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Sustainability Competences Framework: A Tool for Business Growth

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In January 2022, the European Commission published The European Sustainability Competence Framework or GreenComp. 

GreenComp identifies a set of sustainability competences to feed into education and training programs to help learners develop knowledge, skills, and attitudes that promote ways to think, plan and act with empathy, responsibility, and care for the planet’s and the public’s health. It also aims towards business growth and development as the niche of sustainability-driven businesses is growing fast.

At a policy level, GreenComp is a policy action derived from the European Green Deal as a catalyst to promote learning on environmental sustainability in the European Union.

GreenComp provides a common ground to learners and guidance to educators, specifying a consensual definition of what sustainability as a competence entails. It was created to support education and training programs, including lifelong learning. Also, it may be used by corporate trainers to translate the sustainability strategy of their companies in training content and programs that may help the employees and other stakeholders to act for sustainability. This will help learners become systemic and critical thinkers, as well as develop agency, and form a knowledge basis required for caring about the planet’s present and future state.

Sustainability competences among employees may enhance innovation and adaptability at an organizational level and may also support the CSR strategy.

Main concepts definition

Sustainability is defined as “prioritising the needs of all life forms and of the planet by ensuring that human activity does not exceed planetary boundaries.”

A sustainability competence empowers learners to embody sustainability values and embrace complex systems to take or request action that restores and maintains ecosystem health and enhances justice, generating visions for sustainable futures.

Learning for environmental sustainability aims to nurture a sustainability mindset from childhood to adulthood with the understanding that humans are part of and depend on nature. Learners are equipped with knowledge, skills, and attitudes that help them become agents of change and contribute individually and collectively to shaping futures within planetary boundaries.

The European Sustainability Competence framework

GreenComp consists of four competence ‘areas’ that correspond to the definition of sustainability; each competence area contains three competences. In total, there are 12 sustainability ‘competences’ that, taken together, make up the building blocks of the sustainability competence for all people. 

As illustrated in Figure 1 below, the competence areas and competences are numbered for references purposes; this does not imply a sequence of acquisition or hierarchy. All 12 competences are equally important. As such, learners are encouraged to develop all of them.

The four competence areas are intertwined, and sustainability is a competency that encompasses all four. The 12 sustainability competences are also linked and interconnected and should be considered as a whole. While we encourage learners to acquire the 12 competencies, they are not needed to have the highest level of proficiency in all of them, nor do they need to have the same level of proficiency in all of them. Indeed, GreenComp suggests that sustainability as a competency is comprised of 12 components.

Each of the 12 competences is further described in learning outcomes, in terms of Knowledge, Skills, and Attitudes. There are 169 learning outcomes in total.

How businesses can use GreenComp

GreenComp can be used in many ways in the business environment, especially through training programs targeting the employees, as well as mentoring and coaching programs targeting the leadership level. Here are some examples:

  • Development and execution of CSR strategies. GreenComp may provide a framework for a holistic, integrated approach.
  • Development and execution of Innovation strategies. GreenComp may set a common working framework for discussions and initiatives where any employee who wants to contribute can do so.
  • Business development. GreenComp can serve as a compass in finding new business opportunities and new business partners in the niche of sustainability-driven businesses.

Internal Communication Strategy: Guiding Principles and Methods

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Image Source: scyther from Getty Images | Canva

Strategy execution is jeopardized when the progress of employees curbs. When teams lose their edge, their contribution to fueling the execution of strategy fades. Progress may slow down and affect the process of achieving corporate objectives. 

Among the many existing solutions, the focus will be on overhauling the internal communication strategies to convince employees of the relevance of their company’s strategic approach. Internal communication empowers companies to engage their people’s creativity, energy, and commitment to produce value. Through communication strategies, management starts a process of conversion in which employees’ tasks are put into context and become the brush that helps paint the bigger picture.

What is a communication strategy? A communication strategy is a clearly formulated plan that is brought to light through various techniques so that everyone can row in the same direction with the same effort. Hearing and listening are two different things. One can hear the manager talking about the departmental objectives so that all team members can contribute to the organizational strategy. But it is harder to listen and keep the focus on the direction that should be followed. So, the question is, how does the leadership manage to do that?

Before the communication strategy is finally on the cusp of being released, leadership assures that the corporate vision, values, and objectives are absorbed. Then, through personalized internal communication techniques, they deliver the outcome that points the employees in the right direction to cross the desired finish line. In fact, the bond between organizational and communication objectives is vital. Suppose one of the main organizational objectives is to train the customer service team to work effectively with the clients. In that case, the communication objective linked is to ensure that all team members are aware and enforce the standards of care expected. 

Guiding principles for developing an internal communication strategy

Depending on the company, the internal communication techniques will address distinct needs. For example, in big consultancy and audit corporations, the challenge brought is to make the employees aware of the client’s problems and, at the same time, to appropriate the domain’s knowledge and capabilities that could help solve them.                                               

The ability to shield strategies from disasters cannot be translated through a single communication technique. Rarely is the journey paved. The variable that changes the game is how companies want to navigate the set aims. Some of them like to begin with the end, to make the outcome clear from the beginning, and if possible, to paint a picture of it and display it everywhere in the company, as Thomas Butta from Splunk reveals. They find it vital for everyone to be clear about the commitment that should be taken in order to achieve the outcome planned.

In a conversation with Costel Alexe, the former member of the Chamber of Deputies of Romania who now occupies the position of president of the Iași County Council, he revealed the emphasis placed on the bilateral communication set to create a close relationship between the management and the employees and make sure that they understand how important their role is. They prefer to rely on face-to-face meetings between the management and the coordinators of each department of the institution.

“Every week, the management has meetings with the coordinators, where they discuss the status of each project, the opportunities of implementing new projects and each department’s needs and challenges. Through the coordinator’s voices, the administration keeps in touch with all the employees, ensuring the communication flow. Also, as a public institution, the County Council has to comply with the national legislation, besides its internal procedures, when informing the employees about a particular situation. There are certain types of documents and means of communication used in the process of internal communication such as circulars and official forms,” Alexe told The KPI Institute.

The focus of the institution is on implementing a new internal communication strategy based on digitalization. “This is necessary in order to make the activity more efficient and reduce bureaucracy, but also considering the pandemic context  and the need to comply with the social distancing measures. We have already explored the financing opportunities for such a project,” Alexe added.

It is often good to find a response as it will position you on the right track. In these fast-paced times, the clearer and visual the message is, the faster the essence is absorbed.

Here are just a few communication approaches advanced by researchers and intended to encourage behaviors that advance the strategy and promote improved result

Methods for improving internal communication

  1. The Virtuous Circle of Communication                                       

By not sticking the puzzle pieces together, the picture will result as distorted. This applies to organizations as well. Even if good things are effectuated individually, they lose value if not linked together. In order to have a fruitful result from internal communication, organizations need to link seven components: strategy, leadership, planning and prioritization, channel management and content development, role of the internal communication function, face-to-face communication, and impact measurement.

The first element is achieved by having organizations clearly define the strategy, values and behaviors, and their means of communication towards reaching attitudes. By communication, the management makes sure that every factor that blocks the value is being eliminated.

Leadership implies adding commitment to the actions. When conveying a message, it should have a clear purpose, consistency, and focus.

Planning and prioritization mean having a representative team of internal communication involved in strategy planning. Being in touch with those directing the organizational changes, the representative team can reveal through their message the “why” behind the “what.” Each initiative should have a communication plan, and while conveying the message, monitoring the employees reactions is vital. By having the communicators focus on corporate objectives and not only on communication objectives, they will be explicit about what people need to do differently.                        

Channel management and content development are critical for employees to spot the connection among the changes and prioritize what they need to get done. Therefore, communicators need to add meaning to the message and highlight the important points. Therefore, choosing the right channel for communicating a piece of information is gold.        

The role of internal communication function is impactful if the communicators have access to decision makers and the overall objectives set. In some companies, the narrow focus of messengers blocks the value that could be added, and that is because the department is not as close as it should be to the heart of the organization. They should not only master the art of communication but should also present skills for business strategy understanding. To conclude, in order to translate a sentence into action, one needs to understand what that action is about, and they do not serve as an ideas production department.

Face-to-face communication is important in information distribution. Eventually, communication happens between the ears, while the information can happen over wires. Interaction is key to building trust and collaboration. The availability of technology does not substitute a direct conversation.

The last element, which is impact measurement, can be achieved by measuring results against intentions. Organizations can use key performance indicators to ensure that what was planned has been achieved. Tracking the communication efforts provides an overview of the outcome of the communication. Another option is to conduct regular surveys and to include communication capabilities in appraisals.

Image Source: fpphotobank | Canva  

  1.               The Motivation Matrix

By applying this method, senior leadership understands what motivates different employees and learns how to speak to each one’s motivation. There are two key words designed to help: by and for. Everyone is motivated by things and for things. People get motivated by ethos, emotion, or logic, while the same audience gets motivated for achievement, recognition, or power. 

Once the people’s natural desire to perform stands out, one will understand what pushes people. If they are motivated by ethos, the leadership will figure out what authority should ask for the task to be accomplished depending on the degree of credibility. If some are motivated by emotion, leadership will be sure to add emotion to the project. And finally, if some are motivated by logic, leadership will make sure to mention the reasoning behind the task.

Through the motivation matrix, managers will have a sense of what pulls team members. If they are motivated for achievement, they would want to get the work done without hearing what a good job they did. What matters most is to perform the work to the standards set. Those motivated by recognition will look for pats on the back in front of their colleagues, calling their names at a public meeting and giving them recognition when deserved is their way of charging the batteries. And if they are motivated by power, they crave for authority, control, and the ability to make decisions. People who are motivated by power want the award only if it comes with a new title or a new set of tasks to be completed.

Therefore, the leaders that racked up a strong sense of where their teams are coming from can spot what urges them to produce.

  1.               The Four HorseMen

This is the technique that identifies itself as the brightest spot on a painting and catches the viewer’s eye. Applying this technique will make the manager a master of communication as he adds color to his words. Depending on the internal communication channel, the employees might only hear the words without assigning a face to the message. By selecting one of the four categories, the manager chooses how to emphasize words and engage the audience.

Speed– The two components, rate and pace, bring value to the message and allow listeners to follow the speaker. Rate is the speed at which the words are assembled, while pace is the speed at which the thoughts are stuck together. If the manager has to transmit an important message, it would help to build up a bit of speed before arriving at the central thing and then slow down while saying the main information that he wants people to bear in mind. Variate, and people will hang on to the words.

Volume– By alternating the loudness of the speech, one can gain attention and confidence, depending on the situation. In a big room, speaking at loud implies no fear and draws attention to the message. On the other hand, whispering forces the audience to focus and listen.

Stress– It does not refer to the stress faced when trying to meet a deadline, but the one that is applied to a word in order to emphasize something. By changing the stress, a word can be either lengthened or shortened. Applying this third pawn, the author holds the power over the importance of his sayings.

Inflection– Inflection measures the pitch of the message, attaching authority to the one who delivers it. For instance, when asking a question, the pitch goes up at the end of the phrase. Continuing so gives the impression of multiple questions asked. Lowering the pitch in a sentence provides authority and expresses confidence.

In conclusion, business objectives need to be clearly translated for all organizational layers. Internal communication serves as a bridge, connecting those who know what needs to be changed to those who have the power to make it happen. Once the bridge is built, everyone has been provided with a shared understanding of the company’s issues as well as of the “whys” behind the “whats.” The essential assets of an integrated communication are management credibility and trust.

If you’d like to learn more about developing strategies for your business, sign up for The KPI Institute’s Strategy and Business Planning Professional Certification.

Stakeholder Management: Nokia Siemens Network as a Partner

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Image Source: handelsblatt

Telenor Group is a telecommunication provider in 14 countries across Europe and Asia. They depend on reliable, cost-effective operational expenses and faith in delivering results when they choose their partners.

Aamir Ibrahim, the chief strategy officer, vice president cooperative fairs in Telenor Pakistan, explained their main principles in choosing their partners in the Pakistani market.

He believes that customer experience is very important to stay in the market. He said that customer experience is controlled mainly with network availability, which should show strong and continuous coverage all the time.

However, such availability brings more costs to the company in terms of power consumption and power infrastructure availability. This led them to look for other solutions to reduce operational expenses while providing the best services for their customers.

Atiq Ahmad, the chief technical officer, noted that finding a partner who can provide the right solutions for their problems while keeping the expenses within the budget has been one of the company’s main concerns.

All of these factors fit Nokia Siemens Network, showing Telenor-Pakistan that they can depend on them to provide robust products that can ensure the results they agreed on and consider the quality and reduction in operational expenses.

Nokia Siemens Network proved that they deserve to have a long-term partnership by providing efficient and cost-effective solutions for Telenor-Pakistan’s problems. These solutions are also within Nokia’s specialization.

Nokia Siemens Network accomplished this by doing continuous research on the telecommunication sector in terms of needs and the future developments that can be done to keep telecom providers competitive in the market. This way, they ensure the availability of solutions for problems that telecom providers face.

One of those problems is the end-to-end energy issues that telecom companies like Telenor-Pakistan face in terms of high operational expenses. Another is the environmental effects caused by the power networks that operate their sites. However, Nokia Siemens Network strived to provide different solutions to reduce operational expenses, provide trustful networks, and reduce environmental risks.

High experience in the market and good knowledge of customer needs and society’s expectations from a telecom provider are the factors why Nokia Siemens Network was chosen as the service partner for EMBARQ, a leading provider of broadband, entertainment, and voice services in the United States.

Jim Hansen, the senior manager of EMBARQ, said that to stay competitive, they should focus on what they are good at and find the right partner who can manage the sectors in which they are not specialized so they can get the best customer and meet employee satisfaction.

Tom Oothoudt, the manager of strategic planning and network operations focused on that Nokia Siemens Network, said that they are willing to improve their capabilities as well as their resources and solutions shared with EMBARQ to ensure reduction in operational expenses, customer satisfaction, and trusted solutions that will give advantages to the company in terms of results and high quality of services.

Maziad Al Harbi, the general manager of network services solutions at Saudi Telecom Company, a telecom provider in Saudi Arabia, said that the main reason for choosing Nokia Siemens Network to be their partner in delivering advanced services and the required platforms for their implementation is that they are experts in the Saudi market. Moreover, Nokia Siemens Network is said to have advanced knowledge of the market’s needs and what is required to satisfy the customers in addition to their worldwide experience.

He added that they are always active and doing their best to deliver the best solutions as the telecom company offers advanced services to the market faster than other competitors.

All of these reasons are accompanied by the teamwork that Nokia Siemens Network promotes. They believe that working closely with their partners strengthens the relationship, provides better solutions, and ensures a long-term relationship.

To learn more about developing strategies for your business and organization, read more about The KPI Institute’s Strategy and Business Planning Professional Certification.

References

  1. Normann, Richard and Rafael Ramirez, From Value Chain to Value Constellation: Designing Interactive Strategy, Harvard Business Review, 71 (1993) 65.
  2. Stephen L. Vargo and Robert F. Lusch, Evolving to a new dominant logic for marketing, Journal of Marketing, 68 (2004) 1.
  3. Robert F. Lusch, Stephen L. Vargo and Mathew O Berien, Competing through service: Insights from service-dominant logic, Journal of Retailing, 83 (2007) 5
  4. Chickery J. Kasouf, Jenny Darroch, Clase M. Hultman and Morgan P. Miles, Service dominant logic: Implications at the marketing/entrepreneurship interface, Journal of Research in Marketing and Entrepreneurship, 10 (2008) 57.
  5. Stephen L. Vargo and Robert F. Lusch, The service dominant logic mindset (2008), Available from:
  6. http://www.almaden.ibm.com/asr/summit/papers/arizonalusch.pdf.
  7. Franc Jacob and Wolfgang Ulaga, The transition from product to service in business markets: An agenda for academy inquiry, Industrial Marketing Management, 37 (2008) 247.
  8. Michael A. Hitt, M. Tina Dacin, Edward Levitas, Jean-Luc Arregle and Anca Borza, Partner selection in emerging and developing market contexts: Resource-based and organizational learning perspectives, Academy of Management Journal, 43 (2000) 449.
  9. Gulcin Buyukozkan, Orhan Feyzioglu and Erdal Nebol, Selection of the strategic alliance partner in logistics value chain, Int. J. Production Economics, 113 (2008) 148
  10. Szyliowicz, D., Dacin, M. T., and Ventresca, Political and institutional embeddedness: Alliance dynamics in the global exchange services industry. Working paper, Texas A&M University (1999).
  11. Stefan Wuyts, Peter C. Verhoef and Remco Prins, Partner selection in B2B information service markets, Intern J. Research in Marketing, 26 (2009) 4.
  12. Nokia Seimens Netowrk official website, Available from:
  13. http://www.nokiasiemensnetworks.com/.
  14. Telenor Pakistan official website, Available from: http://www.telenor.com.pk/

The Strategy of Memorable Gift Giving: How to Do Corporate Gifting Right

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Corporate gifting has become a $125 billion business in the US market alone. Corporate gifting is the practice of valuing and motivating employees through gifts, such as gift cards, branded items, edible treats, and non-physical favors like an eGift card or an experience. But what do employees generally think when they receive such gifts from the company they work for? 

The 2019-2020 Knack Business Gifting Strategy Report reveals that 77% of gift recipients feel more appreciated by the gesture. Sixty-seven percent believe that the giver values their relationship, and 59% think they did a great job. Forty percent report increased loyalty and a desire to work with the company longer.

However, the feeling of connectedness to the company increases by 50% if the gift received is “memorable.” So, what are the business gifting expectation gaps, and what does the strategy for memorable gift-giving look like?

The Business Gifting Expectation Gap

According to the 2019-2020 Knack Business Gifting Strategy Report, the most important factor that drives employee opinions as far as the corporate gifts they receive are concerned is the thought that went into the gift. Employees believe that it is important that the gifts received are selected for them, especially that the gift includes a personal message and has the employee’s name or initials on it. 

As for the satisfaction levels with the gift received, the most satisfied employees seemingly receive gift cards. The most dissatisfied employees are those who received company-branded items, significantly less, for that matter, than employees who received gifts of any other nature. Employees also agree that company-branded items are the least memorable gift a company can offer its employees.

The Strategy of Memorable Gift Giving

To make the best impact with its gifting initiative, any company should apparently focus on the uniqueness of its gifts, gifts with distinctive value attributes, and items that give back in some way. Another important factor to consider is that aside from gift cards, employees can only estimate the value of a corporate gift. That is why it is important that companies focus more on quality rather than quantity while making the most out of the manner in which the gift is presented to the employee in question.

The quality of the gift unwrapping experience can positively add to the value of the items within. The 2019-2020 Knack Business Gifting Strategy Report reveals that in most circumstances, employees do not expect to receive gifts that cost more than $150, while the average spending amount per gift revolves between $50 and $150.

How to Do Corporate Gifting Right

Planning and developing an effective corporate giving strategy turns out to be a little more complex than one thinks. The following best practices can be applied in terms of making the corporate gifting initiative easier for the HR and administrative staff while also creating a memorable experience for company employees:

  1. Establish a gifting initiative plan and budget: Outline the objectives of the initiative and set specific parameters for completion. For example, consider shipping fees for remote employees and packaging options for on-location recipients.
  2. Consider corporate etiquette for the gifting strategy: When giving personalized gifts, companies must ensure that gifts are maintained within the same monetary value and abide by the corporate guidelines.
  3. Practice outstanding personalization: Put the necessary time and effort in to make employees feel like the gifts were specially selected for each of them. While satisfaction with any gift may be part of the equation, memorability drives the loyalty and connectedness that create the ROI.

Corporate Gifting Trends in 2021

Gift cards are the gifting solution that always fits. They continue to be the safest and the most universally satisfying option for corporate gifts in 2021. Gift cards can be easily personalized while giving employees exactly what they want. E-gift cards seem to be the latest trend in card gifting in the corporate world, and millennials especially prefer them.

The corporate gifting business is booming. Gifting to employees is expected to grow even more in 2022, fueled by C-Suite Executives, 40% of whom plan to budget more for gift-giving strategies in the following year.

The desire to incorporate unique brand values into corporate gifts has reached its climax. Memorable gifting experiences humanize businesses while bonding and strengthening the relationship between an organization and its employees. 

Company-branded gifts have taken a major downturn. “Cheap” things with company logos on them are ranked first in the “Worst gifts ever received by a company employee.” Moreover, company-branded items drive the least satisfaction and are least appreciated by the millennial population segment. 

To learn more about developing strategies for your organization, check out The KPI Institute’s Strategy and Business Planning Professional Certification.

Assessing A Company’s Competitive Power in the Marketplace

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An essential part of assessing a company’s overall situation is determining the relative worth of its competitive assets, which are made of various resources and capabilities. This can gauge a company’s competitive power in the marketplace and detect whether it is impressively strong or disappointingly weak.

Analyzing resources and capabilities helps managers define the competitive advantage of the company. It also helps them determine if they can provide the foundation needed to sustain that advantage. The process involves two steps.

  1. Identifying the company’s resources and capabilities

A firm’s resources and capabilities are the core components of its competitive strategy. This is why it is essential that managers have a clear understanding of these terms.

A resource refers to a type of competitive asset that a firm can control or acquire. It can be a variety of things, such as production capacity, raw materials, and competitive advantage. Some firms have the advantage of being able to acquire higher-quality resources than their rivals.

A company’s brand is a resource, but some of its products are well known and have enduring value, while others are not. Similarly, Some R&D teams are more productive and innovative than others due to their talents and chemistry.

A capability is the ability of a firm to perform some tasks and services that are supported by its resources. Like resources, capabilities vary in form, complexity, and competitive importance. Most companies have recognized the capabilities of their organizations through the deployment of their resources. Some examples include Apple — for its product innovation capabilities, PepsiCo — for its marketing and brand management capabilities, and Nordstrom — for its superior incentive management capabilities.

In identifying resources, a company’s resources can be divided into two categories: intangible and tangible. 

Tangible resources are those that are easily touched or quantified. They include various physical commodities such as mineral resources and manufacturing facilities, and they also include various financial and technological resources of a company.

Intangible resources are often among the most valuable assets of a company. They include various intangible assets such as intellectual capital, human resources, and brands. Some of these assets are also known as intangible assets of the company.

When identifying capabilities, it is important to note that an organizational capability is complex. It is built up through the use of various resources. Most of it is knowledge-based, and its structures and processes are designed to support this process.

For example, the video game design capabilities for which Electronic Arts is known to derive from its highly talented game developers’ creative talents and technological expertise, the company’s culture of creativity, and a compensation system that generously rewards talented developers for creating best-selling video games.

Due to the complexity of the capabilities, it is harder to identify them properly. There are two approaches to uncover and identify a firm’s capabilities.

The first method starts by listing the resource as a starting point for assessing a firm’s capabilities. Since resources are built from them as they are utilized, they can provide clues about the type of capabilities that the firm has. For instance, a firm that has established specialized capabilities in logistics may be able to benefit from the latest RFID tracking technology.

The second method of identifying a firm’s capabilities takes a functional approach. Many capabilities relate to fairly specific functions; these draw on limited resources and typically involve a single department or organizational unit.  Capabilities in direct selling, promotional pricing, or database marketing all connect to the sales and marketing functions. Meanwhile, capabilities in basic research, strategic innovation, or new product development link to a company’s R&D function. This approach requires managers to survey the various functions a firm performs to find the different capabilities associated with each function.

  1. Examining the company’s resources and capabilities to decide which are the most competitively important and whether they can support a sustainable competitive advantage over rival firms.
The second step in assessing a company’s competitive power is to determine which assets are competitive and which can support a firm’s strategy and competitive advantage. This step is designed to evaluate its ability to sustain its competitive advantage.

The four tests that measure a resource’s competitive power are the VRIN tests. VRIN is a shorthand reminder standing for Valuable, Rare, Inimitable, and Nonsubstitutable.

The first two tests determine whether a resource or capability can support a competitive advantage. The last two tests determine whether the competitive advantage can be sustained.

VRIN tests for sustainable competitive advantage ask whether a resource is Valuable, Rare, Inimitable, and Nonsubstitutable.

  • Is the resource or capability competitively Valuable?

To be competitive, a resource or capability must be relevant to its strategy and make it more effective. The resource or capability must also contribute to its overall business model and improve its customer value proposition.

  • Is the resource or capability Rare? Is it something rivals lack?
Resources and capabilities common among firms and widely available cannot be a source of competitive advantage. 
  • Is the resource or capability Inimitable? Is it hard to copy?

The more difficult and costly it is for competitors to copy a company’s resource or capabilities, the more likely they will provide a competitive advantage. This is usually because doing so will require the company to spend a large portion of its resources implementing a strategy and operations that are not easily imitated.

  • Is the resource or capability Nonsubstitutable? Is it invulnerable to the threat of substitution from different types of resources and capabilities?

Even competitively valuable, rare, and costly resources to imitate may lose much of their ability to offer a competitive advantage if rivals possess equivalent substitute resources.

Most firms do not have the capabilities or resources to consistently pass the four tests. This is because many of them have a mixed bag of resources and capabilities – one or two quite valuable, many very good, some satisfactory to mediocre, and so forth.

Passing both of the first two tests requires more—it requires resources and capabilities that are valuable and rare. This is a much higher hurdle that can be cleared only by resources and capabilities that are competitively superior. Resources and competitively superior capabilities are the company’s true strategic assets. They provide the company with a competitive advantage over its competitors, if only in short.

A resource must maintain its competitive advantage and competitive superiority in the face of increasing competition. It must also resist the efforts of its competitors to find equal or inferior substitutes.

Only a few companies can truly pass the four tests. Some of these companies have the capabilities to endure and grow beyond the expectations of their peers. One example is Walmart, which can manage its logistics and supply chain operations that have surpassed its competitors for over 40 years.

Discover more strategy planning concepts through The KPI Institute’s Strategy and Business Planning Professional Certification course. You’ll be able to learn new best practices in the field through case studies and debates. Secure your slot today!

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