Hypercompetitive Industries

A critical review of Biedenbach et al, 2008, The Challenge of Organizing Change in Hypercompetitive Industries: A Literature review, Journal of Change management, vol. 8, No. 2, pp123-145. Biedenbach’s paper draws on the conceptual, qualitative and quantitative research papers from many sources which focus mostly on the studies of hypercompetition. The paper introduces the concept of hypercompetition and concentrates on four change management approaches which consist of planned, emergent, contingency and choice approaches to managing organizational change.

Biedenbach introduces the main focus of the paper which is the challenges in organizing change within a hypercompetitive market.

These two challenges is a capabilities challenges which looks at the sustainability of competitiveness through constant innovation, and the structural challenge which looks at the issue of flexibility and direction. Biedenbach concludes his study indicating that during a dynamic environment not only is capabilities important but innovation and a multi-project approach is essential to a company’s survival.

However he also concludes that there is no best way in managing organizational change in any company which is clearly indicated by the turbulent nature of a hypercompetitive industry, and that further research needs to be conducted in order to explore how to answer the challenges to change.

The study is overall done relatively well thus it is a good paper but there is some limitations. Biedenbach’s study indicates some authors being skeptical of hypercompetition. Biedenbach et al (2008) indicates that hypercompetition is definitely present and supports this with a study indicating sustained competitive advantage.

In this study hypercompetition is a required condition in order for Biedenbach’s argument to be valid since it is looking at the challenge of organizational change in hypercompetitive industries.

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This condition is definitely present in the past, present, and will definitely be around in the future due to the constant change in many industry environments. Although equilibrium or a stable state could be reached competitors will continue to disrupt their competitive capabilities in order to get an upper hand in the industry.

Craig (1996) study show that a combination of environmental change and competitor movements is the cause to hypercompetition along with intense rivalry among organizations and businesses. Craig’s (1996) study continue to indicate that a stable equilibrium will not really be met as firms continue to disrupt each other’s competitive advantage as new rounds of competition start while old rounds end. Understanding how industries become hypercompetitive is important for companies and organizations to be proactive in their strategies, and also in planning how to improve their competitive capabilities and advantage when hypercompetition begins.

In criticizing the dynamic capability challenge Biendenbach does not offer a lot of examples that take this position but indicates the criticalness of this issue. Biendenbach cites other authors but it is not clear if he shared the same perspectives as these authors or does he have his own opinion about the issue. An organization’s Capabilities is important as it defines the organizations skills, it is a valuable concept and is stressed throughout the study.

It is a challenge because in order for a business to compete in a dynamic industry it is important to have a sustainable capability which is extremely hard to maintain in a dynamic environment. It is also an important aspect to an organization as a source of competitive advantage, the capability is special because it depends on intangible knowledge and skills which are not imitable by the organizations competitors. Craig (1996) agrees that capability is something an organization needs to develop in order to compete, and a dynamic capability is essential in hypercompetition.

Craig (1996) introduces two areas of capabilities; one being a specialized capability which is needed to perform specific tasks such as product innovation, the other capability is a general approach which needs to effective combination of different resources in order to compete with other companies. By having effective organizational capabilities this would enable the company to respond to continuous environmental change and the ability to generate new competitive advantages. Although the paper indicates the critical role that innovation plays as a capability within an organization, there is little evidence or examples to show this.

Biedenbach cited some sources on the importance the role of innovation plays, but again does not show if this is merely a general agreement to other author’s material or his own perspective. Innovation is definitely an important capability of an organizations development in competitive advantage. In an industry where there is intense competition having a high innovative capability will be an advantage to a competing business. To be successful in a hypercompetitive environment it is essential for a business to continually generate new competencies, which can be achieved through innovation.

Craig (1996) indicates that innovation is not only to do with bringing a new product to the market, in fact bringing a new product to a market can only begin after the organization changes accordingly. Craig (1996) However before innovation can begin especially in a company which has a long history of being a leader in a particular industry organizational change is required. During hypercompetition organizations that were successful during a stable environment usually become shortsighted, and may believe that strategies and the organizational structures that worked during a non-hypercompetitive period will work during intense competition.

From Craig’s (1996) study due to the organizational structure of ‘Kirin’ (a Japanese beer company) the creativity and product diversification aspect of the company is not developed. This impeded on the ability of the company to innovate which ended up causing the leading beer company to lose out to its main competitor ‘Asahi’ who pushed out a new beer product. In order for a company to gain competitive advantage organizational change must happen, this means a change in the culture of the company which can include empowerment to employees to induce innovative creativity for new products which should match customer needs.

With the development of new products and innovative organizational management the means better competitive capabilities, in turn allowing the company to compete effectively. In criticizing the structural challenge Biedenbach et al (2008) indicates that having flexibility will help an organization in reacting to certain changes in the industry especially during hypercompetition. Having a more flexible organizational structure will allow for quicker response to rival competitive advantages which means better adaptation to different continuous dynamic environment in a hypercompetitive industry.

A company with better flexibility form can enjoy more innovation thus increased capabilities and increased competitive advantage which should be present in simple organizational structures. Volberda’s (1996) study proposes three forms of flexibility mix; rigid, planned, and flexible, the most flexible form means that there is high adaptability with effective handling of competitive disruptions caused by rivals in the form of new innovative products. Volberda (1996) also says that this will allow for easy implementation of change, and preservation of the organizations identity.

Having the correct organizational structure is vital for a company to be successful within a hypercompetitive industry, if there is an inflexible structure it would be very difficult to adapt and react to continuously changing industry environment. This is also evident in the study by Craig (1996) where a rigid organizational structure results in the company ‘Kirin’ to become less competitive as it lost competitive advantage and innovative capability, but in changing the structure the organization allow for more creativity and employee empowerment boosting innovation and thus enabling ‘Kirin’ to compete with Asahi’s new products.

The outcome of a flexible structure is better innovative, but also control while maintaining a brand identity (Volberda, 1996). In summary the study by Biedenbach is written in mind of individuals who is not within the industry of being a change practitioner. This is however a good thing in the context that it is usable by those who want to know more in general about the environment of hypercompetitive industries, the ways in how change is managed and also the challenges that can be faced by firms within a dynamic environment.

However being general proposed certain limitations which was evident throughout the text. Even though a lot of sources was used there was very little real world examples given, this is especially evident in the issues of innovation and capabilities where the study indicates the importance of these two aspects but failed to go into depth on how the two aspects mentioned will affect how a firm performs or even solves the challenges of organization change in a hypercompetitive industry.

Further studies should be conducted in order to make this study more usable to practitioners of change, for instance more examples on how innovation and capabilities affect the performance of an organization should be included. The paper introduces many concepts at the same time which is good for an introduction but to be used by a practitioner more specific research or even focus on a certain concept which can give change agents a better insight into a certain concept. In this case the study could have been more focused on both the structural challenge and especially on the capabilities challenge which was lacking in information.