The Mckinsey Quarterly Extreme Competition
46
The McKinsey Quarterly 2005 Number 1
David Williams
E xtreme competition
Extreme competition
The forces of globalization, technology, and economic liberalization are combining to make life harder than ever for established companies.
William I. Huyett and S. Patrick Viguerie
Jack Welch once said that the 1980s would be a “white-knuckle” decade
of intensifying industrial competition—and that the 1990s would be tougher still. Despite history’s greatest bull market, rising incomes, and unprecedented prosperity throughout much of the world, the former GE chairman was proved right. The “topple rate,” at which companies lose their leadership positions, doubled in the 20 years to the mid-1990s
(Exhibit 1, on the next page). New technologies eclipsed long-established industry champions, and nimbler competitors with sharper value propositions and lower costs emerged, seemingly from nowhere, to take their place.
In many ways, however, the 1990s were just the start of a massive reshaping of the global economy that will continue for the next 10 to 20 years.
Three supply-side forces will combine to unleash innovation and to expand productivity and GDP on a scale never seen before: globalization, particularly the integration of large, low-cost economies into the world’s supply-and-demand base; technology, coupled with the exploitation of the networking and communications infrastructure created in the 1990s; and economic liberalization. The pie is still growing, and growing fast, but the increasingly uncomfortable reality is that the distribution of growth—and profits—is anything but uniform or predictable.
47
48
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The McKinsey Quarterly 2005 Number 1
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The McKinsey Quarterly 2005 Number 1
David Williams
E xtreme competition
Extreme competition
The forces of globalization, technology, and economic liberalization are combining to make life harder than ever for established companies.
William I. Huyett and S. Patrick Viguerie
Jack Welch once said that the 1980s would be a “white-knuckle” decade
of intensifying industrial competition—and that the 1990s would be tougher still. Despite history’s greatest bull market, rising incomes, and unprecedented prosperity throughout much of the world, the former GE chairman was proved right. The “topple rate,” at which companies lose their leadership positions, doubled in the 20 years to the mid-1990s
(Exhibit 1, on the next page). New technologies eclipsed long-established industry champions, and nimbler competitors with sharper value propositions and lower costs emerged, seemingly from nowhere, to take their place.
In many ways, however, the 1990s were just the start of a massive reshaping of the global economy that will continue for the next 10 to 20 years.
Three supply-side forces will combine to unleash innovation and to expand productivity and GDP on a scale never seen before: globalization, particularly the integration of large, low-cost economies into the world’s supply-and-demand base; technology, coupled with the exploitation of the networking and communications infrastructure created in the 1990s; and economic liberalization. The pie is still growing, and growing fast, but the increasingly uncomfortable reality is that the distribution of growth—and profits—is anything but uniform or predictable.
47
48
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The McKinsey Quarterly 2005 Number 1
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