понедельник, 21 июня 2021 г.

Lisa Bodell: Kill the Company to Save the Company

Emma Matthews

“The best ideas typically happen when we’re alone. The best ideas are typically built when we’re together.”

Lisa Bodell is an award-winning author and CEO of FutureThink. As a futurist and expert on innovation and simplicity, she has helped thousands of leaders ignite change in their organizations. Lisa serves as a global council member of the World Economic Forum and was recently selected as one of the Top 50 Keynote Speakers in the World. She is the author of two bestselling books and has appeared in Fast Company, The New York Times, and WIRED, among other publications.

At the Online Bootcamp, Lisa challenged the participants to embrace change and offered four techniques to identify weaknesses, overcome obstacles, and ignite transformation.

Successful Teams Embrace Change

Recent history has demonstrated that the ability to pivot quickly during times of change is absolutely critical in business. Over the past year, many of us have been forced to embrace agility, asking ourselves, “what else,” “who else,” and “how else?” We’ve had to rethink the way we do business, transforming our products, processes, and partnerships. And, unfortunately, we’ve done so reactively, scrambling to enact change in times of extreme uncertainty.

Under more ideal circumstances, leaders and their organizations would be prepared to behave proactively. We would anticipate opportunities and be positioned to take advantage of them. We would see possibilities and not problems. We would let go of the past and embrace the future.

“When you look at people who are really innovative, they are not just agile but they have this mindset that it’s not just about looking at problems but seeing possibilities.”

As a futurist and expert on innovation, Lisa Bodell believes that the most successful teams embrace change. They recognize that the future is not what their organization is today, but what it must become tomorrow. But becoming what we must be in the future requires transformation—and transformation requires us to let go of the habits that are holding us back.

What’s Holding You Back?

There’s never been a better time to change your mindset, challenge your assumptions, and transform the way you do things at work. But chances are, there are a number of things holding you and your team back.

Lisa shared three common habits that prevent organizations from embracing change and successfully transforming.

We value more work over meaningful work. How much is on our to-do lists is not as important as what is on our to-do lists. We have to take a hard look at where we’re spending our time today and make more room to engage in valuable, meaningful work. Lisa encouraged leaders to remember that time is a non-renewable resource, and to be more intentional about how we use it, we must say “yes” with intention and “no” with purpose.
We focus internally rather than externally. “The future is outside the organization, not necessarily in it.” We have to shift the balance, looking outwardly more often. Lisa noted that when we examine our to-do lists, we’ll notice that the tasks we consider obligatory—the things we have to do—are often internal. Our desired work—the things we want to do—are most often external.
We spend more time doing than thinking. To innovate and execute, we need time to think, consider, and imagine. Too often, we use meetings as brainstorming sessions, gathering our teams forcing them to come up with ideas. But, Lisa reminded leaders, truthfully, our best ideas usually occur when we’re alone. Give yourself and your team the space to think, then bring everyone together to build.

Breaking these habits will help you make change a part of the day-to-day for you and your team. It will help you challenge the way you work today and welcome a new way of doing things tomorrow. It will help you ignite transformation.

Four Techniques to Ignite Transformation

Lisa’s work with leading organizations has led her to uncover four techniques that will help you identify weaknesses, overcome challenges, and ignite transformation. She believes that embracing any one of these techniques will allow you to visualize what your organization must become in the future and begin to move in that direction.

https://play.vidyard.com/4bb32bee-20dc-4ee9-beb5-3cc886772f65

#1: Kill Stupid Rules

Getting rid of stupid rules will help you question the way you do things at work and identify low-hanging fruit within the scope of your control.

Lisa argued that if we fail to question how we do things at work, we fall into what we think is a groove but is actually a rut. We go through the same motions—and repeat the same mistakes—over and over again. To challenge the way things are done today, ask your team, “If we could get rid of two rules to help us be more productive, what would they be?” You might be surprised to discover that many of the “rules” your team identifies aren’t rules at all but cultural norms that are well within your sphere of influence.

#2: Drive Curiosity

Leaders can—and should—drive curiosity by asking better questions. More provocative questions offer another method of challenging your way of thinking and revealing better ways to get things done. “In the future, asking the right questions will become more valuable than finding answers. Humans are for questions, machines are for answers.”

Asking better questions will bring your team out of their comfort zone and inspire their resourcefulness, creativity, and innovation. Lisa suggested that the next time you enter a meeting, you ask your team, “What are your biggest time-wasters, and how can we fix them?” You’re likely to uncover tasks that make up impressively long to-do lists but that can’t be categorized as valuable or meaningful work.

#3: Overcome Obstacles

We’re better at solving other peoples’ problems than our own. For help overcoming obstacles, give your problems away and seek solutions from others.

As a leader, you likely spend a significant amount of time considering your problems, turning over solutions, and promptly rejecting them. But when you’re presented with an opportunity to solve someone else’s problem, you’re quick to identify and offer an answer. Lisa challenged you to enlist the support of someone else for help overcoming the biggest obstacles that are in your way.

#4: Kill Your Company

To uncover your biggest weaknesses and determine what needs to change, put yourself in your competitors’ shoes and pretend to “kill your company.”

Lisa acknowledged that while “killing the company” may sound extreme, it’s an exercise that effectively opens minds. The next time you gather your team, ask them to identify your number one competitor and put on that competitor’s mindset. Act as if that competitor is putting you out of business. It will lead you to identify what’s wrong and what needs to change.

Lisa asked all leaders to commit to testing at least one of these techniques. Doing so will help you and your team determine who you need to become and how to do more work that matters. “Simplicity is free. Give yourself a shot at actually embracing change and getting to more work that matters.”

Key Points

The most successful teams recognize that the future is not what your organization is today, but what it must become.
Embracing change and agility will help you identify weaknesses, overcome challenges, and ignite transformation.
Killing stupid rules will help you question the way you do things at work and identify low-hanging fruit within the scope of your control.
Leaders can drive curiosity by asking better questions to challenge ways of thinking and reveal better ways to get things done.
We’re better at solving other peoples’ problems than our own. For help overcoming obstacles, give your problems away and seek solutions from others.
To uncover your biggest weaknesses and determine what needs to change, put yourself in your competitors’ shoes and pretend to “kill your company.”
Real change occurs when you engage people to shift their behavior together.

Questions to Consider

How does your company need to transform? Does your culture support the change and agility necessary to do so?
Which rules or norms can you kill to help you and your team become more productive?
How can you ask your team better questions to challenge their thinking and reveal better ways to get things done?
How could “giving away your problems” help you overcome obstacles? Are you open to the solutions you might receive in return?
If you were to put yourself in the mindset of your biggest competitor, what weaknesses would you see? How would it inspire you to change?

https://bit.ly/2SRHWNV

Отчет о качестве маркетинга в компании

Каждый специалист по маркетингу должен анализировать свою эффективность и качественно преподносить результаты своей работы руководству. В статье мы расскажем о том, как быстро и правильно провести анализ эффективности маркетинговой деятельности предприятия и подготовить отчет о работе отдела маркетинга, используя стандартные и понятные каждому показатели оценки. Применяя данную методику оценки в своей компании, вы поднимите свой профессиональный статус в глазах руководителя (владельца бизнеса) и сможете лучше управлять маркетинговыми программами. В статье вы также найдете образец годового маркетингового отчета с примером заполнения.

Существует четыре группы показателей, по которым можно оценить качество работы маркетинга в компании: показатели уровня продаж, качества работы с клиентами, качества рекламных кампаний и эффективности потраченных бюджетов на маркетинг. Отчитываться по работе маркетинга необходимо регулярно, но не слишком часто. Самый оптимальный вариант: подготовка маркетингового отчета 1 раз в квартал.

Первый шаг: анализ продаж и прибыли

Продажи и прибыль — две цифры, с которых должен начинаться любой отчет по маркетингу. Сравните выполнение фактических и целевых показателей продаж и прибыли, покажите динамику продаж по отношению к предыдущему отчетному периоду и к аналогичному периоду прошлого года. Наиболее полным отчет по продажам будет выглядеть при анализе следующих показателей: продажи в абсолютном и количественном выражении (шт и руб), средняя цена, прибыль и рентабельность продаж. Лучше данные о продажах разбивать по основным товарам или группам товаров (товарным категориям): так вы сможете оценить влияние каждого продукта компании на выполнение плана продаж.

Если у вас есть возможность указать динамику доли рынка товара в сегменте, приведите данный показатель в сравнении с прошлым годом и с динамикой ключевых конкурентов.

Данными цифрами вы покажете, как маркетинговые программы повлияли на финансовые показатели бизнеса. А сравнение с конкурентами поможет руководителю оценить качество роста. Бывают ситуации, когда план продаж не выполняется, но рост к прошлому году значителен, и на фоне общего снижения продаж конкурентов доля рынка компании выглядит хорошо.

Важно! Не стоит бояться показывать плохие цифры: их необходимо просто обосновать. В мире маркетинга бывают разные ситуации: завышенные планы, стагнация рынка, падение спроса на ключевые продукты, высокая активность конкурентов. Важнее понять причину низких показателей и оперативно принять корректирующие меры, которые помогут стабилизировать негативный тренд и повысить конкурентоспособность продукции.

Второй шаг: анализ рекламных затрат

Второй важный шаг анализа эффективности маркетинговой деятельности предприятия — оценка эффективности расходования рекламного бюджета, выделенного на продвижение товара. В данном анализе вам помогут такие показатели, как общий расход маркетингового бюджета, показатель «прибыль — рекламные расходы» и A/S (Advertising to sales, %). Данными цифрами вы покажете, насколько вы превысили или сэкономили бюджет, достигли ли вы роста чистой прибыли и велик ли ваш бюджет на маркетинг.

Обязательно подготовьте распределение бюджета по основным статьям затрат: это поможет ответить на вопрос «Были ли рекламные расходы целевыми? Не потратили ли вы весь бюджет на ненужные, нецелевые мероприятия?».

Для того, чтобы анализ эффективности расходования рекламного бюджета был полным, завершите данный пункт отчета информацией о сравнительной эффективности проведенных маркетинговых программ.

Сравнительная оценка всех программ позволит понять, какие мероприятия сработали более эффективно, а какие не стоит использовать в дальнейшем продвижении товара. Для такой оценки можно взять следующие показатели: рост продаж и прибыли от мероприятия, прирост клиентов или потребительской базы, затраты на привлечение 1 клиента (потребителя).

Третий шаг: оценка качества продвижения и работы с потребителями

После анализа эффективности рекламных затрат переходите к оценке эффективности работы с клиентами и продвижения товара. Качество работы с клиентами и качество продвижения товара — одна из ключевых компетенций маркетолога. Если на динамику продаж и прибыли могут повлиять много факторов, не зависящих от вас, то динамика показателей, описанных в данном разделе отчета может дать исчерпывающую характеристику работе отдела маркетинга в компании.

Итак, качество работы с потребителями и качество продвижения товара на рынок может быть оценено с помощью следующих индикаторов:

Знание товара — говорит о том, насколько заметны ваши рекламные сообщения для целевой аудитории
Потребление товара — говорит о том, насколько привлекателен ваш товар для целевой аудитории
Лояльность к товару (повторные покупки) — говорит о качестве товара
Общий уровень удовлетворенности продуктом — говорит о соответствии товара ожиданиям клиента и о том, что вы правильно понимаете вашу ЦА
Размер клиентской базы — говорит о том, способствуют ли ваши действия росту бизнеса
Продажи и прибыль на 1 клиента — говорит о том, привлекаете ли вы наиболее платежеспособную аудиторию, увеличивается ли частота и количество покупок
Количество точек продаж — говорит о том, насколько вы эффективно работаете с каналами распределения
Оборачиваемость продаж — говорит о том, насколько ваш рост интенсивен или экстенсивен

Четвертый шаг: подготовка Executive Summary

Последним шагом любого отчета о маркетинговой деятельности предприятия является подготовка общей таблицы со всеми ключевыми показателями финансового состояния бизнеса. Такая таблица называется Executive Summary и ставится в начало общего отчета. В ней вы указываете только самые важные показатели и динамику к прошлому году.

Отдельным пунктом проанализируйте отклонения, причины выполнения и невыполнения плана.

Завершением любого отчета по работе отдела маркетинга в компании является план дальнейших действий, состоящий из программы корректирующих мероприятий и плана мероприятий на будущий период. Программа корректирующих мероприятий включает в себя любые действия, которые отвечают на вопрос «Что необходимо сделать, чтобы исключить обнаруженные отрицательные стороны работы отдела маркетинга?». Такими действиями могут быть программы, направленные на выполнение плана продаж; изменение продукта, исключение неэффективных мероприятий; изменение стратегии коммуникации и т.п. Планы мероприятий на будущий период полезно также обсуждать на общих отчетах о маркетинговой деятельности предприятия, чтобы предоставить руководству полную информацию о том, как вы собираетесь развивать продукт.

https://bit.ly/3gLQkYK

VRIO Analysis

VRIO: From Firm Resources to Competitive Advantage

The VRIO Framework or VRIO Model is part of the Resource-Based View (RBV), which is a perspective that examines the link between a company’s internal characteristics and its performance. RBV is therefore complementary to the Industrial Organization (I/O) perspectives that look more at external factors such as competitiveness in order to determine performance and profit potential (e.g. Porter’s Five Forces). The supporters of RBV argue that organizations should look inside the company to find the sources of competitive advantage instead of looking at the competitive environment. The key concepts within this view are therefore Firm Resources and Sustainable Competitive Advantage. Firm resources can be defined as ‘all assets, capabilities, organizational processes, firm attributes, information and knowledge controlled by a firm that enables it to improve its efficiency and effectiveness’. Resources are often classified into categories such as tangible (e.g. equipment, machinery, land, buildings and cash) and intangible (e.g. trademarks, brand reputation, patents and licenses) or physical, human and organizational resources. In order for companies to transform these resources into sustainable competitive advantage, resources must have four attributes that can be summarized into the VRIO framework.

Valuable (VRIO)

First and foremost resources must be valuable. According to the RBV, resources are seen as valuable when they enable a firm to implement strategies that improve a firm’s efficiency and effectiveness by exploiting opportunities or by mitigating threats. Another way to assess whether a resource or investment is valuable is by looking at its Net Present Value (NPV), meaning that the costs invested in the resource should be lower than the expected future cash flows discounted back in time. If non of the resources possessed by a firm are considered valuable, the focal firm is likely to have a competitive disadvantage.

VRIO Framework Video Tutorial

Rare (VRIO)

Secondly, resources must be rare. Resources that can only be acquired by one or few companies are considered to be rare. If a certain valuable resource is possessed by a large amount of players in the industry, each of the players has a capability to exploit the resource in the same way, thereby implementing a common strategy that gives non of the players a competitive advantage. Such a situation is indicated as competitive parity or competitive equality. In case a company does possess a large amount of resources that are valuable and rare, it is likely to have at least temporary competitive advantage.

Inimitable (VRIO)

Although valuable and rare resources may help companies to engage in strategies that other firms cannot pursue since the other firms lack the relevant resources, it is no guarantee for long-term competitive advantage. It may give the focal company a first-mover advantage but competitors will probably try to imitate these resources. Another criteria that resources should meet is therefore that they should be hard and costly to imitate or substitute. According to the RBV, resources can be imperfectly imitable due to a combination of three reasons:

Unique historical conditions: choices made in the past influence the options a company has in the present and future (path-dependency). Similarly, a company that has located its facilities on what turns out to be a much more valuable location than initially anticipated, has an imperfectly imitable physical resource.
Causal ambiguity: causal ambiguity exists when the link between the resources controlled by the focal company and its sustainable competitive advantage is not fully understood. Competitors won’t be able to duplicate the focal company, since they simply don’t know which resources they should imitate.
Social complexity: if the most important resource of a company is a combination of the strenght of its social network, interpersonal relations, a company’s culture and its reputation among both suppliers and customers, it is very hard for competitors to build an identical social network since it is dependent on so many different factors.

If a company’s resources are both valuable, rare and inimitable due to the reasons mentioned above, the focal company has a high potential to gain a competitive advantage that is sustainable over time. There is however one more important criteria that needs to be present within the company.

Organization-wide supported (VRIO)

The resources themself do not create any advantage for a company if the company is not organized in way to adequately exploit these resources and capture the value from them. The focal company therefore needs the capability to assemble and coordinate resources effectively. Examples of these organizational components include a company’s formal reporting structure, strategic planning and budgeting systems, management control systems and compensation policies. Without the correct organization to acquire, use and monitor the resources involved, even companies with valuable, rare and imperfectly imitable resources will not be able to create a sustainable competitive advantage. When all four resource attributes are present, a company is save to assume it has a distinctive competence that can be used as source of sustainable competitive advantage. Below is a diagrom that sums up the four VRIO attributes and the resulting advantages the company has in different situations.

Note that the VRIO framework is a follow-up of the VRIN framework (Valuable, Rare, Hard to Imitate, Non-substitutable). The creator of the VRIN and VRIO framework, Jay Barney, combined the I and N into one attribute and added the O as extra criteria. Inimitability in the VRIO framework therefore means that resources are hard to imitate because competitors cannot duplicate and/or substitute them. It is recommended to combine this framework with Porter’s Value Chain Analysis in order to create a more complete overview of the strengths and weaknesses of the organization’s internal factors.

VRIO Framework

Definition

VRIO framework

is the tool used to analyze firm’s internal resources and capabilities to find out if they can be a source of sustained competitive advantage.

Understanding the tool

In order to understand the sources of competitive advantage firms are using many tools to analyze their external (Porter’s 5 Forces, PEST analysis) and internal (Value Chain analysis, BCG Matrix) environments. One of such tools that analyze firm’s internal resources is VRIO analysis. The tool was originally developed by Barney, J. B. (1991) in his work ‘Firm Resources and Sustained Competitive Advantage’, where the author identified four attributes that firm’s resources must possess in order to become a source of sustained competitive advantage. According to him, the resources must be valuable, rare, imperfectly imitable and non-substitutable. His original framework was called VRIN. In 1995, in his later work ‘Looking Inside for Competitive Advantage’ Barney has introduced VRIO framework, which was the improvement of VRIN model. VRIO analysis stands for four questions that ask if a resource is: valuable? rare? costly to imitate? And is a firm organized to capture the value of the resources? A resource or capability that meets all four requirements can bring sustained competitive advantage for the company.

Adopted from Rothaermel’s (2013) ‘Strategic Management’, p.91

Valuable
The first question of the framework asks if a resource adds value by enabling a firm to exploit opportunities or defend against threats. If the answer is yes, then a resource is considered valuable. Resources are also valuable if they help organizations to increase the perceived customer value. This is done by increasing differentiation or/and decreasing the price of the product. The resources that cannot meet this condition, lead to competitive disadvantage. It is important to continually review the value of the resources because constantly changing internal or external conditions can make them less valuable or useless at all.

The V in the framework of Vrio Analysis answers the basic questions that are the resources and capabilities are valuable for the company’s growth and development or not. And will they be able to exploit and make optimal use of the opportunity available for the growth or mitigate the threat posed at the marketplace?

If it defines one of the two aspects mentioned above then it can be considered as the strength of the company and if it does not, it is the sheer weakness of the company that needs to be worked on in a dedicated manner. However, depending on the merit of the situation and the industry domain, some of the resources and capabilities can be considered as a weakness to one company and strength to the other.

Below mentioned are the six common types of opportunities that a firm can exploit for its growth and development are:

Cultural shift amongst the target audience

Technological change

Demographic change

Economic change

International events

Legal and Political conditions

The five threats that the firm’s resources or capabilities could avoid or mitigate are:

The threat of competition or rivalry

Threat of buyers

Threat of suppliers

The threat of new entrants in the market

Threat of substitutes

In both the cases of exploiting the opportunity or mitigating the threat, the end result lies in the increase of the revenues, decrement in the costs or both the scenarios depending on the merit of the situation and the play of internal and external factors affecting the operations of the company.

https://bit.ly/2Um1Z7M

Rare

Resources that can only be acquired by one or very few companies are considered rare. Rare and valuable resources grant temporary competitive advantage. On the other hand, the situation when more than few companies have the same resource or uses the capability in the similar way, leads to competitive parity. This is because firms can use identical resources to implement the same strategies and no organization can achieve superior performance.

Even though competitive parity is not the desired position, a firm should not neglect the resources that are valuable but common. Losing valuable resources and capabilities would hurt an organization because they are essential for staying in the market.

The concept of rarity results in the competitive advantage for the firm as the firm has the valuable set of resources and capabilities that are extremely unique and special as compared to the competitors in the market and gives an edge to the firm amidst the dynamic nature of the market. The question arises on how to figure out if the firm’s resources are rare in nature and help it gives a competitive edge in the industry?

The available resources and capabilities of the firm should be able to sustain the competitive advantage being short in supply and should persist over a period of time. If both the factors are not met, the firm fails to attain the objective of competitive advantage in the market.

Costly to Imitate
A resource is costly to imitate if other organizations that doesn’t have it can’t imitate, buy or substitute it at a reasonable price. Imitation can occur in two ways: by directly imitating (duplicating) the resource or providing the comparable product/service (substituting).

A firm that has valuable, rare and costly to imitate resources can (but not necessarily will) achieve sustained competitive advantage. Barney has identified three reasons why resources can be hard to imitate:

Historical conditions. Resources that were developed due to historical events or over a long period usually are costly to imitate.
Causal ambiguity. Companies can’t identify the particular resources that are the cause of competitive advantage.
Social Complexity. The resources and capabilities that are based on company’s culture or interpersonal relationships.

In the framework of Vrio Analysis, the primary and main question on the front of Imitability arises that, do the firms without any set of unique resources and capabilities face the demerit of cost disadvantage for obtaining or developing it as compared to its competitor’s firms that already possess the same. The companies that have the rare and valuable resources that are quite unique in nature and are quite difficult to imitate gain the first mover advantage in the market gaining the competitive advantage.

To gain the competitive edge and attain the objectives of higher sales and elevated profits, the companies optimally harness on its rare and valuable resources to exploit the growth opportunities available or mitigate the threat posed by the external factors such as growing competition, change in the government policies or evolving tastes and preferences of the customers.

When the competitors of the company discover the same, they either ignore and continue with their business operations with the old ways with whatever amount of profits they have been earning or in the second option, they carefully understand and analyze the resources that work as the competitive advantage for the firm and try to duplicate or imitate the same.

However, if the resources are quite innovative and the resources are not that easy to access, imitation gets quite difficult. And in such as case, the company enjoys the long-term and sustained competitive advantage in the market-beating its arch-rivals and competition.

Various forms of Imitation

The imitation can be done in two forms, either through direct duplication or coming up with the substitutes. After the careful observation and analysis of the firm’s resources possessed by the firm that works in its favor as the competitive advantage, the competitive firm directly imitates. If the cost of imitation is high, the company will be able to sustain the competitive advantage on a long-term basis and if not, it will be temporary in nature. The second option for the imitating firm is to come up with the substitute to gain the similar level and form of competitive advantage.

Cost of Imitation of the resources

Special and Unique Historical Conditions through which the innovative firm gains low-cost access to exceptional resources in a particular time and space,

In the case of causal ambiguity, the imitating firm cannot figure out and analyze the factors that lead to the competitive advantage of an innovative firm,

The case of social complexity arises when the resources involved in gaining competitive advantage are based on interpersonal relationship, culture, and other social backgrounds.

When the innovative resources work as the long-term competitive advantage is duly certified through the process of Patents by the specific authorities.

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Organized to Capture Value
The resources itself do not confer any advantage for a company if it’s not organized to capture the value from them. A firm must organize its management systems, processes, policies, organizational structure and culture to be able to fully realize the potential of its valuable, rare and costly to imitate resources and capabilities. Only then the companies can achieve sustained competitive advantage.

The next aspect in the framework of Vrio Analysis is the organization that comprises of many factors that include the compensation policies, management reporting structure, and the management control systems for the entire hierarchy of the firm. The management reporting structure comprises of the aspects of the various reporting authorities and who reports to whom in the organization.

The management control system comprises the rules and regulations to make sure that the manager’s decisions are well aligned with the firm’s strategies. It consists of the regular meetings, budgeting procedures, and the other reporting activities to keep the management well informed about the day-to-day activities. The informal activities include the company’s innate culture and motivating employees to monitor each other to attain the firm’s aims and objectives.

To make the employees work in a certain order, the company comes up with the various compensation policies such as bonuses; leave salaries, travel allowances, additional vacation days to keep them motivated that will help the firm to attain the competitive advantage in the market.

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Using the tool

Step 1. Identify valuable, rare and costly to imitate resources

There are two types of resources: tangible and intangible. Tangible assets are physical things like land, buildings and machinery. Companies can easily by them in the market so tangible assets are rarely the source of competitive advantage. On the other hand, intangible assets, such as brand reputation, trademarks, intellectual property, unique training system or unique way of performing tasks, can’t be acquired so easily and offer the benefits of sustained competitive advantage. Therefore, to find valuable, rare and costly to imitate resources, you should first look at company’s intangible assets.

Finding valuable resources:

An easy way to identify such resources is to look at the value chain and SWOT analyses. Value chain analysis identifies the most valuable activities, which are the source of cost or differentiation advantage. By looking into the analysis, you can easily find the valuable resources or capabilities. In addition, SWOT analysis recognizes the strengths of the company that are used to exploit opportunities or defend against threats (which is exactly what a valuable resource does). If you still struggle finding valuable resources, you can identify them by asking the following questions:

Which activities lower the cost of production without decreasing perceived customer value?
Which activities increase product or service differentiation and perceived customer value?
Have your company won an award or been recognized as the best in something? (most innovative, best employer, highest customer retention or best exporter)
Do you have an access to scarce raw materials or hard to get in distribution channels?
Do you have special relationship with your suppliers? Such as tightly integrated order and distribution system powered by unique software?
Do you have employees with unique skills and capabilities?
Do you have brand reputation for quality, innovation, customer service?
Do you do perform any tasks better than your competitors do? (Benchmarking is useful here)
Does your company hold any other strengths compared to rivals?

Finding rare resources:

How many other companies own a resource or can perform capability in the same way in your industry?
Can a resource be easily bought in the market by rivals?
Can competitors obtain the resource or capability in the near future?

Finding costly to imitate resources:

Do other companies can easily duplicate a resource?
Can competitors easily develop a substitute resource?
Do patents protect it?
Is a resource or capability socially complex?
Is it hard to identify the particular processes, tasks, or other factors that form the resource?

Step 2. Find out if your company is organized to exploit these resources

Following questions might be helpful:

Does your company has an effective strategic management process in organization?
Are there effective motivation and reward systems in place?
Does your company’s culture reward innovative ideas?
Is an organizational structure designed to use a resource?
Are there excellent management and control systems?

Step 3. Protect the resources

When you identified a resource or capability that has all 4 VRIO attributes, you should protect it using all possible means. After all, it is the source of your sustained competitive advantage. The first thing you should do is to make the top management aware of such resource and suggest how it can be used to lower the costs or to differentiate the products and services. Then you should think of ideas how to make it more costly to imitate. If other companies won’t be able to imitate a resource at reasonable prices, it will stay rare for much longer.

Step 4. Constantly review VRIO resources and capabilities

The value of the resources changes over time and they must be reviewed constantly to find out if they are as valuable as they once were. Competitors are also keen to achieve the same competitive advantages so they’ll be keen to replicate the resources, which means that they will no longer be rare. Often, new VRIO resources or capabilities are developed inside an organization and by identifying them you can protect you sources of competitive advantage more easily.

VRIO example

Google’s capability evaluated using VRIO framework

Google's VRIO capability
Valuable?	Rare?	Costly to Imitate?	Is a company organized to exploit it?
Excellent employee management
Yes	Yes	Yes	Yes
Result: sustained competitive advantage

Google’s ability to manage their people effectively is a source of both differentiation and cost advantages. Unlike other companies, which rely on trust and relationship in people management, Google uses data about its employees to manage them. This capability allows making correct (data based) decisions about which people to hire and the best way to use their skills. As a result, Google is able to hire innovative employees that are also very productive ($1 million in revenue per employee). Besides being valuable, it is also a rare capability because no other company uses data based employee management so extensively. Is it costly to imitate? It is costly to imitate, at least, in the near future. First, companies should build the highly sophisticated software, which is both costly and hard to do. Second, HR managers should be trained to make data based decisions and forget their old management methods. Is Google organized to capture value from this capability? Certainly, it has trained HR managers that know how to use the data and manage people accordingly. It also has the needed IT skills to collect and manage the data about its employees.

There are many more businesses that have VRIO resources or capabilities, including many of the companies we analyzed using swot analysis.