Hypercompetition

Hyperturbulence and Hypercompetition

The pace of change in the health care industry has been accelerating. An aging population, complex regulations, new drugs and technologies, inflation, provider shortages, and a host of other environmental factors create a marketplace that is hyperturbulent. In a hyperturbulent market, organizations operate under conditions of constant uncertainty and competitive disequilibrium.

As a means of adapting to hyperturbulent environments, health care organizations are engaged in rapidly changing competitive paradigms based on “price-quality positioning, competition to create new know-how and establish first-mover advantage, competition to protect or invade established product or geographic markets, and competition based on deep pockets and creation of even deeper pocketed alliances” (D'Aveni, 1995). Such strategic maneuvering is hypercompetition. Where Porter's (1980) five forces model focused on how to build defensive barriers, hypercompetition puts companies on the attack, eroding, circumventing, and hurdling such barriers so no company enjoys a sustainable advantage. Even in environments where an organization has few direct competitors, suppliers and customers work to erode any competitive advantage that creates a profit. The net effect of this paradigm is that organizations need to recognize and exploit temporary advantages.

The key to exploiting transient advantages and surviving in a hypercompetitive environment is to build a flexible organization with a high degree of adaptive capacity. Flexibility is the effective search for an optimal fit or opportunity to change the environment that flows from organizational members' “strategic thinking.” Adaptive capacity is the ability to act on new opportunities and is a characteristic of “learning organizations” that allows them to change themselves in an effective and orderly manner.