Intelligent Business

How can an organization survive in times of strategic war?

Emperor and leader of the ‘ Grande Armée’ Napoleon Bonaparte was forced to leave his throne in 1814 and banned to the Italian island of Elba. After his return to France the four great European powers conspired to strike against France. Napoleon decided to be ahead of this: he wanted to conquer Belgium in a fast way to conquer more countries after that. This campaign started at the 15th of June 1815 and ended at the 18th of June in the same year at the battlefield of Waterloo. In order to defeat him, his opponents had used his own war strategy against him: according to experts it was the main reason of his defeat.

Napoleon was already confronted with the consequences of strategy and the copying of one of his own advantages, that was used against him in 1815. Despite the fact that the battle of Waterloo happened 200 years ago, tactics that were used in that battle are daily strategy for organizations in our days. How do you keep a strategic advantage when anything can be copied nowadays?

Is there such a thing as a long lasting strategic advantage?

Obtaining a long lasting competitive advantage is, also for modern organizations, one of the focus points for strategic management (Barney, 1991; Prahalad & Hamel, 1997). Many scholars looked in to the problem of keeping a strategic advantage and many theories were developed (think for example about Porter’s Five Forces Model, 1980). But, as Grimm et al. (2006) pointed out, in our modern times a long lasting competitive advantage cannot be realized anymore, due to globalization and the speed in which information can be spread and copied worldwide. The authors talk about a period of hypercompetition that has emerged, through which obtaining a long lasting competitive advantage has no use:  “(…) today’s global business environment is becoming increasingly competitive and hostile, that every firm advantage will be quickly eroded and overcome by fast-paced competition (…).” (Grimm et al., p. 8).

So what do we do when we know that any strategic advantage that we create can and will be used against us within days or maybe hours? We have to start looking for the unique aspects from our organization, the ones that are difficult to copy. The old theories of valuable resources in an organization have to be looked at from a new background: a world where sustainable competitive advantages hardly exist anymore.

Unique resources to compete with

One group of strategic scholars focused on looking for strategic advantages inside the organisation (and not within circumstances surrounding the organisation): this was called the resource-based view (Black & Boal, 1994; Foss, 1997; Mata et al., 1995; Wernerfelt, 1984; Lippman & Rumelt, 1992; Teece, Pisano, & Shuen, 1997, Grimm et al., 2006). For their explanation of the term ‘resources’ these last authors used the paper of Barney (1986b): “all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness.”  (Grimm et al., 2006, p. 70).

Since we concluded in the previous section, that resources today are much easier to copy than they were before, we have to look for certain unique resources in the organization. These resources need to be difficult to copy and therefore intangible, so that the competition can be kept at a distance for some time. Rothberg & Erickson (2005) note that many companies forget their intangible resources when thinking about strategic advantages, because intangible resources are more difficult to connect to figures about profit or costs. “Less obvious is the analysis of the unique and rare resources that serve to support the activity, such as intangible skills and know-how of employees, (…). Although this second category might be considered soft and subjective, it can also be connected with important tangible costs and revenue (…).” (p. 76). As the authors state, it is lamentable that organizations don’t use see their intangible resources as of potential strategic value: “(…) people, their individual and collective knowledge and ability to generate actionable intelligence, are the greatest asset of the firm.” (p. 27).

Tacit knowledge as an unique resource in your organization

It can be concluded, that for example the knowledge of your employees that they have built up by experience and cannot be put into documents (so-called tacit knowledge, Polanyi 1967), can be a unique resource for your organization to compete with. Certain experience can be very rare, difficult to copy or to replace: a very valuable resource in times of strategic war! With a lot of experience in your organization, you can respond quicker to a new development and take better and faster decisions (den Hamer, 2005; Rothberg & Erickson, 2005; Davenport & Prusak, 1998).

So, in these times of hypercompetition and strategic wars, you have to focus on those resources that make your organization unique in the battle. Then why is it that during the current economic crisis, the first things that happen are the lay-off of a lot of employees? The built up experience, the tacit knowledge of your people, the knowledge that makes your organization unique: these unique resources deserve some special consideration because they can save your organizations life during the strategic battle yet to come.

Literature

• Barney, J. B. (1986b). Strategic Factor Markets: Expectations, Luck, and Business Strategy. Management Science, 32(10), 1231 - 1241.
• Barney, J. B. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management 17(1), 99 - 120.
• Davenport, T. H., & Prusak, L. (1998). Working Knowledge. How organizations manage what they know. Boston: Harvard Business School Press.
• den Hamer, P. (2005). De organisatie van business intelligence. Den Haag: Academic Service.
• Foss, N. J. (1997). Resources, Firms and Strategies. Oxford: Oxford University Press.
• Grimm, C. M., Lee, H., & Smith, K. G. (2006). Strategy as action: competitive dynamics and competitive advantage. . Oxford: Oxford University Press.
• Hislop, D. (2005). Knowledge management in organizations: a critical introduction. Oxford: Oxford University Press.
• Kogut, B., & Zander, U. (1997). Knowledge of the Firm, Combinative Capabilities, and the Replication of Technology. In N. J. Foss (Ed.), Resources, Firms and Strategies (pp. 306 - 327). Oxford: Oxford University Press.
• Lippman, S. A., & Rumelt, R. P. (1992). Demand Uncertainty, Capital Specificity, and Industry Evolution. Industrial and Corporate Change, 1(1), 235 - 262.
• Mata, F. J., Fuerst, W. L., & Barney, J. B. (1995). Information Technology and Sustained Competitive Advantage: A Resource-Based Analysis. MIS Quarterly, 19(4), 487 - 505.
• Polanyi, M. (1967). The tacit dimension. London: Routledge & Kegan Paul.
• Porter, M. E. (1980). Competitive strategy: techniques for analyzing industries and competitors. New York: Free Press.
• Prahalad, C. K., & Hamel, G. (1997). The Core Competence of the Corporation. In N. J. Foss (Ed.), Resources, Firms and Strategies (pp. 235 - 257). Oxford: Oxford University Press.
• Rothberg, H. N., & Erickson, G. S. (2005). From Knowledge to Intelligence. Burlington, MA: Elsevier.
• Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic Capabilities and Strategic Management. In N. J. Foss (Ed.), Resources, Firms and Strategies (pp. 268 - 286).
• Wernerfelt, B. (1984). A Resource-Based View of the Firm. Strategic Management Journal, 5(2), 171 - 180.

Add comment September 16th, 2008