Day 10 in MIT Sloan Fellows Class 2023, Introduction to Marketing and Strategy -3
Capture value
We learned how to create value( profit) in the market. Then the next topic is how to capture value. In other words, how to generate value by differentiating ourselves from horizontal competitors.
Market power and sustainable strategic resource
Before jumping into differentiation, we need to think about market power. This theory was introduced by Micheal Porter, and the essence of this theory is figuring out the relative position of my own company in the market and competitors. We need to look at only horizontal competitors( in the same value chain, but may in the different market segments).
Strategic resources may be introduced by some different terminologies( core competency), but they have almost identical meanings. The first foundation is Resource-Based Value by Barney in 1991.
https://journals.sagepub.com/doi/10.1177/014920639101700108
In a nutshell, a strategic resource is an internal resource to enable you to differentiate yourself from your competitors.
Requirements for strategic resources
There are four different requirements for strategic resources.
- Ownership and control
- Differentiation
- Satisfy customers
- Sustainability
Just to be clear, sustainability does not mean environmental protection or D&I. It just means the life length of your competitive advantage.
The beauty of the Mckinsey HR system
The professor introduced Mckinsey as an excellent example of strategic resources.
They successfully build an HR system to make their human capital a strategic resource.
Mckinsey's strategic resources are three components.
- Humans
- Relationship( with large clients)
- Brand image
With a strong brand image, they hire so many MBA students. (At MIT Sloan, there are 400 graduates every year. Nearly 80 students get offers, and 99% accepted an offer.)
After just two years of working experience, the firm encourages employees to leave the company. Why? There are two reasons. Firstly, not create a star consultant and make the HR system more robust. (MLB is the example of opposites) Secondly, Mck wants to transform its Human resource into relationship resources.
