The activities of the firm are summed up in the creation, expansion, management, preservation and delivery of value. The sine qua non of the delivery of value is distinctive, and distinctive is at the heart of competitive advantage. Otherwise, a firm may as well ask who is the least expensive, as they will soon outstrip the competition since there is no distinction in product or service. But this is not the case in successful business, and top tier business news sites are not filled with blasé attitudes toward winning over the dollar votes of customers. Rather, regular readings are replete with what it takes to win in an increasingly global and competitive market where information has exploded and diffusion of product ideals expand with increasing rapidity.
While I was studying in my MBA program, there were a number of models considered that attempted to create a framework that made some sense of how the winners did it, and those who missed opportunities were left as a footnote in history. The VRINE1 model is one of these business frameworks, with all the above cited distinctive qualities that act as drivers to a real win in an astonishingly competitive and crowded market. It is one thing to point out that competitive advantage gains momentum through the allocation of resources within the VRINE model, but what does this actually mean to the firm? The lines are somewhat blurred when it comes to rarity, nonsubstitutability exploitability since these are all activities that can be mimicked with enough capital. But aping good ideas is not enough, no matter how many resources are available to the firm. Sooner or later, when real and essential value is delivered, the customer will grow tired of the cheap (connotative to quality) knockoff, and cast their dollar votes toward quality. This is why I believe the three components mentioned, though essential, actually support the ultimate goal quality, in the context of inimitability.
I’ll ride my Apple hobbyhorse again to illustrate the point; enter the iPad. Every tablet in the history of computing has failed. This is because in every instance the firms delivered half-baked schlock. Through a tight integration of software and hardware (can you name another firm who is doing this yet? Kindle is getting there) Apple delivered nothing short of art, the convergence of technology with the humanities when they released the iPad over two years ago. That is inimitability and value. And although most of us will never approach such a dramatic influence, are you working in whatever capacity you can to create, manage, expand, preserve and deliver value? If not, why? If not, you may not be doing the bare minimum.
1 The VRINE model is an “Analytical framework suggesting that a firm with resources and capabilities which are valuable, rare, inimitable, nonsubstitutable, and exploitable will gain a competitive advantage.” Sanders, Gerry; Mason Carpenter (2009-11-11). Strategic Management: Concepts, ePub (2nd Edition) (Kindle Locations 2873-2874). Pearson HE, Inc.. Kindle Edition.
Carpenter, M. & Sanders, G. (2008). Strategic Management: A Dynamic Perspective. Upper Saddle River, New Jersey: Prentice Hall.