Gaining Competitive Advantage from Intangible Assets

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Gaining Competitive Advantage from Intangible
Assets John Kay Hay Group, Athens,
April 2nd 2003
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Top 12 Global Industrials by Market
Capitalisation 1912
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Top 12 Global Industrials by Market
Capitalisation today
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Phases of Business Strategy

• 1960s/1970s
• Strategy is corporate planning

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Phases of Business Strategy

• 1960s/1970s
• Strategy is corporate planning
• 1970s/1980s
• What kind of company do we want to be?
• Visions and mission statements

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Quality is Free
Higher quality
More sales
Greater revenues
Lower unit costs
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Distinctive Capabilities?

• Positioning
• Scale
• Market share
• Vision

• Reputation
• Innovation
• Strategic assets
• Architecture

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Architecture

• What it is
• A structure of relational (informal) contracts
• What it does
• Facilitates information exchange, flexible
  response, organisational knowledge
  
• Who does it
• Benetton, Marks Spencer
• Japanese keiretsu, Italian networks

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Corporate Success

• Corporate success rests on distinctive
  capabilities, not on doing well what others
  already do well
  

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Corporate Success

• Corporate success rests on distinctive
  capabilities, not on doing well what others
  already do well
  
• Distinctive capabilities are much easier to
  identify than to create

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Corporate Success

• Corporate success rests on distinctive
  capabilities, not on doing well what others
  already do well
  
• Distinctive capabilities are much easier to
  identify than to create
  
• Many distinctive capabilities are the product of
  a historical environment and cannot be reproduced
  in its absence

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• Corporate success rests on distinctive
  capabilities, not on doing well what others
  already do well
  
• Distinctive capabilities are much easier to
  identify than to create
  
• Many distinctive capabilities are the product of
  a historical environment and cannot be reproduced
  in its absence
  
• Competitive advantage rests on the application of
  a distinctive capability in a relevant market
  environment

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New rules of business success
Networks and standards are key
First mover advantages are wide ranging
There will be few firms in any industry
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University of VirginiaSchool of Engineering and
Applied ScienceDepartment of Computer Science
The Oracle of Bacon at VirginiaThe Oracle
says Rudolph Valentino has a Bacon number of 3.
Rudolph Valentino was in Eagle, The (1925) with
Russell Simpson Russell Simpson was in Broken
Lance (1954) with Robert Wagner Robert Wagner
was in Wild Things (1998) with Kevin Bacon
Enter the name of an actor or actresse.g.
Elvis Presley or Robert De Niro or Sarah Jessica
Parker
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http//www.cs.virginia.edu/cgi-bin/oracle/movielin
ks?firstnameKevinBacongame1

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http//www.dpmms.cam.ac.uk/dcr24/Nomic/Acka/subga
mes/bacon.html
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Networks
No Bacon number exceeds four.
We are no more than six degrees of separation
apart.
All real networks are connected clusters
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Standards
The shadow of Microsoft is everywhere
But MS/DOS Windows is almost the only standard
controlled by a private company
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Few firms in any industry
Because fixed costs are large, dominance is
common e.g. spreadsheets, browsers
But because innovation is constant, new firms
constantly emerge
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MacIntyre envisages two crews, one organized on
strictly self-regarding materialist, rationalist
lines. It is organized and understood as a
purely technical and economic means to a
productive end, whose aim is only or overridingly
to satisfy as profitably as possible some
markets demand for fish. when the level of
reward is insufficiently high, then the
individual whose motivations and values are of
this kind will have from her or his own point of
view the best of reasons for leaving this
particular view. Alasdair MacIntyre , pp 285-
6 in A partial response to my critics in Horton
Mendus (eds.) (1994)
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The second crew comes from one of the close-knit
fishing communities which MacIntyre admires, and
in which fishing constitutes what he calls a
practice. In it we find a crew whose members
may well have initially joined for the sake of
their wage or other share of the catch, but who
have acquired from the rest of the crew an
understanding of and devotion to excellence in
fishing the interdependence of the members of a
fishing crew in respect of skills, the
achievement of goods and the acquisition of
virtues will extend to an interdependence of the
families of crew members and perhaps beyond them
to the whole society of a fishing village.