Competitive Advantage

More Recent Views

More recently, the quest for competitive advantage has centered on resources. The resource-based view (RBV) of competitive advantage proposed that organizations that control critical resources such as land, labor, and capital have an advantage over those that do not control critical resources. It seemed somewhat obvious that organizations with more financial resources should have an advantage over those with less. However, when Wal-Mart overwhelmed Sears at a time when the latter had much deeper pockets, the resource-based view became suspect. Upstarts in an industry so dominated by firms such as IBM deepened the suspicion of the resource-based view.

The importance of knowledge-based industries today has caused some to suggest that knowledge and the ability of an organization to learn and change are the real keys to competitive advantage. Much is written about the competitive value of knowledge and its proper management as a strategic resource.

Comprehensive Framework

In fact, competitive advantage can be achieved by capitalizing on resources, competencies, or capabilities. Resources, tangible and intangible, can provide competitive advantage. The reputation (intangible resource) of the Mayo Clinic provides a tremendous competitive advantage over other less well-known medical facilities. Distinct competencies (skills that no other competitors possess) can also provide a competitive advantage. The competencies of physicians in leading-edge stem cell transplant centers provide a competitive advantage that not even the Mayo Clinic can overcome with regard to these specialized procedures. Finally, organizations can obtain a competitive advantage by their integrative or management abilities. Some—relatively few—organizations seem unusually good at bringing together resources and competencies, leveraging them, and thereby obtaining exceptional synergies.

Key Questions for Competitive Advantage

Regardless of whether one is talking about resources, competencies, or capabilities, the things an organization is counting on to provide a competitive advantage must meet some rather specific criteria. These criteria are value, rareness, ease of imitation, and sustainability. For any resource, competence, or capability that might provide a competitive advantage, strategic leaders must ask the following questions and obtain definite responses. First, “Is the resource, competence, or capability of value to our patients, doctors, and other stakeholders?” The answer must be yes. If stakeholders do not value it, it cannot be the source of competitive advantage. Second, “Are we essentially the only competitor who possesses the resource, competence, or capability?” The answer must be yes. If all the competitors possess it, it cannot be the source of competitive advantage. Third, “Is our resource, competence, or capability difficult for our competitors to imitate?” The answer must be yes. If it is not difficult to imitate, competitors will imitate it as soon as they recognize that you have an advantage. Finally, “Can we sustain the resource, competence, or capability?” The answer must be yes. If you cannot sustain it, it cannot be the source of competitive advantage.

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