A strategy is only as good as the next move of your competitor. Therefore, with all of the planning models widely available, nothing is more crucial than understanding your position relative to that of your obvious and not-so-obvious competition. Specifically, I found the rivalry described in The Five Competitor Forces That Shape Strategy to be a fascinating insight into how an organization’s strategy is created by, and not merely a response to, competitor behavior. By understanding the ways in which an industry is structured and how competition plays out, a keen strategist is able to anticipate the moves of other firms within and outside the industry and adapt accordingly.
Through this holistic approach to strategy development, a strategist is able to keep his or her pulse on industry at all times so that the organization’s strategy is always evolving along with its industry. We saw this in the Coke vs. Pepsi case Cola Wars and also in the modern-day tech startup landscape, where companies routinely alter their approach to different business processes based on what will best suit them at the present time. Coke and Pepsi were both able to change their bottling contract several times in their history, sometimes stepping backward when necessary. Therefore, I would describe the five forces by saying that they define the necessary adaptability of firms to anticipate the dynamics of their industry and how it is changing and how they redefine their strategies accordingly.
Lacking adaptability in your strategy is akin to a firm lacking a core vision or big, audacious goals, as discussed previously. Both will ultimately lead to the demise of the company as swifter entrants and nimbler existing competitors are able to overtake those firms that are unwilling to conduct the necessary competitor analysis to help define their strategy. In short, the five forces should be viewed as a continuous struggle to be embraced because, in the end, your strategy will only benefit from the degree of adaptability you have delivered to your firm.
- Dave DeBor