New Venture Lab: Equipping Christian Entrepreneurs

"We have entered a prolonged period of unprecedented turbulence and uncertainty. It isn’t simply fallout from the great recession— which is only the most recent symptom of a broader, more fundamental shift in the environment. The forces that have been sweeping through our markets over the past decade— many of them complex and interrelated— are giving CEOs a deep sense of unease. Consider the fact that the volatility of operating margins, mostly static since the 1950s, has more than doubled, along with the ballooning gap between winners and losers. 

Market leadership is even more wobbly. The percentage of companies dropping out of the top-three ranking in their industry grew from 2 percent in 1960 to 14 percent in 2008. More than 40 percent of U.S. gross domestic product is in industries that are highly unpredictable and volatile in terms of market position. Furthermore, leadership no longer means what it used to. The once strong correlation between profitability and industry share has now almost disappeared in some sectors. We calculate that the probability that the market share leader is also the profitability leader declined from 34 percent in 1950 to just 7 percent in 2007. Some executives have a hard time even knowing which industry they are in or what companies they are competing with. 

All this uncertainty makes it nearly impossible to develop a strategy in the traditional sense. Consider that the goal of most strategies is to build an enduring (and implicitly static) competitive advantage through careful market positioning (dominant scale and attractive niche) or by assembling superior capabilities and competencies. But such a goal assumes well-defined and largely stable industries comprising a few relatively homogeneous competitors. 

That assumption is proving increasingly unrealistic in the face of today’s extremely fluid environment. Most industries have experienced instability in at least one area of their business model, but some— such as technology-driven industries and commercial banking— have been affected in many. The hardest-hit industries are those that have been disproportionately affected by globalization, deregulation, digitalization, connectivity, deconstruction, and the shift from products to services."

Source: Reeves, Martin ; Deimler, Michael S. (2012-01-25). "Adaptive Advantage: Winning Strategies for Uncertain Times". The Boston Consulting Group, Inc.