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Are you deploying and maximizing the capabilities and resources of your firm to their utmost? Would you like to see a model to help determine if your firm has a sustainable competitive advantage? I’d like to share with you an approach that is written about in most business strategy books, but that I see rarely implemented in the A/E/P industry.

My interest stems from my executive experience within global A/E/P firms, through my strategic coaching practice, and as a Faculty Fellow in an MBA program. In fact, my applied doctoral research was based on the work of Edith Penrose who developed what has become to be known as the Resource Based View (RBV) of strategy. The RBV, and I’m simplifying here, attempts to explain the persistent question as to why some firms do better than others. Her work essentially states that those firms that can better develop, acquire, hone, and deploy their resources and capabilities can outperform competitors. The question is how is that done?

The VRIO Assessment

Scholar and researcher Jay Barney expanded on Penrose’s work when he developed what is known as the VRIO assessment.

 I use VRIO Assessment to show firms how to identify and hone their competitive advantages and address areas requiring improvement. The approach is straightforward using these categories: Valuable; Rare; Inimitable; Organizational. Brief descriptions follow:

  • Valuable – do your resources and capabilities bring value to your customers? How do you know? Through your constant discovery and market research you’ll know what customers value and have a deep understanding of trends.
  • Rare – do you possess IP or unique resource and capability bundles that other firms don’t? For example, does your firm have the best, most innovative, and extensive portfolio in stadium design, the best bridge architects in the world, etc.
  • Inimitable – are your resources and capabilities difficult or costly for competitors to copy or replicate? Are you constantly developing, acquiring, and training to keep them world-class?
  • Organizational – do you have the technology, systems, and key staff to pull it all together. In a COVID-19 world, your organizational capabilities and ability to maximize your resources and deliver client value is unprecedented.

Going VRIO: How does your firm rate?

To assess the potential advantages of your resources and capabilities, set up this simple table. You may use Yes/No qualitative scoring and/or a quantitative score (0 to 100) for each factor. To complete this table quickly consider taking the results from the SWOT, TOWS, and Market/Competitor analysis you routinely do and feed it directly into the table. Be honest with yourself and don’t fall for that adage about “eating your own cooking.”

In the sample above, if you answer “Yes” to each category and can honestly and objectively score more than 90/100 your firm (or team if it’s for an individual pursuit), you have a sustainable competitive advantage.

What if you do not score a “Yes” or over 90 on each category? Depending on the category and your assessment for each one, your advantage will range from none, to competitive parity, to temporary advantage.

Consider constructing a VRIO Assessment. Keep it current in your CRM system and see how the results can work for you!

Keep thinking strategically.

I welcome your comments & questions.
STEPHEN F. MAYER, PH.D., P.E.

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