Wednesday, September 12, 2007

Diruptive thinking

Recently attended a video conference by Prof Richard D'avani (Tuck School of Business-Dartmouth,VA) on 'Hyper competition' . What should companies do in an competitive environment to succeed? and what should be the right strategy...?

One insight gained is..' self-cannibalization'..i.e...rather that wait for the competition to assail and rip apart the competitive advantage, firms should constantly engage themselves in continuous innovation. Being first is not always the same as being the best. Entry barriers are trampled down or circumvented.Goliaths are brought down by clever Davids with slingshots. We've seen and heard the stories in corporate world - Ford vs Toyota , Merill Lynch vs Schwab , Yahoo vs Google, Microsoft vs Sun Micro system etc etc.

As competition enters, the industry always shifts from Monopoly( only one player, excessive profits) to Oligopoly ( few more players , sustainable profits) to Perfect Competition( many players , no Abnormal profits). Hence to stay and continue enjoying that phase of (sustainable or excessive profits) , the companies should disrupt the market place on a regular basis( i.e constantly innovate and redefine the rules of the game) ...such that competition will always have the 'catching up' to do.

Take for example what happened to Ford in US ( huge distribution, service and dealer network panning American continent);in came Toyota with "TQM" and cars that didn't need repair and wait time for delivery. Ford was always engaged in 'catching up' by asking " what is Toyota doing next?" , while Toyota was busy self-cannibalizing its competitive advantage and moving ahead by asking " what next?" Or for that matter..what happened to the music industry in last one decade is for everyone to see. The digital revolution has crossed all barriers and changed the music industry today. Maybe the advent of "I" ( Apple's I-Phone and I-Pod) is a just the beginning ( more on this later...)

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