II.

Strategies for Competing in Turbulent, High-Velocity Markets

1. More and more companies are finding themselves in industry situations characterized by rapid technological
change, short product life cycles because of entry of important new rivals into the marketplace, frequent launches
of new competitive moves by rivals, and fast-evolving customer requirements and expectations all occurring at
once.
A. Strategic Postures for Coping with Rapid Change
1. The central strategy-making challenge in a turbulent market environment is managing change.
2. A company can assume any of three strategic postures in dealing with high-velocity change:
a. It can react to change
b. It can anticipate change, make plans for dealing with the expected changes, and follow its plans as changes
occur
c. It can lead change
Reacting to change and anticipating change are basically defensive postures; leading change is an
offensive posture.
3. Figure 8.1, Meeting the Challenge of High-Velocity Change, illustrates the three strategic postures a company
can assume when dealing with high-velocity change.
4. As a practical matter, a companys approach to managing change should ideally incorporate all three postures,
though not in the same proportion.
CORE CONCEPT: Industry leaders are proactive agents of change, not reactive followers and analyzers.
Moreover, they improvise, experiment, and adapt rapidly.
5. The best performing companies in high-velocity markets consistently seek to lead change with proactive
strategies.
B. Strategic Moves for Fast-Changing Markets
1. Competitive success in fast-changing markets tends to hinge on a companys ability to improvise, experiment,
adapt, reinvent, and regenerate as market and competitive conditions shift rapidly and sometimes unpredictably.
2. The following five strategic moves seem to offer the best payoffs:
a. Invest aggressively in R&D to stay on the leading edge of technological know-how
b. Develop quick response capability
c. Rely on strategic partnerships with outside suppliers and with companies making tie-in products
d. Initiate fresh actions every few months not just when a competitive response is needed
e. Keep the companys products and services fresh and exciting enough to stand out in the midst of all the
change that is taking place
3. Cutting-edge know-how and first-to-market capabilities are very valuable competitive assets in fast-evolving
markets.
CORE CONCEPT: In fast paced markets, in-depth expertise, speed, agility, innovativeness, opportunism,
and resource flexibility are critical organizational capabilities.
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1. Strategic Options in High-Velocity Markets
2. 14. Which Position will the company take? REACT TO CHANGE ANTICIPATE CHANGE LEAD
CHANGE
3. 15. Objective: Stay on leading edge of technological advances Translate technological advances into
innovative new products Focus R&D on critical areas Deepen expertise by mastering technology & capturing
learning curve effects INVEST AGGRESSIVELY IN R&D
4. 16. DEVELOP QUICK RESPONSE CAPABILITIES Shift resources Adapt competencies Create new
competitive capabilities Speed new products to market RELY ON STRATEGIC PARTNERSHIPS - With
other companies to quickly develop technology - With OEMs for components - Backward outsourcing,
building internal resources
5. 17. STAY FRESH Initiate fresh action, every few months new/improved products, new geographic
markets, refresh existing brands every 2 years. STAY IN THE LIMELIGHT STAY INNOVATIVE & WELL-
MATCHED TO CHANGES IN MARKET PLACE.