In a study prepared by Gary Hamel, founder of Strategos, and conducted by Gallup, Hamel asked more than 500 CEOs whether they believed the strategies of their major competitors had been getting more alike or more dissimilar. This is not good news. Hamel argues that if everyone in a particular industry followed an identical strategy and had similar resources, the result would be something close to perfect competition. Hamel argues that the inevitable result of convergent strategies is to produce margin convergence around a relatively low average. Paul Strebel and Derek Abell, faculty members at the International Institute of Management Development in Lausanne, say that in nearly every industry, strategies tend to cluster around some central tendency of industry orthodoxy.
Strategies converge because recipes get slavishly imitated.
There's nothing wrong with imitation as long as a company has achieved strategy differentiation in other areas. But all too often a successful new business model becomes the model for companies that are not creative enough to invent their own. In the end, strategies converge because everyone defines the industry in the same way, uses the same segmentation criteria, sells through the same channels, and adopts the same service policies and operating processes. Without innovation, a company will devote a mountain of resources to achieve a molehill of differentiation. If you commit to innovation now, you have a chance to reinvent your company, escape strategy convergence, and develop a strategy of competitive differentiation.