The Empire Strikes Back: Counterrevolutionary Strategies for Industry Leaders
The Empire Strikes Back: Counterrevolutionary Strategies for Industry Leaders
By: Richard D’Aveni
Industry leaders or incumbents frequently face threats that have the potential to make their firm’s competencies and products obsolete. Threats can be in the form of new technologies or business models, the author refers to these threats as revolutions. Richard D’Aveni wrote the article to describe the structure of a counterrevolution and what strategies should be used against revolutionaries. D’Aveni describes in detail the five different strategies that incumbents should use to protect themselves against revolutions. This summary explains theories about counterrevolution strategies and how they relate to strategic management.
Incumbents will always be concerned about new technologies and business models that represent significant threats to their industry. After studying the strategies of more than 100 incumbents, D’Aveni found that many of the revolutions are not successful. Revolutions that have managed to succeed often owe their success to the incompetence of the incumbents, than to the strength of the revolution itself. D’Aveni found that industry leaders will often ignore revolutions too long; allowing it to gain momentum in the industry. He also found that by over-embracing revolutions, companies have destroyed their strengths while exhausting their resources. By implementing the appropriate counterrevolutionary strategies, companies can minimize the effect of revolutions.
The five strategies D’Aveni recommends incumbents to use to counter a revolution are containment, shaping, absorption, neutralization, and annulment. These strategies are used in relation to the status of the revolution. Containment strategy can be used when a revolution is detected early. Once a containment strategy can no longer be used, then an incumbent can use the shaping strategy. However, if a revolution is likely to succeed, then an absorption strategy could be used.
By: Richard D’Aveni
Industry leaders or incumbents frequently face threats that have the potential to make their firm’s competencies and products obsolete. Threats can be in the form of new technologies or business models, the author refers to these threats as revolutions. Richard D’Aveni wrote the article to describe the structure of a counterrevolution and what strategies should be used against revolutionaries. D’Aveni describes in detail the five different strategies that incumbents should use to protect themselves against revolutions. This summary explains theories about counterrevolution strategies and how they relate to strategic management.
Incumbents will always be concerned about new technologies and business models that represent significant threats to their industry. After studying the strategies of more than 100 incumbents, D’Aveni found that many of the revolutions are not successful. Revolutions that have managed to succeed often owe their success to the incompetence of the incumbents, than to the strength of the revolution itself. D’Aveni found that industry leaders will often ignore revolutions too long; allowing it to gain momentum in the industry. He also found that by over-embracing revolutions, companies have destroyed their strengths while exhausting their resources. By implementing the appropriate counterrevolutionary strategies, companies can minimize the effect of revolutions.
The five strategies D’Aveni recommends incumbents to use to counter a revolution are containment, shaping, absorption, neutralization, and annulment. These strategies are used in relation to the status of the revolution. Containment strategy can be used when a revolution is detected early. Once a containment strategy can no longer be used, then an incumbent can use the shaping strategy. However, if a revolution is likely to succeed, then an absorption strategy could be used.