Sustainable Competitive Advantage
1 Sustainable Competitive Advantage
Resources are the assets, capabilities, processes, information, and knowledge that an organization controls. Firms use their resources to improve organizational effectiveness and efficiency. Resources are critical to organizational strategy because they can help companies create and sustain an advantage over competitors.3
Organizations can achieve a competitive advantage by using their resources to provide greater value for customers than competitors can. For example, iTunes and iPod created competitive advantage for Apple and value for its customers by combining elements of design, price, and capability in a unique way. But the most important advantage was being the first company to make it easy to legally download music to digital devices. (Prior to the iTunes store, the only means of acquiring digital music was illegal file swapping.) Apple negotiated agreements with virtually all of the major record labels to distribute their songs from a central online library, and iTunes quickly became the premier platform for music downloading. The easy-to-understand site came with free downloadable software customers could use to organize and manage their digital music library.4
The goal of most organizational strategies is to create and then sustain a competitive advantage. A competitive advantage becomes a sustainable competitive advantage when other companies cannot duplicate the value a firm is providing to customers. Sustainable competitive advantage is not the same as a long-lasting competitive advantage, though companies obviously want a competitive advantage to last a long time. Instead, a competitive advantage is sustained if competitors have tried unsuccessfully to duplicate the advantage and have, for the moment, stopped trying to duplicate it. It’s the corporate equivalent of your competitors saying, “We give up. You win. We can’t do what you do, and we’re not even going to try to do it any more.” As Exhibit 5.1 shows,
Resources are the assets, capabilities, processes, information, and knowledge that an organization controls. Firms use their resources to improve organizational effectiveness and efficiency. Resources are critical to organizational strategy because they can help companies create and sustain an advantage over competitors.3
Organizations can achieve a competitive advantage by using their resources to provide greater value for customers than competitors can. For example, iTunes and iPod created competitive advantage for Apple and value for its customers by combining elements of design, price, and capability in a unique way. But the most important advantage was being the first company to make it easy to legally download music to digital devices. (Prior to the iTunes store, the only means of acquiring digital music was illegal file swapping.) Apple negotiated agreements with virtually all of the major record labels to distribute their songs from a central online library, and iTunes quickly became the premier platform for music downloading. The easy-to-understand site came with free downloadable software customers could use to organize and manage their digital music library.4
The goal of most organizational strategies is to create and then sustain a competitive advantage. A competitive advantage becomes a sustainable competitive advantage when other companies cannot duplicate the value a firm is providing to customers. Sustainable competitive advantage is not the same as a long-lasting competitive advantage, though companies obviously want a competitive advantage to last a long time. Instead, a competitive advantage is sustained if competitors have tried unsuccessfully to duplicate the advantage and have, for the moment, stopped trying to duplicate it. It’s the corporate equivalent of your competitors saying, “We give up. You win. We can’t do what you do, and we’re not even going to try to do it any more.” As Exhibit 5.1 shows,