In the Studebaker National Museum sits an automobile that is powered by ion beams. Engineers within the Studebaker Corporation saw an opportunity to build an automobile that used a completely revolutionary design and energy source. They built a prototype of the automobile but lacked the capabilities and assets to produce the ion beams to propel the car as they had planned. If it were possible to produce the envisioned automobile, it would have produced a solid Area A, a point of difference, in the automotive industry. Because they were unable to deliver on their strategy, their prototype sits in the Studebaker National Museum as another good idea that lacked the resources, capabilities, and assets necessary to make it work. The Studebaker Company had the vision but lacked the internal resources, capabilities, and assets to bring their idea to life. The world is full of executives and entrepreneurs who have tremendous strategies and sensational ideas, but who are unable to execute those strategies or carry out those ideas to realize the anticipated dream.
What is in a company’s DNA, its internal characteristics, that makes it possible to produce the goods and services desired by the customer? What are the characteristics that both build and sustain an organization’s current competitive advantage (Area A) and have the potential to create future advantages?
Having identified areas of customer need and opportunity to build a sustainable point of difference, an Area A, executives face the daunting task of implementation. This requires them to look for the resources, capabilities, and assets necessary to successfully achieve Area A. Sometimes the necessary resources, capabilities, and assets can be found inside the firm; other times, the executive must look outside the firm.
Da Ali G Show is a satirical TV series starring Sacha Baron Cohen. During its second season, Cohen, playing the lead character “Ali G,” carried out comedic interviews with unsuspecting celebrities and professionals. In one episode, Ali visited with an investor and showed a blank skateboard, without wheels, and introduced it as a “hoverboard.” Ali explained that he had seen it in a movie (Back to the Future) years ago, and so he knew it was possible to produce one and that it would have huge market potential. In fact, Ali explained he was amazed that someone had not already produced the hoverboard since it had already been in the movies. He went on to explain that all he needed from the investor was a team of scientists with the technology, knowledge, and skills to make the hoverboard work.(http://www.youtube.com/watch?v=nkuOuxRD1Bc) Ali G had a great idea, with a potentially huge Area A—teens would have lined up to get their own hoverboard; the only thing lacking was the back office, inside resources, capabilities, and assets necessary to make it happen!
Customers rarely know anything about what occurs inside an organization, much less care about what an organization must do to create the attributes they desire. They are often completely unaware of what it takes in terms of the skills, resources, or costs necessary to make attributes and features they desire possible. In most cases, customers only care about the desired benefits that are salient to them are delivered in a cost-effective, efficient manner. For example, most computer users do not understand the internal design and associated knowledge and skills required to create a product with the attributes they desire. In fact, customers will often call those involved with the internal workings of the computer “nerds” or “geeks,” especially when they enthusiastically try to explain the internal beauty of the machine and the competencies involved! Most customers only see the computer’s attributes and expect a great product for a great price. Yet the inside resources, capabilities, and assets necessary for the production of a computer not only makes the current attributes available but also makes future attributes and cost saving possible. The link between the company’s DNA and desired customer attributes can be graphically demonstrated as follow:
Internal Resources → Customer attributes/benefits → Capabilities & Assets → Position
Because of the link between inside company resources, assets, and capabilities necessary to deliver the attributes customer demand, it is essential that company executives have a clear understanding of not only what organizational DNA is used to deliver current customer attributes and benefits but also how it might be used to deliver future attributes and benefits. Executives who become so focused on current internal practices and characteristics necessary to deliver attributes that current customers demand, without keeping an eye on attributes that future customers will desire, risk market myopia that will make his or her firm irrelevant over time.(Christensen (1997).) This chapter is designed to help you understand the essential internal building blocks of execution and how to locate them. In the process, you will discover the essential value drivers necessary for your organization to have a sustainable competitive advantage.
