Competitive Advantage

Sub Topic


  • PKM + Knowledge Management + Competitive Advantage
  • Goal setting
    • If knowledge is the goose that laid the golden egg, we should have goals around it.
    • Goal types: Normative, strategic, operational
  • How To Turn Knowledge Into An Asset
    • Getting knowledge doesn’t mean it will be valuable to you.
      • Wrong knowledge
      • We forget it
      • We never apply it
      The company’s main objective is “transmutation of accumulated knowledge into a corporate asset, by:

Further Research

key presumption of this paper is that the concept of knowledge is scale free; it should apply in the same manner to individuals and organizations.
  • Firm Resources And Sustained Advantage
    • Inability to be copied
      • What knowledge is difficult to copy and what knowledge isn’t.
        • Celebrity
          • Elon Musk - Choosing areas that few others go into
            • Maximizing something else different than others.
        • Cumulative knowledge
          • Math
        • Combinatorial
        • Between K-16, we are taught that nothing is more important than learning. Afterwards, it falls off.
        • What if it keeps increasing in value the better we learn.
  • Knowledge as a source of competitive advantage
  • Value chain
  • Schools of competitive advantage

Personal Thoughts

  • The world is changing rapidly:
    • Markets
    • Culture
    • Technology
    • Players in markets
  • We want to have a competitive advantage and be one of the best where we choose to compete:
    • Job
    • Company
    • Raising funds
    • Recruiting employees
    • Capturing attention
  • Competition is fierce:
    • Global
    • Winner-take-most
  • Competitive advantage is temporary:
    • “Every competitive advantage is predicated upon a particular set of conditions that exist at a particular point in time for particular reasons. Many of history’s seemingly unassailable advantages have proved transitory because the underlying factors changed. The very existence of competitive advantage sets in motion creative innovation that, as competitors strive to level the playing field, cause the advantage to dissipate. That does not mean the search for competitive advantage is futile. Rather, it suggests that successful strategists need to cultivate a deep understanding of the process of competition and progress and of the factors that undergird each advantage. Only thus will they be able to see when old advantages are poised to disappear and how new advantages ca ben build in their stead.” —Clayton Christensen, The Past and Future of Competitive Advantage
    • Why
      • Nature of competition changes
        • What worked in the past no longer works
      • High profits attract competition
    • Example: Fortune 500
    • Example: Good To Great
  • Sustainable competitive advantage is the elusive holy grail
    • To exist, it needs to be possible for well-funded, smart competitors with other advantages to not be able to compete.
    • Is it possible?
    • What causes it? How has what caused it changed?
      • Past: physical assets, capital
      • Now: Intellectual capital
  • What does that mean for how we should make decisions about our career?
  • There isn’t much research on personal, long-term competitive advantage:
    • There is a lot on temporary advantage (ie - business model)
    • There is a lot on how companies create competitive advantage
  • This matters because companies are different than people.
    • We live longer than companies
    • We are more important than companies
  • At the same time, there are similarities
    • Compete for mates, jobs, and as entrepreneurs
    • We have to make more than we spend
  • So, what can we learn from companies and competitive advantage as there has been over two million academic articles that mention it.
  • In a world where advantages are temporary, the ability to generate new advantages becomes more and more important.
  • Idea value chain is important
  • Depersonalization is important
    • Before: Tacit knowledge embodied in a skill paid per hour
    • After: Depersonalized knowledge embodied in content, machine, or software

Paths to Competitive Advantage

Capability Gap
Total Quality Management (TQM)
* Top management commitment/leadership * Teams * Culture * Training / education * Process efficiency
* Deming * Dean * Bowen & Reed
Capability Gap
Functional/business system gaps
Capability Gap
position gaps,
Capability Gap
Regulatory / Legal
Capability Gap
Cultural or organization/ managerial quality gaps.
Resource Resource-Based Theory (RBT)
The traditional view of resources is land, labor, and capital. Knowledge is becoming the prime resource. —- Barney (1991) stated that not all firm resources hold the potential of sustainable competitive advantages; instead, they must possess four attributes: rareness, value, inability to be imitated, and inability to be substituted.
Financial Capital
Physical Assets
Hunt and Morgan (1996) proposed that "potential resources can be most usefully categorized as financial, physical, legal, human, organizational, informational, and relational”.
Intellectual Capital
George Stalk
Value Chain
What happens when the raw material or resource of an economy is knowledge?
Depersonalization Of Knowledge
Ability to get knowledge out of your head where you’re just exercising your skill to where it can be scaled.
Competence Development
(Johannessen and Olsen, 2003)
Differentiate Goods & Services
(Johannessen and Olsen, 2003; Teece et al., 1997),
Market Position
Economies Of Scale
Market Position
Economies Of Scope
Product-line breadth
Vertical Integration and Nonintegration
resources that are heterogeneous, rare, and difficult to imitate
Peteraf (1993) and Teece et al. (1997)

Internal / External

Another more general categorization has only internal and external sources. Internal sources include resources that are owned by the organization, activities, and skills that make it superior to its competitors. External sources are the external environment that has been a source of competitive advantage. It contains a variety of factors (political, economic, demographic and technological) that affect organizations positively or negatively. To achieve SCA, the organization relies on internal sources more. If the factors of external environment present opportunities for the organization and have the proper conditions, the advantage cannot be achieved only through the resources and capabilities of the organization but through its ability to deal with those conditions and investment opportunities.

Schools Of Thought

Resource Based Theory

Since the 1991 publication of the first Journal of Management special issue devoted to resourcebased inquiry, resource-based theory (RBT) has evolved from a nascent, upstart perspective to one of the most prominent and powerful theories for understanding organizations. —The Future Of Resource-Based Theory: Revitalization or Decline?



  • Meta-analysis of the empirical evidence related to the RBT’s core tenets (Crook, Ketchen, Combs, & Todd, 2008),
  • Critical examination of the methodology surrounding RBT (Armstrong & Shimizu, 2007)
  • Review of critiques of the RBT (Kraaijenbrink, Spender, & Groen, 2010)


  • Knowledge-based view (Grant, 1996)
  • Natural-resource-based view (NRBV) of the firm (Hart, 1995)
  • Dynamic capabilities (Teece, Pisano, & Shuen, 1997)


  • Jay B Barney

Hunt and Morgan (1996) proposed that "potential resources can be most usefully categorized as financial, physical, legal, human, organizational, informational, and relational”.

Hunt and Morgan (1996) proposed that "potential resources can be most usefully categorized as financial, physical, legal, human, organizational, informational, and relational”.

Hunt and Morgan (1996) proposed that "potential resources can be most usefully categorized as financial, physical, legal, human, organizational, informational, and relational”.

(Johannessen and Olsen, 2003; Teece et al., 1997),

(Johannessen and Olsen, 2003; Teece et al., 1997),


  • Business Models
  • Competencies (internal processes)

Knowledge management is the goose that laid the golden egg. It births competitive advantages in a changing world.

  • Types of knowledge
    • Tacit (Michael Polanyi)
    • Formalized
      • “Economic progress seems to be closely connected to the transfer of physical and intellectual work from human beings to machines and instructions to hardware and software, that is, a process of depersonalization.
  • Routine vs Nonroutine / Physical vs Cognitive / Low Skill vs High Skill
    • Nonroutine
    • High skill
  • Carving off repeatable work

Types OF Advantage

  • Doing the right thing (effectiveness)
  • Doing things right (efficiency)
  • Doing things differently (differentiation)


Briefly put, the economist's traditional categorization into land, labor and capital has been superseded by knowledge as the prime resource (Steward, 1997; Peters, 1992; Quinn, 1992; Marchand and Horton, 1986).
"If anybody (emphasis added) can do it, you can't make money on it." (Osten, 1999)