Hypercompetition in the 21st Century: A Look Back and a Look Forward
Robert R. Wiggins and Frances H. Fabian
The term "hypercompetition" (sometimes "hyper-competition"), meaning very intense levels of competition, had appeared in sociology and economic journals1 prior to the 1990s, but its use in the title of Richard D'Aveni's 1994 book, Hypercompetition: Managing the Dynamics of Strategic Maneuvering,2 made it part of the management lexicon. As a professor at a top business school, the Tuck School of Business at Dartmouth College, D'Aveni, had observed a business environment that seemed far more dynamic than the world described and predicted by the leading theories in the field of strategic management, many of which were built on the foundation that had been laid at the Harvard Business School by Professor Michael Porter and others.3
D'Aveni argued that Porter's theories and prescriptions for managers were based on ideas formed in, and using data from, the 1950s, 1960s, and 1970s, when the pace of change in technology and business was relatively sedate. The accelerating pace of change in the 1980s and 1990s (and presumably beyond) made these theories and prescriptions increasingly irrelevant, therefore making the need for new theories and prescriptions increasingly urgent. D'Aveni also argued that Porter's models, as well as many other models being taught in business schools, were often static, taking a snapshot of what is and what was, when what was needed were dynamic models that could incorporate rapid changes in what could be and what would be. In addition, Porter's models were developed based on data from manufacturing industries, making them less useful when examining service industries, as any MBA student who has tried will vouch for.
Hypercompetition today stands as a unique touch point for understanding a deeper self-assessment of global competition that is currently roiling countries and economies. Since the 1994 publication of D'Aveni's book, business schools and scholars have argued about the existence, pervasiveness, and importance of hypercompetition. The benefits of hyper-competition may arguably include the amazing productivity gains in all business and supply chain management in the last two decades. Not only do consumers live with an array of products recently unthinkable, but the access to markets, products, and most importantly, information, through the Internet have made domestic barriers unworkable.
But when new firms jump into the reality of hypercompetition by ceaselessly pushing the cost/quality frontier, they also leave behind the ravages of costlier or more inefficient competitors. Unfortunately, it seems that the ability to recuperate from such devastation at a community level has not accordingly kept pace. This lag is even more concerning when such wreckage has been unequally spread across countries, for example, raising the profile of BRIC (Brazil, Russia, India, China) countries and devastating manufacturing towns in the United States. As we will argue later, hypercompetition may be spawning nostalgia for more secure or "genteel" systems, whether or not the belief in such possibilities is economically warranted. In the end, we believe that hypercompetition is likely a permanent feature of the competitive landscape. Increasing our understanding of its mechanics by incorporating it more explicitly in the business curriculum is not as much as an endorsement as an acknowledgment of the new global landscape.
In the following sections, we will review the past and current state of the discussions and arguments concerning hypercompetition ("A Look Back"). We will then discuss D'Aveni's four arenas analysis and its applications and implications for management education ("Interlude: Four Arenas Analysis"). We conclude with some suggested extensions for each of the arenas (cost quality, timing/know-how, strongholds, and deep pockets) and with an overall observation on how hypercompetition is emblematic of a larger reassessment occurring about the nature of economic systems and its impact on nations as we move further into the 21st century ("A Look Forward").