Leading companies in the photovoltaic industry should not take their positions for granted. No single company has been able to stay on top for a sustained period of time, according to PRTM’s 2011 Photovoltaic Sustainable Growth Index. Worse yet, as the ranking of the 25 largest publicly traded PV companies demonstrates, those that fall from the top seldom return to dominant market positions. In light of this rapid churn, industry executives must ask themselves, “Why are companies in this sector so vulnerable, and what can we do to stay ahead?”

Many companies simply cannot adapt their capabilities quickly enough to keep pace with a constantly evolving solar market. Operational strategies take time to devise and implement, and an approach that makes sense one year can be obsolete the next. In effect, many PV companies are perpetually fighting the last war.

This volatility is being driven by three principal dynamics, each with greater impact than the dynamics that exist in other industries:

Significant swings in year-over-year growth occur. Since 2000, the PV market has grown roughly 50% annually. This is an impressive number, but it fails to reflect the volatile nature of the sector’s growth. The sector has experienced growth rates that exceeded 130% in one year and shrunk down to 20% the next, only to soar 130% the year after.