Quote from F. Kotler’s book “Chaotica”
Hypercompetition occurs when technology or offerings are so new that standards and rules of the game change rapidly, leading to competitive advantages that cannot be countered. It is characterized by intense and swift competitive actions that rivals must quickly undertake to create new advantages and undermine their competitors’ strengths. The speed of revolutionary turbulence created by hypercompetition is fueled by globalization, more appealing substitute products, greater segmentation of consumer tastes, deregulation, and the invention of new business models. All of this contributes to structural imbalances that dismantle barriers to market entry and shift industry leadership.
Richard D’Aveni, a professor of business strategy at the Amos Tuck School at Dartmouth College and author of the book “Hypercompetition: Managing the Dynamics of Strategic Maneuvering,” argues that one cannot rely on a competitive advantage in the long term. Advantage is continuously created, undermined, destroyed, and renewed through strategic maneuvering by companies that disrupt markets and act as if there are no barriers to market entry. The best way to succeed in today’s world is to render the competitive advantages of the current market leader obsolete.
Hypercompetition strategies for conducting a revolution
- Customer satisfaction is key to winning in every dynamic interaction with competitors.
- Strategic forecasting is the process of seeking new knowledge to predict what customers will want in the future.
- Speed is crucial to leverage opportunities in your favor and respond to competitors’ counterattacks.
- The element of surprise enhances a company’s ability to overwhelm its competitor and seize a superior position before the competitor can counterattack.
The tactics of hypercompetition for carrying out a revolution.
- Signals are being sent about (1) the announcement of a strategic intention to dominate the market, or (2) to manipulate the future moves of competitors.
- The market rules are changing, creating a powerful revolutionary situation for competitors.
- Simultaneous or sequential movements are made, using specific steps to mislead or displace a competitor.
In an era of turbulence, competitive advantages shift sharply from slow-moving incumbents trying to defend their positions to agile attackers with strategies specifically designed to undermine the competitive edge of market leaders. These market leaders are often larger, more rigid firms with increasingly traditional (and outdated) competitive advantages. Competitive advantage is becoming more transient, and the most successful firms are those that can move from one competitive advantage to another in an environment of turbulence and chaos.
In a chaotic hyper-competitive environment, profits will be lower for companies that cannot create new competitive advantages faster than their previous ones erode. Moreover, the weight of their devalued and costly strategies will hinder many of them from adapting and adopting new chaotic strategies quickly enough.