Food Aficionado Smart Brief: Volume 19
Welcome back to another edition of The Food Aficionado Smart Brief! Happy Monday, we hope your weekend allowed you to recharge and get prepared for another opportunity-filled week! In the realm of business, gaining and maintaining a competitive advantage is a key factor leading to long-term success. But honestly, how does someone even gain that competitive advantage? Today, we want to discuss the factors that build your personal advantage in the industry. We'll start with the supporting factors of resources and capabilities, that are used to identify and reinforce your core competencies; the backbone to a competitive advantage.
Finding Your Competitive Advantage 1. Resources To begin, every business starts with its resources. There are both tangible resources, like capital, labor, and ingredients, as well as intangible resources like knowledge, culture, and intellectual property. However, simply listing all of your resources isn't going to really help discover a competitive advantage. In order to identify what resources will truly help support your core competencies, you should analyze them using the VRIO framework. VRIO stands for resources that are valuable, rare, costly to imitate, and the firm must be organized to capture the value. Resources that are valuable enable a business to take advantage of opportunities or offset threats. Having rare resources means that few others possess them and they are also costly to imitate. Finally, an effective structure and capabilities are necessary to properly reinforce your core competency using these tangible or intangible resources. As seen in the chart below, it's important to check off each box of the VRIO framework if you want to tap into a truly sustainable competitive advantage.
2. Capabilities Another supporting factor of core competencies is your business's capabilities. For this smart-brief, the capabilities we are discussing are based on organizational and managerial skills. These are dynamic capabilities which allow the business to create or deploy their resources in strategic manners. In essence, each activity that a manager takes should add incremental support down the value chain. These skills are flexible and allow managers to adapt their capabilities in any given scenario. Without a strong ability to perform and add value, your resources will end up going to waste.
3. Core Competencies Finally, we have your business's core competencies. A core competency is your unique strength that is embedded in your business and allows for differentiation. By properly orchestrating your resources with flexible capabilities, you can determine your own core competency. Once you discover what that unique strength is, your business can leverage that core competency into an activity or process, eventually leading to a competitive advantage. This may all sound like a bunch of mumbo jumbo, however, it is extremely important to not only be knowledgeable about what makes your business stand out but also what may lead to true long-term success. Working all together, resources, capabilities, and your core competencies will help you gain a sustainable competitive advantage that will differentiate you from the rest of the industry.