By Sabine Reisinger and Johannes Lehner
Driven by digitalization, robotics, artificial intelligence and different global crises, many industries have become more competitive. In addition, new business models, platforms and sharing concepts have shifted industry boundaries and created new arenas of competition. In such competitive environments, executives need to decide whether it is better to consolidate their current position or break new ground in order to compete successfully in the future. In order to arrive at such a decision, initiating a well-structured analysis of the competitive landscape can prove advantageous.
We propose the Creating Competitiveness Model to enable systematic examinations of specific business models. The model focuses on two strategic questions:
- When creating added value for customers and fulfilling its mission is a company better off operating independently or in collaboration with other companies?
- Should a company rely on its known strengths, existing competencies and established structures or is it better to break new ground? .
Figure 1 visualizes these two questions through two axes. The horizontal axis represents the alternative courses of action in terms of rivalry and cooperation. The vertical axis represents the degree of continuity (stability) and strategic choice (innovation). Intersecting these two axes results in a diagram with four fields, which we call the competitive arenas “dominate”, “persist”, “drive” and “network”.
Figure 1: The Creating Competitiveness Model
Each competitive arena exhibits distinct characteristics and presents unique challenges. Gaining a comprehensive understanding of the challenges and opportunities within a specific competitive arena, as well as identifying the management methods, strategy tools and structures that align with each arena, can establish a decisive competitive advantage. The following explanations represent an initial insight for executives and strategists.
Competitive Arena “Dominate”:
Companies and organizations in this arena fuel competition and focus on innovation and renewal. They pursue their own goals against others, convinced that they are more successful alone than through collaboration with others. Strategic leaders invest in research and development, innovative products, core competences, dynamic capabilities, strong brands, and unique products to increase their market power and strengthen their competitive position. To achieve this, they need financial resources and (highly) qualified personnel. Leaders within this sphere may also explore groundbreaking opportunities through cooperation, strategic alliances, and value networks.
Competitive Arena “Persist”
In this arena, competition is based on efficiency, quality and/or aggressive pricing and the best possible adaptation to the specifics of the market segment or niche. Companies rely on their experience with a limited number of products or services in a narrow and largely stable market segment or clearly defined niche. Continuous improvement of products and services and close adaptation to the specificities of the served segments/niches are important success factors. Leaders in this domain accomplish this through their deep understanding of the market and strict control of organizational and cost aspects. In order to explore new paths they could focus on collaboration, research and development, or marketing.
Competitive Arena “Drive”
Organizations in this arena identify new business opportunities, launch new ventures, enter new markets and establish new business models. They pursue these endeavors in collaboration with others to effectively fulfil their mission. They build on their strong collaborative skills to identify new business opportunities, launch initiatives and build alliances to develop new markets with innovative service offerings. They benefit from strong dynamic capabilities, digitalization and increasing networking. However, there is a danger that strategic leaders behave opportunistically and exploit existing resources and capabilities of the network only for their own company.
Competitive Arena “Network”
In this arena, companies take a long-term view and seek to reduce market uncertainty through networks, collaborations and strategic alliances. The primary focus of investments lies in enhancing processes throughout the value chain as well as improving existing products and services. To this end, companies rely on long-term relationships, strong cooperation skills, trust, continuous development and adaptability. Strategic leaders in this domain can focus on improving and developing their offer by means of strengthening strategic partnerships and optimizing processes. In order to break new ground they can enter into new strategic alliances or act opportunistically.
Certain business models reside at the intersection of the four competitive arenas. Within the dynamic interplay between these axes, leaders must adeptly cultivate competencies related to both competition and cooperation, as well as exploitation and innovation. In this context, competitiveness depends on the ability to demonstrate ambidexterity and coopetition skills.
Getting Started
We developed an online tool − the CC-Finder − that supports the initial assessment an organization’s position in the Creating Competitiveness Model through a rapid diagnosis. The resulting report facilitates a methodical examination of strategic alternatives and their implications on resources, competitive dynamics and sustainable success. For more details, visit https://www.creating-competitiveness.at/english/competitiveness-finder/
Digging Deeper:
[1] REISINGER, Sabine & LEHNER, Johannes M. (2022). Dealing with strategic tensions in digital business ecosystems. In: Baumann, Sabine: Handbook on Digital Business Ecosystems: Strategies, Platforms, Technologies, Governance and Societal Challenges. DOI: 10.4337/9781839107191.00011
[2] CHAKMA, Rubina; PAUL, Justin; DHIR, Sanjay. (2021) Organizational ambidexterity: A review and research agenda. IEEE Transactions on Engineering Management. DOI: 10.1109/TEM.2021.3114609
[3] CHEN, Ming‐Jer & MILLER, Danny (2015). Reconceptualizing competitive dynamics: A multidimensional framework. Strategic Management Journal, 36(5), 758-775. DOI: https://doi.org/10.1002/smj.2245
About the Authors
Sabine Reisinger is a strategist with parallel academic and management consulting backgrounds. She is a Senior Lecturer for Strategic Management at the Johannes Kepler University Linz. Her consulting and research interests include strategy processes, change processes, competitiveness, and the human factor of strategy. Her recent research addresses issues of competitiveness in a digital and interconnected world. In addition, she is the author of one of the top strategy books. LinkedIn: https://www.linkedin.com/in/sabine-reisinger-a68557127/
Johannes M. Lehner is Professor of Business Administration, specialized in Organization Studies and Strategic Management at Johannes Kepler University, Linz, Austria. His research interests are focused around decision making on the strategic level, status in organization and project management, especially as part of innovation processes. He has published in top-tier journals such as Management Science, has authored and co-authored several books and regularly publishes in the Media for the general public (e.g. recently in FAZ, Aug 7, 2023). LinkedIn: https://www.linkedin.com/in/johannes-lehner-a039252/
