An organisation is a set of capabilities that combine to achieve specific objectives. If you do not use and grow your capabilities, then they disappear. If we study competitive advantage, we will see that looking at how we employ workers and re-evaluating what we expect from our staff is what will get us ahead of the competition.
We start by saying that there are two processes in an organisation – purchasing and delivery. Let’s look at two organisations (A and B) that perform the same on the bottom line.
In Organisation A, we have an advantage in purchasing, and in Organisation B, the advantage is in delivery. Would it work to take the best of the purchasing in Organisation A and combine it with the best of delivery in Organisation B?
Logically we would have the best purchasing and the best delivery – but would this be the best performing organisation? Studies of the resource-based view of the organisation tend to support the fact that this is not what happens in reality.
The resources from different parts of the organisation tend to cross-subsidise each other and we may find that resources are differently allocated and utilised in these processes. Taking the best from somewhere else, often fails because we do not account for the fundamental differences in people.
Shareholders and management define the value as perceived, to achieve competitive advantage and allocate resources accordingly. It means that in organisation A, we have decided to be good at purchasing and subsequently the resources that are there are allocated to be good at purchasing. If we now shift resources from purchasing to delivery, then we erode the competitive advantage. If we allocate more resources to delivery – we erode profitability.
When making decisions to become better – we are unlikely to want to lose our advantage in areas where we have competitive advantage, and this would require us to relook the resources and processes involved in other areas, which will change our position of competitive advantage. The art of strategy is to make these decisions wisely and understand the impact of these choices in the long term.
If we do not exploit the resources and capabilities inherent in the resources that we have, we progressively deteriorate in our ability to use the same resources to generate competitive advantage. If you hire a top gun, and you employ them as a receptionist – then they will become good at reception work, but the same resource may have built brilliant strategies for growth.
To move resources from a position where they are adding normal value to becoming a significant advantage, a lot must change including:
This means in effect, that we are creating new products, addressing new markets and executing differently for every resource change that we make in an organisation. Most of these are fundamental changes for established businesses and managers, who are often experts at crushing the hopes and ambitions of people, hiding behind resourcing and the need to justify the return on investment – while failing to recognise the inherent potential and extent to which people do want to participate in unlocking the true potential of an organisation.
In high innovation and high performance organisations, there is an increasing recognition that individuals have a far greater role to play in delivering unique value and that the use of individual capabilities is critical in advancing the specific causes that they are capable of executing. Organisations are doing much more with far fewer staff than ever before. But these successes are highly dependent on individuals.
This resource-based view states that businesses are essentially a collection of people with capabilities, and we have to ask how each resource in our domain can contribute the maximum and find the ideal configuration, to utilise the unique skills and abilities of each person in our space. This view, together with some basic risk management practices that capture and advance knowledge, seems to be part of the future world of work.
For most organisation designers this would be a nightmare, as the basic assumption is not that staff will do the same work, but that staff will each contribute to a common goal, according to their capability. But then again, research shows that as many as 77% of people are not engaged at work and do not believe that they are adding value.
So maybe it is time to relook how we employ people, what we expect from each other and also what we can each contribute in relation to the common purpose of our organisation. This will unlock value and create unique capabilities that our competitors will not be able to replicate, because they do not have the same people working for them.