A study conducted by the consulting firm McKinsey with a sample of 30 companies around the world found that there are three basic capabilities, beyond the operational ones, to create competitive advantage (1)
The capabilities of a company are made up of all the skills, resources and relationships that they bring together to build their businesses.
Companies that focus on achieving lasting competitive advantages are very aware of their capabilities but generally understand them as the capabilities of their personnel, their processes, organizational knowledge, in short, they identify capabilities with operations but do not distinguish them as the forces that they can generate business distinction among competitors.
In today's competitive environment and always, a company must be good at what it does and possess skills that allow it to stand out. Distinctive competencies not only enable firms to make more money from existing businesses but to extract more value from new opportunities.
Distinctive capabilities, as important as operational capabilities, have a broader conception than the latter, in addition to operational ability, the new definition of capability includes three other classes of resources: privileged assets, skills that enable growth, and relationships. specials.
New capabilities
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Privileged assets
Skills that allow growth
Special relationships
Let's see each one of them:
Privileged assets
They are made up of tangible or intangible assets that are difficult to copy and give their owners a competitive advantage, including trademarks, patents and other assets protected by intellectual property, reputation, corporate image, ethics, infrastructure and information concerning the consumer.
- Brands: Strong brands can be used as a special element (catapult) for the launch of new products without threatening the credibility of the current business. Customer information: Maintaining detailed information on customers, their needs and habits, can allow establishing closer relationships with them and thus generate greater sales and increase value. Distribution channels: Companies can use the scale of their distribution channels to increase sales of their existing products and services or reduce the cost of launching new ones.
Skills that allow growth
Organizations that master generic growth-enabling skills such as the ability to make acquisitions, business structuring, financing, risk management, and capital management have a significant advantage in their power for sustainable growth. While operational skills tend to be specific to each of a company's businesses, these growth-enabling skills are transferable from one market or business unit to another.
- Ability to carry out acquisitions and mergers: A bad acquisition can generate difficulties and losses, acquiring companies on favorable terms that allow generating greater value and consolidating the business, in addition, integrating them quickly is a distinctive ability. Financing and risk management skills: These skills allow the organizations that possess them to achieve high growth rates, since they find quick and effective solutions to the problems of obtaining funds that their competitors do not find for fear of high risk.
Special relationships
This ability is seldom recognized as an advantage generator, but it is actually very important. Relationships with suppliers, customers and other companies can provide growth opportunities and should be nurtured as they open up opportunities to enter new industries and markets as well as attract new business.
Distinctive capabilities cannot depend on people but must be inherent values of the corporation
From capabilities to benefits
Gaining and maintaining an advantage in our competitive position depends on how well we can combine our distinctive capabilities, some are more important than others and it is more difficult to imitate the right combination of them than individually one by one. The challenge then is to find, control and combine our critical capabilities in such a way that the competition has no chance to imitate us, thus we can create sustainable competitive advantages.
Collis and Montgomery, professors at Harvard Business School, argue that any ability becomes a source of competitive advantage only if it passes several tests. First, it must be difficult to imitate; second, it must not be easy to replace with an alternative capacity; third, it must transcend time and not be a passing fad; fourth, it must be difficult to trade and fifth, it must be competitively superior and valuable in the product's market.
References:
"Turning capabilities into advantages" MEHRDAD A. BAGHAI, STEPHEN C. COLEY, AND DAVID WHITE. The McKinsey Quarterly, 1999 Number 1, pp. 100–109
