Sustainability: Hyper-competition and Continuous Change (Examination of Schwab)
2009/// Filed in: Management IS
The question of whether sustainable competitive advantage is possible in fast-changing hyper-competitive environments such as the financial services sector is actively being debated by the research community. Attaining and sustaining competitive advantage in today's continuously changing hyper-competitive global environment is challenging. Continuous and disrupting change is especially significant in the financial services sector since regulatory pressure and policy can change very quickly depending on the national and global economic situation as well as political factors.
Some authors have argued that in the current fast-changing environment the firm's objective should be directed to an active strategy of disrupting the status quo to create an unsustainable series of competitive advantages (D'Aveni.99). According to this school of thought, sustainable competitive advantages are no longer possible and we are in the next level of competition (D'Aveni.99). The reality of continuous change leads to a new competitive paradigm that goes beyond the traditional basis for competition such as service, quality, price, products, reputation, customer base, and market access. These classical factors are certainly a pre-requisite for achieving success, but sustaining a leadership position depends on great measure of intangible factors operating at the social fabric level of the firm. These include the firm's culture, processes, corporate systems, human resources, management style, adaptability and agility, as well as leadership capability and vision. Schwab's ability to quickly prototype, test, and successfully intro to market new services (e.g. e.Schwab in 1996, Schwab Brokerage Site in 1998, Schwab Alerts in 1999, Learning Center in 2000, PocketBroker in 2000, CyberTrader in 2003, Personal Choice in 2004, Rebalacing Wizard in 2004) as well as the numerous awards received since 1998 are an indication of Schwab's capability and potential for sustainable success through continuous innovation in finding new ways to add value for customers in order to retain their loyalty.
Some authors have argued that in the current fast-changing environment the firm's objective should be directed to an active strategy of disrupting the status quo to create an unsustainable series of competitive advantages (D'Aveni.99). According to this school of thought, sustainable competitive advantages are no longer possible and we are in the next level of competition (D'Aveni.99). The reality of continuous change leads to a new competitive paradigm that goes beyond the traditional basis for competition such as service, quality, price, products, reputation, customer base, and market access. These classical factors are certainly a pre-requisite for achieving success, but sustaining a leadership position depends on great measure of intangible factors operating at the social fabric level of the firm. These include the firm's culture, processes, corporate systems, human resources, management style, adaptability and agility, as well as leadership capability and vision. Schwab's ability to quickly prototype, test, and successfully intro to market new services (e.g. e.Schwab in 1996, Schwab Brokerage Site in 1998, Schwab Alerts in 1999, Learning Center in 2000, PocketBroker in 2000, CyberTrader in 2003, Personal Choice in 2004, Rebalacing Wizard in 2004) as well as the numerous awards received since 1998 are an indication of Schwab's capability and potential for sustainable success through continuous innovation in finding new ways to add value for customers in order to retain their loyalty.