In this evening’s presentation Prof. D’Aveni began by explaining that hypercompetition has been a theme throughout his career. In a world of rapid change in regulations and technology, products have a quick life cycle and sustainable competitive advantage is impossible – particularly with increasing competition from China.  The tried and true models, like SWOT analysis, will no longer work properly.  Using an analogy of a tennis match, Prof. D’Aveni said that nowadays companies are not just focused on one tennis game, they are playing hundreds. Therefore, a traditional strategy based on pitting one’s strength against the weakness of one’s opponent is no longer effective – this type of strategy would simply allow the opponent to learn quickly and improve their skills. 

Prof. D’Aveni said that in a hypercompetitive world, companies must think multiple steps ahead of rivals, and strategy should be focused on using one’s strength against the strength of competitors. He explained by elaborating on the following points:-

The Old Rules: Win by Reducing Rivalry (Porter Model) 
Build Non-Competitive Industry Structures
l   Barriers to entry – exclude competitors
l   Reduce rivalry
      Ø  Avoid price wars
      Ø  Strength against weakness
      Ø  Proprietary technology
l   Use power of monopoly
      Ø  Over buyer
      Ø  Over seller
l   Oligopolistic Bargains
      Ø  Signaling Cooperation
      Ø  Avoiding Price Wars
      Ø  Avoid Frontal Attacks
      Ø  Strength against Weakness
l   Retreat to Low Rivalry Markets
l   Focus on Hard-to-Replicate Niches
      Ø  Service and Relationships
      Ø  Proprietary Technologies
      Ø  Brand Names and Premium Images

The old rules, argues Prof. D’Aveni, had taught an entire generation to be non-competitive.

Hypercompetition – A New Type of Competition
During his speech, Prof. D’Aveni used the automobile industry as an example of how the consumers’ definition of quality can change in a way that makes previous models obsolete. In the sixties, he said, consumers liked big, heavy cars. Then there was a shift in consumer preference and people began demanding smaller, more streamlined cars.  At the same time, cars were going from less to more complex, with the addition of airbags, safety systems, automation, etc.  Prof. D’Aveni stressed that in order to beat the commodity trap, manufacturers needed to predict what the next generations would demand, and how the definitions of quality would change.

In hypercompetition, Prof. D’Aveni said, one must out-manoeuvre one’s opponent by serving the customer better, one must compete to neutralise or make obsolete the opponent’s advantage at serving the customer, and one cannot indefinitely sustain one’s advantage.  The new rules, he asserted, require companies to disrupt the status quo in order to reshape and reinvent the industry – there are two types of firms, he said, the disruptive and the dead.

The lecture closed after Prof. D’Aveni took some questions from the audience.

Writer: Rachael McGuinness

Editor: Charmaine N. Clarke