Thursday, 8 November 2007

The Evolving Bases of Competition

from Hayes, R., Pisano, G., Upton, D. & Wheelwright, S. (2005) Operations, Strategy and Technology: Pursuing the Competitive Edge. John Wiley & Sons

p. 7-8:

...In the early 1970s, most competition in the U.S. was price-based. Within a given industry, defect levels, breath of product line, delivery times, and the rate of new product introductions tended to be roughly similar across companies, thus, rendering them "neutral" as far as competitive differentiation was concerned. ... "The American consumer will not pay for better quality", confidently stated one top auto industry executive to a class of Harvard MBA students back in the mid-1970s.

This, of course, was about the time many Japanese companies were beginning to mout attacks on U.S. markets based on their product's superior performance, fit, and finish, as well as defect rates that were one-hundredth or less of the levels that had been acceptable before. And European luxury cars began flooding U.S. markets in response to an exploding demand for clearly superior - and vastly more expensive - performance and appeareance. In the 1980s, quality became "Job #1" at Ford and many other companies...

...Clearly, a fundamental shift in consumer preferences had occurred: quality had moved from being a neutral basis of competition to being a powerful source of competitive differentiation.

The resulting, somewhat frantic, efforts by U.S. companies over the next decade to reduce costs and improve quality ... succeeded in narrowing the gap between U.S. and Japanese products in many industries - to the point where often those attributes no longer served as effective bases for competitive differentiation. This kind of competitive stalemate usually presages a new assault from a different direction (one must be careful not to prepare oneself to fight the previous war, as Marshall Foch vainly warned France in the 1930s). Indeed, even as companies belatedly recognized and grudgingly responded to the quality revolution, another competitive battleground began to emerge: flexibility and product variety.

The authors go on to point out that after flexibility and variety, the next "battleground" was the speed of new product introduction.

Are we straining the analogue here if we note that

a) there might be an OODA loop in action,
b) this illustrates the changing balance from ch'i to cheng (ch'i becomes cheng)?

No comments: