Recently, I was asked whether Edith Penrose’s
“RBV” (Resource Based View) is today obsolete.
Fair question, given that RBV goes back to 1959.
This led to a question as to whether Porter’s Competitive Advantage method has or has not evolved to “Sustainable competitive advantage” / ” Temporary Competitive Advantage”.
Here is a link to one leading article on the topic “Sustainable competitive advantage or temporary competitive advantage: Improving understanding of an important strategy construct”. (T O’Shannassy – 2008)
A key statement in the article is “. . .in many industries for many firms competitive advantage is only a temporary outcome due to the influence of environmental uncertainty.”
Seems to me uncertainty (not just environmental uncertainty) has always been present, just as any initiative is, and always has been, characterized by risk.
I would add to this that all competitive advantage is, and always has been, temporary (Yogi Berra probably would have said that “You have it until you don’t have it”), so my question is why have people spent time and money picking at Porter’s method?
If we go along with the distinction, a “temporary” CA could be the result of landing a big contract, but a more likely scenario is building CA takes a lot of time and money and once you have CA, you need to pause to consolidate/sustain your CA but then try to augment your CA.
One thing we can say, for sure, is that anyone who subscribes to RBA and follows the method:
knows that if strategy changes, in-progress initiatives need to be reviewed and, in some instances, terminated (e.g. a competitor leapfrogs your innovative product, no point continuing with that implementation).
RBA requires that all work performed be supportive of strategy, accordingly the timeline for a strategic initiative must exceed implementation time for that initiative.
Since most important initiatives get authorized by way of ROI submissions, the timeline for an initiative is the time to breakeven, hopefully, a bit longer.
Bottom line, long-running initiatives work for long strategies, short-running initiatives are needed for short duration strategies and all competitive advantage is temporary,
Part of identifying/prioritizing initiatives to build/sustain/augment CA is to have a mix or short-lifecycle strategies and long-lifecycle strategies.
Anything new in all of the above?
What is “new” is the ability to view all corporate resources, view all initiatives, view all prioritized initiatives, view the status of all initiative implementation and view the status of all Cases at a graphic free-form-search knowledge base. The icing on the cake is the ability to change resource allocations and priorities of tentative initiatives and make real-time assessments in respect of in-progress Cases.
Nice alternative to arriving at a strategy planning meeting pushing a cartload of studies, reports, supporting documents and spreadsheets.