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An organization cannot operate without having resources of varying kinds. While they have minimal value alone, when combined, resources are the engine that creates value for an organization. Remember that tangible resources include office, manufacturing or warehousing facilities, financial assets and human resources. Intangible resources can include customer goodwill, brand awareness, patents and even routines or “way of doing business”.
The focus is on the following:
- Valuable physical assets
- Valuable organizational assets
- Key partnerships
An organization with a culture that strongly supports innovation could certainly consider that culture to be a VRIN resource. RBV can enable innovation but articulating the organization’s greatest operating strengths and then asks how the organization can best use those internal capacities. It does not focus just on a single product line or division but looks at the overall picture and aims to tap under-utilized resources.
What factors need to be considered when managing internal and external resources?
Sample form for a new household cleaning product:
Some of the questions to ask when seeking to identify competitively important resources are:
- What are our valuable physical assets? Where are the gaps? Examples could include modern, technically advanced production plants or equipment, well-located offices or a strong financial balance sheet.
Our valuable physical assets are our product testing equipment for different formulations of our new product to determine processes that can be scaled up from a smaller production model. This allows us for example, to determine if a certain kind of packaging may be more challenging to produce when the quantities are increased rapidly. This is especially relevant because we are considering innovative packaging. A gap is in our plant equipment’s capacity to scale up production rapidly. This may require external partners who can manage outsourced production.
What are the valuable organizational assets? Where are the gaps? Examples could include valuable patents, a strong distribution network or exclusive supplier contracts.
We have a patent pending for the process to develop the new product formulation. A challenge is lack of a robust distribution network across provinces and a pricing and promotion strategy to counter competitive choices.
What are our key partnerships? Where are the gaps? Examples could include a joint venture or a distribution partner that enables access to specialized, lucrative markets.
We have strong R&D partnerships with a University but haven’t developed a national strategy of partnerships as yet. For example, crowdsourcing of ideas may be an area to look into. Our competitors are also looking into other partnerships with government funded innovation centres.