cannibalizing the value of their current resources and market position before others are able to do so.

  2. The End of Incrementalism • We have reached the end of incrementalism in the quest to create new wealth. Quality, cost, time-to-market, process improvements -- these are important, but we are hitting the point of diminished returns…. Unless today’s established corporations learn to reinvent themselves and their industries, much of the new wealth will be created by newcomers.” -- Gary Hamel

  3. The Hypercompetitive Process Drivers for Hypercompetition Industry/Market Conditions Firm Behavior Performance Consequences

  4. Globalization of markets New and different rivals Changing resource mix Rise of alliances as an organization vehicle Information diffusion and the rate of learning Market entry Rate of technological growth Deregulation Changes in vertical relationships Providing alternative sourcing, organizing, and distribution systems Changes in reliance on scale economies Flexible manufacturing Organization modes (alliances, etc) Vertical relationships Changes in capital markets Openness Pressure for results Drivers for Hypercompetition

  5. Decreasing entry barriers Limited scale economies Open supply & distribution networks Open technology standards No institutional boundaries Increased rivalry Numerous & diverse rivals Changing rivals Increasingly close substitute products/services Changing and unclear industry boundaries Converging markets Deregulation Technology changes Shifting critical success factors Industry/Market Conditions

  6. Consequences for Firm Behavior • Increased boldness in action • Attacks on industry leaders • Redefining markets and products • More frequent and intense competitive interactions • Breakdown in tacit collusion • Increased emphasis on speed in strategic actions • Time to market • Focus on mobile and/or substitutable resources

  7. Performance Consequences • Temporary competitive advantages achievable • Volatility in firm performance • Shifting market shares • Loss of market leadership common • Increasing birth and death of businesses

  8. D’Aveni’s 7S’s for Succeedingin Hypercompetitive Markets • Vision for Disruption • Stakeholder satisfaction • Strategic soothsaying

  9. D’Aveni’s 7S’s for Succeedingin Hypercompetitive Markets • Capability for Disruption • Speed • Surprise

  10. D’Aveni’s 7S’s for Succeedingin Hypercompetitive Markets • Tactics for Disruption • Shifting the rules • Signaling • Simultaneous and sequential strategic thrusts

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