Competitive Advantage

What are bases for Competitive Advantage?

• Porter’s Generic Strategies– Cost Leadership– Differentiation

What are bases for Competitive Advantage?

• Porter’s Generic Strategies– Cost Leadership– Differentiation

• Resource Based View– Must have superior resources/capabilities

How do you sustain a competitive advantage?

• Barney: Your resources must be:– Valuable– Rare– Imperfectly imitatable– Non-substitutable

FOE and Competitive Advantage

• Key question: How do key stakeholders help create competitive advantage?

• Society (Chapter 8)

• Partners (Chapter 7)

• Investors (Chapter 6)

• Customers (Chapter 5)

• Employees (Chapter 4)

So, what are the major themes regarding Employees (Chap 4)?

“Just as companies now track brand equity and customer

equity, they should also track employee equity” (FOE, p. 91)

ACE Model of People Equity

• Alignment– Of employees (and units) with organization

• Capabilities– Mobilizing talent, information and resources to

meet customer needs

• Engagement– Passion for organizations as “great places to

work, purchase from, and even invest in”

Schiemann, Reinventing Talent Management, in press

Effects of People Equity

71%

18%

65%

37%

0%10%20%30%

40%50%60%70%80%90%

100%

Quality Performance Financial Performance

High People Equity Low People Equity

Schiemann, Reinventing Talent Management, in press

Effects of People Equity

Schiemann, Reinventing Talent Management, in press

7.7%

16.7%

Top Quartile PE Bottom Quartile PE

HR “Heroes”

“Everywhere I’ve worked where I had to hire people, the rule of thumb among managers was to involve HR as little as possible in the process.”

- Stewart, “Taking on the Last Bureaucracy” (1996)

Concerns About HR

• “They don’t know what they’re doing”– “Paper-pushers”– Credibility

• “They’re out of the loop”– “ They don’t understand my needs”

• “They get in the way”– “Tell me what I CAN’T do”