Creating Sustainable Competitive Advantage

and Dynamic Capabilities

1. Defining and evaluating Competitive Advantage

2. Creating Competitive Advantage

3. Defining and evaluating Core Competence

4. Dynamic Capabilities in Theory

5. Dynamic Capabilities in Practice

6. Summary

Outline

Oliver, J.J. (2016). High velocity markets drive adaptive capabilities, Strategic Direction. Vol. 32, No.1, 5-7

Oliver, J.J. (2014). Dynamic Capabilities and Superior Firm Performance in the UK Media Industry. Journal of Media Business Studies, 11(2), 57-77

Prahalad, C. K., and Hamel, G., (1990). The Core Competence of the Corporation, Harvard Business Review, May-June

Reeves, M., Levin, S., and Ueda, D., (2016). The Biology of Corporate Survival, Harvard Business Review, January-February, 47-55

Winter, S.G., (2003). Understanding Dynamic Capabilities. Strategic Management Journal, Vol.5, 171-80

Indicative Reading

“Companies are dying younger because they

are failing to adapt to the growing complexity of the environment. Many misread the

environment, select the wrong approach to

strategy, or fail to support a viable

approach with the right behaviours and capabilities”

Reeves, Levin and Ueda (2016:48)

“A firm achieves competitive

advantage in a given market whenever it outperforms it competitors”.

Pettigrew et al (2007:55)

2. Defining and evaluating Competitive Advantage

Superior benefits

Lower prices

Better service

Faster delivery

Availability of product/service

Competitive advantage is focused on the pursuit of beating competitors.

a lower cost of production ability to provide higher perceived benefits

However this is a short term approach as it;

improves on known competitive offers doing the same, but slightly better often seen in better prices and terms

Beating the competition

Beating the competition

3. Defining & Evaluating Core Competence

“Core competencies are the collective learning in the organisation, especially how

to co-ordinate diverse production skills and

integrate multiple streams of technologies”.

Hamel and Prahalad (1990: 82)

Managing Core Competencies

This approach to media strategy is about competing in the market place in a sustainable way.

The focus is on;

emphasising innovation and vision

a “gateway to tomorrows opportunities”

avoiding head to head competition

being competitively unique and differentiated

applying core skills to new products and markets

This approach to strategy making is a focused and integrative approach to the management of

media resources

what do we do well as a company?

analyse, in detail, 3-4 organisational skills

resources exploited to produce skills, capabilities and competencies

core competency can take years to develop

'key factors for success' lie within company

strategy is not necessarily dictated by environment

Core Competence Criteria Test

Potential to access a wide variety of markets

Make a significant contribution to perceived customer benefits

Difficult for competitors to imitate

Core CompetenciesFamily Content Production Management

Natural History

Product Innovation Management

Breaking News

4. Dynamic Capabilities in Theory

“Dynamic capabilities

is the ability to build new

competencies”Danneels (2008:519)

Dynamic capabilities is concerned with organisational adaptation

Adaptation is centred on an ability to reconfigure resources, capabilities and competencies

Requires deliberate resource investment

Occurs in a compressed timescale due to the fast changing nature of the market

Aims to produce positive effects on corporate performance and competitive advantage over time

Corporate strategies that are aspirational

Aspirational statements made by the Chairman/CEO

Create tomorrow's competitive advantages faster than competitors copy the ones you possess today

Ability to bear high R&D costs for a sustained period

An emphasis on Product Development

Financial investment in people/processes

Identifying targets for Corporate Acquisition

Management judgement – intuitive people that are correct more often than not

Dynamic Capabilities Characteristics

How have UK television broadcasters adapted the new media environment?

A comparison of dynamic media management capabilities

BskyB (2000-2011) ITV (2004-2011)

5. Dynamic Capabilities in Practice

BskyB Financial Performance

Aspirational statements

The top selling US car in 1963

-Top speed 135 mph; 0-60 in 9.8 seconds; 11.8 mpg.

BskyB: Aspirational Statements

“Sky seeks to invest

and adapt in order to remain

competitive.”Rupert Murdoch, CEO

(2003)

“Our focus has been on setting the pace of

change and re-affirming our appetite for doing so.”

James Murdoch, CEO (2006)

“We challenge ourselves constantly to be a

business that is adaptable

and embraces change.”Jeremy Darroch, CEO

(2008)

An emphasis on Product Development

BskyB Product Innovation: moving to multi-platform,

multi-product

ITV Financial Performance

ITV Aspirational Statements

“

“It’s too soon to conclude definitive

plans for the business, but

generally I have developed more

positive impressions than negative ones”

Michael GradeExecutive Chairman,

ITV(2006)

“Adapting to this new media environment

requires urgent change to ITVs

strategy, management, culture and organisation”

Adam CrozierChief Executive, ITV

(2010)

ITV Product Innovation: moving to multi-platform

BskyB have reconfigured their resource base, capabilities, and competencies to become a multi-platform, multi-product media company

BskyB have a corporate culture of risk-taking

BskyB have achieved dynamic capability and have managed long-term media innovation by investing and adapting

ITV have not adapted to the new media environment at the same rate.

ITV have remained a TV broadcaster exhibiting signs of ‘path dependence’ rather than dynamic capability

What can we learn about Dynamic Media Capabilities?

Competitive advantage means satisfying consumer needs better than the competition

Core competencies are the collective learning from integrating skills, knowledge and technology to produce a set of unique skills in an organisation

This combination can add value and create long term, sustainable competitive advantage

However, core competencies can decay or become core rigidities

Organisations must adapt their resource base, capabilities and competencies to produce dynamic capabilities

6. Summary