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 if it could not use it to meet the changing needs of customers. DEC’s performance indicates that strongholds (third arena) are not a sustained advantage when innovators created new products that eroded its traditional strong­hold. Texas Instruments’ case indicates that even deep pockets (fourth arena), developed over twenty years of financial success, could be eroded by top-heavy management and lack of understanding or attention to changes in the marketplace.

All advantages erode. As competitors copy an advantage, it is no longer an advantage. It is a cost of doing business. For example, automatic teller machines do not provide a competitive advantage to banks because almost all banks offer them. Now banks need to have them to stay competitive, and they need to find new sources of competitive advantage.

As Henry Ford commented in his autobiography, “Businessmen go down with their businesses because they like the old way so well they can­not bring themselves to change … seldom does the cobbler take up with a new-fangled way of soling shoes, and seldom does the artisan willingly take up with new methods in his trade.”19

The New 7-S’s are concerned with this very issue. In hypercompetitive environments, in which change is increasingly important, the New 7-S’s are concerned with destroying the status quo, disrupting what has been done in the past, and creating a new and different future.

The only enduring advantage results from the ability to generate new advantages in the four arenas. While no cost or quality advantage is sus­tainable, the skill of generating new cost and quality advantages is sustain­able. What are the key factors that contribute to this skill in moving from advantage to advantage, in seizing and maintaining the initiative in an arena or across the four arenas? These issues will be explored in greater detail in Chapter 7, which examines how to compete in an environment of hypercompetition and introduces the purpose of and the relationship among the New 7-S’s for competing in these environments.

Source: D’aveni Richard A. (1994), Hypercompetition, Free Press.

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