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December 4, 2005

Making Advantage Sustainable

In competition, we might spend a lot of time operating without knowing if we have an advantage. We organize our activity around the idea that we need one, and so we look both for how to get it and keep it.

But it's the nature of competition that the opponent constantly tries to eliminate the apparent advantage that we have; so it's an unfortunate fact is that the advantage we have might not be the one that we need.

The true challenge of "sustainable advantage" is that what we really want is "recurring" advantage, crafted from the limits of our own versatility.

Competition exaggerates our sensitivity to the cause-and-effect relationships of actions and events. When we perform well, it comes from finding reliable ways to make the right things happen on time.

Following that thinking:
- Behavior patterns become the focus of attention for generating the desired difference again in the future.
- Management is expected to drive and institutionalize successful patterns.

We keep score of management's effectiveness by tracking the accumulated moments of advantage, and organizational behavior is generally managed towards constantly getting another such moment by doing something that worked before.

This makes advantage appear to be primarily the result of discretion and discipline -- what most people recognize as "execution".

It also leans on management's pattern identification to forecast the way to what we think of as "repeat successes".

But really, management's ability to repeatedly succeed is structural in a different way. Management might steer behaviors, shaping their intent; but the behaviors take their form from their underlying enablers or "support" mechanisms: culture, infrastructure, and demand.

Despite the current emphasis on standards and best practices, there isn't a unique set of ideal enablers for having an advantage over another organization. In action, organizations blend different kinds of enablement into a structure, to support the ability to affect conditions as desired. The issue is always whether the blend is functional or dysfunctional.

The overall functional structure is composed of layers of enablers. Versatility is the result of being able to successfully blend them for meeting the necessities of the particular moment and place at hand.

For advantage, the coherence of the structure must support an operation that has suitable impact.
For sustained advantage, what must be maintained is effectiveness in blending the structure.

The key enablers are in two large groups: Business, and Organization.

Business enablers:
- Market position
- Performance logic

Organization enablers:
- Competency
- Infrastructure
- Ownership

Naturally, the organization is subscribed to host or empower the actions of the business. But as described in the following details, the underlying architecture of each party makes their co-operation rational. Building from the bottom first to the the top, we see the meaning and implementation of "structure" progressively change -- that is, in ways that allow each successive layer to exploit the preceding one.

In Ownership: structure secures capacity for generating resources
In Infrastructure: structure aligns resources for utilization access
In Competency: structure defines assurance of procedural options

In Performance Logic: structure prioritizes support for value generation
In Market Position: structure distributes locations for value capture

Facing opportunity and demand, the business must be able to dynamically re-organize itself internally, to draw on the latent throughput of capability that is most pertinent at the time. It requires an intelligence similar to that used to determine ad hoc routing alternatives through networks, or designing collaborative systems on the OSI model.

By further analogy, the language and the grammar stay the same, but the expressions spontaneously conform to the needs of the communication event by exploiting the connections allowed in the language and the grammar.

The real advantage comes from the impact of the expression; sustaining advantage requires a capability to generate new expressions continually -- to continue making impact and to leverage impacts already made.

For a fuller elaboration of this functional architecture, see the Archestra Topical Framework.

Posted by Malcolm Ryder at December 4, 2005 12:02 PM

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