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Competing With Ordinary Resources

Book Description

During the last three decades, research on resources has concluded that a sound strategy should rely on the exclusive control of valuable and rare resources — such as a distinctive brand name, an unparalleled set of talents or an incomparable technology. In this view, the essential pillars of strategic success are nonsubstitutable resources and inimitable capabilities, and competitive advantage stems from unique and scarce resources. However, the authors argue that competing on unique, rare and inimitable resources can be risky, because acquiring and protecting such resources can be costly; after all, most companies in an industry are seeking to obtain them. The authors contend that ordinary resources may play an overlooked but important role in successful strategies — and competing with ordinary resources can be a valuable complement to competing with strategic resources. An ordinary resource is a common resource on the market, generally perceived as neutral in terms of performance. Such a resource is considered, at best, as ensuring competitive parity. While ordinary resources are not, in and of themselves, a source of competitive advantage and greater performance, they are generally required for the business to function properly. Examples of ordinary resources include compliance with ISO standards in the automobile industry; stores and salespeople in retailing; and websites and logistics competencies in e-commerce. Unless ordinary resources are leveraged, strategic resources cannot always deliver their full-fledged competitive potential. In particular, the use of ordinary resources enables the duplication of a business model in many business units and/or in many countries. For instance, McDonald’s Corp. is the world’s largest chain of fast-food restaurants. But the replication of the McDonald’s business model is possible specifically because the model leverages relatively ordinary resources, in the form of more than 1.8 million employees worldwide. Most entry-level McDonald’s employees are not highly qualified, are part-time workers and can be easily replaced. However, the McDonald’s brand can only be leveraged thanks to these ordinary resources. The authors also observe that the emergence of new business models that leverage a vast array of ordinary resources — particularly multisided platform business models — raises questions about the relevance of the traditional strategic focus on scarcity-based approaches and unique resources. For example, Airbnb connects an abundant number of people who want to source out their empty rooms to hirers who are looking for a space for a couple of nights. Airbnb’s user-friendly website, plain and simple business model and 24/7 customer care service allow people to make use of their empty rooms in their house, a resource once considered to be relatively useless or trivial. The authors conclude that in some cases, the mobilization of massive amounts of ordinary resources through platform business models can outweigh the value of a few unique strategic assets. “Crowd jewels,” they conclude, can be a valuable substitute for “crown jewels.”