King of the hill: Dethroning the industry leader (original) (raw)

2001, Academy of Management Executive

Article published in the Academy of Management Executive, May 2001. EXECUTIVE OVERVIEW An important goal of many second or third place firms in an industry is to dethrone the leader and attain the number one position. Other things being equal, industry leadership, because of scale and scope effects and through the development of customer switching costs, is often associated with greater profitability. Industry leaders also enjoy other reputation and brand identification benefits. This article examines how challengers can successfully overtake industry leaders. The focus is on the specific competitive behaviors or new competitive actions that challenger take to dethrone the leader. The study also examines the competitive actions leaders take to guard against aggressive challengers. Employing Schumpeter's theory of creative destruction, the article describes the dynamic competitive actions and reactions of challengers and industry leaders to one another in what the authors refer to as the battle for "king of the hill." Drawing from a sample of nearly 5000 competitive actions in 41 industries over a seven-year time period, the research highlights the successful new competitive actions of challengers to dethrone industry leaders. The major findings: successful challengers are more aggressive in taking action, carry out a complex repertoire of actions, are unpredictable in the timing and location of attack, and are able to delay the reaction of industry leaders. The reasons why industry leaders fall victim to the actions of challengers are discussed, and strategies are offered that may allow industry leaders to more effectively defend their position as "king of the hill.