SURVIVING SURPRISE: HOW FIRMS WERE AFFECTED BY - AND RESPONDED TO - UNEXPECTED, DISRUPTIVE, DISCONTINUOUS CHANGE IN THE MARKETING ENVIRONMENT

Abstract

Changes to the marketing environment occur in numerous ways and with a wide range of characteristics. This research examines the effects of - and responses to - surprise, which is defined as disruptive, discontinuous events that result in unexpected changes to the environment. Some authors have suggested that organizations have tended to overestimate their ability both to predict and to control calamitous environmental events, resulting in relatively little attention being paid to environmental surprise in the marketing literature (Cunha et al, 2006). Indeed, much of the research in this domain has focused on improving organizations' ability to recognize - or even anticipate - such events, thus rendering them not surprises (Ansoff, 1975; Lampel & Shapira, 2001). But, as Cunha and associates respond, "... researchers should investigate how organizations might deal with unanticipated events," not just how to avoid them (2006, p. 320, emphasis added). This research addresses a portion of the identified gap. Just as there is a range of possible changes and change types, organizations' responses also vary. Depending on the nature of the environmental event(s), the appropriate form of strategic response can be quite different. Therefore, how organizations respond to environmental change is a critical element of their marketing strategies. Remaining properly aligned with their external surroundings has repeatedly been shown to produce significant benefits in terms of marketing performance and financial success (Venkatraman & Prescott, 1990). Barney and associates state that "... to the extent some firms in a rapidly changing environment are more nimble, more able to change quickly, and more alert to changes in their competitive environment, they will be able to adapt to changing market conditions more rapidly than competitors, and thus gain competitive advantage" (2001, p. 631). Study 1 What happens when firms are confronted by a strategic surprise - defined as "sudden, urgent, unfamiliar change" (Ansoff 1975, p. 22) - such as the terrorist attacks that occurred on September 11, 2001? Numerous studies have examined how strategic change, in the aftermath of a significant environmental event, contributes to organizational survival and success. But, is strategic change the appropriate response to unexpected and disruptive environmental change? And is there a preferred trajectory for change, such that certain strategies are better suited than others to the post-surprise environment? This exploratory research examines whether or not strategic change is an appropriate response to strategic surprise by considering the actions of motor carriers in the aftermath of 9/11. The data evidences significant disruption to the trucking industry following the event; for example, among the sample, mean operating ratios declined by more than 50%. But while nearly 40% of the carriers studied changed their strategies in the post-9/11 environment, this did not guarantee better performance. In fact, all carriers fared worse following the attacks, but those carriers that changed strategies actually performed significantly worse than those that persisted with their pre-9/11 strategies. Study 2 In Study 2, a scoring model of strategic resilience is developed that enables motor carriers to assess their likelihood of withstanding disruptive environmental change. Supply chain resilience is an emergent research stream that considers the ability of a supply chain network to anticipate, prepare for, and adapt to significant environmental risks in the form of disruptions and unanticipated events (Ponomarov & Holcomb, 2009). This study examines the ability of motor carriers - a critical and essential component of most supply chains - to survive such events. Using variables identified in Study 1, together with those from numerous previous studies in the prediction-model research domain, the second study considers which factors are significant and contribute the most utility to an overall resilience score. In addition, this study approaches the model-building process using a proven methodology (conjoint analysis) which previously has not been applied to this type of research, while examining an especially broad range of possible alternatives. The resultant model provides firms in the motor-carrier industry with a "resilience score" that suggests their likelihood of survival in the post-event marketing environment. The resilience model enables motor carriers to self-assess their ability to withstand disruptive events in the marketing environment, including strategic surprises such as 9/11. Motor carriers with weaker scores (i.e., less than 600, on a scale from 300 to 900) are more likely to exit - though clearly are not guaranteed to do so. This model correctly identified nearly 70% of carriers that ultimately exited from the industry. In addition, the model provided evidence of where motor carriers should focus their attention in a post-disruption marketing environment. Six factors emerged as most significant to carriers' resilience as evidenced by the model. These elements are recommended as the metrics to which carriers themselves - and dependent supply chain network members - pay most attention following an environmental disruption.