Only five years ago, most markets were dominated by a few leading companies, mighty icons with household names that seemed immortal. How quaint all that now seems. Today’s competitors are far more numerous, able, and fierce than ever before because they have to be: What used to be outstanding performance is now the norm.
A useful analogy is the sport of speed skating. In the 1980 Winter Olympics, American Eric Heiden accomplished an unprecedented feat—he won five gold medals Though it was unbeatable in 1980, twenty-five competitors surpassed Heiden’s record in Nagano, Japan, eighteen years later in the 5,000-meter race, and did so by at least 12 seconds. The gold medalist, Gianni Romme of the Netherlands, covered the distance in 6 minutes 22 seconds, eclipsing Heiden’s time by an unbelievable 40 seconds. For that competition, Heiden would not have even qualified.
Of course, the improved scores are at least in part attributable to advances in the state of the art. In skating, the hinged blade of the new clap skate gives skaters a more powerful drive, and aerodynamic suits also improve performance.
Business practices evolve in similar ways. Products can be manufactured faster and cheaper. Just-in-time delivery systems eliminate inventories. The Internet, barely a consideration five years ago, is transforming thousands of companies and hundreds of markets. And new software enables customers to bypass intermediaries and serve themselves on-line, saving time and cash.
But technology and improved methods are only part of thestory. The changing conditions themselves encourage more competition. Like the Klondike gold rush, the Internet is a magnet that lures companies into costly ventures in unknown territory. The high-tech race sets a standard that attracts even also-rans to an expanding field. Those that are unsuccessful don’t quit altogether; they just switch to other fields. Lowered barriers to entry and the huge pool of available capital encourage managers to raise their sights and branch into new areas.
Thus, new (and newly) flexible competitors appear not only in cyberspace but out of left field. For example, the Boeing Company is now lending customers money to buy its planes, depriving banks of the loans. Bankers, in turn, are selling stocks and insurance. Stockbrokers have become financial advisers, and insurers enter the medical business in response to their efforts to hold down medical costs.
Entire companies and industries are evolving into others. Publisher Time, Inc., merges with Warner Bros. and becomes an entertainment company, then enters cyberspace to merge with America Online. Two electric utilities, Peco Energy Co. and Utilicorp United Inc. are joining AT&T and ADT Security Services, Inc., the security alarm company, for a combined project that will offer customers natural gas, electricity, phone service, Internet connections, and home security all on a single bill.
For customers, all of this points toward a dazzling new array of choices. For managers, it means learning new tricks to avoid failure.
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