The particular importance of three distinctive capabilities: architecture, reputation and innovation

ADS

The particular importance of three distinctive capabilities: architecture, reputation and innovation
 

Architecture is the network of relationships and contracts both inside and outside the fi rm. Its
importance lies in its ability to create knowledge and routines, to respond to market changes and to
exchange information both inside and outside the organisation. Long-term relationships with other
organisations can lead to real strategy benefi ts that competitors cannot replicate. Examples include:

• the contacts between major construction companies such as Bouygues and government departments which place substantial contracts;
• negotiations between rail companies such as Nederlandse Spoorwegen and trade unions on new working practices to introduce new technologies and reduce costs
• corporate negotiation between pharmaceutical companies such as GSK and Merck and governments on new drug price structures

Reputation is the strategic standing of the organisation in the eyes of its customers and other
stakeholders. T his allows an organisation to communicate favourable information about itself to
its customers. It is particularly concerned with long-term relationships and takes lengthy periods
to build. Once gained, it provides a real distinctiveness that rivals cannot match. Examples include

• Reputation for good-quality work, delivered on time and to budget. Construction companies can gain immensely over time as they perform consistently in this area
•  Reputation for a quality service that is usually punctual and reliable. Railway companies can gain or lose in this area, particularly when they are competing for business against alternative forms of public transport such as buses.

Innovative capability is the special talent possessed by some organisations for developing and exploiting innovative ideas. Some organisations fi nd it easier to innovate than others because of their structures, culture, procedures and rewards. They may even innovate and then fail to take advantage of this against competitors. This is a highly important area of strategy that deservescareful study.

ADS