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Executive Overview
This business is intensely, vigorously, bitterly, savagely competitive.
-Robert Crandall, CEO, American Airlines
Major sustainable competitive advantages are almost non-existent in the field of financial services.
-Warren Buffeff
I don't believe in friendly competition. I want to put them out of business.
-Mitchell Leibovitz, CEO of auto parts retailer Pep Boys
Declare business war. This is the enemy.
-Statement over a photo of Northern Telecom CEO
Paul Stern on posters at an AT&T plant in Denver2
In the old days in science, the universe was fairly simple. Nearly every science museum had a huge, old model of the solar system in which all the movements of the planets were controlled with clockwork gears. Then we realized that reality was much more complex. All motion was relative.
Business has also entered an age of new realities. It is essential to understand and take advantage of the dynamic motion and flux of our global markets and technological breakthroughs. Moreover, a fundamental shift in thinking is necessary for coping with these changes. While companies have struggled to try to sustain their advantages, in fact, no organization can build a competitive advantage that is sustainable. Every advantage erodes. So in this hypercompetitive environment, companies must actively work to disrupt their own advantages and the advantages of competitors. To cope with this new reality, managers must employ a new 7S's framework3 that can be used to analyze industries and competitors and to identify one's own strengths and weaknesses in meeting the challenges of hypercompetition.
We have seen giants of American industry, such as General Motors and IBM, shaken to their cores. Their competitive advantages, once considered unassailable, have been ripped and torn in the fierce winds of competition. Technological wonders appear overnight. Aggressive global competitors arrive on the scene. Organizations are restructured. Markets appear and fade. The weathered rule books and generic strategies once used to plot our strategies no longer work as well in this environment.
The traditional sources of advantages no longer provide long-term security. Both GM and IBM still have economies of scale, massive advertising budgets, the best distribution systems in their industries, cutting-edge R&D, deep pockets, and many other features that give them power over buyers and suppliers and that raise barriers to entry...