Richard A. D'Aveni, Professor of Strategic Management

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The Empire Strikes Back: Counter Revolutionary Strategies for Industry Leaders

The Empire Strikes Back: Counter Revolutionary Strategies for Industry Leaders

Industry leaders frequently worry that their companies will fall victim to some revolutionary business model or disruptive technology. But new research shows that it's strategically better for incumbents to counter a revolution than to ignore or fully embrace it. Successful incumbents rely on one or more of five approaches to restrain, modify or, if necessary, neutralize a revolutionary threat. A company that perceives a revolution in its earliest stages can use containment strategies. By throwing up roadblocks, an incumbent can often limit the degree to which customers and competitors accept a nascent insurgency. And, sometimes, revolutions die there. If not, early containment buys a company some time to shape the revolution so that it complements, rather than supersedes, the incumbent's strengths. And even if shaping efforts fail, they can give an industry leader more time to work out how to absorb the threat by bringing the new competencies or technologies inside the firm in such a way that they don't destroy its existing strengths and capabilities. When revolutions have progressed too far to slow them down, incumbents must take a more aggressive tack. Neutralizing strategies meet a revolution head-on and terminate it--by, say, temporarily giving away the benefits offered by the challenger for free. Annulment strategies allow the market leader to leapfrog over or sidestep the threat. These five strategic approaches need not be used in isolation.

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