Creating Sustainable

Competitive
Advantage and
Dynamic Capabilities

Lecture Outline
1. Defining and evaluating Competitive Advantage
2. Creating Competitive Advantage
3. Defining and evaluating Core Competence
4. Dynamic Capabilities and Superior Performance
5. Dynamic Capabilities in Action
6. Summary

Indicative Reading
Oliver, J.J. (2012). Winning in High Velocity markets: the
case of BSkyB. Strategic Direction. Vol. 28, No.10, 3-5
Oliver, J.J. (2014). Dynamic Capabilities and Superior Firm
Performance in the UK Media Industry. Journal of Media
Business Studies, 11(2): 57-77
Pettigrew, A., Thomas, A., and Whittington, R., (2007).
Handbook of Strategic Management. Sage Publications
Ltd., London.
Prahalad, C. K., and Hamel, G., (1990). The Core
Competence of the Corporation, Harvard Business Review,
May-June
Winter, S.G., (2003). Understanding Dynamic Capabilities.
Strategic Management Journal, Vol.5,171-80

2. Defining and evaluating Competitive

Advantage

A firm achieves
competitive
advantage in a given
market whenever it
outperforms it
competitors.
Pettigrew et al (2007:55)

Superior
benefits

Lower prices

Better
service

Faster
delivery

Beating the
competition
Competitive advantage is focused on
the pursuit of beating competitors.

a lower cost of production

ability to provide higher perceived
benefits

However this is a short term approach

as it;

improves on known competitive offers

doing the same, but slightly better
often seen in better prices and terms

Beating the competition

4. Defining & Evaluating Core

Competence
Core competencies are the
collective learning in the
organisation, especially how to
co-ordinate diverse production
skills and integrate multiple
streams of technologies.
Hamel and Prahalad (1990: 82)

Bain & Co

This approach to media strategy is about competing in the market

place in a

sustainable way.

The focus is on;

emphasising innovation and vision

a gateway to tomorrows opportunities

avoiding head to head competition

being competitively unique and differentiated

applying core skills to new products and markets

This approach to strategy making is a focused and integrative

approach to the management of media resources

what do we do well as a company?

analyse, in detail, 3-4 organisational skills

resources exploited to produce skills, capabilities and

competencies

core competency can take years to develop

'key factors for success' lie within company

strategy is not necessarily dictated by environment

Core Competence Criteria Test

Potential

to access a
wide variety of
markets

Make

a significant
contribution to
perceived customer
benefits

Difficult

for
competitors to imitate

Core Competencies
Breaking News

Natural
History

Family Content
Production
Management

Product
Innovation
Management

5. Dynamic Capabilities

Dynamic capabilities is
concerned with organisational
adaptation

Adaptation is centred on an
ability to reconfigure resources,
capabilities and competencies

Requires deliberate resource

investment

Occurs in a compressed
timescale due to the fast
changing nature of the market

Aims to produce positive effects

on corporate performance and
competitive advantage over
time

Dynamic
capabilities is
the ability to
build new
competencies

Danneels (2008:519)

Two case studies

How have UK television

broadcasters adapted the new
media environment?
A comparison of dynamic media
management capabilities
A comparison of media innovation
BskyB (2000-2011) ITV (2004-2011)

Dynamic Capabilities
Characteristics

Corporate strategies that are aspirational

Aspirational statements made by the Chairman/CEO

Create tomorrow's competitive advantages faster than
competitors copy the ones you possess today
Ability to bear high R&D costs for a sustained period
An emphasis on Product Development
Financial investment in people/processes
Identifying targets for Corporate Acquisition
Management judgement intuitive people that are correct

BskyB Financial
Performance

Aspirational statements

The top selling US car in

1963

-Top speed 135 mph; 0-60 in 9.8

seconds; 11.8 mpg.

BskyB: Aspirational
Statements
Sky seeks to invest
and adapt in order
to remain
competitive.
Rupert Murdoch,
CEO
(2003)

We challenge ourselves
constantly to be a business
that is adaptable
and embraces change.
Jeremy Darroch, CEO
(2008)

Our focus has been on setting the pace

of
change and re-affirming our appetite for
doing so.
James Murdoch, CEO (2006)

An emphasis on Product
Development

BskyB Product Innovation:

moving to multi-platform,
multi-product

ITV Financial
Performance

ITV Aspirational
Statements

Its too soon to

conclude definitive
plans for the
business, but
generally I have
developed more
positive impressions
than negative ones
Michael Grade
Executive Chairman,

Adapting to this
new media
environment
requires urgent
change to ITVs
strategy,
management,
culture and
organisation
Adam Crozier
Chief Executive, ITV

ITV Product Innovation: moving to multiplatform

What can we learn about Dynamic

Media Capabilities?
BskyB have reconfigured their resource base,
capabilities, and competencies to become a multiplatform, multi-product media company
BskyB have a corporate culture of risk-taking
BskyB have achieved dynamic capability and have
managed long-term media innovation by investing and
adapting
ITV have not adapted to the new media environment at
the same rate.
ITV have remained a TV broadcaster exhibiting signs of
path dependence rather than dynamic capability

6. Summary
Competitive advantage means satisfying consumer
needs better than the competition

Core competencies are the collective learning from

integrating skills, knowledge and technology to
produce a set of unique skills in an organisation

This combination can add value and create long

term, sustainable competitive advantage

However, core competencies can decay or become

core rigidities

Organisations must adapt their resource base,

capabilities and competencies to produce dynamic
capabilities