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Introducing The Competitive Dimension To Corporate Foresight
Introducing The Competitive Dimension To Corporate Foresight
Challenges for Sustainable Growth in Helsinki, Finland on 16-19 June 2013. The publication is
available to ISPIM members at www.ispim.org.
René Rohrbeck
Aarhus University, Business and Social Sciences, Department of
Business Administration, Bartolins Allé 10, 8000 Aarhus C, Denmark.
E-mail rrohr@asb.dk
* Corresponding author
1 Introduction
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This paper was presented at The XXIV ISPIM Conference – Innovating in Global Markets:
Challenges for Sustainable Growth in Helsinki, Finland on 16-19 June 2013. The publication is
available to ISPIM members at www.ispim.org.
also be successful in triggering and implementing the change, a competitor might have
been for example faster in responding resulting in a loss of competitive advantage.
Another possibility is that the competitor anticipates the response of our focal firm and
takes measures to counteract (Helfat et al., 2007). We therefore feel that research and
practice on corporate foresight could profit from integrating methods and approaches that
allow dealing with competitive dynamics.
This paper consists of three parts. In the first part we review literature that discusses
the competitive dimension of corporate foresight. In the second part we use some case
examples to illustrate means used to integrate competitive dynamics into corporate
foresight exercises. In a third step part we draft a first conceptual framework that
integrates the competitive dimension into a generic corporate foresight process.
Only little evidence on approaches to include the competitive dimension into foresight
activities can be found in the literature. However, by referring to the broader literature on
foresight and its tools, we discuss available approaches and broaden the discussion by
also discussing strategy literature.
The field of competitive intelligence has been connected with foresight before (e.g.
Neugarten, 2006; Schwarz, 2007), but these papers have contributed little insights into
how to implement competitor foresight approaches. Competitive intelligence has been
perceived as an activity primarily concerned with analyzing the competitors of an
organization and as an activity that considers the environments of that corporation
(Bernhardt, 1994). In this realm it has been proposed that firms should aim to anticipate
the moves of their competitors and that foresight can assist in this activity. In that respect
Beal (2000) revealed a positive effect of environmental scanning on the firms capability
to align its competitive strategies with the environment.
It has also been noted that maintaining a competitive advantage becomes increasingly
difficult. There are indications that achieving temporary advantage is more difficult than
previously thought and that the erosion of advantage occurs routinely as a result of
dynamic and interactive rivalry (Sirmon, Hitt, Arregle, & Campbell, 2010). Also
particularly in hypercompetitive industries with escalating levels of competition and
reduced periods of competitive advantage, it might be important to act boldly and
aggressively to create a competitive advantage (Bogner & Barr, 2000)
Two techniques that are particularly promising for navigating uncertain competitive
environments are business wargaming and scenario planning. It has been argued that
business wargames (Kurtz, 2003a; Oriesek & Schwarz, 2008; Schwarz, 2011) and
scenarios (Perrottet, 1998) are particularly suited to create foresight on the competitive
landscape of a firm.
A business wargame is a role-playing simulation of a dynamic business situation.
Each team in the wargame is cast in the role of certain stakeholder, for example a
competitor, to act in a given business situation. The typical business wargame lasts
several rounds, each one representing a defined time period into the future. A business
wargame is usually preceded by extensive research on the industry in which the wargame
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takes place. Wargames can have several purposes, such as strategy testing, crisis planning
and management, change management, planning, and training and education (Oriesek &
Schwarz, 2008). Despite the field of application, business wargames predominately
evolve into the future and incorporate the reactions of competitors, herby not only
developing foresight concerning an industry, but also concerning the possible actions and
reactions of competitors. It has been argued that a business wargame can be connected to
a corporate foresight process, providing insights on the future dynamics in an industry
(Schwarz, 2009).
Fahey (1998) has argued that scenarios can be used to identify and test plausible
competitor strategy alternatives, he refers to competitor scenarios. He describes two types
of competitor scenarios:
“One type of scenario stems from open-ended or unconstrained what-if
questions that suggest possible end states, such as a completely new
competitor strategy. […] On the other hand, scenario developers can
also ask what the competitor would do under distinctly different
competitive or industry end states” (Fahey, 1998: 225).
While this approach has its merits, two shortcomings in respect to our discussion are
evident. First, a prerequisite for this approach is that the competitors are known. This
approach is therefore less suitable for developing foresight on the competitive landscape,
where new entrants are commonplace. Second, this approach is too static in the sense that
it does not allow to capture the dynamics of an industry or competition evolving into the
future.
To understand the need to tailor competitor foresight approach for the application in
firms it is useful to look at literature on competitive strategy. The founding father of
competitive strategy is arguably Michael Porter (1980), who identified Five Forces that
drive industry competition. One of these forces is ‘new entrants’, in which respect he
points out that:
“The threat of entry into an industry depends on the barriers to entry
that are present, coupled with the reaction from existing competitors
that the entrant can expect. If barriers are high and/ or the newcomer
can expect sharp retaliation from entrenched competitors, the threat of
entry is low” (Porter, 1980: 7).
Porter (1980) underlines the relevance of not only analyzing existing competitors but
also potential ones. While he admits that forecasting potential competitors is a difficult
task, he suggest that these potential competitors can be identified from the following
groups:
“firms not in the industry but who could overcome entry barriers
particular cheaply; firms for whom there is obvious synergy from being
in the industry; firms for whom competing in the industry is an obvious
extension for the corporate strategy; customers or suppliers who may
integrate backward or forward” (Porter, 1980: 50).
While Porter (1980) argues that predicting the future goals of competitors will also
add to assessing how competitors might change their strategy, it appears that Porter is
arguing from the point of view of rather stable industries. New competitors might either
find the industry interesting to enter (low entry barriers) or might already be part of the
value chain (expansion of value chain). However, what appears missing here is how
changes in the industry in the future might either led to the convergence of industries,
create new business models or allow new competitors to enter.
Geroski (1999) takes these ideas a step further when he argues for an approach for the
early warning of new rivals.
“New entrants act like other firms: they observe events in the market
develop new ideas, and decide to enter markets using rational similar to
that of incumbents. This is why companies can spot new competitors.
They are not aliens from Mars acting in bizarre and unpredictable
way” (Geroski, 1999: 108).
This also implies that new competitors might come from firms operating from within
or nearby the particular industry (Geroski, 1999). He goes on to argue that a central skill
in identifying new rivals is assessing the effects of innovations in the own industry. In
this respect one could argue that corporate foresight could actually enable firms to
identify these innovations early and therefore also allow to early identify potential
competitors. Further, Geroski (1999) argues that putting oneself in the shoes of the
competitor is a way to see the industry from the competitor’s perspective, which is the
same idea underlying the business wargaming technique.
In the following a first case study is described to illustrate how foresight can be used for
exploring competitive dynamics. The insights from this case study shall than be used to
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formulate a conceptual framework for competitor foresight. However, the aim of our
overall research project is to further collect evidence and use this evidence to enhance
and develop the framework
4 Competitor foresight
The goal of this paper is to assess how the competitive dimension can be integrated into
Corporate Foresight. More precisely, the goal of this paper is to discuss an approach that
allows firms to include the competitive dimension into their foresight activities.
From the literature analysis we expect that firms would aim to answer in their competitor
analysis these questions:
• Which new competitors might be entering my industry in the future?
• How will the boundaries of my industry change?
This paper was presented at The XXIV ISPIM Conference – Innovating in Global Markets:
Challenges for Sustainable Growth in Helsinki, Finland on 16-19 June 2013. The publication is
available to ISPIM members at www.ispim.org.
• What actions might my current and future competitors utilize to gain competitive
advantage?
• Or more specifically: What kind of innovations are my competitors working to gain
competitive advantage?
While the case study revealed how a particular company worked towards answering
question one and two, we learned less on how to address the latter two. The first two
questions were primarily supported by the foresight methods
• Trend analysis, through which the firm identified the disruptive technological change
and later identified the change drivers that would form the basis for the scenario
analysis
• The scenario analysis, which was used to identify possible development trajectories.
For the next two questions about anticipating potential competitor actions business
wargaming seems a particular promising method. It would allow to play out different
tactics and action portfolios both from the firm’s and the competitor’s perspective.
In that respect it is in many industries particularly relevant to focus on the role of new
innovations in gaining a competitive advantage (Rohrbeck & Gemünden, 2011). From
previous research we know that firms compile overviews of competitor products and
services even before they are on the market (Rohrbeck, Arnold, & Heuer, 2007). This
allows them to anticipate the disruptive and competitive-advantage-building potential that
such innovations might yield.
To integrate such information and prepare decision making business wargaming has
multiple strengths (Bergeron & Hiller, 2002; Bracken, 2001; Kurtz, 2003b; Kurtz &
West, 2002; Mendonca & Sapio, 2009; Treat, Thibault, & Asin, 1996):
• Allows integrating any foresight insights including technological, political, socio-
cultural and competitor environment
• Allows to prepare future decisions by playing them out
• Allows to provide decision makes with a dynamic perspective on their and their
competitor’s actions
• Allows decision makers to live through future scenarios and experience decision
making in these future settings
5 Conclusion
This paper discusses the relevance of the competitive dimension for corporate foresight.
We believe that the paper adds a new aspect to the discussion on corporate foresight. By
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linking foresight to competitive strategy we identify the key questions that firms aim to
answer, when engaging in future-oriented strategizing.
These questions provide guidance for searching for relevant foresight methods and
point at the need for an integrative method to bring together the different elements and
provide a platform to preparing future decisions.
This paper and the underlying research is still in an early stage, but we hope that it
provides already some food for thought and helps to facilitate a fruitful discussion at the
conference.
This paper was presented at The XXIV ISPIM Conference – Innovating in Global Markets:
Challenges for Sustainable Growth in Helsinki, Finland on 16-19 June 2013. The publication is
available to ISPIM members at www.ispim.org.
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