Competitive-advantage | Bertrand Duperrin's Notepad

Taking the most of intangible assets creates strong competitive advantage

December 21, 2008 By Bertrand DUPERRIN 1 Comment

A glance at McKinsey’s to read one of their latest production : “Using Power Curves to assess industries dynamics“.

A survey based on 150 companies revenue shows that performance doesn’t follow a bell curve but a “power curve” that shows that most companies in a given indistry are above the average. What, said differently, means that few leaders take the biggest part of he revenue and only leave crumbs to the others. Said my way it means that many companies are failing to keep up, what is not an issue in a context of growth when it’s always easy to make feasts with lots of crumbles but is worrying in the current times.

One interesting point of the survey, even if thinking it explains everything would be naive, is about the exploitation of intangible assets in a given industy. In this case the curve is more pronounced than for industries using more conventional assets.

Power curves are also promoted by intangible assets—talent, networks, brands, and intellectual property—because they can drive increasing returns to scale, generate economies of scope, and help differentiate value propositions.

This survey is sectional. I would have liked to know what makes the diffrenece inside a given industry, that’s to say if the impact of intangible assets was likely to be as imporant in “tangible assets” oriented industry where immaterial capital would have (or not) a major role if it was more taken into account.

Filed Under: Economy & New Models Tagged With: competitive-advantage, immaterial assets, intangible assets, mckinsey, performance

From repetition to differenciation

February 19, 2008 By Bertrand DUPERRIN Leave a Comment

Companies find hard to adopt the “2.0″ attitude, just because it targets an unexploited field of the organization. Since novelty applies to an unexploited domain, why trying to understand it since we don’t use it. Saying that, the question is more about sensibilizing companies about exploring new performance and knowledge fields in order to face new challenges rather than adopting tools that don’t match current practices.

As I read in Social Media, it’s more important to explore new fields than evaluating it with our present certainties. Entreprise 2.0 discussion can be resumed this way : knowing how to take differenciation into account while we were only focused on repetition.

I say “take into account” because it’s not about replacement but about complementarity. And it applies to many fields.

The organizational challenges of global trends: A McKinsey Global Survey

January 13, 2008 By Bertrand DUPERRIN Leave a Comment

This survey is not free but very intersting to understand manager’s concerns.

The respondents say that intensifying competition for talent, shifting centers of economic activity, and increased technological connectivity are the most important trends for their companies. Moving quickly and dealing with regional diversity are two of the most common concerns.

Two-thirds of the executives say that their companies aren’t sure of the right organizational response to emerging global trends—but the vast majority believe that responding effectively is critical for competitive advantage.

I don’t know if enteprise 2.0 is coming, if tools will precede organizational transformation, and even if people really know how important tools will be to help them in the transformation process…but they’re sure they have to manage and share information and interactions differently…

Filed Under: Management & HR Tagged With: competitive-advantage, mckinsey, organisation, strategy

Enterprise 2.0 vs Productivity

October 8, 2007 By Bertrand DUPERRIN Leave a Comment

It’s been a long time since my last post but there are times It’s hard to keep alive two blogs in different languages. A few weeks ago the debate rose in the french blogosphere about Enterprise 2.0 productivity. I won’t translate the three long notes I wrote about it but make a short synthesis.

Contextual approach

Traditonnally, productivity is the ratio between what you produce and the means you use to produce. And, in the way people have been considering productivity so far, it was about material productivity, information was only for organization matters. The big difference is now production, when it’s not fully immaterial, is mainly made of immaterial. For exemple, even when one buy a car, can I you tell me the part of immaterial included in it ? Studies, Marketing, defining a new concept… by the way the Ford Model T time is over…

Considering information is now a mean of production implies one may not ony focus on the time taken to produce it but also on its value. And what’s important with information, contrary to material goods, is that it’s not a single use good. It’s easy to know the cost of production : the ration between the time it took to produce it and what the producer’s cost for the company for this amount of time. But a given information could be used by many people, with a different value at each times. Imagine a note I wrote in 2 hours helps, 2 month later, a co-worker to close a big deal, and the year after another to close a smallest deal, then after…. In fact information becomes more and more like a multiple-use stock option : its value will depend on the context but everyone cas use it as many times as needed…

Giving information its real value will help accountants realize social computing doesn’t mean drop in productivity

• Qualitive approach

Who are the people who are the most concerned by enterprise 2.0 and social computing ? Knowledge workers. And as Peter Drucker said in “Management Challenges for the 21st Century”, knowledge workers’ productivity is mainly about quality.

Do you expect a person who work in marketing to suggest you x concepts an hour or the right concept at the same time ? A consultant to give you a lot answers to your problemes or only answers that works ? A banker to make a lot of transactions with your money or only the transactions that will make you make more money ?

• Considering competitive advantage

What are companies looking for ? Profits for sure…and that why productivity matters ! Not really, this is a consequence. What they’re looking for is competitive advantage, and competitive advantage will lead to increased profits. Remember Nicholas Carr‘s analysis on why ERP didn’t help companies to make money : it was because the technology was available for all and, thus, it couldn’t bring a competitive advantage that is supposed to be, if not unique, at least hardly copyiable.

Today’s competitive advantage is more than ever about innovation. Innovation in new products but also in micro-improvement in the way you do business. The more innovative and agile-brained people you have to more chance you have to build a real competitive advantage. Humm…in fact not really. Because today’s information systems and organizations doesn’t allow those kind of people to really use these specific skills, and, moreover, the company can’t harness it. So the difference between companies that hire skilled people and those who hire average people is not as big as expected.

Social software helps companies harness these people’s skill, and helps them innovate more and quicker. And this is key in building a competitive advantage. You may answer that, in this case also, the technology is available for all. But the point is the advantage won’t rely on technology but on the people who use it. And a company’s human capital is unique.

So, and that’s really key in my opinion, social computing helps companies building an unique competitive advantage. And that’s more important than the productivity debate.