Viewpoint: technology-enabled knowledge for sustainable advantage.
Businesses have always competed on knowledge, whether executives explicitly have said so or not. So, what's new? What's new is that technology now permits us to acquire, organize, manage and leverage vast amounts of knowledge much more efficiently and purposefully than ever before, and in ways that were almost unimaginable even a decade ago.It has become increasingly clear that the ability to use knowledge more effectively than competition represents the only basis for sustained competitive advantage in today's rapidly changing world, particularly at a time when most traditional forms of competitive advantage are soon matched or surpassed by others. Look how quickly costs and quality are equaled. Excellence in these areas is merely the price of admission to the competitive game. And the new game is technology-enabled and knowledge-driven.
To play this new game to win requires new skills, new capabilities and new mindsets. Increasingly, information technology enables us to build more responsive business processes around vital information and knowledge flows, linking us to changing customer needs and other external factors. But above all, we must fully appreciate that doing so is a social activity. The enabling technology must be virtually invisible. Now, more than ever, it's a people game in which sharing, dialog, and trust count. Welcome to the rapidly developing knowledge age!
I like the Hamel and Prahalad concept of "core competences," which they define as a "bundle of skills and technologies that enables a company to provide a particular benefit to customers." An example they use is at Federal Express where on-time delivery is the benefit its core competence delivers. My caution is that "core competency" is often misapplied, as is often the case with new, important concepts. I would rather focus on "distinctive competences," that is, distinctive in the eyes of customers. What many executives call "core" may or may not be sufficiently distinctive to provide the value that wins and keeps targeted customers.
Distinctive competences are those which clearly set you apart from competition in the minds of customers; they give you the competitive edge. They are usually built on a unique combination of deeply embedded skills, know-how, networks, and a range of relationships that others cannot readily duplicate. Here the use of information technology to link humans and knowledge required to deliver superior value to customers represents the distinctive competency that others can't readily replicate.
Keeping today's knowledge base up to snuff is difficult enough, but it is even more difficult to identify and develop distinctive competences for tomorrow. In my view, we must first understand which knowledge domains are needed to succeed both now and longer-term, and then devise flexible approaches to acquire and leverage these changing knowledge sets over time. In doing so, a firm's growing store of knowledge must be linked to a wide range of internal and external sources.
Among internal sources, don't forget employees on the periphery, frequently the far-out guys with different mindsets who often see things differently.
Among obvious external sources are customers, suppliers, alliance partners, and even a range of off-beat cage-rattlers. But it takes an open mind, judgment and foresight to evaluate the far-out stuff and zero in on what could be truly meaningful and useful.
Few firms currently do much of this effectively. And even when they try, existing core competences and successful ways of doing business often block recognition of the implications of what they see or should do. "We know best" prevails. Tragically, too many of us are incapable of using new knowledge to "see differently." It's often too challenging to the status quo, or to our mindsets. Or too disruptive to certain customer groups.
In fast-moving, high-tech markets it is almost as if a company first determines strategically the markets or technology domains in which it will be the leader. Meaningful values are needed to help provide guidance or a framework for some of the difficult decisions that are bound to arise in doing so. Clear leadership from the top is essential. A high degree of technological competence that links company activities with customers, often on a real time basis, is also essential, particularly in jointly developing new products/services. Thus, to a large extent, different customer groups--or even individual customers--set day-to-day strategies, defined largely by the product and services they need and will buy as part of a continuing longer-term relationship.
Doing so requires very close, highly interactive working relationships between internal cross-functional teams and lead and other customers, as well as other sources of new knowledge, particularly as product development cycles get shorter and shorter. Some firms, such as Intel, have developed this capability. But others in similar fast-moving fields must get cracking. And it is technology that can enable more of us to use knowledge and judgment more effectively as the basis for sustained competitive advantage and customer loyalty.
Samuel M. Felton is associated with the Strategic Management Database
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| Author: | Felton, Samuel M. |
|---|---|
| Publication: | International Journal of Retail & Distribution Management |
| Date: | Feb 1, 1998 |
| Words: | 812 |
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