Ten Truths About Competitive Advantage

1. Ten Truths About Competitive Advantage Jay B. Barney Professor and Chase Chair Fisher College The Ohio State University

2. Central Principles of the Resource-based View • Firms are bundles of resources and capabilities • Resources and capabilities that are valuable, rare, and costly to imitate can be sources of sustained competitive advantage

3. The VRIO Framework Is a resource . . . Costly to Competitive ValuableRareImitate Organized Implications No No -- -- Disadvantage Yes No -- Parity Yes Yes -- Temp Advantage Yes Yes Yes Sus Advantage Yes

4. Truth One • The attractiveness of an industry cannot be evaluated independent of the resources and capabilities a firm brings to an industry. • Southwest; Wal Mart; Crown, Cork and Seal; Nucor Steel

5. Truth Two • Competitive advantage is every employee’s responsibility. • Janitor at a Nissan plant, secretary at Koch

6. Truth Three • Doing just as well as the competition ensures mediocrity.

7. Truth Four • Product features are almost never sources of sustained competitive advantage; capabilities needed to create products can be. • Sony Corporation

8. Truth Five • It is usually better to be an excellent you then a mediocre them. • Competing with Cat, Competing with HP

9. Truth Six • If it is harder for them and easier for you, it is likely to be a source of sustained competitive advantage. • The Mailbox, Inc.

10. Truth Seven • Trust, friendship, and teamwork—this is the stuff of sustained competitive advantage.

11. Truth Eight • Firms with valuable, rare, and costly to imitate capabilities can screw up their organization and still make money—don’t learn from them. • Xerox

12. Truth Nine • Firms with valuable capabilities that are neither rare or costly to imitate must rely on their organization to make them distinctive. • Farmers

13. Truth Ten • If a conflict exists between your capabilities and your organization, change your organization. • The skill to change, the will to change