Strategic Assets– Rethink Your Competitive Edge in Shifting Global Markets: Strategic Muscle Ain’t What It Used To Be…

Strategic Assets are specific core resources, capabilities… that an organization possesses, which provides it with a significant and unique competitive edge that sustains it as growing, prosperous organization… In financial accounting, an asset is an economic resource; anything tangible or intangible that is capable of being owned or controlled to produce value. 

Simply stated, assets represent value of ownership that can be converted into cash (although cash itself is also considered an asset)… Under this definition, such things as; employees, customers, brands, supply chain… are not considered assets, even though they may be the critical factors in the economic success of an organization– This is because an organization does not have sufficient control over these entities to satisfy the accepted definition of an asset…

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But according to Paul O’Malley; strategic assets are key capabilities, resources, relationships… which are the basic ingredients for value creation and key driving factors in the success of a business… Examples of strategic assets might include; employees, customers, intellectual property, brands, distribution channels… According to John Kay; strategic assets are certain competitive advantages based not only on the distinctive capabilities of a business but on also on their dominance or market position

However, in today’s highly competitive business environment many so-called strategic assets may not be sustainable and eventually they become competitive liabilities rather than assets… So, have you reviewed the basic assumptions behind your strategic assets, lately… are they still valid, or are your strategic assets more of a liability?

Strategy- Strategic Fundamentals: The use of the term strategy or strategic has literally changed the map of the world and caused the rise and fall of many businesses, organizations, nations… The unique combination of wisdom, science and craft have made strategic value creation a universally sought after skill…

The basic premise of a strategy is that its development requires the courage to accept uncertainty… According to a French general; strategy is the art of conducting war not by means of coup d’oeil (glance or look) from behind a horse’s ears, but in an office on a map… Strategists must accept that they will not have all of the information and not see the spectrum of events, yet they must be committed to creating and implementing a strategy…

The uncertainty that may exist is not only a result of not having complete information and not being able to predict future events, it also is a result of the events generated by a dynamic and thinking competitor. The design of strategy with competitors in mind and their undetermined actions is what requires a strategist’s embrace of uncertainty… Strategy deals with competitive situation in an uncontrolled environment…

Strategy is the greatest ‘winning tool’ that man ever invented! It enables the practitioners to see clearly the future of any encounter before it’s undertaken,,, Strategy is ‘the thinking of the General’ and has been the secret art of success for thousands of years… According to Sun Tzu; all men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved... Business history is littered with examples of leaders who could not accept the uncertainty of strategy, and defining unsustainable ‘strategic assets’ and wounding-up settling for failure at the hands of competitive tactics…

In the article Competing on Resources by David J. Collis and Cynthia A. Montgomery writes: Competitive edge are the things that enable an enterprise to perform activities better or more cheaply than their rivals, e.g.; physical assets, prime locations, intangible assets, strong brand, technology capabilities, brilliant supply chain, outstanding employees…

As recently as 10 years ago, we thought we knew most of what we needed to know about competitive strategies, but the pace of global competition and technological change has left many businesses struggling to keep up… One business framework that is grounded in economics is ‘resource-based view’ or strategic asset view of a business…

This approach derives its strength from its ability to explain in clear managerial terms why some competitors are more profitable than others, how to put the idea of core competence into practice, and how to develop diversification strategies that make sense… it sees companies as having a very different collection of tangible and intangible assets and capabilities…

No two companies are alike because no two companies have the same set of experiences, or acquired the same assets and skills, or built the same organizational cultures… These assets-capabilities determine how efficiently and effectively a company performs its functional activities: Following this logic, a company is positioned to succeed if it has the best and most appropriate stocks of competitive relevant resources for its business…

These capabilities, built up over time, transform otherwise pedestrian or commodity inputs into superior products and make the companies that develop them more competitive in global markets… Competitive advantage, whatever its source, ultimately is attributed to the ownership of valuable resources (both tangible and intangible) that enables the business to perform activities better, more cheaply, different from competitors… Superior business performance is, therefore, based on competitively distinct set of resources (i.e., strategic assets), which are deployed within a well-conceived strategy…

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In the article Most Important Assets are Not on the Balance Sheet by Leslie Back  writes: In context of accounting, assets are defined as items of economic value, especially those that can be converted to cash, such as; property, equipment, inventory, and the like… Also, intangibles, such as; patents, trademarks, goodwill… are quantified for balance sheets…

These assets, as well as liabilities and retained earnings on the other side of the sheet, dominate corporate thought and action. In so doing, however, companies overlook their most important assets, its ‘employees’. The employee is the secret in the sauce and glue that holds organizations together– without ‘right’ employees, other assets are valueless… and, followed by a good business ‘reputation’ as the next most important asset…

Fortune Magazine has estimated that a company’s reputation represents 75% of the total value of an average business… Which brings us to the last non-financial asset; ‘corporate mission’… This asset, when appropriately applied, will protect all other assets. The ‘mission’ provides guidance: It gives employees a sense of purpose, it guides all decision-making, it the moral and ethical compass and written articulation of the organization’s soul…

When a ‘mission’ is clearly defined it gives direction on what assets should be acquired and where to divest… Hence, when an organization has a ‘mission’ beyond the mere of money-making, and when it considers its ’employees’ as its greatest investment, and when it secures its ‘reputation’ by doing what is right… then these, by definition, are strategic assets…

According to Cliff Bowman; companies are continually under pressure to make the most of their assets… In today’s highly competitive world, it’s essential to understand what ‘thing’ is giving your organization a competitive advantage or edge in the market place: What is it about your product or service that is valued by your customers, such that they buy it? What is your competitive edge– your strategic asset– your differentiator that separates you from the competition… You must identify those dimensions that are critical to your customers, and why they choose you over a rival…

Pinpointing the best way to deliver value to the customers is a strategic asset… Understanding your special qualities requires you to delve deep inside your organization to uncover the sources of advantage, many of which may not be obvious, but they are your organization’s competitive muscle and the key to your business success…

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However, in today’s global business landscape strategic assets can quickly become obsolete assets– basic assumptions about your competitive position and presumed strategic assets might not be valid… According to nine out of 10 executives; their companies developed annual strategic plans where they define their mission, competitive edge–strategic assets… Moreover, they develop these plans without consideration for the pace of change in their business environment…

As market pressures drive organizations to become more– flexible, responsive, able to change on a moment’s notice, the ability to rethink the execution of strategy based on new competitive assumptions is rapidly becoming more important than the strategy itself… According to Denise Lee Yohn; the amount of disruption in today’s markets (and the speed at which it happens) requires a very different planning approach. Instead of setting a definite strategy and following through at all costs, companies must focus on– strategically adapting to and excelling at whatever path they find themselves on…

Organizations must focus more on having the right people and less on the right plan, replace strategic planning with strategic decision-making, and nourish a culture of discipline, action, and results… Developing strategic agility starts with changing many of your ‘thought bubbles’ (i.e., beliefs, assumptions, rules) about your competitive edge–strategic assets and strategic planning process..

Accept the idea that many– ideas, beliefs, assumptions on which you based your plans may well be obsolete… Shift your thinking about competitive edge and focus on market realities, which means that you must automatically assume that markets are constantly changing… focus on what needs to shift in the organization, and how you can adapt to get to where you want to go.

Once you determine the necessary course corrections, take action immediately… It’s hard making-decisions without certainty about what the future holds, but the world moves so fast that hesitation can be fatal… And, once you fall behind, it can be very difficult to catch up… Make the development of strategic agility a strategic asset and priority for the organization…