Competitive advantage and key success factors

by billso on Wednesday, 31 January 2007

This week my IS 6100 stu­dents should be read­ing chap­ters 1, 2 and 13. My IS 7010 stu­dents are well into the third mod­ule of their textbook.

In this unusu­ally long blog post­ing, I’ll dis­cuss two impor­tant con­cepts regard­ing strate­gic man­age­ment: com­pet­i­tive advan­tage and key suc­cess fac­tors.

Microsoft has launched a mar­ket­ing web site for the new Win­dows Vista oper­at­ing sys­tem, which was released to the US retail mar­ket yes­ter­day. It’s an unusual site. The spokesman, Demitri Mar­tin, barely men­tions com­put­ers, Microsoft or Win­dows Vista. The episodes, skits and com­ments focus on how com­pli­cated his life has become. By impli­ca­tion, Win­dows Vista offers his char­ac­ter hope for a less stress­ful life.

This is the first online ad cam­paign that I’ve seen with its own RSS feed, avail­able at http://www.clearification.com/rss/. The RSS icon is also vis­i­ble in the ad.

Of course, it helps to view the cam­paign at http://clearification.com with Microsoft’s web browser, Inter­net Explorer. I haven’t tried the site in Fire­fox or Safari, but my expe­ri­ence is that Microsoft’s web sites work best in IE.

As Patri­cia Win­ters Lauro of the New York times pointed out yes­ter­day at http://www.nytimes.com/2007/01/30/business/media/30adco.html, this cam­paign is a stark con­trast to the intro­duc­tion of Win­dows 95 almost 12 years ago. Jay Leno was the “face” of that cam­paign.

Apple’s spokes­men, Justin Long and John Hodg­man, are fea­tured in hilar­i­ous tele­vi­sion com­mer­cials that can be viewed at http://apple.com/getamac

(And just for the record, I use a Mac and a Win­dows PC.)

For my IS 6100 stu­dents, these mar­ket­ing cam­paigns are inter­est­ing exam­ples of con­cepts dis­cussed in Chap­ter 2. (My IS 7010 stu­dents might find this blog post help­ful, too.) Microsoft is the dom­i­nant provider of desk­top com­puter soft­ware. Some of Microsoft’s com­pet­i­tive advan­tages rely upon the ubiq­uity of the company’s prod­ucts and ser­vices. Almost every busi­ness uses Microsoft Office. Most uni­ver­si­ties in the US have stan­dard­ized on this pro­duc­tiv­ity suite, too. Most per­sonal com­put­ers come with a ver­sion of Microsoft Win­dows preinstalled.

A com­pet­i­tive advan­tage gives an orga­ni­za­tion enhanced capa­bil­i­ties for devel­op­ing and deliv­er­ing strate­gic value. Com­pa­nies should have sev­eral com­pet­i­tive advan­tages that are com­ple­men­tary, dif­fi­cult to copy, and sus­tain­able over the long-term. I believe that com­pa­nies rent, not own, their com­pet­i­tive advantages.

Apple has man­aged to increase its mar­ket share with the suc­cess­ful intro­duc­tion of Intel-powered com­put­ers to its prod­uct line. Apple has devel­oped and main­tained com­pet­i­tive advan­tages in the areas of usabil­ity and prod­uct design. The Mac­in­tosh and iPod are two good examples.

Over the last year, Apple has used its new Intel CPUs to offer enhanced com­pat­i­bil­ity with the Win­tel (Windows/Intel) com­put­ing plat­form. There are sev­eral soft­ware pack­ages avail­able that let Intel Mac­in­tosh users install and run Microsoft Win­dows appli­ca­tions. Apple’s Boot Camp, Par­al­lels and CrossOver Mac are three exam­ples that I’ve eval­u­ated. Some of these pack­ages run faster than tra­di­tional Windows-based computers.

It’s no sur­prise that Apple’s mar­ket share in the desk­top com­puter indus­try has risen over the last few years. By one recent esti­mate cited in http://www.applematters.com/index.php/section/comments/1788/, Apple now has 5% of the US desk­top com­puter market.

At the same time, both Microsoft and Apple must address sev­eral key suc­cess fac­tors (KSFs) in the desk­top com­puter indus­try. Over time, a company’s com­pet­i­tive advan­tage may be copied, ren­dered less valu­able, or oth­er­wise con­verted into KSFs. Com­pa­nies rent their com­pet­i­tive advan­tages (CAs), just as com­pa­nies rent mar­ket share. Nei­ther CAs nor KSFs can be bought and owned outright.

There’s a good list of KSFs for online retail­ers at http://retailindustry.about.com/library/bl/bl_yg0309.htm

Keep in mind that in most indus­tries, there are only a few KSFs, and these tend to show up in SWOT analy­ses as strengths or weak­nesses of spe­cific com­pa­nies in that indus­try. Here’s a PDF file that sum­ma­rizes some impor­tant ideas about SWOT analy­sis. There’s some more infor­ma­tion on pp 419–420 in the IS 6100 text­book. I’ve also posted a PDF file about SWOT analy­sis here.

As an exam­ple, sup­port for Uni­ver­sal Ser­ial Bus (USB) devices was a nov­elty in 1998. The orig­i­nal ver­sion of Win­dows 98 shipped with­out USB sup­port. To this day, many hard­ware man­u­fac­tur­ers include install disks with Win­dows 98 dri­vers for their devices.

Today, USB sup­port is con­sid­ered essen­tial in any desk­top com­puter and oper­at­ing sys­tem. Cus­tomers might ignore a com­puter man­u­fac­turer or oper­at­ing sys­tem sup­plier that does not include USB sup­port in their prod­ucts, unless that prod­uct has com­pelling fea­tures that obvi­ate the need for USB.

My favorite exam­ple of a KSF is in the ele­va­tor indus­try. Most build­ing own­ers and main­te­nance depart­ments can­not pro­vide spe­cial­ized ser­vice for their building’s ele­va­tors. There­fore, ele­va­tor com­pa­nies like Otis and Thyseen-Krupp pro­vide 24/7 repair ser­vice. It’s expen­sive, but it’s nec­es­sary to sup­port cus­tomers. No one wants to wait for a bro­ken ele­va­tor or be stuck in a bro­ken elevator.

Please note that KSFs are more spe­cific ver­sions of crit­i­cal suc­cess fac­tors (CSFs), which are dis­cussed in Chap­ter 10 of O’Brien & Marakas. (379–380).

Here is a help­ful PPT file about the five forces and value chain mod­els. I fixed this link on Feb­ru­ary 2 at 14:45 HT.

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Tagged as: Apple, competitive-advantage, example, hardware, Intel, iPod, key-success-factors, ksf, Microsoft, mobile, office, software, usability, Vista, Windows

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