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Adaptability:

The New Competitive Advantage

By /martin Reeves and Mike Deimler

We live in an era of risk and instability. The once strong correlation between profitability and industry share is now almost nonexist in some sectors. All this uncertainty poses a tremendous challenge for strategy making. That’s because traditional approaches to strategy – though often seen as the answer to change and uncertainty – actually assume a relatively stable and predictable world. The goal of most strategies is to build an enduring competitive advantage by establisihng clever market positioning or assembling right capabilities and competencies for making or delivering an offering. Companies undertake periodic strategy reviews and set directions and organizational structure on basis of an analysis of their industry and some forecast of how it will evolve.

Globalization, new technologies, and greater transparency have combined to upend the buiseness environment. In this article we’ll look how at how companies at leading edge are using these four organizational capabilities to attain adaptive advantage. We’ll also discuss the implications of this fundamental strategic shift for large, established corporations, many of which have built their operations around scale and efficiency – sources of advantage that rely on a essentially stable environment.

1. The ability to read and act on signals

In order to adapt, a company must have its antennae tuned to signals of change from the external environment, decode them, and quickly act to refine or reinvent its business model and even reshape the information landscape of its industry. Adaptive companies must similarly rely on shopisticate point of sale systems to ensure that they acquire the right information. And they must apply advanced daata-mining technologies to recognize relevant patterns in it. Companies are also leveraging their signal reading capabilities to make opertaional interventions in real time,...