DeliveringDesiredOutcomesEfficiently.chatterjee

8/12/2019 DeliveringDesiredOutcomesEfficiently.chatterjee

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Delivering DesiredOutcomes EfficientlyT H E CREATIVE KEY T OCOMPETITIVE STRATEGY

Sayan hatterjee

Strategy formulation involves the constant search for ways in which the firm 'sunique resources can be redeployed in changing circumstances.'Starting resource positions are a very poor predictor of future industryleadership/It's gone from a game of resources to game of rate of progress.^

anagement literature suggests that competitive advantage comesfrom unique resources that cannot be easily acquired, imitated, orsubstituted for by others. It is difficult to argue with this concept,provided that the resources in question are used to produce some-thing that customers value. However, does the concept provide any guidanceto managers except to say that if they have a sustained monopoly on a valuableresource, they can profit from It? A manager seeking guidance needs answer tothe following questions: What is the basis for the value tha t comes from theresource ? Is this basis likely to cont inue in the fu ture? If the basis rema insunchanged in the future, how does one know if the resource is inimitable orunstibstitutable? Neither resource-based theory nor its traditional counterjiart,SWOT analysis, is very useful in answering these questions. While the managermay be able to come up with answers , getting them is likely to be a trial anderror process. For example, consider the following situation using strialy theguidance of SWOT or resource-based theory.


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Delivering Desired Outcomes Efficiently

Xerox knows that its good service network that allows it to enjoy competitiveadvantage. Xerox has determined that itisdifficult for new entrants to developa comparable service network. How would Xerox determine if ihis competitiveadvantageissustaitiable?It is not enough to analyze th e difficulty of a com petitor's im itating th eservice netw ork. Nor is it enough to figure out the fit betw een all the com po-nent parts of Xerox's distribution strategy that may tiiake it difficult lo copy.^Rather, the competitor will have to figure out if the service network is theonly way the competitive advantage can be gained. Using either SWOT or theresource-based framework, this becomes a completely open-end ed question.However, if one moves away from viewing the resource {the service network)as the basis of the competitive advantage and toward seeing the outcome tliatcustomers value as the basis, the question can he easily addressed. In this case,

customers would be loyal to Xerox not because of its service network per se, butbecause the netw ork p revents dow ntim e. If one no w starts the analysis by ques-tioning if others can deliver this same uptim e outcome , possibilities beyondm ere imitation of the service network open up. A competitor m ay be able todeliver the same outcom e of reduced do wn time throu gh a different resource,such as by manufacturing excellence {so that a machine needs few repairs) orby designing a machine that customers can service easily by themselves. Canon'sentry into the personal copier market and the office equipment market utilizedboth design and manufacturing to get around ils lack of service and other infra-structures in the copier market.

Now consider another situation.There are large efficiency costs if an assembly line has to be stopped for any rea-son. Crown Cork and Seal ran into this problem when it found that its assemblyline supervisors had to run from the can seamer end to solve problems at ihelabeling end because of problems with the labeling machine that the labelingend worker was not trained to solve. However, the m inute or two that it took thesupervisor to reach the other end was enough to cause blockage and thereforethe line had to be stopped even though the problem itself could be resolved in afew seconds. How would you try to solve this problem most efficiently so thai theline did not have to be stopped?If your solutions involved training the assembly line worker, hiring a newsupervisor for the labeling end, or buying a more robust labeling machine, thenyou have basically applied a resource-based solution to the problem: acquireresources to develop competitive advantage, in this case by reducing downtimecosts.However, now look at the situation by considering the cause of the down-time. This can be characterized as the inability of the supervisor to reach the

labeling end quickly enough to prevent a blockage. Now try to think ahout asolutionhow can the supervisor reach the labeling end from the can seamer


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Delivering Desired Outcom es EfFicientiy

Similarly, the Mazda Miata is an ano ma ly if one com pares its featuresto those considered imp ortant in a sports car. The Miata's success can be m oreeasily explained by the outcome that its customers valued, a recapturing of theexcitement that the British two-seaters used to provide. The point is sitnply thatcompetitive advantage should not be measured by how unique a particularresource is (i.e., whether any one else can get it), or even by the fit among acompany's aaivities. Rather, competitive advantage should be measured hy howunique and valuable the out omeassociated w ith the resource or activities of thefirm is.As many industry leaders have found out, relying on the barriers to imi-tation of their unique resources simply invited new entrants to go around thosebarriers and deliver the same or better outcotiics using completely different setsof resources or activities. A unique resource does not create competitive advan-tage,but a unique and valuable outcome does.

Strategic managem ent should help managers acquire the optimalresources to deliver unique out omes more efficiently than their competitiondoes,not just help them find new uses for existing resources (see Figure 1).Thus,for Xerox the relevant question was not the inimitahility of ils resources,hut the inimitability of a key outcomedowntime. For Crown Cork and Seal,the efficient solution was a matte r of considering the ou tcom e of quick accessto both ends of the assembly line.By starting with the outcomes of processes and sometimes re-definingoutcom es, m anagers may be able to identify a different value chain as well asunique internal process modifications that lead to competitive advantage. Thevalue thai a firm adds arises from a collection of outcomes, not from activitiesand processes. A firm's ability to extract value from the marketplace will dependon how it creatively defines, develops, and delivers outcomesinternal andexternal. There are usually multiple processes or product features that candeliver the same outcome, and it is the outcome that creates value (see Figure1).Before jumping into an analysis of processes or of underlying resources,managers should step back and try to consider alternative processes that candeliver the satne outcome and select the processes that play into a firm's corecompetencies. The manager should also consider several outcomes that can addsimilar value and choose the one that best matches the resources of the finn.This mindset will open up creative thinking more than concentrating purely onprocesses or product features, and it will help managers see opportunities forcompetitive advantages by facilitating re-engineering and exploiting new marketopportunities.

Outcom es and eneric StrategiesIt is widely accepted that one-dimensional generic strategies of either


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Delivering Desired Otrtcomes Efficiently

F I G U R E I Resources and OutcomesThe Link with Value

ResourcesEx: ServiceEngineers

rocessesEx: ServiceNetwori

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DeliveringDesiredOutcomesEfficiently.chatterjee