GARBAGE CANS AND ADVANCING HYPERCOMPETITION - THE CREATION AND EXPLOITATION OF NEW CAPABILITIES AND STRATEGIC FLEXIBILITY IN 2 REGIONAL BELL OPERATING COMPANIES

How does an organization functioning in a regulated, monopoly environm ent transform itself to prepare for hypercompetitive conditions? Two o f the regional Bell operating companies (RBOCs) found one answer to th at question: create self-contained areas of chaotic activities with th e potential to spawn new managerial capabilities and flexibility. Afte r divestiture from AT & T, the RBOCs maintained their local telephone service monopolies, but they all became involved in numerous unregulat ed activities, such as international expansion. For two of the seven R BOCs, the international activities led to new skills, learning and cap abilities developed inside their stodgy bureaucracies. By the early 19 90s, the RBOCs' local telephone service was facing dramatic change. Po werful potential entrants such as long-distance, wireless, and cable c ompanies were surrounding and converging on the local telephone servic e industry through their new wireless licenses, collaborations crossin g traditional industry borders, and new network development. The RBOCs saw clear signs of impending hypercompetitive conditions. How the two RBOCs changed over an eight-year period and prepared for hypercompeti tion illustrates several aspects of Volberda's model of organizational transformation. The two RBOCs proceeded through two parallel trajecto ries of change, which after several years converged and necessitated r eorganization. Only through a major organizational change were the two RBOCs able to redeploy the capabilities acquired from international a ctivities into their regulated core business, thereby creating the fle xibility they needed to prepare for advancing hypercompetition. With t he imminent removal of regulatory barriers and legal roadblocks to com petition in local telephone service in the United States, the RBOCs' f lexibility and ability to manage hypercompetition may soon be tested.