Future of strategy in an ever-changing Competitive Landscape.
Today, businesses should reiterate and carefully foresight their methods and strategies that they use and implement. Reiteration is essential primarily because of globalization and technological factors that are rapidly changing the competitive landscape. If we look back to 1995, the competitive landscape was quite distinctive when compared to the present scenario, and in the forthcoming years, it can continue to change. As the business environment is getting fiercely competitive due to the continuous flow of disruptive technologies, it forces organizations to continually adapt to new strategies and change the way things work cooperatively to thrive (Grant, 2015) ultimately. Adapting to a new approach enables organizations to serve the customers’ needs better and win a competitive game by having a competitive edge over competitors. As the world is getting more globalized and businesses are getting even more internationalized, and external environment analysis is relevant for organizations.
Consequently, factors like adaptability and interconnectedness are crucial in accelerating industrial attractiveness and shaping future strategies for companies to stay relevant. Let us see how the competitive landscape has evolved from 1995 until the present scenario and what future strategy that organizations should consider keeping in mind the current situation.
Bird’ s-eye view of changes in the competitive landscape
In 1995, ‘information’ was very protected and was not as accessible as it is presently. Today, even developing have affordable access to 3G or 4G access to wireless connectivity. At the same time, individuals have access to cheap smartphones, which makes information and knowledge dispersion quick and easy. However, this was not the case 24 years ago. According to Bettis & Hitt (1995), who predicted rightly and foresaw that complex technological developments would change the nature of competition and strategy implementation by organizations where technology innovations would evolve to present a ‘New Competitive Landscape.’ Due to the increased accessibility and better integration between technology and strategy that has changed how business work presently when compared to 1995. Currently, technological developments like smart and connected products increase accessibility to cause network effects that offer exponentially expanding opportunities for organizations to have higher reliability, greater flexibility, and new functionality that altogether alters the industry structure and nature of competition. Organizations create value through network externalities due to the increase in the ‘internet of things,’ reflecting the growing number of smart and connected products that provide new opportunities for the organization to create platforms. These platforms become central to an ecosystem that captures value for organizations, and its success helps the organization enjoy a competitive advantage.
Platform strategies by business organizations clearly show that access to information and interaction are the sources of value. Being a part of that ecosystem offers an ecosystem advantage due to increasing levels of interconnectedness within a complex and nonlinear system. For example, digital platforms show a trend of how disruptive technologies continue to change in a complex and nonlinear order that affects the competitive landscape as well as business operation and its functionality. A few years ago, for customer attraction, and for businesses to thrive, the existence of shopping malls and physical stores were essential. However, now this is not the case. For businesses to succeed, they need to be on digital platforms and apply platform strategies to address the needs of their customer needs, and it is fulfilled via e-commerce portals. These portals enable the availability of products from anywhere around the world, facilitating a global network that smoothly and effectively bridges the gap of globalization. Now, traditional businesses are forced to adapt to survive, by going digital and applying platform strategy, mainly due to increased accessibility and interconnectedness that stems from information technology. Above all, firms should have the ability to deliver complex solutions to the customers’ constant demands that require capabilities to go beyond a single firm. Thus, information and interaction create more value for companies who apply a platform strategy to acquire these capabilities. Additionally, the digital platforms enable stakeholders to stay connected all times, which further adds value by facilitating communication within an ecosystem to provide better value to the customer and enjoy ecosystem advantage by just being a part of that ecosystem.
According to Porter & Heppelmann (2014), Smart, Connected Products reshape the industry structure since it not only enables industry boundaries to expand over product systems but also from systems to systems affecting Porter’s five forces. It is thereby creating a new competitive landscape. For example, Amazon has successfully managed to adapt to technological changes constantly. It began its journey as an online bookseller but soon erupted into a merchandiser giant. Using a bundle of digital technologies in streaming, logistics, and cloud services, it created a platform that has a diversified portfolio that includes one-click purchasing by customers, marketplace integration for third party sellers, drone delivery, fulfillment robotics, and subscription services for prime users. Like Amazon, organizations that embrace adaptability at the right time and interconnectedness in the form of powerful platforms and digital ecosystems, create and capture value to all the end-users, suppliers, and themselves. Furthermore, platforms can be used to access external sources of knowledge and innovations that can be used for internal knowledge development, which helps the organization dynamically rejuvenate their capabilities necessary in the changing environment. Hence, preventing organizations from facing inertia but rather embrace them to adapt and coexist successfully.
Digital technologies have created markets where network externalities arise both from user connections and the availability of complements, creating cumulative forces that make digital platform multi-sided markets. As a result of which, winner-takes-all-market. To put this in another perspective, both suppliers and customers are the essential players of the platform ecosystem. The companies that offer digital platform services act like a medium that connects and creates value for users to benefit from it. Besides, they are mainly dependent on users for capturing value out of the medium and for their existence in the long term. Consequently, the new digital and technological era of interconnectedness provides suppliers and customers the essential power that impacts their bargaining power in the whole ecosystem that changes and leverages by affecting Porter’s five forces, which significantly impacts the company’s success. Thereby forcing companies to adapt to strategies that create a new and volatile competitive landscape that not only benefits them alone but also creates value for the ecosystem as a whole.
In effect, if we turn this around, it could be argued that due to an increase in information technology, companies can quickly gather customer data and their preferences on a large scale due to big data analysis, thus lowering the customers’ bargaining power. Also, companies use customer data to personalize their overall experience, which rather lures them to buy products that they don’t need or create value — resulting in that the bargaining power of customers is lowered rather than impacting companies. However, what is important to realize is that customers these days are well informed to be aware of things around that eventually outweigh the companies’ power to trick customers and control customer behavior. For instance, reviews by customers on products impact the credibility of the organization’s reputation, where reviews play a role in affecting other customers’ buying behavior. Companies should necessarily implement customer-centric strategies.
Besides, the momentum of increased competition by big companies now focusing on “pushing back,” which focuses on internal capabilities rather than emerging competitors by introducing routines that prevent bias and help companies seek new ways of thinking. Organizations need to have the right talent since human resources such as talented employees and good leaders are the essential organizational capabilities that help in creating a competitive advantage. Hence, physical infrastructure is not as necessary as before, but rather the shift has moved towards the importance of information technology, making platforms, and resources valuable at the movement.
In conclusion, today’s business landscape is in a state of flux due to the constant technological, economic, and cultural changes that make companies vulnerable to adapt to new trends and needs to address the rapidly advancing technology consistently. This is mainly done to be able to keep their businesses relevant in an ever-evolving market. Fortunately, many business leaders today have been able to identify these changes and react accordingly by adapting and using game-changing technologies in a globalized world by implementing platform strategies to enjoy enormous growth. However, technology is disruptive, which increases industrial ambiguity and customers’ bargaining power, therefore intensifying the changing competitive landscape. As a result, maintaining interconnectedness between organizations is very important, done through strategic relationships such as alliances and mergers. Strategic relationships enable competing firms to share knowledge and capabilities that increase the collective size of the market pie by striking coopetition.
In the future, disruptive technologies will continue to change the competitive environment, and there are no future proof strategies for organizations to anticipate and implement them immediately. However, firms should be able to follow the adaptability strategy. This can be achieved when organizations are flexible. After all, disruptive technologies are a big deal that the companies should fear. However, if they carefully scan the competitive environment to identify some of the potentially disruptive capacities and technologies that need to be acquired by them even before it becomes expensive and unavailable is helpful. They can further develop on those technologies by themselves adapting to it, at risk of being successful or not. Adapting to new technology will enable them to reinvent themselves by taking risks and being experimental to explore future opportunities to expand their horizons. Through this, they can shape the future of their organizational markets rather than change the future market altogether. Additionally, they should be able to identify and use the capabilities in a dynamic aspect so that the capabilities are flexible enough to efficiently achieve short-term goals and be useful in the long term.
Consequently, it is hard for organizations to predict their long-term strategies since there is a constant change in the industry. Therefore, organizations should be flexible enough to identify and respond to the environment by being adaptable and interconnected so that they can manage to thrive in an intense and ever-changing competitive landscape to remain sustainable.
I hope you have enjoyed reading this article. I am looking forward to hear your thoughts and insights on this topic. Feel free to reach out to me at yashaswini.r.26@gmail.com
