Hypercomepetition
Thursday, August 24, 2000
The Art of Hypercompetition
The Art of Hypercompetition
(Page 1 of 2)
By Glenn Rifkin
Is the idea of sustained competitive advantage dead?
Richard D'Aveni, professor of business strategy at the Amos Tuck School at Dartmouth College, believes it is. According to Mr.
D'Aveni, business has entered a new era of hypercompetition, shifting dramatically from slow-moving stable oligopolies to an environment characterized by a quick- strike mentality on the part of companies aimed specifically at disrupting the competitive advantage of market leaders.
Mr. D'Aveni says he discovered in his consulting work that traditional strategic concepts were making companies weaker, not stronger. "The old structure was: define an industry, reduce the level of competition and then avoid competition where possible," he says. "But I found that successful companies were not doing any of these things. The best performers were disrupting markets, acting as if there were no boundaries to entry."
In his book, "Hypercompetition: Managing the Dynamics of Strategic Maneuvering" (Free Press), Mr. D'Aveni argues that competitive advantage is no longer sustainable over the long haul. Advantage, instead, is continually created, eroded, destroyed and recreated through strategic maneuvering.
The old goal, Mr. D'Aveni says, was to increase profitability by legally restraining the level of competition in an industry.
Companies avoided price wars, segmented the market to avoid head-to-head competition and tried to keep the number of competitors low by putting up entry barriers around their industries. Today, he points out, this strategy is "literally impossible."
He says four driving forces are contributing to the new era of hypercompetition: customer changes, including fragmenting tastes; rapid technological change; falling geographic and industry boundaries as markets globalize, and deep pockets among competitors due to the rise of giant global
The Art of Hypercompetition
The Art of Hypercompetition
(Page 1 of 2)
By Glenn Rifkin
Is the idea of sustained competitive advantage dead?
Richard D'Aveni, professor of business strategy at the Amos Tuck School at Dartmouth College, believes it is. According to Mr.
D'Aveni, business has entered a new era of hypercompetition, shifting dramatically from slow-moving stable oligopolies to an environment characterized by a quick- strike mentality on the part of companies aimed specifically at disrupting the competitive advantage of market leaders.
Mr. D'Aveni says he discovered in his consulting work that traditional strategic concepts were making companies weaker, not stronger. "The old structure was: define an industry, reduce the level of competition and then avoid competition where possible," he says. "But I found that successful companies were not doing any of these things. The best performers were disrupting markets, acting as if there were no boundaries to entry."
In his book, "Hypercompetition: Managing the Dynamics of Strategic Maneuvering" (Free Press), Mr. D'Aveni argues that competitive advantage is no longer sustainable over the long haul. Advantage, instead, is continually created, eroded, destroyed and recreated through strategic maneuvering.
The old goal, Mr. D'Aveni says, was to increase profitability by legally restraining the level of competition in an industry.
Companies avoided price wars, segmented the market to avoid head-to-head competition and tried to keep the number of competitors low by putting up entry barriers around their industries. Today, he points out, this strategy is "literally impossible."
He says four driving forces are contributing to the new era of hypercompetition: customer changes, including fragmenting tastes; rapid technological change; falling geographic and industry boundaries as markets globalize, and deep pockets among competitors due to the rise of giant global