RENEWAL PROCESSES IN FAMILY FIRMS
LEVERAGING RESOURCES AND
CAPABILITIES FOR STRATEGIC
RENEWAL
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The resource-based view of the firm
Assumptions
firms can be conceptualized as bundles of resources
those resources are heterogeneously distributed across firms
resource differences persist over time
Definitions
• Resources are those specific physical, human, and
organizational assets that can be used to implement valuecreating strategies.
• They include the local abilities or ‘competencies’ that are
fundamental to the competitive advantage of a firm
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The resource-based view of the firm
Competitive advantage
Strategy
FIT
Industry’s critical
success factors
Capabilities
Competencies
Organizational routines
Norms and directives
Resources
Tangible:
• financial
• physical
Intangible:
• technology
• reputation
• culture
Human:
• competences and
specialized knowledge
• interaction and
communication abilities
• motivation
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The resource-based view of the firm
Basic tenets
When firms have resources that are valuable, rare, inimitable, and
non-substitutable (i.e., so-called VRIN attributes), they can achieve
sustainable competitive advantage by implementing new valuecreating strategies that cannot be easily duplicated by competitors.
‘Resources form the basis of unique value-creating strategies and
their related activity systems that address specific markets and
customers in distinctive ways, and so lead to competitive advantage’
When these resources and their related activity systems have
complementarities, their potential to create sustainable competitive
advantage is enhanced
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Resources at the basis of SMEs renewal
By deploying new combinations of skills and competencies, innovators
can develop new approaches to resolving industry problems.
The advantage of these firms is not their limited resource endowment
(“being more flexible; being more nimble…”).
What distinguishes these firms from others is:
a greater gap between resources and aspirations
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Resources at the basis of SMEs renewal
These firms act differently, as a consequence:
 from fit to stretch (fit between resources and opportunities)
 from resource allocation to resource leverage
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The leveraging of resources
There are 5 basic ways in which management can
leverage resources:
• concentrating them more effectively on key strategic
goals
• accumulating them more efficiently
• complementing one kind of resource with another to
create higher order value
• conserving resources wherever possible
• recovering resources from the marketplace in the
shortest possible time
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The leveraging of resources
1ST SOURCE OF RESOURCE LEVERAGE:
CONCENTRATING RESOURCES.
Convergence: have we created a chasm between resources and
aspirations that will compel creative resource leverage? Have we been loyal
to our strategic goals and consistent in their pursuit?
Focus: have we clearly identified the next competitive advantage that we
must build? Is top management’s attention focused firmly on the task until it
is accomplished?
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The leveraging of resources
2ND SOURCE OF RESOURCE LEVERAGE:
ACCUMULATING RESOURCES.
Extraction: are we willing to apply lessons learned on the front line,
even when they conflict with long-held orthodoxies? Have we
found a way to tap the best ideas of every employee?
Borrowing: are we willing to learn from outsiders as well as from
insiders? Have we established borrowing processes and learning
goals for employees working with alliances and joint ventures?
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The leveraging of resources
3RD SOURCE OF RESOURCE LEVERAGE:
COMPLEMENTING RESOURCES.
Blending: have we created a class of technology generalists who can
multiply our resources? Have we created an environment in which
employees explore new skill combinations?
Balancing: have we pursued high standards across the board so that
our ability to exploit excellence in one area is never imperiled by
mediocrity in another? Can we correct our imbalances?
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The leveraging of resources
4TH SOURCE OF RESOURCE LEVERAGE:
CONSERVING RESOURCES.
Recycling: do we view core competencies as corporate resources
rather than the property of individual businesses? Have we created
lateral communication to ensure that ideas aren’t trapped?
Co-option: have we identified the industry players who are dependent
on us for some critical skill or for their very livelihood? Do we
understand how to enroll others in the pursuit of our goals?
Shielding: do we understand competitors’ blind spots and
orthodoxies? Can we attack without risking retaliation? Do we know
how to explore markets through low-cost, low-risk incursions?
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The leveraging of resources
5TH SOURCE OF RESOURCE LEVERAGE:
RECOVERING RESOURCES.
Recovery: have we shortened product-development, orderprocessing, and product-launch times? Have we built global
brands and distribution positions that allow us to preempt slower
rivals?
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Critiques to the resource-based perspective
Excessive focus on the exploitation of existing
resources, rather than continuous development of new
ones to address changing markets: ‘It is evident that the
resource-based perspective focuses on strategies for
exploiting existing firm-specific assets’
How to address high-velocity markets, just
leveraging existing resources?
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
High velocity markets
1. Rapid and unpredictable change in the industry
2. Hypercompetition
3. Growing complexity
4. Sudden and dramatic change in markets
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
High velocity markets
Winners in the global marketplace have been firms that can
demostrate timely responsiveness and rapid and flexible
product innovation, coupled with the management
capability of effectively coordinate and redeploy internal and
external competencies.
Not surprisingly, scholars have remarked that companies can
accumulate even a large stock of resources and still not have
many useful capabilities.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
High velocity markets and dynamic capabilities
In high velocity markets it is necessary to introduce the
concept of ‘dynamic capabilities’, emphasizing two key
aspects which were not the main focus of attention in previous
strategy perspectives. The term dynamic refers to the shifting
character of the environment; certain strategic responses are
required when time-to-market and timing is critical, the pace of
innovation is accelerating, and the nature of future competition
and markets is difficult to determine. The term capabilities
emphasises the key role of strategic management in
appropriately adapting, integrating, and re-configuring internal
and external organizational skills, resources, and functional
competences toward changing environment.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Dynamic Capabilities Perspective
Firms compete on the basis of product design, product quality,
process efficiency, and other attributes. However, in a
Shumpeterian world (entrepreneurship=creative destruction),
firms are constantly attempting to improve their competencies
or to imitate the competence of their most qualified
competitors. Rivalry to develop new competences or to
improve existing ones is critical in a Schumpeterian world.
The dynamic capabilities approach places emphasis on the firm’s
internal processes, assets and market positions, the path along
which it has traveled, and the paths that lie ahead.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Dynamic Capabilities/Some definitions
‘Dynamic capabilities are the antecedent organizational and
strategic routines by which managers alter their resource
base–acquire and shed resources, integrate them together,
and recombine them–to generate new value-creating
strategies. As such, they are the drivers behind the creation,
evolution, and recombination of other resources into new
sources of competitive advantage’
(Eisenhardt and Martin, 2000)
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Dynamic Capabilities/Some definitions
“A dynamic capability is a learned pattern of collective
activity through which the organization systematically
generates and modifies its operational routines in pursuit of
improved effectiveness”
(Zollo and Winter, 2002).
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Dynamic Capabilities/Some definitions
‘We define dynamic capabilities as the firm’s ability to
integrate, build, and reconfigure internal and external
competences to address rapidly changing environments’. They
reflect an organization’s ability to achieve new forms of
competitive advantage
(Teece, Pisano and Shuen, 1997)
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Dynamic Capabilities
The dynamic capabilities perspective sees strategic initiatives
as resulting from the multi-layered recombination of firmspecific resources and competences.
Such recombination could be either intentional or
unintentional; can occur either at the environmental level or
within the organization; can be the result of managerial choice
or of blind external forces.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
Dynamic capabilities and strategic evolution
processes
According to this perspective, strategic evolution processes
are described as resulting from a continuous recombination
of routines and resources, based on a limited repertoire of
clearly traceable recursive recombination patterns.
This relative stable set of routines and resources which are
recombined through time can be defined as core microstrategies.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
Ettore
Alessi
Carlo
Alessi
Michele
Alessi
Stefano
Alessi
Alessio
Alessi
Giovanni Alessi
Carlo Alessi
Alberto
Alessi
Alberto Alessi
Michele Alessi
Ettore Alessi
Alessio Alessi
Stefano Alessi
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
•
1921. Alessi was established; producing metal household objects commissioned by
external clients
•
1924. Alessi started to produce trays and coffee-makers designed in-house
•
1930s. The company started to develop a design style with Carlo Alessi
•
1930s. Alessi started to export in few European countries and to experiment the
use of steel
•
1940-50s. Alessi converted almost entirely to military production
•
1955. Alessi started its first collaborations with external designers (first
partecipation to design exhibitions)
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
• 1960s. Investments in production and exports
• 1970. Alberto Alessi joined the company. ‘Alessi d’après’ and ‘Programma 8’ were
started
• 1983. The Officina Alessi trademark was created
• 1989. The first catalogue of wooden objects was published with the Twergi brand
name
• 1990. Alessi acquired Tendentse (porcelain and ceramics household objects)
• 1992. Alessi started collaboration with Philips
• 1993. Alessi stimulated a group of designers to explore the creative potential of
plastics (Family follows Fiction program)
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
Since 1921
Traditional stainless steel tableware
and household objects
Since 1985
Historical reproductions
1991
Since 1993
Plastic objects
Electric kitchen appliances w/Philips
2002
Watches w/SII Marketing Int. Inc.
2002
Alessi bathroom w/Inda, Laufen, Oras
Since 1985
Porcelain tableware objects
Since 1989
Traditional wooden household objects
2003
Cordless telephone w/Siemens
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
Alessi was founded in 1921
200
180
Turnover (billion Italian Lire)
160
140
120
100
80
60
40
20
0
1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Year
“a definition of success for business firms … their ability to
survive and grow”
(Nelson and Winter, 1982, p.9)
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
M ETAPROJECT
Brief
Evaluation
Desiderata
Engineering
The nucleus of new strategic initiatives at Alessi has been recognized as the
homogeneous set of organizational routines through which each new project
is conceived, evaluated and its essential ‘design philosophy’ maintained
throughout the production phase.
The basic elements of this nucleus of organizational routines and resources,
thus the Alessi core micro-strategies, are represented above.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
Results are business projects (e.g., the new family of plastics objects resulting
from the Family Follows Fiction metaproject) which apparently depart from
previous strategic initiative.
Every new strategic initiative in Alessi follows the same rationale: the core
micro-strategy is recombined with new designers’ idea and projects, skills and
experiences, with new design, lines, materials or technologies.
The core micro-strategy emerged from the routinization of micro-activities
carried out by people at all levels of the organization.
Alessi top management gradually learned to select and refine the
organizational routines which were providing most effective, thus
contributing to the construction of the core micro-strategy.
Fernando Alberti, PhD
RENEWAL PROCESSES IN FAMILY FIRMS
The Alessi example
Entrepreneur and managerial team
Strategic
intent or
purpose
Evolutionengineering
knowledge
Alessi factory.
Network of existing
designers and suppliers.
Network of new
designers and
suppliers
Existing resources
and competencies
Newly accessed
resources and
competencies
Dynamic Capability
Alessi
System of Core
Organizational
Routines
Recursive
recombinatio
n patterns
Strategic renewal.
New strategic initiative.
Previous strategic initiatives
Fernando Alberti, PhD