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There are large and small ways of altering your business boundaries but
each can be strategically critical.
It may be very tempting to stop manufacturing some of your compo-
nents and buy them from specialists but will this be wise in the long
run? Make versus buy decisions need information and insight into the
current and potential long-term value of the resources that will be lost.
Down this road can lie over-dependence on suppliers and eventual
hollowing out.
RCA
RCA began out-sourcing the metal parts for the electron guns in TV tubes because it cost less, then they
out-sourced the gun assembly for the same reason, But with it their capability to design electron guns
slid away. Their cheap supplier was Sony, who actively built on knowledge supplied by RCA and invented
the Trinitron system the rest is history.
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2 When to use this book
IBM
Even more dramatic examples were IBMs decisions to outsource their PC operating system to a firm
called Microsoft and to out-source the microprocessor design to Intel.
Anon Inc.*
A firm set up a number of distributors in different parts of the world to sell and service its products. A key
customer segment was food and drink manufacturers, a sector dominated by multi-national giants.
Unfortunately two of the distributors were much more interested in selling products than servicing. Their
service departments had poor facilities and it was difficult to convince the distributors owners that good
service could make money. They were only interested in the chase for the next order. Inevitably that atti-
tude created problems for the firms service reputation in those countries. Unfortunately that reputation
propagated through a key multi-national customer and affected sales in countries that were actually
being serviced well.
Disaster is at hand
It could be that prospects in your current markets and/or current technolo-
gies look bleak, there is little growth and competition is intensifying. Entry
into new markets and/or adopting new technologies appear to be the only
ways forward. But this can be a dangerous strategy, how can you minimise
the risks? There is a saying that when disaster strikes an individual they are
thrown back on their resources. This is also true for companies:
*Companies that have been given fictitious names are identified by an asterisk throughout the book.
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3 When to use this book
Apple Computer
Apple's recovery from near disaster in 1997 is a remarkable story. From net revenues of $11bn in 1995 the
forecast for 1997 was $7bn. Losses were mounting; staff layoffs climbing and factories were sold off.
Pundits forecast the end of Apple there would be new owners or it would be killed off.
What were Apple's key resources?
First was its distinctive operating system (Mac OS), still superior to Microsoft Windows in feel and friend-
liness, yet somehow having lost its way in development terms and importantly the Mac OS was no longer
exclusively available to Apple. Earlier it had been licensed to a set of 'clone' manufacturers, the most sig-
nificant being Motorola, Power Computing and Apus. The idea was that a wider range of manufacturers
would grow the total market for Mac OS-based computers. Unfortunately the evidence was that the clone
makers were taking business from Apple rather more than increasing the total market.
The second resource was the most fanatically loyal customer base in the electronics world. If you owned
a Mac you stayed with it, they were superior to any WIntel PC. You had the OS of choice in better looking,
well made, robust designs with low ownership costs.
Third were its design-related resources and fourth was the brand, known worldwide and giving that user
base the feeling that they were special, somehow different to the crowd.
When Steve Jobs succeeded Gil Amelio in Autumn 1997, there was plenty of evidence that Jobs under-
stood these resources. At MacWorld, Boston, he emphasised Apple would need to exploit its strongest
assets more and defined them as the brand, 'as recognisable as Nike or Coca Cola' and the Mac OS.
Apple is about the Mac OS ... We are going to invest a lot more in it.
What next?
First the OS and the customer base; Jobs quickly hiked the license cost for the new Mac OS 8 and bought
up one of the largest clone makers, Power Computing. This signalled a reverse in licensing policy. To Jobs
the Mac OS was Apple it was an asset (or resource) Apple needed exclusively. If parts of Apples previously
loyal customer base had abandoned Apple hardware to follow the Mac OS onto Motorola and other clone
hardware surely this proved licensing was a route to disaster. By the end of 1998 all licensing agreements
had collapsed, the clone makers had gone and the Mac OS was available on Apple hardware exclusively.
Copyright 2002. Cambridge University Press. All rights reserved.
Not only that, between Autumn 1997 and Autumn 1999, four significant upgrades to the Mac OS had been
released. These were just what the customer base liked, instead of infrequent blockbuster upgrades Jobs, it
seems, had gone for regular incremental releases, each of which had a group of must have developments.
What about the brand? Most brand positioning copy focused on the exclusivity angle. The think differ-
ent campaign associated Apple buyers with independent minds of the past, from John Lennon to Ghandi
to Einstein. Jobs refusal to take a salary for almost two years could also be regarded as thinking different at
the core of Apple. (Though a grateful board put that right with the gift of a jet plane in early 2000.) Perhaps
more risky was the abandonment of the characteristic rainbow Apple logo for a silver Apple. But the
embodiment of the brand was the product and those distinctive design resources were also exploited to
the full.
The iMac and iBook changed the look of desktop and portable computers. Apple then had the hardware
of choice for computers in TV programmes and advertisements. These products also contained a series of
technological firsts from faster interfaces and the death of the integrated floppy disk drive to the first
desktop computer cooled by convection rather than a fan.
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4 When to use this book
Abacus*
A worldwide supplier of industrial measuring equipment, Abacus, had already decided to gain an advan-
tage over competitors through improving the competence of its service activities. This included installa-
tion, service and repair, consumables supply, customer training, advice and maintenance contract nego-
tiation. Their first improvements were to product training, defining service engineer toolkits and indeed
defining what good service was from health and safety issues to dress code, all were documented in a
service standard. The standard was audited yearly within fully owned and third party sales and service
organisations. Standards were improving, metrics showing service response times were also improving
what else should be done?
A resource analysis revealed some areas that had not been tackled. One example was the central role of
the service engineer to offering good service. Competent service engineers can solve technical problems
and some of the social problems caused if a machine breaks down. Customers can get frustrated and
annoyed and it is difficult to recruit staff that can handle these two aspects of the job. But Abacus had no
way of testing how competent new recruits or experienced staff actually were at these skills. An engineer
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5 When to use this book
would be recruited because s/he did well in the interview and had passed relevant exams. Following that
s/he would receive product training either locally or at the factory - there were no exams to show how
well the training had been understood and little motivation for colleagues to expose an engineer who was
failing. During the time it takes for the underperforming engineer to be discovered or to leave, much
damage can be done.
In response a set of technical competency tests were designed and psychological tests were used routine-
ly during interviews to test basic technical understanding and to identify traits useful for dealing with
customers. The technical tests are used throughout the world, while outlets have the freedom to use more
culturally coherent psychological tests where available. The resource analysis also showed that in wholly
owned service centres if an engineer settled in the chances were s/he would stay on average seven years,
rather higher than usual in these positions. Recruiting better engineers could therefore pay off for a con-
siderable time.
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6 When to use this book
For the start-up and small companies the issue is lack of resources,
of a need to grow your firms resource and competence base and espe-
cially to grow the resource of management. Start-ups, in particular, are
practically by definition focused on their resources and competences.
For it is these that differentiate them from competitors the new idea,
perspective and knowledge that others do not possess, the ability to
move faster and to more proactively address the implications of new
ideas without the encumbrances of a past history. These are the
resources and competences that make your firm useful and valuable to
larger firms. They are your firm. Your challenge is to exploit them most
effectively and that is a matter of management, the resource of manage-
ment. This book and the resource analysis approaches it suggests are
certainly valuable for organisations short of resources they are the
ones who arguably need to understand their resources and resource
development needs the most.
Copyright 2002. Cambridge University Press. All rights reserved.
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How to use this book
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Practical competence and
1 resource frameworks
What is a competence?
Competence categories
Resource and competence architecture
What is a resource?
What makes a resource important?
What makes a competence important?
Competence in this sense is a way of describing how well (or not) your
firm performs its necessary activities.
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9
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10 Practical competence and resource frameworks
Caterpillar
This large construction plant manufacturer, is recognised as having a competence in supporting cus-
tomers through its worldwide support/maintenance network.
What are these activities? One useful model is that based on business
processes. Table 1.2, based on the CIM-OSA1 list of business processes
illustrates the wide variety of activities most firms carry out. The struc-
ture given here is suitable for both manufacturing and service-oriented
companies. Different markets impose different needs so we can expect
that the areas of high performance and thus high competence neces-
sary to be successful will vary with industrial sector. The examples in
this section illustrate this.
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11 1.1 What is a competence?
Direction setting
Includes all strategic planning activities including the new-product introduction process:
market research/product specification and design
manufacturing process specification and design
acquisition/mergers/divestment
performance measurement and objective setting
networks with relevant legislators and industry bodies
Order flow products
Begins with the selling of the product and ends with paying in the customers cheque:
order receipt and scheduling
raw material purchase
assembly, testing, delivery
invoicing and money receipt
for custom products contractual matters, project management, commissioning
building customer relationships
Order flow services
Services provided to the customers include:
installation, technical support and repair
Copyright 2002. Cambridge University Press. All rights reserved.
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12 Practical competence and resource frameworks
Honda
Hondas competence in the development of high-performance engines and power trains is well known.
Their moves from motor cycles into lawnmowers, outboard motors and eventually into automobiles were
founded on this technical competence. Honda are also noted for their high competence at managing
their dealer networks. This competence had been of critical importance during the massive growth phase
of Honda motor-cycles in the US. At the time the existing motor-cycle distributorships were predomi-
nantly hobbyist bikers, who had little respect for the under-powered Hondas. So Honda developed a new
kind of motor cycle dealership, complete with showrooms, repair bays, finance options and an audited
standard of service.
Table 1.4 gives some definitions of competence categories you will and
wont have heard of. The one definition we would advise you to look at
carefully is the shaded one Dynamic capability.
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13 1.2 Categories of competence
Competence Description
category
Until now we have not used the word capability since we consider the
words competence and capability to be interchangeable, thus we have
just used one competence. Dynamic capability is an exception it is
the competence that determines the adaptation of all competences or
activities over time and is therefore worthy of a different name. Firms
with a well-developed dynamic capability are aware of the need to
question and adapt their competences. This is not easy, human beings
Copyright 2002. Cambridge University Press. All rights reserved.
in general like to relax, to operate in their comfort zone. This is not the
destiny of aware managers in fast-moving industries. As Lewis Platt of
Hewlett Packard put it:
Reading this book is one way of sensitising you to the need for a
dynamic capability in your firm, using this book will improve the per-
formance and structure of your firms dynamic capability.
There are more competence notions in the human resources and
education literatures where the emphasis is on individual competency
and competencies (rather than competence and competences). This
book focuses on analysing resources and competences at a more global,
organisational level. Clearly, however, improvements to these compe-
tences will need improvements to the competencies of individual sales
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14 Practical competence and resource frameworks
Resource
A
Copyright 2002. Cambridge University Press. All rights reserved.
Resource Resource
B C
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15 1.3 Resource and competence architecture
Co iverin
de
mp g
l
Strong
ete qua
belief that
nc
quality is key
e: ity pr
Loyal and
l
experienced
SPC staff
duo
knowledge Rigorous
ct
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16 Practical competence and resource frameworks
Co liverin
de
mp g
Strong
ete qua
belief that
nc
quality is key
e: lity pr
Loyal and
SPC experienced
knowledge staff
du o
and skills
ct
Performance Rigorous
measurement
ISO 9001
and reward system procedures
Reliable manufacturing Customer focus
system a strong value
Co sign cturin
de nufa
mp of p g
ma
nd
c
In-house
Skills in using automation
DFM procedure and design
knowledge
Figure 1.3 The role of the product and process design competence.
Copyright 2002. Cambridge University Press. All rights reserved.
But that does not explain all of their performance, Figure 1.3 shows that
their product and manufacturing process design is also performing at a
high-competence level necessary to maintain the reliability of the manu-
facturing system, and this further underpins the quality performance.
Underlying that competence we find another set of resources:
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17 1.3 Resource and competence architecture
Co liverin
de
mp g
Strong
ete qu a
belief that
nc
quality is key
e: ity pr
Loyal and
l
SPC experienced
knowledge staff
duo
and skills
ct
Performance Rigorous
measurement ISO 9001
and reward system procedures
Reliable Customer focus
manufacturing system a strong value
Co sign cturin
de nufa
mp of p g p
ma
Co
ete rod ro
mp
nc
ete
e: uct a ess
nc
e:
for
Design
mi
nd
c
for manufacture
ng
procedure
an
do
pe
ra
In-house
ti
Skills in using
ng
automation
DFM procedure Multi-disciplinary
in
and design
tea
knowledge personnel
ms
Skills in using Structured problem
Copyright 2002. Cambridge University Press. All rights reserved.
Appraisal system
values teamwork
Cu
sto
me
Resource
r
A
pe
rce
i
ved
com
pe
ten
ces
Resource Resource
B C
Tec
hn
So
ica
cia
l su
lly
Resource
pp
su
X
or t
pp
ive
or
tiv
co
ec
mp
Resource
om
ete
pe
ten
nc
e
ce
Resource
Y
Resource
Copyright 2002. Cambridge University Press. All rights reserved.
Resource
P
R
Note also that the resources in our example are not necessarily tied to
these competences alone. The workforce is involved with a multitude of
activities, from scheduling batches through the factory to disposing of
waste material. They have other deep-rooted values as well as customer
focus. For instance the wage bargaining in this company is often a highly
contentious matter as the workforce attempt to get their share of the
results of the firms competitive advantage. So the performance of a com-
petence can often depend on the attention and priority managers give to it
compared to other activities in which the same manpower and perhaps
different knowledge and expertise are required. This suggests a sixth factor:
The SDQ example also shows a wide range of resources, from top
management beliefs to the company appraisal system. It is now time to
explain what a resource is and to describe the range of possible resources.
Tangible resources are relatively obvious, examples include buildings, plant, equip-
ment, exclusive licenses, patents, stocks, land, debtors, employees
generally tangible resources can be touched or felt, they have a physical
shape.
Intangible resources are, by definition less easy to recognise. They include skills, experi-
ence and knowledge of employees, advisers, suppliers and distributors.
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20 Practical competence and resource frameworks
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21 1.5 What makes a resource important?
Network resources Interest groups within the company, networks involving compa-
ny personnel with suppliers, customers, legislative authorities,
or advisers. We include reputation and brand in this category.
Resources important A key resource area related to recognising when valuable
for change resources have become out-dated and need to be changed or
even destroyed. Examples here are the beliefs of influential
workers and managers, the existence of resources for imple-
menting change (like cash for investment).
Do not make the mistake of thinking that these resource types are sepa-
rable. That a resource is either tangible or not, or that a resource is
knowledge-based or system-based. Resources can be mixtures of
knowledge, system and physical hardware that are not easy to separate
with neat definitions.
Do not ignore yourself here because you, as a manager, are a highly
valuable resource that is key to identifying the need for change in your
company, assessing the direction of that change and carrying it out. But
at the same time you are maintaining the competences on which your
competitive position depends through the organisation of your under-
lying resources. Experienced managers are particularly complex
resource bundles. They are typically tangible, part of many networks,
are influential holders of cultural resources, have a wide set of knowl-
edge assets and are certainly important for change.
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22 Practical competence and resource frameworks
Is it valuable?
There are almost as many ways a resource can be valuable as there are
different resources:
Xerox
At their Palo Alto Research Centre (PARC) Xerox spent the 1960s and early 1970s developing a range of
valuable, scarce and difficult to imitate technological resources. The personal computer; desktop mouse
coupled with an icon-based, easy to use operating system; ethernet and laser printing were all developed
at PARC. Unfortunately Xerox failed to exploit these technologies because of other, weaker resources:
No structure existed to promote these technologies.
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23 1.5 What makes a resource important?
Once discovered an intensely bureaucratic product introduction process stifled many of them;
Those finally developed were poorly exploited because management compensation systems were
based, almost totally, on maximising current revenue. Market development for future sales was
almost irrelevant.
The funds generated from the virtual monopoly Xerox enjoyed in the copier business enabled PARC to
excel in many technologies yet, ironically, also bred a set of resources that frustrated their exploitation.
If the resource is difficult to copy its value may last and there are three
reasons why a resource might be difficult to copy:
Caterpillar re-visited
Shortly before the USA entered the Second World War the federal government decided to appoint a single
supplier of construction equipment to build and maintain military bases and airfields around the world.
Following tenders Caterpillar was chosen and the government agreed to pay equipment prices high
enough to enable them to develop a worldwide service and supply network. Unique historical conditions
provided the opportunity for Caterpillar to develop this costly and difficult to imitate competence.
Caterpillar management took advantage of this opportunity by developing appropriate resources: global
reporting structure; global inventory and other control systems; compensation policies to encourage
employees to work around the world, etc.
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24 Practical competence and resource frameworks
Mailbox Inc.
Mailbox Inc. is a simple business it gathers bulk mail from customers (advertisements, free offers, etc.),
sorts it by post-code and then takes it to the post office to be mailed. (The post office charges less for this
sort of mailing when it is supplied in delivery rounds and Mailbox Inc. makes money by charging its cus-
tomers a rate in between those offered by the post office for sorted and unsorted mail.) It has enjoyed a
major market share advantage in the DallasFort Worth area over a long period. How does it do this?
There is no single advantage it seems that across the company Sales, Operations, Finance and Human
resource management Mailboxs success derives from doing the thousands of things required to run a
bulk mailing organisation well. Each is easy and cheap to imitate but as a whole their operation is costly
and difficult to imitate. Managers in Mailbox find their success difficult to explain, what chance do com-
petitors have of understanding what to imitate?
If your competitors can recognise your valuable resources yet face high costs
or long time-scales to acquire them they may think twice before trying to
copy. If they face high costs and long time-scales your competitors are even
less likely to copy, for in the time needed to catch up your performance can
improve further and the competitive landscape can always change.
However competitors may be able to get round this problem by sub-
stitution. Can its advantages be substituted? Some advantages can be
undermined by competitors who change the rules of the game. While
Caterpillar have promoted their worldwide support competence a sig-
nificant competitor has still emerged.
network support competence with equipment that breaks down less frequently. One of their compe-
tences is to design very reliable mid-size, construction equipment.
Finally, a firm can destroy its own resources particularly quickly, espe-
cially resources that naturally depreciate quickly. The value of some
knowledge resources can decline quickly in fast-moving, high-technolo-
gy industries. In the communications sector an engineers knowledge
gets out of date as new electronic components and system standards
are introduced. This is one example of a host of resources that can
decay if left alone unused or unmaintained. The longer a resource can
endure without attention the more sustainable it can be.
Is it versatile?
A versatile resource can be used in a number of places outside its cur-
rent application. However some resources are not versatile, there are
three potential reasons for this:
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25 1.5 What makes a resource important?
Virgin
One of the latest industries to bear a Virgin logo is the UK West Coast rail line joining London and
Glasgow. For the first time Richard Branson did not begin a brand new company, he took over ancient
rolling stock running on an under-invested, dilapidated rail infrastructure whose improvement depended
on another company Railtrack.
Trains ran late and ran still later while the rolling stock was cosmetically improved. The logo did not bring suc-
cess. All may be well in a few years time, new rolling stock has been ordered and the network will be improved
- but that very improvement will cause considerable disruption to Virgin rail users. In 1997 Virgin trailed their
competitors with almost 30% of the 650,000 complaints received by the privatised rail companies. In 1998 it
was the same story, Virgin had more complaints than any of the other privatised rail companies.
Branson may rue the day he placed the Virgin logo on trains that broke down and were frequently late.
One should be more careful with valuable and versatile resources.
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26 Practical competence and resource frameworks
We end Chapter 1 at this point and will begin to use these ideas to help
your business, in the next chapter.
1.7 Summary
The major ideas covered in this chapter are:
Copyright 2002. Cambridge University Press. All rights reserved.
Resources are the building blocks that underpin the activities in a com-
pany, they come in many shapes and sizes.
A competence is an activity performed at a range of levels, there are a
number of different types.
Dynamic capability is the ability within a firm to adapt its competences
over time.
To distinguish between a competence and a resource ask whether the
item in question is something the organisation has or has access to? If
so its a resource and will be best expressed as a noun. Or is it some-
thing the organisation does? In which case its a competence and will be
best expressed as a verb.
The performance of a competence is dependent on
the health and appropriateness of its underlying resources
on your management of those resources
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27 1.8 Further reading
Prahalad, C.K. and Hamel, G. (1990) The core competence of the corporation
Harvard Business Review, MayJune, 79-91 (reprint # 90311).
For why managers got excited about the internal analysis of firms.
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28 Practical competence and resource frameworks
Teece, D.J., Pisano, G. and Shuen, A.(1997) Dynamic capabilities and strategic
management, Strategic Management Journal, 18, (7), 509533.
A classic paper which, prior to its publication in 1997, might well have become
the most photocopied working paper in the history of strategy research.
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Awareness what does
2 success look like?
1 There are many ways of generating a set of business objectives, see either of the accompanying
books, Creating a Winning Business Formula and Getting the Measure of your Business.
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30 Awareness what does success look like?
The need: it is very easy to damage a firms resources, even if you do not
intend to
The approach: a description of the methods used and the thinking
behind them
Outcomes: opinions from managers using the approach
Toolkit: tools that help structure the discussion and debate
The chapter ends with a summary of the main ideas raised in the chap-
ter and a process review that describes what you will gain from actually
using the Awareness method.
ly seeking ways of reducing their business with SEI. The toolroom had also closed and its equipment sold or
otherwise written off. This was an unusual decision given 70% of SEIs sales were customised late in the pro-
duction process and involved the manufacture of customer specified jigs and fixtures. These were now out-
sourced and, according to the Operations Director, this put lead times in the hands of suppliers, especially
since SEI had no resources to perform late design changes. By the end of the year, across the business,
morale had collapsed and many of those with talent were seeking other employment.
to be about building a better resource base for the future. We are aware
that there are other measures of achievement the owner of a vineyard
aims to pass it on to the next generation in a better condition than
when s/he took it on. In modern business life, particularly in the USA
and, to a lesser extent, the UK, a more short-term view of share price is
demanded. There are problems with this balance of thinking:
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32 Awareness what does success look like?
Coherent
Business implementation actions
objectives
"Balance sheet"
Improved assets/abilities
for further performance
improvement
Figure 2.2 Actions that improve performance and the resource base.
The analogy used in Figure 2.2 compares the outcome of improved per-
formance (leadtime, growth, etc.) with the yearly profit or loss. An
improvement in resources and abilities can be compared with an
improvement in the balance sheet but is rather more difficult to meas-
ure. We shall return to the measurement issue in Chapter 8. Importantly
your future balance sheet, resources and competences are fundamental
to the performance improvements you will be able to achieve in the
future. We shall also return to the concentration on share price as a
measure of company performance in Chapter 9.
Copyright 2002. Cambridge University Press. All rights reserved.
Figure 2.3 illustrates these different kinds of activities and, for both
types, we can look at the resources needed to underpin them. We shall
be concentrating on the improved operational activities.
2Most companies have more than one product market group, for example many manufacturing
companies have a spares market as well as an original equipment market. Though related, the
business objectives of each group will be very different.
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33 2.2 The approach
What resources
Change underpin these
activities activities?
What Resources
Business activities are required
objectives to achieve these business
objectives? Resources
These questions require you to think about how your firm works in an
operational sense. The outcome is a vision of the resources and compe-
tences required to support improved performance and provide a fur-
ther platform from which even better performance can be achieved.
Resources underpinning the change activities are more subtle. There are often prob-
lems in changing organisations:
usually costs money. If resource availability is very tight, again there will
be delays in the act of changing.
Consultants are often used to make up for either or both of the above
problems. Here change happens but it may not last.
It is these systems and the beliefs and values that underlie them that
need attention if a firms ability to change is to be improved.
Your vision of the resources underpinning your improved performance
are fed into Chapter 7. In that chapter these aspects are covered in detail,
improvement methods are discussed and improvement actions selected.
2.3 Outcomes
Our experience with this envisioning approach suggests that:
It appeals to most managers they seem to instinctively value this look
at the means (or resources) that underpin their firms performance
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2.4 Toolkit
The toolkit consists of:
A method called Awareness for creating and organising a resource and
competence perspective from a set of business objectives
Worksheet examples
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35 2.4 Toolkit
2.4.1 Awareness
3
CD
Forms
3 This symbol indicates that a copy of the form or table it accompanies is obtained from the CD.
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36 Awareness what does success look like?
The process:
Take each objective in turn and
Use the format shown in Table 2.1 to list the main activities that will need to improve
to achieve the objective
Against each activity list the resources that will need to be improved, acquired or bet-
ter co-ordinated to achieve the objective (use the resource category headings (Table
1.5) to prompt the different kinds of resource)
When complete, look for areas of conflict and resolve them.
Further analysis normally suggests itself, for example:
Draw together all the cultural resource developments
Draw together system improvements and prioritise
Draw together knowledge needs to suggest appropriate training
Compare current improvement plans with the desired resources:
Will these plans deliver these resources?
Will some plans undermine needed resources?
Tips:
Use the sheet as a working document, it will need to be re-formatted and tidied
up after the session.
Good prompt questions, mentioned earlier are:
What new resources have been acquired e.g. machinery, engineers, sales staff, suppli-
ers, advisors ...?
Which resources have been improved e.g. through training or refurbishment?
Which systems have been improved e.g. by automation or simplification?
What actions have been better co-ordinated e.g. by re-organisation or
employing a more competent manager?
Copyright 2002. Cambridge University Press. All rights reserved.
What current problems have been reduced or eliminated and how exactly
was this achieved?
Get the team to close their eyes and try to visualise whats different. Are people
running about faster? Staying at work longer? Or are tasks being accomplished
more effectively?
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37 2.4 Toolkit
Post-event
contact to
check on
customers
reactions
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38 Awareness what does success look like?
Table 2.3 Improve the co-ordination of the design and build process
Improved design Design Better know- Robust design Designs to be Visit other PRTM con-
process libraries ledge of reviews owned by contractors sultants
product and originating to look for
Design systems Design for designer over new tech-
quality across modular their whole niques
measures designers build guide- lifecycle
lines
Careers for Preferences
graduates Early involve- for sharing
cycling ment of rather than
between manufacturing hoarding
design and in design knowledge
manufacturing process
2.5 Summary
The main ideas in this chapter are:
It is easy to destroy most resources
Often it doesnt even take much time
Regarding resources purely as means and not ends leads to:
A short-term view
Resource development being ad hoc
Resource insensitive decisions being made
The Awareness method sensitises you to develop your resource base at
the same time as achieving your business objectives
Resource-aware actions will provide
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39 2.6 Process review
But beware you are only sensitised to the resources and competences
important for achieving this set of business objectives. You have other
important resources that have not been documented.
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Matching problems to
3 analysis methods
But how can you tackle the other strategic areas we described earlier? In
the section When to use this book, we described three other areas
where resource and competence analyses are vital:
For all these areas it is essential to identify your firms current resources
and to assess their value and sustainability. The Awareness method
does not identify your current resources, it helps you to visualise the
connection between achieving your business objectives and the
resources needed to underpin improved performance. Indeed it sensi-
tises you to protect and develop resources relevant to your current busi-
ness objectives. You almost certainly have important resources that are
not attached to your current objectives. Awareness does not identify
them so they are still in danger from your action plans.
So while the Awareness method offers a good introduction to resource-
based thinking and can help protect and develop some important
resources, a further method is required to tackle the first three areas, above,
and to supplement Awareness. In this chapter we develop a second process,
called Insight which enables us to tackle these other strategic issues.
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42 Matching problems to analysis methods
We conclude with a summary of the main ideas in the chapter and a list
of further reading so those interested can study the ideas more deeply.
Deciding to buy rather than make usually applies to services and com-
ponents commonly available where the particular skills and equipment
used are neither valuable nor do they offer any sustainable advantage.
Examples are commodity components like fastenings, raw plastics and
steel plate, and services like payroll, distribution and some training.
Copyright 2002. Cambridge University Press. All rights reserved.
Deciding to make rather than buy usually applies to services and com-
ponents designed specifically for your business. If the component con-
cerned plays a fundamental role in providing any important perform-
ance attributes of the final product (or service) it is likely to be retained
in-house. Some of the design and/or production skills needed may be
rare and therefore valuable. Manufacturing skills may be intertwined
with product design skills in such a way that design skills ebb away if
there is no in-house manufacturing skills to support them.
Apple Computer
Apple designs its own hardware and its software operating system (the Mac OS). This, says the CEO, Jobs,
enables Apple to be fully in control of the users experience. What it also does is enable Apple to provide
outstanding innovation first to provide the fast Universal Serial Bus interface, replacing slower serial
and parallel buses; first to provide the digital video Firewire interface; first to scrap the integrated floppy
disc; and first to provide integral wireless networking. That reputation for innovation is one of Apples key
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43 3.1 Boundary change decisions, disaster and sustainable advantage
resources and is strongly related to the Apple brand and its loyal user base.
Many WIntel PC manufacturers do little more than assemble boards and mouldings from Taiwan, install
software from Seattle and then market and distribute their products. They are not in a position to inno-
vate technologically since the majority of the product is out-sourced. Their innovations have been in
manufacturing cost reduction and low-cost distribution.
Charles Fine has shown that the implications of buy versus make deci-
sions on the supply chain can have long lived effects which may be very
difficult to predict.
The key issue here is how companies can retain control over strategic
competencies and resources when they have to subcontract large vol-
umes of work. Should they retain a wide sourcing network to limit the
learning in any one manufacturer and forgo potential cost savings? Or
should they choose a narrow one based on joint ventures or some other
solution? Central to any such decision is the identification of those
resources and competences that must be retained in-house.
The logic for entering a joint venture depends on understanding your own, your part-
ners and the joint ventures resources.
Both you and your partners will be trying to access complementary
resources in one another. A resource analysis is needed to help assess
the value of the partnerships resources and the potential risks of your
partners accessing resources you wish to keep to yourself.
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44 Matching problems to analysis methods
When disaster is at hand, perhaps because your product range is being superseded by
substitutes using a different technology, one aim would be to assess
your ability to take on the new technology and how your existing cus-
tomer network and other distribution resources might be used to delay
the competitors progress.
Taking the technology on-board may be possible by licensing or even
a buy out if the competing firm is willing. It is important not to under-
estimate the value of your market knowledge and distribution networks
in these situations.
Failing this, another route is to identify which of your resources are
versatile, so that they can be used in adjacent markets or technologies
related to the ones currently in difficulty.
Perhaps you are just becoming less successful in a highly competitive
market. In resource terms there are two common explanations for this:
Like Apple you may have forgotten your most vital resources (see
above) and have stopped using them to the full. This is most likely when
there have been regular changes at the top of the organisation. In the
Apple case one of the founders, Jobs, returned to the company knowing
exactly what was important. The answer was get back to your strengths.
Unlike Apple you may be leveraging your important resources big time.
The trouble is time has moved on and these traditionally valuable
resources are not so valuable in the customers eyes as they had been.
Other aspects of your product or service package have become impor-
tant, and you have not reacted to that. Chances are there are a number
of people who, sotto voce, have been proposing what to do about these
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45 3.2 Top-down versus bottom-up processes
league. It was much the same with the 1949-53 Yankees, who won five World series with players who never
led the league in any major batting. Their lineup never was as strong as Bostons or Clevelands, never had
the punch of the Dodger teams they beat three times in that span.
S. Cohen, (1982) A monkey on the back, a lump in the throat, Inside Sports, 4(4),20
Somehow these teams worked well together. In soccer as in basketball when you have the ball you can shoot or
pass. The soccer teams in the UK that have had sustained success Liverpool, Leeds and, coming on at the mil-
lennium, Manchester United have all been passing teams. Co-ordinate until a shot has good odds and then
shoot.
Taking these issues into account we need another resource and compe-
tence analysis method that provides enough detail in the strategic decision
area of interest. It will need to identify relevant resources and assess their
value, sustainability and sometimes their versatility. Developing a new
method involves choosing between a top-down and a bottom-up process.
top-down
bottom-up
both
produce little new data. The output is likely to reinforce the status quo
regarding the firms strengths and weaknesses; after all analysing your
strengths and weaknesses is a political matter. Generally the power and
influence around a boardroom table is closely connected to the percep-
tions of what is important. However, since company boards and man-
agement teams can rarely find time for detailed analysis, top-down
methods are most appropriate for them to use themselves. Care has to
be taken in designing such methods to try to avoid managers falling
back on old scripts, arguments and positions.1
Bottom-up approaches have considerable strengths but they are also far
from perfect. Table 3.1 summarises the trade offs between the two approaches.
1Awareness is a top-down method specifically designed not to look at your firms current
resources. Instead it focuses on resources you can build a future set of desirable resources
that align with achieving your business objectives.
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46 Matching problems to analysis methods
It is the third option, both top-down and bottom-up that promises most
success. Senior managers should be able to identify (top-down) the key
competences or decision areas for analysis and the actual analysis is
best carried out involving the staff who know the area (bottom-up),
assisted by an external facilitator and a sponsoring senior manager.
Copyright 2002. Cambridge University Press. All rights reserved.
2 This article, as of April 2000, was the most reprinted article from the Harvard Business Review
ever (reprint # 90311).
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47 3.3 The level of detail required
High High
Department?
Corporation Low
Low
Narrow Wide
Focus
Figure 3.1 Project scope and level of detail reached.
Canon
When Prahalad and Hamel wrote The core competence of the corporation they drew attention to the
ideas of competence. In their examples they informed us that Canon had core competences in microelec-
tronics, fine optics and precision mechanics. Not only that, Canon also had the competence to mobilise
these competences into products across the corporation in its many divisions, from cameras to photo-
copiers. Remember the Xerox example where strong technological competences existed but could not be
mobilised into products.
However, it is not difficult to identify the technological competences in Canon, most engineers could do
that with a cursory look at Canons product range. What is much more interesting and important to
understand is the resource base on which those competences are built. What are the resources in the fine
optics area? Simulation methods? Glass formulation knowledge? Lens grinding expertise? Input of
research from particular universities? And how are these resources configured and managed?
Copyright 2002. Cambridge University Press. All rights reserved.
Anonymous academics*
A university research centre, composed of ten researchers, including PhD students, decided to analyse
their competences and resources. They used the methods in this book.
Over a four year period many resources had been developed, from a frequently visited web site to a com-
prehensive database of articles in their subject area to an inclusive culture that valued individuals. But it
became very clear that the key resources were the individuals involved, some much more so than others.
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48 Matching problems to analysis methods
Developing the centre further would be concerned with the competencies of individuals. In so doing the
relative competencies of some individuals would be exposed. The centre leader was unwilling to go into
these areas in public and perhaps wisely, the facilitator did not force the issue and the project stopped.
3.4 Insight
The Insight method is aimed at providing an understanding of your firms
current resources which helps to tackle the first group of issues listed earli-
er changing boundaries, facing disaster, creating a sustainable advantage
or looking for improvement ideas. As well as helping managers to make
resource-aware decisions the method provides real insight into how their
organisations work and the prospect of more creative strategy-making.
The contrast between Insight and Awareness is described in Table 3.3.
Step 1 defines the project scope and focus, identifying participants and
a project organisation. It is described in Chapter 4.
Step 2 takes that focus and scope and identifies the relevant resources.
This step starts to build an understanding of resource-based ideas and
often provides new perspectives and solutions to current concerns. It is
described in Chapter 5.
activities aimed at
competence and
resource building
Step 3 (Chapter 6)
Step 2 (Chapter 5)
Resource-coloured spectacles
Identifying List of resources
Curiosity resources New perspectives on current
concerns
Achieving a
business Step 1 (Chapter 4)
objective
Defining Defined focus
Business Participants
project scope
decisions Project organisation
and focus Boundary
Step 3 takes the resource listing and assesses them for value and sus-
tainability against documented scenarios. It is described in Chapter 6.
Both Insight and Awareness use the resource and competence building
process to review results, test and implement alternative resource-
aware actions. It is described in Chapter 7.
3.5 Summary
The major points covered in this chapter are:
There are two sets of problems which resource-based ideas can help
tackle.
The first set focuses on resources and competences that will be needed
to achieve current business objectives. The Awareness process is suit-
able for this task
Awareness begins with a firms business objectives, envisions the
resources and competences needed to achieve those objectives and
uses this vision to produce resource-aware action plans.
The second covers changing boundaries, facing disaster, creating a sus-
tainable advantage or looking for improvement ideas. These issues
require an analysis that focuses on existing resources and their assess-
ment. Insight is designed to help tackle these decision areas.
There are pitfalls when choosing very large or very small areas of inter-
est large areas can lead to insufficient detail, small areas can become
highly personal.
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Insight what focus and
4 scope is appropriate?
This is the first step in the Insight method, where the aim is to docu-
ment the focus and scope of the analysis. The inputs may be a desire to
achieve a previously developed business objective, to tackle particular
resource- and competence-sensitive decisions or just plain curiosity. As
Figure 4.1 shows the outputs are a defined focus; an estimate of the size
of the task, measured by the number of participants; a boundary round
the analysis; and an organised project.
Curiosity
Achieving a
business
objective
Defined focus
Defining
Business Participants
decisions
project scope
Project organisation
and focus
Boundary
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52 Insight what focus and scope is appropriate?
Boundary changes: By their nature boundary changes are usually easy to focus upon,
taking on a new technology or investigating a particular make versus
buy issue are cases in point. Both acquisitions and divestments are also
normally easy to focus upon since there has to be considerable clarity
on what is to be bought or sold.
When disaster is at hand: In contrast here we have an unfocused, open problem. The
place to start may be unclear but in the worst case the best start is likely
to be identifying the activities that have been strengths:
Building a sustainable advantage: The key here is to find valuable and sustainable
resources. In the Abacus case the thought that service provision could
become a sustainable advantage was suggested by some market data
about current advantages and the beliefs of senior managers that serv-
ice was vital.
Abacus Ltd
Abacus, suppliers of automatic measuring equipment to the fast moving consumer goods industries had
surveyed the sales and servicing performance of its rivals and itself. The results showed a set of small
advantages over rivals in the service area. High reliability was a given in their industry but the board
believed that from their current position they could differentiate themselves from their competitors on
product service. How could they improve their service competence? Firstly by providing a much more
supportive infrastructure, including training, a definition of what good service was and a service audit
system. With new ideas in short supply it was decided to carry out a resource analysis.
Copyright 2002. Cambridge University Press. All rights reserved.
Curiosity: Your management team, maybe even you, are simply curious about
resource-based ideas. There may be a proposal that you need to identify
your core competences. Such a project can become vast and be carried
out at a level of generalisation that is unhelpful and unsatisfactory. One
aim of this chapter is to steer you toward smaller units of analysis. In
this way actionable outcomes will be achieved in short time-scales and
your understanding of resource and competence analysis can be built
up. Having improved your knowledge, you will then be able to tackle
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53 4.3 Issues
Examples
A companys service competence will depend on the serviceability designed into its products as well as
the competencies of its service engineers.
A firms perceived on-time delivery competence can be affected as much by the salesmans reluctance to
mislead customers on delivery times as the operations functions performance.
A firms ability to consistently design eye-catching products will depend on its recruitment, development
and retention of outstanding designers as well as its technical design processes.
4.3 Issues
This section discusses the specific resource- and competence-related
aspects of the management of the project.
In Chapter 2 we suggested the management team as the best group
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54 Insight what focus and scope is appropriate?
Abacus Ltd
Every time the launch of PPk36 was mentioned eyes narrowed and people seemed to look inside them-
selves. It had been a near disaster hundreds of products that failed for reasons they did not understand.
The company had almost gone bust, everyone had suffered, they had stared into the abyss. The company
now had a powerful resource the shared memory of a disastrous product launch. It was something no
competitor would want to imitate but it was there and they could use it to their advantage.
The Abacus example illustrates a resource that was difficult for insiders
to articulate let alone use. They did not wish to even speak about it.
For now we continue by describing tools for defining the focus and
scope of the study.
4.4 Toolkit
The toolkit covers methods for defining and putting a boundary round
the focus area.
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55 4.4 Toolkit
Drawing a boundary
Aim To agree the activities and organisations relevant to the analysis and the participants
in the analysis.
Why? This step helps to ensure that:
the scale of the analysis is understood
relevant participants are identified
the area of interest is seen in a business context
How? Use the format shown in Table 4.1 to record the activities covered by the competence
area, with their organisational and product scope, and finally list those people who
need to be interviewed.
involved?
List the products involved:
The whole product range?
A defined product range?
Given the above who should be inter-
viewed?
CD
Forms
E 1: A service competence
Abacus supply automatic measuring equipment for production lines.
They intend to make a difference in their market through superior
product servicing. The company has three product groups and chooses
the largest, the Delta range, as its product focus. The company has a
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56 Insight what focus and scope is appropriate?
What major activities are included in Installation, repair and service, technical
the area of interest? support, spares and consumables provision,
Use the business process checklist, customer training, maintenance contract
Table 1.2, as a prompt. sales and visits
New product introduction. (Recruitment,
training and motivating of Service staff,
omitted from first attempt)
What is the organisational scope: Central Service support
All activities in the organisation? District Sales management
OR A set of activities across a number of UK Service organisation
business units or organisations? One European third party distributor
OR All activities within a single business A range of customers
unit or organisation?
OR A set of activities within a single
business unit or organisation?
What third party organisations are
involved?
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research centre.
The boundaries are shown on Table 4.3, the major activities to be
covered are all those carried out by the research centre. The organisa-
tional scope is the whole research centre plus a representative from
each of the five product groups.
The product scope covers all product groups. A representative group of
six managers led by a Director will be assembled on the main project
and data is expected from 30 others.
This example illustrates a project that is likely to identify compe-
tences within the boundaries of the research laboratory but miss com-
petences lying partly outside its borders, perhaps with particular sup-
pliers or the development departments of certain product groups.
These competences could be much more important to the business as a
whole than some identified within the research unit.
Drawing a boundary too tightly runs the risk of failing to identify
important resources and competences.
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58 Insight what focus and scope is appropriate?
What major activities are included in All activities within the research centre:
the area of interest? agreeing projects with their product group
Use the business process checklist, customers
Table 1.2, as a prompt. carrying them out
reviewing them
giving advice
labour support
technology support
What is the organisational scope: The whole of the central research and
All activities in the organisation? development unit and one customer per
product group
OR A set of activities across a number of
business units or organisations?
OR All activities within a single business
unit or organisation?
OR A set of activities within a single
business unit or organisation?
What third party organisations are
involved?
List the products involved All product groups
The whole product range?
A defined product range?
The analysis will involve a core team of
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59 4.6 Process review
4.5 Summary
The main ideas raised and advice given in this chapter are:
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Insight where are these
5 resources?
This is the second step of the Insight method. The aim is to identify and
document the resources relevant to the main activities defined in the
previous chapter. The inputs will be a defined focus, an organised proj-
ect, a list of participants and a defined scope, measured by the products
and organisations involved. As Figure 5.1 shows, the outputs are a cate-
gorised list of resources and the beginning of a set of resource-coloured
spectacles for those most involved.
Resource-coloured spectacles
Identifying
List of resources
resources
New perspectives on current
concerns
Defined focus
Participants
Project organisation
Boundary
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The chapter concludes with a summary of the main points covered and
a process review, describing the outputs if you follow the process.
Our experience suggests that it is much more complex than that. There
are two main difficulties:
First, managers are very close to their own resources, some of those
resources are part of them and their colleagues. They are particularly
close to the values within the company, attitudes toward customers,
change and quality, for example. They are just as close to deep-seated
assumptions about, for example, the market, parts of the manufactur-
ing process, or design limitations on products. For instance in one firm
we found a widely held belief that a certain type of product would
always fail. This belief could prevent the firm from aiming for high relia-
bility in this product range while its competitors, with no such belief
would have no such problem. Such beliefs and values are very impor-
tant resources, because they distinguish your firm from others and
because values and beliefs are difficult to copy.
Second, such is the variety of resource types how can one have any con-
fidence that the most important resources have been identified?
By acquisition:
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63 5.2 Identification a new angle
By accessing:
By internal development:
Training courses
Gained through repeated, analysed experience
Adaptation of machinery to meet particular requirements
Through systems which aim to hold and/or acquire knowledge, for
example order processing systems which naturally update customer
addresses or sales histories and surveys, used to acquire customer, sup-
plier or employee opinions
1 We have come across a related idea. Once upon a time when a business made its accounts not
only were the finances recorded but the account in the sense story or narrative of the year was
also recorded.
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64 Insight where are these resources?
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65 5.2 Identification a new angle
Instead of delivering in six weeks fairly reliably, AMI now promised deliveries in two weeks but often
delivered in three. The performance measurement system was amended to emphasise delivery on time
and a total productive maintenance (TPM) program began. The first task in the programme was to sys-
tematically strip, clean and effectively bring each machine to an as new standard over a series of week-
ends. Maintenance items were identified and placed next to the machines, operators were trained to
carry out routine lubrication and filter changes and the story continues.
(Competitors Time
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begin to copy)
= Value to the business
Figure 5.3 Developing a competence for low and reliable lead times at AMI, the story
so far.
Many firms could tell a story like this. The story can be represented in a
historical picture like Figure 5.3. It is not difficult to go from this history
to the model of a competence based on a group of interacting
resources. Figure 5.4 shows the history interpreted into AMIs compe-
tence for short leadtimes and reliable delivery.
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66 Insight where are these resources?
Co
mp
Co d reli
e
an
ten
JIT
mp abl
ce
knowledge
ete e d
Resource
and skills on
nc eliv
A
ef
the shopfloor
or ery
sh
or t
Initial TPM knowledge
le
Resource Resource
ad
Production Sales
B C
tim
control system skills and
es
knowledge
Quick
change SMED knowledge
tools especially tool design
Performance Order
measurement system acquisition system
Figure 5.4 AIMs competence for short leadtimes and reliable delivery, the underlying
resources.
5.3 Toolkit
The toolkit in this chapter consists of two parts:
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67 5.3 Toolkit
Aim To construct a skeleton picture of past events, changes and assumptions in the
area of interest.
Why? Resources evolve over time, through the intentional and unintentional acts of man-
agers, changes in the environment etc. Representing these events over time helps
you to recognise the activities that help build resources and the current state of your
resources.
How? Draw a skeleton picture as shown in Figure 5.5
Materials:
Flipchart sheets, pens, Post-it notes
Tips Generally going back four to five years with an extra column for significant events
further back in time is about right
Allow 12 inches per year
Allow a column for next year to accommodate planned events in the area of interest
Allow one third of the vertical axis for external events since most events tend to be
internal
Label the time axis in 1/2 years. This is as accurate as you need to be
An edited example of a completed history is shown in Figure 5.6. You arent supposed
to be able to read it it is intended to give an idea of the result, in this case around
70 Post-its.
External
Internal
Time
CD
Forms
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68 Insight where are these resources?
External
Internal
Time
Figure 5.6 A populated history.
The picture can be completed by a group or by a set of interviews with the interview-
er assembling the final picture and then checking it with interviewees. Note that
eight participants is as many as most facilitators can manage (if a group is the
chosen route).
Time
For a group approach set aside approximately two hours, depending on the scope of
the analysis and how much history you include. It can also be convenient to construct
these histories in hourly time slots (perhaps over a couple of sandwich lunches).
What is an event?
Events are factual descriptions of what has happened or is planned to happen. The
description should include its approximate date in case the post-it becomes
detached from the sheet. The event must also be relevant for the activities of interest.
Therefore an analysis of a firms customer service activities could include:
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69 5.3 Toolkit
Assumptions?
It is essential to record comments and opinions on the area of interest and place
those on the history. Generally we place these along the bottom of the history and
include its source since this is important context to the comment. Case examples
include:
These products are very sensitive to environmental conditions
The service function is a lot more respected round here than in my last company
Beginning
A useful start point is for all participants to fill out an event which sets their first
memory of the area of interest. That may be when they joined the company or when
they joined one of the relevant organisations. These first post-its are fixed to the
chart, just inside the internal level and around the date when they joined. From here
the routine to follow is:
Write the event description on a Post-it, making sure the group understand it
The facilitator usually positions the Post-it; events incorporating internal and exter-
nal features are placed on the boundary
When to pause
Check back to the boundary definition to check whether relevant events have been
captured from all the main activities. Check back to Table 1.2 to make sure all rele-
vant main activities have been covered.
Tips At the end of this stage:
Make sure the history is checked with interested parties who were not present
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Feedback this picture to the steering group or project sponsor. This is an important
part of keeping this constituency on board. Encourage them to add events that have
been missed
Use the CD to make a fair and storable copy
How? The history generated in the previous section contains many of the resources directly.
They can be accessed by asking:
What tangible resources are contained in the history?
What systems and procedures are referred to in the history?
What knowledge, skills and experience have been built by training courses or collect-
ing and analysing data? Other resources, particularly concerned with the values and
culture of the company and their relation to the area of interest are more subtle,
sometimes captured comments give clues to cultural issues. The following questions
are also useful:
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70 Insight where are these resources?
CD
Forms
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71 5.3 Toolkit
Three events and a comment combine to produce a wide-ranging service standard and yearly
auditing system resources.
An event and a comment combine to produce a foundation course resource for Service engineers
which covers and explains the technologies used in products rather than being product centred.
Comprehensiveness
In Section 5.1, we wondered how to assess whether the most important
resources had been identified. There are two ways of viewing this:
Have examples of all the different resource types been captured? Table
1.5, provides a good checklist if there are gaps try to fill them since
most focus areas contain resources of all these types.
Have all the relevant resources been identified? Well never know but
there are some resources that are often missed at first:
Memory is an important resource but it is only useful if those with
memories stay with your firm. Memories and a stable workforce can
be powerful forces for and against change, they are often identified
late in a study.
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73 5.4 Summary
Architecture
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The final step in this stage is to draw an architecture of the resources list-
ed, trying to identify any technically or socially supportive competences,
as shown in Figure 1.4. This may not always be possible but it often
reveals unconsidered resources.
5.4 Summary
The main points covered in this chapter are:
History is important, todays resources have been built from past
actions often unconsciously
Cultural resources can be very powerful, try hard to identify them
Dont worry that a picture of your history might not help reveal your
resources it does, and remarkably well
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74 Insight where are these resources?
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Insight how important are
6 these resources?
The third part of the Insight process tackles the assessment of resources
identified in the last chapter. The inputs are a list of categorised
resources and one or more defined scenarios. The outputs are the
resource assessment, a better focused pair of resource-coloured specta-
cles for those involved, and ideas for improvement see (Figure 6.1).
Resource-coloured spectacles
List of resources
New perspectives on current
concerns
abstract measures being used. You have, without any analysis, an intu-
itive feel for the importance of the resources in your organisation. This
step sets out a way of verifying that intuition. Where your intuition and
the methods outcomes do not match there is potential for intense dis-
agreement. There are a number of sources of disagreement:
Past glories
Retail banks have traditionally put great importance on their branch networks. In the age of internet
banking prime high street locations are becoming less and less important. The freeholds may be valuable
in themselves and provide cash to invest in other services. But now profitable current accounts can be
handled without the overhead costs of an extensive branch network.
on them.
The context of the assessment may not be explicit or understood and par-
ticular resources are more important in some scenarios than in others.
Context
Taking the retail banking analogy above, one scenario might be that 20% of profitable current accounts
will move to direct banking over the internet. Another might be that 85% will move to direct banking. In
the former scenario a branch network is likely to remain more important than in the second.
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77 6.2 Issues in practice
earnest discussion. No wonder their evaluations would be difficult to explain and justify to their peers.
Value Sustainability
Resource 1 1 2
Tangible
Resource 2 2 4
resources
Resource 3 5 5
Skill, knowledge
and experience
Systems and
procedures
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78 Insight how important are these resources?
RGX continued
Six weeks after the original strategy workshop, all project teams reported their progress and plans to the
board and their peers. Unfortunately the presentation did not go well for the competence team:
We explained that the verified technical analysis competence was much more than just the engineering
analysis department but most of them ignored that. They preferred to think we were saying that depart-
ment was core and, by implication, loads of other departments werent. Which obviously, to them, couldnt
be true.
Individuals in the audience had core competence suggestions of their own but the team felt these sug-
gestions (e.g. project management) were desirable rather than actual competences. It was certainly true
that a good research organisation might be expected to have very good project management skills this
was a desirable competence but it was not a competence RGX currently performed well. The team also
found it difficult to defend and justify their choice of competences and so, over the next month, team
members contacted other managers in RGX to spread their understanding of competence ideas and col-
lect data to test whether the six potential competences so far identified could be core. This lengthy dia-
logue finally led to wide agreement with only one change to the original competence list.
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