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Hypercompetition by Richard A. D’Aveni

The full title of this ground-breaking book on strategy by Richard D’Aveni with Robert Gunther is

Hypercompetition: Managing the Dynamics of Strategic Maneuvering“.

In my review posted on Amazon.co.uk, I gave this book a rating of Five Stars. This means it is Excellent and Very Highly Recommended to the appropriate people.

Here is my book review.

A very important book that challenges the orthodoxy of strategic planning

This is a book I’ve wanted to read for many years and finally, in 2011 I did. Although it dates back to 1994 I’m very impressed about its ideas on strategy dynamics.

The view of business strategy presented in book is both scary and exciting.

The essence of strategy is building competitive advantage but in a world of hypercompetition, no competitive advantage is sustainable.

Hypercompetition is “an environment in which advantages are rapidly created or eroded.” If you’re the leader, then in a few years you could have become a has-been. If you’re a challenger facing an entrenched competitor, then there is hope that you can match and overtake your bitter rival.

While the traditional approach to strategy emphasises the creation of competitive advantage, Richard D’Aveni takes the alternative view; strategy is about the creative destruction of the opponent’s advantage. The presence of one hypercompetitive business in the market is enough to tip the entire industry into hypercompetition because competitors are forced to react to the threats.

Much of what Richard D’Aveni writes can be seen as a direct challenge to the ideas in two of the classic books on strategy by Michael Porter, Competitive Strategy and Competitive Advantage. While I am a big fan of Porter’s ideas, I believe the debate is healthy.

Some industries go through periods of radical change in a very short time-scale – think of technology products which burst onto the scene with great excitement and are then replaced by a new innovation e.g. laptops to tablets like the Apple iPad.

Other industries slowly evolve. Both Coca Cola and Pepsi date back to the late 19th century but still dominate the carbonated soft drinks industry around the world. The same theory of strategy will struggle to fit both so Hypercompetition is an important addition to the concepts.

The author argues that competition escalates across four areas of competition. As developments make continued improvement in one area difficult, competition jumps across to another. The four arenas are:
1 Cost-quality advantages
2 Timing and know-how advantages
3 Strongholds from erecting entry barriers
4 Deep pockets

I really like this emphasis on competitive reaction since too many businesses produce strategy as if their competitors didn’t exist or are powerless to stop them, let alone with their own goals for increasing market share and profitability.

Hypercompetition is about creating and profiting from temporary advantages in constant waves of product, process and strategic innovations.

D’Aveni argues that trying to sustain an existing competitive advantage is potentially a trap because the focus should be on identifying and creating the next sets of advantages. He presents a very different view of competition and the strategy you need to follow to succeed.

Does all this change mean you should forget about strategic planning?

Of course not. That would mean your business was left behind at the first fence but it does mean you have to stay fit and focused to keep up with anyone setting the pace in your industry.

The author introduces the New 7 S’s which a reference to the McKinsey 7 S framework for strategic fit written about by Peters and Waterman in their best selling book “In Search Of Excellence“. He argues that in hypercompetition, the opposition can use the old 7-s framework against the firm because it makes the business predictable.

The New 7 S are:
1 – Superior stakeholder satisfaction
2 – Strategic soothsaying
3 – Positioning for Speed
4 – Positioning for Surprise
5 – Shifting the rules of competition
6 – Signalling strategic intent
7 – Simultaneous and sequential strategic thrusts

The first two create a vision for market disruption, the third and fourth are key capabilities to use across markets and the final three are disruptive tactics in a hypercompetitive environment.

It’s an intellectually stimulating but challenging read which gets your brain spinning.

It’s a combination of old wine in new bottles and new wine so just as you start to feel back in your comfort zone of existing strategic knowledge, it veers off to somewhere new.

Just like other classic strategy books, its examples are now dated and it would be great to see a fully revised second edition. The world it paints is scary and it’s not crossed over into popular management reading because the message may not be what business leaders and entrepreneurs want to hear. There isn’t an easy path to success in hypercompetition. You have to keep racing hard to get ahead and stay ahead.

Highly recommended despite the old examples. It’s not suitable to traditional business owners but ambitious entrepreneurs who are planning to disrupt a market should gain plenty from it. It’s also not recommended for most business coaches but it’s a book that a specialist strategy consultant should have read.

It is available to buy from Amazon.co.uk and Amazon.com.

Paul Simister is a business coach who helps business owners who are stuck, get unstuck. If your business is based in the UK, you can have a free Business SOS consultation with me.

There are many thousand of business books, you can see the full list of my reviews at Business Books Reviews by Paul Simister. I’ve also narrowed these down to a list of the 12 Best Business Books For Business Owners & Entrepreneurs.

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