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Looking Inside for Competitive Advantage

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Looking Inside for Competitive Advantage

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    1. Looking Inside for Competitive Advantage Jay B. Barney Academy of Management Executive

    2. Looking Inside for Competitive Advantage Academy of Management Executive Vol. 9, No.4, 1995 Jay B. Barney Fischer College of Business Ohio State University

    3. Categories of Resources Financial Available cash, access to financing Physical Property, Plant & Equipment Human Experience, knowledge, judgment Organizational Formal systems & intangibles attributes

    4. The Question of Value Are these resources useful? Depends on the environmental context and the opportunities to which they are applied Implications? Keep your resources up to date! Apply them to appropriate challenges!

    5. The Question of Rareness If all or most competing firms also have the same valuable resources, they won’t create an advantage for any one firm. Common resources are still important as “table stakes” – necessary in order to participate successfully in an industry

    6. The Question of Imitability If a valuable resource can be easily copied it won’t remain rare for long. Resources that arise from Idiosyncracies of history Numerous small decisions Social interactions are often difficult to imitate.

    7. A connection to Porter Resources that are rare and difficult to imitate can be a basis for competitive advantage. Jay B. Barney “A company can outperform rivals only if it can establish a difference that it can preserve.” Michael Porter, What is Strategy?

    8. A connection to Mintzberg Resources that arise from historical idiosyncracies and numerous small decisions can be difficult to imitate Jay B. Barney Strategies are both patterns from the past (and plans for the future). Henry Mintzberg

    9. The Question of Organization Can the firm coordinate and apply these resources effectively? A collection of exceptional hockey players does not necessarily make for an exceptional hockey team. Team Canada in the 2006 Winter Olympics

    10. The Resource-based view of the firm Start by looking within for distinctive attributes and then find ways to leverage them to best advantage.

    11. Strategy as Simple Rules Kathleen Eisenhardt, Donald Sull Harvard Business Review

    12. Strategy as Simple Rules Kathleen M. Eisenhardt, Donald Sull Harvard Business Review, 2001 Strategies are encouraged to emerge within deliberately designed rules which “define without confining” direction Environment is made up of opportunities, (rather than products, markets, channels) Strategy is opportunism (not position) Intended for “high velocity” environments Intended for “high velocity” environments Intended for high velocity markets Intended for “high velocity” environments Intended for “high velocity” environments Intended for high velocity markets

    13. A connection to Mintzberg “Define without confining direction” Strategy as Simple Rules Too much of a strategy’s benefits can lead to missed opportunities and an inability to adapt. Mintzberg, The Strategy Concept II Why Organizations Need Strategies

    14. Types of “Simple Rules” How-to rules Boundary rules Priority rules Timing rules Exit rules

    15. How to Rules How do we go about pursuing opportunities? What is distinctive about these processes?

    16. Boundary Rules What kind of opportunities will we even consider pursuing? What kind of opportunities will we ignore!

    17. A connection to Porter Boundary rules determine what kind of opportunities we will even consider … and by implication, those that we will ignore! Strategy is also about what not to do. Michael Porter, What is Strategy?

    18. Priority Rules How will we establish (possibly shifting) priorities among the opportunities within our boundaries? These priorities will probably not be static

    19. Timing Rules What is the “pace” of our strategic initiatives? How often do we initiate something new? Within what time frame do we expect an initiative to come to fruition?

    20. Exit Rules How do we know when it is time to quit and move on to other opportunities?

    21. Issues with Simple Rules How many is the right number? How specific should they be? How should they be established? Often this is based on experience When should they be changed?

    22. Strategy as Simple Rules Kathleen M. Eisenhardt, Donald Sull Harvard Business Review, 2001 “Strategy-space” is made up of opportunities; strategy is opportunism Simple rules “define without confining” direction A very fluid approach to strategy for a dynamic fast-paced environment

    23. Reflection and Reconciliation Emergent Strategy (Mintzberg) Strategy as Position (Porter) Resource-based view of the firm (Barney) Strategy as Simple Rules (Eisenhardt, Sull) Which concept of strategy, or hybrid of conceptions, is most convincing to you?

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