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Hypercompetition

General Motors and IBM have been battered to their cores. Jack Welch, the chairman of General Electric, called the frenzied competition of the 1980's "a white knuckle decade" and said the 1990s would be worse. In this pathbreaking book that will define this new age of "hypercompetition," Richard D'Aveni reveals how competitive moves and countermoves escalate with such ferocity today that the traditional sources of competitive advantage can no longer be sustained. To compete in this dynamic environment, D'Aveni argues that a company must fundamentally shift its strategic focus. He constructs a brilliant operational model that shows how firms move up "escalation ladders" as advantage is continually created, eroded, destroyed, and recreated through strategic maneuvering in four arenas of competition. Using this "Four Arena" analysis, D'Aveni explains how competitors engage in a struggle for control by seeking leadership in the arenas of "price and quality," "timing and know-how," "stronghold creation/invasion," and "deep pockets." Winners set the pace in each of these four competitive battlegrounds.
Using hundreds of detailed examples from hypercompetitive industries such as computers, software, automobiles, airlines, pharmaceuticals, toys and soft drinks, D'Avenie demonstrates how hypercompetitive firms succeed in dynamic markets by disrupting the status quo and creating a continuous series of temporary advantages. They seize the initiative, D'Aveni explains, by employing a set of strategies he calls the "New 7-S's" Superior Stakeholder Satisfaction, Strategic Soothsaying, Speed, Surprise, Shifting the Rules of Competition, Signaling Strategic Intent, and Simultaneous and Sequential Thrusts. Paradoxically, firms must destroy their competitive advantages to gain advantage, D'Aveni shows. Long-term success depends not on sustaining an advantage through a static, long-term strategy, but instead on formulating a dynamic strategy for the creating, destruction, and recreation of short-term advantages.
America must embrace the new reality of hypercompetition, D'Aveni concludes in a compelling analysis of the potential chilling effect of American antitrust laws on competitiveness. This masterful book, essentially an operating manual of strategy and tactics for a new era, will be required reading for managers, planners, consultants, academics, and students of hypercompetitive industries.

Discussion Group Questions
1. Is there any such thing as a sustainable competitive advantage in a world where change is rapid and radical? What is the impact of low-priced generics, rapid imitation, technological change, deregulation, the Internet, globalization, industry convergence, value migration, and other recent trends on sustainability of advantages?
2. If advantages can't be sustained, how do firms create shareholder value? Even if hypercompetition causes margins to fall, can hypercompetitive strategies create growth?
3. Is it possible to constantly disrupt the rules of competition in the price and quality arena?
4. How can hypercompetitors redefine the predominant definition of quality in a market? How do they radically redefine the way products are priced?
5. If rapid learning by competitors erodes your business know-how (your core competencies), then does it make sense to leverage your core competencies?
6. Should firms spend more on adding new competencies and building their weakness than on leveraging their strengths?
7. Should hypercompetitors attack the strength (the key know-how) of an industry leader? Shouldn't they attack the weakness of the leader? What gives decisive victory?
8. Do barriers to entry really exist? Or are they barriers only if we lack the imagination to find a way around them?
9. With so many industries converging, is it possible to build barriers around any market or market segment?
10. Does hypercompetition in the strongholds arena mean that many more industries will converge? If so, what does this mean for Wall Street's preference for "pure play" companies?
11. How can you predict which will win -- brains or brawn?
12. What happens if a firm has both brains and brawn? Is it really unbeatable?
13. What makes a firm really good at disrupting the rules of the game and the current playing field? Where does the intent and imagination come from?
14. Does an internally consistent organization with a tightly fitting set of the old seven S's stand a chance in a hypercompetitive world? Which is more important in hypercompetition, efficiency or adaptability?
15. Are the New 7S's a sustainable advantage? How to you beat a good hypercompetitor?

George B. Taylor Professor of Entrepreneurial Studies, The Wharton School A matchless contribution, so timely, so relevant, so close to the reality of today's competition that no manager can ignore it.

David J. Ravenscraft Professor of Business Administration, University of North Carolina at Chapel Hill Once every decade or two, a book identifies the path to the next generation of thinking. This is such a book.

Robert C. Purcell, Jr. Executive in Charge, Corporate Strategy Development, General Motors Corporation D'Aveni has clearly broken some new ground with this book. He has effectively challenged many of the 'accepted truths' in the world of competitive strategy.

Donald C. Hambrick Samuel Bronfman Professor of Democratic Business Enterprise, Columbia University D'Aveni advances strategic thinking to the dynamic, give-and-take world that actually confronts company executives.

Paul N. Clark President, Pharmaceutical Products Division, Abbott Laboratories As a participant in an industry that is changing very rapidly, I enjoyed the numerous examples of how others are coping with fast-paced change.

Kenji Wada General Manager, Human Resources, Sony Corporation I found his discussion of the organization refreshing. Hyper-competitionis filled with suggestions invaluable in redesigning a company.

William F. Achtmeyer Managing Director, The Parthenon Group D'Aveni has captured the essence of strategy for the 1990s and the new millennia.

More books from this author: Richard A. D'aveni