A Framework and Evaluation Model to Determine Industry Velocity

An important skill for any organization to secure their survival is an ability to match their internal capabilities with external demands of their business environment. Unfortunately, most firms fail to understand what is really a factual demand of their business environment, since changes occur unexpectedly and ambiguously. As a result, numerous researchers are trying to build theories and models that can evaluate changes in the business environment of an organization. Environmental velocity is one theory that can help both academics and practitioners to understand changes in the industry an organization operates in. Environmental velocity assesses the rate and direction of change for a given industry, to classify it into low, medium or high velocity. Understanding the velocity of an organization's business environment will help management to develop a suitable strategy that can effectively handle the changes in their industry. The purpose of the research proposed in this paper is to develop a quantitative measurement tool for environmental velocity. At present, most of the existing assessment models are qualitative in nature, where the judgment of velocity is based on opinion. To build a velocity assessment model, the proposed research is going to examine relevant criteria and their relative effect on environmental velocity across industries with different velocities. With such an assessment model organizations are able to prepare themselves for changes in their business environment and thus reduce some of the uncertainties and risks associated with them.