Strategic Management Dynamics

Chapter 2 - Resources Drive Performance

This Chapter starts by establishing the importance of rigorous causal analysis – pushing back from top-level performance outcomes through the logical chain of causality that accounts for those outcomes. This process ultimately exposes the fundamental relationship between resources and demand, revenues, costs and profits. The Chapter shows how equivalent principles operate in public services and voluntary organisations. This resource-driven perspective is compared with other approaches to understanding and forecasting performance. Links are made to the industry-forces view of performance, cost-leadership and differentiation, the value-curve approach and the resource-based view of strategy (RBV).

This Chapter includes connections to the following Strategy concepts: Value-Curve, Value Chain, Generic Strategies, Industry Forces and Vision & Mission.

KEY ISSUES

Key Issues

• The need for rigorous causal explanations of performance.
• From performance outcomes to the resources that drive demand and supply, revenue and costs.
• Measures of performance for a whole time-period vs. quantities of resources at an instant in time.
• Critical importance of tracking numbers over time, including non-business cases and functional challenges.
• From understanding history to estimating future performance - market-based and resource-based explanations and forecasts.
• Strategy dynamics and the resource-based view of strategy.
• Identifying, specifying and measuring resources – and definitions for resources and capabilities.