The extent of hypercompetition

1. Hypercompetition Is Widespread As illustrated by the quotes at the opening of this chapter, there is growing evidence of intensifying competition in a wide range of industries. Hypercompetition is not limited to high-tech industries such as comput­ers, but has left its mark on more mundane operations, such as diapers and auto parts. It

Why hypercompetition persists

1. The Negative Consequences of Hypercompetition Although hypercompetition is not a dead end, as perfect competition is, it is such an intense competitive environment that companies might be ex-pected to avoid it as much as they avoid perfect competition. Hypercompetition forces companies to go through the agonizing process of reinventing themselves, developing new advantages,

The nature of competition has changed in a fundamental way

Some Fundamental Shifts in the Realm of Economic Competition: The New Paradoxes The shift to hypercompetition is so fundamental that it turns some of the intuitive principles of competition on their heads. Success in a hypercompetitive market is based on the following paradoxes, indicating the need for a new approach to strategy: Firms must

The consequences of competing with traditional strategies in a hypercompetitive world

There is growing evidence that companies are at a loss as to how to deal with hypercompetition. There have been recent waves of mergers fol­lowed by waves of divestitures. The failure of effective management strat­egy has led to the dominance of financial strategies, measuring success by quarterly profits because the strategies that lead to

Hypercompetition – The only enduring advantage

As the stories of these companies illustrate, none of the traditional advan­tages of the four arenas offers an enduring way to win. Levi’s experience shows that high quality is not an enduring advantage (first arena), because quality shifted from product quality to fashionability. Hewlett-Packard’s case shows that its know-how (second arena) was not enough

Living with Hypercompetition: The New 7-S’s

Paraphrasing George Bernard Shaw, while the reasonable person adapts himself to the world, the unreasonable one persists in trying to adapt the world to himself. Thus, all progress depends upon the un, reasonable person. In hypercompetition the reasonable strategies that focus on sustaining advantages do not lead to progress. Companies make progress in hypercompetition

A broader definition of strategy: Managing the escalation ladders

Hypercompetition demands a broader approach to strategy. The focus on disruption and the creation of a series of temporary advantages demand a strategic theory with the breadth to support a long series of actions and interactions and to do so with the flexibility to accommodate shifts in direction. In hypercompetition the ability to manage

The New 7-S’s

My studies of successful and unsuccessful companies in hypercompetitive environments reveal seven key elements of a dynamic approach to strat­egy that encompass the three factors for effective delivery of a series of market disruptions: vision, capabilities, and tactics. The New 7-S frame­work is based on a strategy of finding and building temporary advantages through

Goal of The New 7-S’s

While the traditional 7-S’s are concerned with capitalizing on creating a static strategic fit among internal aspects of the organization, the New 7-S’s are concerned with four key goals that are based on understanding dynamic strategic interactions over long periods of time. These four goals are Disrupting the status quo Competitors disrupt the status

Living with Hypercompetition: The source of profits

While neoclassical microeconomic theory and industrial organization the-ory suggest that companies earn profits by gaining a unique advantage and avoiding perfect competition,15 the Austrian school of econgjoates identi-result of a dynamic proceSSWTreative destruction,” or disequilibrium.17 In other words, entrepreneurial discovery creates profits by finding new ways to better serve customers. It is in essence

Using the New 7-S’s: Two forms of disruption

As indicated, this is not a linear process that begins with vision and ends with tactics. Instead, it is a continuous process in which vision contributes to capabilities, which contribute to tactics. Tactics in turn contribute to vision and capabilities. As will be discussed below, strategy is developed by a process of triangulation that

A vision for disruption

A vision for disruption comes from being able to identify ways to satisfy customers better than competitors at a given point in time and over and over again. The battle for the market is the battle for the hearts and minds of customers. This is accomplished by satisfying current customers in exist­ing markets, finding

Capabilities for disruption

To capitalize on the advantages identified through the first two S’s, hypercompetitive firms develop capabilities for speed and surprise. Speed and surprise are capabilities that can be used in many ways. Fixed capabilities, such as investments in plants and other resources, tend to commit a company to a certain course of action. In static

Tactics for disruption

The final three S’s are concerned with tactics for delivering disruptions— shifting the rules of competition, signaling strategic intent, and simulta­neous and sequential strategic thrusts. The vision for disruption and capa­bilities for disruption help shape the tactics that will be used. And if a firm is good at specific tactics, the company may shape

How the new 7*S’s work together to create disruption

This chapter has described how each of the New 7-S’s contributes to the disruption of competitors. It has described how the strategies of sustaining advantage used in static environments have been replaced by strategies of disruption in hypercompetition. The “three circles” diagram (see Figure 8-1) suggests how the New 7-S’s work together toward the

A new 7-S analysis of intel’s secret to success: The new 7-S’s inside

The New 7-S’s can be used to assess competitors, especially to identify their strengths, weaknesses, and use of these factors in the four arenas of competition. Intel Corporation provides an illustration of how a hyper­competitive company uses the New 7-S’s to seize the initiative over and over again. It has drawn upon most, if

Dynamic 7’S analysis: analyzing how competitors seize the initiative from each other

Even if the company is good at using the New 7-S’s, competitors can still seize the initiative, as indicated by the above discussion of the four arenas. Competitors have taken advantage of vulnerabilities of Intel in each of the arenas. They have also used their own strengths in certain S’s or changed the way

New tools for dynamic strategic planning based on the new 7-S’s

As discussed in Part II, approaches to long-term strategic planning that are designed to sustain advantage actually are a poor preparation for long-term success. At best, they prepare companies to win one round of competition. Traditional five-year and ten-year planning models that emphasize sus­tained advantage and planned sequences of milestones and budgets are usually

Loss of the initiative and downward spirals of decline

1. The Downward Spiral With the new analytical tools discussed above, hypercompetitive firms can use the New 7-S’s to seize the initiative. When a company using the New 7-S’s seizes the initiative, its competitor suffers a parallel loss of the initiative. Just as repeatedly seizing the initiative leads to a cycle of mo-mentum, repeated

Sustaining the unsustainable by using the new 7-S’s

Ultimately, knowledge of how to use the New 7-S’s to disrupt the status quo and seize the initiative with a series of unsustainable advantages may be the only source of advantage that is sustained over time. Through using the New 7-S’s to establish a series of temporary advantages, companies build a sustained advantage. This