The nature of competition is changing and it will be led by the organizations that have cultivated cutting-edge capabilities to drive their competitive advantage.  One of the key competitive challenges organizations face is how to compete effectively.  In a world of innovations and disruptions, not all competitors are playing by the same rules.  The leaders are creating new markets and thus creating new rules to which  others will have to adapt.  The speed of business and innovation continues to increase and thus the window of opportunity to act is shrinking.  The world is now full of organizations that are rich with mature capabilities and have the ability to move quickly on new opportunities or into new and non-traditional markets.  Last century companies competed on “quality of operations” around their core business; this century will be defined by those companies that grow the capabilities to make ”change” their core business.

Let’s explore several aspects of how competition is changing:

• New Strategies: Is your organization aware of the evolution in competitive strategy?
• New Competition: Are non-traditional competitors the greatest disruptors?
• New Partnerships: What non-traditional organizations could be candidates for new strategic partnerships?
• New Politics: Is your organization participating in the right regions for your industry?
• New Culture: How strong is your leadership and talent development?
• Insights: Does your organization have the capabilities to compete?

New Strategies

The 20th century saw the rise of modern industry.   The primary paradigm of that century revolved around operations and efficiency.  There were about 8 classic strategies that companies pursed in an attempt to be a market leader, chase the leaders or support the leaders.  The 21st century has seen over 20+ new strategies enter the competitive arena!  This century is being defined more by an innovation economy based on value creation, adaptation, and agility.  Richard N. Foster, the co-author of Creative Destruction, writes that 75% of the S&P 500 will be replaced by 2027.  Meaning that 75% of the new companies joining the S&P500, may be built around new strategies.

New Competitors

Many companies have battled for decades against a set of classic rivals.  These companies all competed using similar business models and constantly sought to outdo each other with incremental advancements forcing each other into parity plays to remain equals.

Today, these classic rivals are facing many new forms of competitors and disruptions.   New competitors and start-ups are disrupting their markets with vastly new technologies, new organizational capabilities, and new value propositions.  These disruptions echo throughout the entire ecosystem as partnerships get re-evaluated.  New channels to reach consumers/customers appear.   Supply chains are reoptimized for the new rivals.  In addition, organizations with mature capabilities can look at cross-sector opportunities.  Just as start-ups can create disruption, non-traditional rivals can enter your market with more advanced capabilities, resources and partnership networks than any of the classic rivals you have faced in the past.   The speed at which these emerging and non-traditional challenges can move will be drastically different to your constraints and those of your classic rivals.

Given that the rate at which the window of opportunity to act is diminishing, the rate of attrition of classic competitors is increasing.   As the level of threat rises, companies would do well to look at their classic rivals as potential partners willing to co-invest to meet the new challenges they are mutually facing.  “The enemy of my enemy is my friend…”

New Partnerships

Global competitors think differently than you.   A company starting out in another country immediately has to face competition from long-established North American and European corporations.  Any new company starting out under this level of competition tends to seek out strategic partnerships.  The same could be true even for a large company moving into a new innovation or market.   The power of partnerships is in the combination of assets, capabilities, reach, and influence of the combined firms.  This is why so many consortiums are forming and are selectively cultivating to have both cross-sector breadth and capability depth.

North American companies are especially trapped in last century’s paradigm of competing as a single company.   Our classic brands in retail, healthcare, manufacturing, agriculture, for example, still fight their peers in a 1:1 struggle, while globally, large consortiums are forming that will dwarf their individual company resources.  Keep in mind, the stealth nature of partnerships and consortium building.  It is a great strategic advantage to build a global consortium, especially if the competition fails to notice it.   It is also important to note that partnership structures are vastly evolving, so don’t limit your thinking to traditional partnerships and structures from the past.  There is a whole new economy developing underneath the new partnership models.

New Politics

Underpinning the entire notion of new strategies are the business models  and environments that drive them.  We need to challenge our thinking of traditional business models based on pure operational efficiency and linear growth.  First and foremost,  consider that other countries are not driven by the short-term thinking that USA quarterly market numbers perpetuate.  Other countries are spawning private or government owned multi-national corporations that are focused on long-term strategic advantage around sustainable innovation and development of emerging markets.  This is quite a contrast to incremental innovation strategies driven by quarterly metrics.  Other countries won’t be constrained by mature regulation in areas of medicine, genetics, energy, environmentalism, etc.  The resurgence of nationalism will also see an increase in unfair trade and business practices within foreign markets.  Government participation and/or control  in industry will also drive cross-sector integration and potentially large government funding behind innovation to lead in the emerging markets.

The lack of global IP regulation will also increase the speed required to maintain competitiveness as IP can be copied and advanced without recourse. The USA may find itself a nation of individual companies and with a dis-associated government competing against nation states that are fully aligned, integrated and built for innovation and commercialization of any IP discovered around the globe.  These challenges, and many more,  continue to drive the importance of global consortiums to be able to effectively combine the capabilities and benefits across national boundaries.

One of the most important considerations, to strategy and politics, is the competitive arena forming around the Grand Challenges.  While these global challenges are a unifying force that all nations are vested in, they are also some of the largest business opportunities yet to be developed.  Regardless of your companies industry, size, current core business, and current capabilities,  your organization should be strategically plan its relationship to the Grand Challenges.  At a minimum,  what consortiums do you need to form or be a part of to have relevance? What strategic position of influence will you play in that ecosystem of assets, products, and services?

New Culture

The leading companies of tomorrow will have new vision, mission and value systems supported by a new set of cutting edge capabilities.  The capabilities will span areas of innovation, commercialization, organization development and business intelligence. With all the new strategies in the market today, the key enabler is what your organization can really do and what it can obtain through partnerships.

An organization’s people and culture are its most strategic assets. These will be the defining characteristics of the winners.   So how much is your organizations leadership going to invest in building your people and your culture?  The talent gap will forever widen, so the ability to develop the talent that you have is paramount and one of the best methods of retention as well.  While the gig economy offers flexibility, it is also fragile if your talent disappears.

Tomorrow’s competitors embrace “change” as part of the core business.  Whether you’re a true innovator or the best at adapting to disruption, change is at the center of both.  Cultural biases around “failure” need to be set aside to value “exploration” above all else.   The best innovation pilots fail and in doing so create learnings.   It is the “race to insights” that give companies the strategic, first mover advantage.

Insights

While this article could only touch on a few aspects of how competition is changing, a universal theme is that today’s companies will have to create new capabilities to effectively compete in the future. The speed of business, globalization, and grand challenges will define the innovation economy of the 21st century.   The inability of companies to adapt and evolve will create a rate of business Darwinism that we have never seen.   Last century’s top companies lasted an average of 66 years and now it is less than 20 years.  In a decade, what will that number be?

Companies will be in the business of both getting into and out of new markets. Companies will need to excel at exploration, evaluation and decision making.  They will have to be responsive enough to capitalize on the window of opportunity. In the next decade, the rise and fall of so many companies will keep Harvard busy writing business cases studies immortalizing today’s executives, their decisions and their outcomes.

Is your organization ready to compete?

• Does your organization have the language and market patterns to identify the new Competitive Strategies?
• Do you have the market intelligence and new data types to visualize the Ecosystem Mapping?
• Are you performing accurate Strategic Positioning and evaluation of the opportunities as an input to your Strategic Planning process?