Looking Inside for Competitive Advantage

Document Sample
Looking Inside for Competitive Advantage Powered By Docstoc
					  Looking Inside for
Competitive Advantage

        Jay B. Barney
    Academy of Management
          Executive
     Looking Inside for
    Competitive Advantage
        Academy of Management Executive
               Vol. 9, No.4, 1995



 Jay B. Barney
  – Fischer College of Business
    Ohio State University
Parameters of Strategy
    Categories of Resources
 Financial
  – Available cash, access to financing
 Physical
  – Property, Plant & Equipment
 Human
  – Skills, knowledge, experience, judgment
 Organizational
  – Formal systems & intangibles attributes
      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!
   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
   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.
      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?
   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
 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
      The Resource-based
        view of the firm

 Start by looking within
  for distinctive attributes
  and then find ways to
  leverage them to best
  advantage.
 Strategy as
Simple Rules

 Kathleen Eisenhardt,
      Donald Sull
Harvard Business Review
    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)
  – Strategy is build on processes
   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
Types of “Simple Rules”
   How-to rules
   Boundary rules
   Priority rules
   Timing rules
   Exit rules
             How to Rules
 How do we go about pursuing
  opportunities?
  – What is distinctive about these processes?
             How to Rules
 How do we go about pursuing
  opportunities?
  – What is distinctive about these processes?



 Strategy rests on unique activities.
  – Michael Porter, What is Strategy?
      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?
          Boundary Rules
 What kind of opportunities will we even
  consider pursuing?
  – What kind of opportunities will we ignore!
      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?
             Priority Rules
 How will we establish (possibly shifting)
  priorities among the opportunities within
  our boundaries?
  – These priorities will probably not be static
            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?
              Exit Rules
 How do we know when it is time to quit
  and move on to other opportunities?
    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?
    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
 Reflection and Reconciliation
 Emergent Strategy (Mintzberg)
 Deliberate 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?

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:96
posted:3/10/2012
language:English
pages:26