Master Thesis
Towards a strategy that includes what we have,
what we want and what they want
Sebastiaan van Vugt
University of Groningen
Faculty of Economics and Business
Small Business & Entrepreneurship
June 22, 2015
Supervisor: prof. dr. P.S. Zwart
Co-assessor: dr. C.H.M. Lutz
S.van.Vugt@student.rug.nl
Student Number: s2814560
Prologue
We are all the same and we are all unique. We all want something and we all have something,
even if it were only potential...
How now do we realise our combined potential?
Acknowledgements:
Hereby I want to thank the people that have contributed to this work. First of all I want to thank prof. Zwart for agreeing to be my supervisor in the last moment and especially for believing in my potential and that of my research. Two big thank yous go to the owners of cafe de Doos and cafe ‘t Gat, A. Swart and L. Russchen, for agreeing to participate in this research and for sharing their competitive insights. Another thank you goes to the ninth customer to fill out a my questionnaire in cafe de Doos who was so kind to provide more than what was asked for on the back which ended up leading to important insights for this research. Finally I of course want to thank my parents who have supported me tirelessly throughout my study.
Towards a strategy that includes what we have, what we want and
what they want
Abstract:
Currently there are two major streams of literature that try to explain how a firm may be going to succeed within its competitive environment. The first is called the inside-out view (IO) and advocates heterogeneous resource bases as a source of competitive advantage. This is tempting because homogenous resources would allow every company to exploit the same opportunities which would result in a perfect competition without the possibility of having an advantage.
The second stream of literature is called the outside-in view (OI) which makes customer value the strategic objective. Both views make excellent points on strategy however currently there is not one reconciled theory that indicates when to use which type of information nor is it clear if either is sufficient to warrant strategic changes by itself. The resulting research question of this thesis was therefore ”When should business resources guide strategic decision making and when customer value?”. In order to investigate this question and get a better idea of the basics of strategy it was decided to take strategic information as an independent variable and study how this impacts on strategic change.
As insufficient data could be found from literature and in-depth business insights were needed it was decided to conduct a thorough qualitative analysis of two cafes in Groningen. The study of each cafe was conducted in two phases. In the identification phase, OI and IO information was gathered from multiple perspectives through various observations and interviews with the customers and owners of the cafe. Then in the consultation phase the various types information were presented and it was inquired what strategic changes would result.
As a template for IO mainly the RBV insights of Barney (1991) were used. Resources and bundles of resources (RCs) of the cafes were identified and it was established whether some had the potential to increase efficiency and effectiveness (V), were different from the competition (R), had the potential to stay different due to social complexities and historical conditions (I) or were hard to substitute (N) which together is called VRIN. Establishing OI
information mainly focused on identifying the customers’ current values, wishes for improvements and on a obtaining a deeper understanding of their needs and motivations.
The first owner received the strategic information relevant to his business in four stages and in each stage strategic changes were identified. In the first stage no information was presented, in the second IO information, the third OI information and finally all the information was provided and it was asked what changes would be made based on this information. For the second company IO and OI information were turned around in order to study if the sequence would be of importance.
It turns out that strategic changes were made based on both IO and OI information. OI information was however perceived as more important and had a larger impact. Both SBOs also preferred to first learn of the OI information and then of the IO information.
Results pointed however also to a difficulty in distinguishing between VRIN RCs and customer values, the inadequacy of VRIN RCs in inducing change by themselves, the insufficiency of considering only customer values in deciding on strategic change and the involvement of the mission in strategic decision making. Ideas were then generated based on IO, OI or IO+OI information and it was measured not only if these were accepted but if they would match the mission, customer value and available resources.
Based on limited evidence it turns out that there is a strong correlation of the fit between mission, customer value and resources that are within reach of the firm for the ideas that lead to strategic change. Therefore strategic decision making requires the consideration of resources, customer value and the mission in unison. These results have lead to the construction of a model for stakeholder analysis based on what stakeholders have and want (Figure 3).
According to the insights of this research the reaction to as well as the prediction and creation of changes in the match of the wants and haves of all the stakeholders involved is what makes strategy. Several propositions have been provided in order to test the newly developed theory.
Table of contents
1. Introduction 8 1.1 Introduction 8 1.2 Conceptual Model 11 1.3 Methodology 11 2. Literature Review 13 2.1 Introduction 13 2.1.1 Why change? 13 2.2 – No Strategic Information (0) 142.3 – The Inside-Out View (IO) 14
2.3.1 Defining resources. 14
2.3.2 Resource combinations. 14
2.3.3 Resource typology. 15
2.3.4 Defining “competitive advantage” according to the inside-out view. 15
2.3.4.1 Value. 15
2.3.4.2 Rareness. 16
2.3.4.3 In-Imitability. 16
2.3.4.3.1. (a) Unique historical conditions. 16
2.3.4.3.2 (b) Causal ambiguity. 16
2.3.4.3.3. (c) Social Complexity. 16
2.3.4.4 Non-substitutability. 17
2.3.5 How to change? 17
2.4 The Outside-In View (OI) 18
2.4.1 How to change? 19
2.5 Outside-In & Inside-Out (OI & IO) 19
2.5.1 How to change? 20
2.6 Mission 20
2.7 Conclusion 21
3. Research Design 22
3.1 Introduction - Dynamics and Perspectives 22
3.2 Population Sample 22
3.3 Data Gathering 22
3.3.1 Identification phase. 25
3.3.1.1 Establishing owner motivation and perception. 25
3.3.1.2 IO (see table 2 for an overview). 25
3.3.1.3 OI (see table 3 for an overview). 26
3.3.2 Consultation phase. 29
3.4 Data Processing 32
3.4.1 Identification phase - IO. 32
3.4.2 Identification phase - OI. 32 3.4.3 Consultation phase. 33 3.5 Research Quality 33 3.5.1 Controllability. 33 3.5.2 Reliability. 34 3.5.3 Validity. 35 4. Results 36
4.1 Results Company 1 – Café de Doos 36
4.1.1 Mission. 36
4.1.2 Identification phase. 37
4.1.2.1 IO. 37
4.1.2.1.1 Findings from the SBO. 37
4.1.2.1.2 Findings from the customers. 38
4.1.2.1.3 Findings from the customers of the competition (Cafe ‘t Gat) - The major RCs compared. 38 4.1.2.1.4 Observations. 39 4.1.2.1.5 Environment. 39 4.1.2.1.6 Literature. 39 4.1.2.2 OI. 39
4.1.2.2.1 Findings from the SBO. 39
4.1.2.2.2 Findings from the Customers and the customers of the competition. 39
4.1.2.2.3 Observations. 40 4.1.2.2.4 Questionnaire. 40 4.1.2.3 Ideas. 40 4.1.2.3.1 IO 40 4.1.2.3.2 OI 41 4.1.2.3.2 IO + OI 41 4.1.3 Consultation phase. 41 4.1.3.1 0. 42 4.1.3.2 IO. 42 4.1.3.3 OI. 43 4.1.3.4 IO + OI. 43 4.1.4 Ideas. 44
4.2 Results Company 2 – Café ‘t Gat 45
4.2.1.5.5 IO-2. 49
4.2.1.5.6 IO-3. 49
4.2.1.5.7 OI+IO-1. 50
4.2.1.5.8 OI+IO-2. 50
4.2.1.5.9 OI+IO-3. 50
5. Discussion and Conclusion 51
5.1 Discussion of the Results from Cafe de Doos and Implications for the Second Part of the Research
51
5.1.1 IO. 51
5.1.2 OI. 52
5.1.3 IO+OI. 52
5.2 Discussion of the Results from Cafe ‘t Gat and Cafe de Doos 54
5.2.1 Ideas. 54
5.3 Overall Discussion 55
5.3.1 Havant’s analysis. 56
5.3.2 The nature of the stakeholders. 56
5.4 Limitations 58
5.5 Propositions 59
5.6 Answering the Research Questions 59
5.7 Conclusion 61
6. References 62
Appendix A – Research and Interview Guides 67
Appendix 1: Research Guide - Identification phase 67
Appendix 2: Research Guide - Consultation Phase v.1 70
Appendix 3: Research Guide - Consultation Phase v.2 71
Appendix 4: Interview Guidelines 72
Appendix B – Identification phase Interview setup and results 73
Appendix 5: Interview cafe de Doos 1 – Owner 1 73
Appendix 6: Interview cafe de Doos 2 – Customers 1 79
Appendix 7: Interview cafe de Doos 3 – Owner 2 84
Appendix 8: Interview cafe de Doos 4 – Customers 2 88
Appendix 9: Interview cafe de Doos 5 – Customers of the competition 94
Appendix 10: Interview cafe de Doos 6 – Owner 3 100
Appendix 11: Interview cafe ‘t Gat 1 – Owner 1 114
Appendix 12: Interview cafe ‘t Gat 2 – Customers 1 120
Appendix 13: Interview cafe ‘t Gat 3 – Owner 2 125
Appendix 14: Interview cafe ‘t Gat 4 – Customers 2 129
Appendix 15: Interview cafe ‘t Gat 6 – Customers 3 136
Appendix 16: Interview cafe ‘t Gat 7 – Customers of the competition 141
Appendix 17: Results Company 2 – Café ‘t Gat 146
Appendix 18: Interview 8 – Owner 3 153
Appendix C - Identification phase - Information on both cafes 170
Appendix 19: Environment observation 170
Appendix 20: Friendly stranger involvement 172
Appendix 21: Literature 174
Appendix D - Identification phase - Questionnaires 175
Appendix 22: Questionnaire – Customers – cafe de Doos 175
Appendix 23: Questionnaire – Customers – cafe ‘t Gat 181
Appendix E: Transcripts
Transcript 1 – Interview cafe de Doos 1 – Owner 1 Transcript 2 – Interview cafe de Doos 3 – Owner 2 Transcript 3 – Interview cafe de Doos 7 – Owner 3 Transcript 4 – Interview cafe ‘t Gat 1 – Owner 1 Transcript 5 – Interview cafe ‘t Gat 3 – Owner 2 Transcript 6 – Interview cafe ‘t Gat 7 – Owner 3
1. Introduction
1.1 Introduction
In the field of strategy there are two seemingly irreconcilable approaches in determining how to obtain a competitive advantage. One view uses the customer as a focal point for maximising value creation and profit capturing and is called the outside-in view. Another view uses resources or “stocks of available factors that are owned or controlled by the firm” (Amit and Schoemaker, 1993) to explain how a company may be uniquely differentiated and equipped to reduce costs, exploit opportunities and/or neutralize threats (Barney, 1991; Newbert, 2008). The latter is called an inside-out view or more popularly the RBV which is short for the resource-based view.
Both views make excellent points on how to capture profits beyond the industry’s average yet literature does not specify when to focus on which of the two views. According to the outside-in view, firms compete by delivering customer value which according to Day & Moorman’s (2010) is about “the trade-off between the benefits that customers perceive they are getting from an offering and the perceived cost of obtaining these benefits—adjusted for the riskiness of the offer”. This makes customer focus and intent on delivering customer value essential and a strong argument in favour of the outside-in view. However if resources would not matter and could simply be assumed to be homogeneously distributed then every company would have the same opportunities and may exploit these simultaneously. This in turn would result in perfect competition without the possibility to make a beyond industry average profit (Barney, 1991). Both the customer and company resources are thus integral points in determining how to obtain a competitive advantage.
inside-out view a culprit causing too much attention to be spent within the organisation and too little on the customers. There are many examples where customer focus and a deep understanding of the customers’ needs have proved beneficial to the firm and have lead to above average performance. In their book “Strategy from the outside-in” Day and Moorman (2010) do however not mention the need for heterogeneous qualities of the firm in obtaining a competitive advantage.
Noble et al. (2002) conclude by saying that “there is no single strategic orientation that leads to superior performance in all situations” and call for a call for a comparative analysis of strategic orientations. Paladino (2008) compares the effects of a focus on resources with a focus on customers in innovation and performance and calls for further research in understanding the effects of both elements. Besides such comparative studies there are also indications that detailed qualitative research is necessary on further understanding the inside-out strategy. Currently the RBV is dysfunctional as “The value of a resource is too indeterminate to provide for useful theory” (Kraaijenbrink, 2010) and there are calls to include alternative metrics for measuring value (Newbert, 2008) as it is currently not well defined (Priem & Butler 2001). Kraaijenbrink (2010) also states that “the RBV community has clung to an inappropriately narrow neo-classical economic rationality and has thereby diminished its opportunities for progress over the last decade or so” thus further evidencing the need for and current lack of research in this area.
need for more knowledge on how both customer value and the RBV may be utilised in strategic decision making.
In conclusion, strategic decision making is dependent on both resources and customer value. Up to this date there is however no consolidated view on how the inside-out view may contribute to strategy making nor is it clear when resources should guide strategic decision making and when customer value. Such knowledge is necessary for firms in order to have a chance at commercial success as well as have a strong position among competitors. Therefore this research aims at answering the question:
When should business resources guide strategic decision making and when customer
value?
And sub Questions:
Is strategic information on either customer value or firm resources sufficient to initiate a
change in the way the firm is run?
Are strategic information on both customer value and firm resources sufficient to initiate
a change in the way the firm is run?
Is there a difference in perceived importance between strategic information based on
customer value and firm resources?
Is there a preferred sequence in analysing strategic information based on customer
value and firm resources?
1.2 Conceptual Model
The conceptual model of this study is the following:
Five values will be considered for the independent variable:
0: This is the control. In this situation no strategic information is provided. IO: This type of strategic information is based on the inside-out view. OI: This type of strategic information is based on the outside-in view.
IO+OI: This type of strategic information is based on both the inside-out view and the outside-in view. A distinction will be made between first considering the IO and then the OI and the other way around first considering the OI and then the IO. Therefore this variable will be further split in two:
IO
OI OIIO
1.3 Methodology
In order to be competitive remaining the same is often not an option. It has been theorised that strategic change can be made based on the company’s resources and on customer values. It is not clear however if heterogeneity of company resources alone can be a sufficient motivator for change nor is it clear if customer values without heed to resources is a sufficient motivator for change.
This thesis aims at developing theory on a more effective strategy that incorporates both inside-out as well as inside-outside-in views by means of qualitative research. At the end of this research no solid theory is expected to have emerged, rather logical patterns supported by evidence from the case studies and the literature research. These patterns may be used for the formation of
propositions that can be researched in subsequent theory testing. This thesis therefore deals with the theory development part of the empirical cycle (van Aken et al., 2012).
For the purpose of this study, from 2 competing cafes in Groningen, OI and IO data will (mainly) be gathered through observations and various interviews with the respective owners and customers (see table 2, 3 and 5 for the detailed approach). Strategic change will then be determined by asking the owners how this information will change the strategic management of the company (see table 4, 6 and 7). To the same end a number of ideas will be presented based on IO, OI and IO+OI types of strategic information.
2. Literature Review
2.1 Introduction
Strategy implies an “understanding of how [the firm] is going to succeed within its competitive environment” (Besanko, 2013). Towards this end both an outside-in view taking into account customer value and an inside-out view taking into account firm resources and the potential to differentiate itself from the competition are imperative. Consistent with the previous chapter, four strategies will be discussed in detail. These include 0 or no strategic information, IO or inside-out, OI or outside-in and IO+OI or a combination of inside-out and outside-in and will each be discussed in a separate paragraph in this chapter. Before discussing various strategies first reasons and possible consequences of strategic change will be discussed.
2.1.1 Why change? A change aimed at succeeding in the competitive environment
could be seen as innovation. The lack of directed change where ideas or inventions are translated into goods or services for which people will pay make a company vulnerable to others that do develop superior means of enticing people to pay for a good or service, especially when this may substitute the former good or service (Interpreted from Biemans, 2014, Besanko 2013 and Barney 1991).
There are plenty of examples in history of companies that initially performed very well but have seen their market share melt away due to a lack of innovation. Polaroid had a great technology for instantly developing photos but failed to adapt to digital photography and had to file for bankruptcy in 2002. Blockbuster was very big in VHS video’s that could be rented in stores. The concept was however overtaken by mail order DVD’s and later online streaming from Netflix. Still at its peak in 2004 Blockbuster filed for bankruptcy in 2010. Another example is Nokia. Recently it was still the undisputed leader in sales of mobile phones. However, by its late adoption of touch screen technology and integration with other services it lost its ground to brands such as Apple and Samsung.
strategic information a small business owner (SBO) will apply when forming a vision for change as well as to what (possible) effect such strategic approach is implemented.
2.2 – No Strategic Information (0)
When external strategic information is not provided the SBO has several rational and irrational choices to aid in strategic decision making. Prior knowledge of resources and customers may guide the SBO in making changes that can be seen as acting on IO or OI type of strategic information. This would be considered calculated rational. There are however also other types of intelligence that may provide legitimate support in decision making. These include e.g. learned behaviour or conventional behaviour and rules, intuition (where one guess is substituted for two) or imitation of expertise (where the guess of someone else is substituted for one’s own) (March, 1978). It will thus be interesting to observe how strategic decision making takes place in the absence of strategic information.
2.3 – The Inside-Out View (IO)
2.3.1 Defining resources. According to the inside-out view resources that are different
from the competition and hard to copy are at the basis of a firm’s competitive advantage. There are in fact many definitions of what resources are (Kraaijenbrink & Groen, 2008) but Barney (1991) uses the definition of Daft (1983) in which resources are “all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness”. Due to this particular definition being somewhat confusing as pointed out by Priem & Buttler in 2001 the definition of resources used in this paper will simply be “all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm”.
2.3.2 Resource combinations. Newbert (2008) makes a compelling case in favour of
resources needing capabilities in order to be of any use. It is therefore understood that combinations of the elements in the previously given definition may need to be combined. As capabilities is however included in the earlier stated definition of resources the combinations will simply be called resource combinations or RCs. For the purpose of this thesis when studying the potential of resources to deliver a competitive advantage, RCs will be considered. RCs will be defined as one or more assets, capabilities, organisational processes, firm attributes, information, knowledge and alike that are controlled by the firm that may deliver a competitive advantage.
2.3.3 Resource typology. In order to aid the structure of this research the investigation
will make use of Newbert’s (2008) typology of resources including financial, human, intellectual, organizational and physical resources as shown in table 1.
Financial Resources Capital, cash, equity, retained earnings, etc.
Human Resources Training, experience, judgment, intelligence, relationships, etc. of individual employees
Intellectual Resources Patents, copyrights, trademarks, trade secrets, etc.
Organizational Resources
Relationships with other firms (such as partners, suppliers, buyers, creditors), channels of distribution, corporate culture, etc.
Physical Resources Physical technology, plant and equipment, geographic location, raw materials, etc.
Table 1 – Definitions of resource categories (Newbert, 2008)
In fact this typology is based on Barney’s common (1997) typology with the addition of intellectual resources. This fits with the KBV theory which is similar to the RBV but focuses on intangible resources and considers heterogeneous knowledge bases to be the main determinants of performance difference (Deeds & DeCarolis, 1999).
2.3.4 Defining “competitive advantage” according to the inside-out view.
In order to provide a sustained competitive advantage resources ought to be heterogeneous and immobile (Barney, 1991). This insight has been used in order to define four empirical indicators. These are value (V), rareness (R), in-imitability (I) and non-substitutability (N) also called VRIN.
2.3.4.1 Value. According to Barney (1991) resources are valuable when they enable a
firm to conceive of or implement strategies that improve its efficiency and effectiveness and when they exploit opportunities or neutralize threats in a firm's environment. In 2001 Priem and Butler criticized this definition of “value” however as it appeared to be tautological in nature and therefore lack practical value. According to the most recent review which could be found on the resource based view, there is in fact still no useful definition for the “value” of a resource (Kraaijenbrink et al., 2010). In order to both circumvent the issues around value as well as stay close to the meaning of the inside-out view, which implies a prime focus on the resources of the firm, valuable RCs will be defined as “RCs that have the potential to increase efficiency and effectiveness when exploited” which is similar to the view of Haynie et al. (2009).
2.3.4.2 Rareness. Rareness is somewhat difficult to define. Barney (1991) considers it
obvious that valuable resources that are absolutely unique will generate a competitive advantage. In case there are other firms with a similar resource or set of resources Barney considers that it may still generate a competitive advantage as long as “the number of firms that possess a particular valuable resource (or a bundle of valuable resources) is less than the number of firms needed to generate perfect competition dynamics in an industry (Hirshleifer, 1980)”. Rareness has thus not been narrowly defined but instead it is clear that the more unique the particular RC is the better its potential of delivering a competitive advantage.
2.3.4.3 In-Imitability. Valuable and rare organizational resources can only be sources of
sustained competitive advantage if firms that do not possess these resources cannot obtain them. Barney (1991) states that “firm resources can be imperfectly imitable for one or a combination of three reasons:
“(a) the ability of a firm to obtain a resource is dependent upon unique historical conditions, (b) the link between the resources possessed by a firm and a firm's sustained competitive advantage is causally ambiguous, or
(c) the resource generating a firm's advantage is socially complex (Dierickx & Cool, 1989)”
2.3.4.3.1. (a) Unique historical conditions. Unique historical conditions refers to the
historic and social aspects of a firm. The RBV states that the ability to acquire and exploit some resources depends upon their place in time and space. As time is a unidirectional dimension, once a particular unique time in history passes it cannot be imitated. The firms that do not have the same space- and time- bound resources cannot obtain them. This makes such resources imperfectly imitable.
2.3.4.3.2 (b) Causal ambiguity. According to Barney (1991) causal ambiguity or an
imperfect understanding of how resources may confer a competitive advantage may be a barrier to imitation of such competitive advantage. Despite its logic it would seem that this would make such a barrier per definition not (fully) understood and therefore hard if not impossible to identify and leverage. Instead this thesis will therefore focus on the need for resources that are different from the competition (Deeds & DeCarolis, 1999) and that has the potential of staying different due to market imperfections (Powell, 2007).
2.3.4.3.3. (c) Social Complexity. Barney (1991) also states that firm resources may be
with the customer and the relations between the customers may contribute to rare and valuable RCs to deliver a long term competitive advantage.
2.3.4.4 Non-substitutability. According to Barney (1991) substitutability may occur
instead of imitation when either similar resources can conceive of and implement the same strategies or when very different resource may be strategic substitutes. Top management teams are given as an example of the former. Different teams will consist of different people with different operating practices, will have a different history etc. but may be strategically equivalent and thus substitutes. As an example of the latter charismatic leaders conferring a vision to the management is compared with formal planning system. These are very different but may also be strategically equivalent and therefore considered substitutes.
2.3.5 How to change? Thus far few empirical studies have been conducted towards the
RBV’s suitability in providing useful strategic advice. Two studies in that direction include those of Newbert (2008) and Rangone (1999). Newbert (2008) finds that rare resources and capabilities correspond to having a competitive advantage which in turn has been related to an increased performance. Rangone (1999) describes a very sophisticated method for determining strategic value and strategic consistency and applies this method to 14 companies. Despite being very convincing no actual proof is given that resources identified in this way really correspond to performance. No empirical research has been found studying how heterogeneous resources may be deployed to create a competitive advantage. Instead as remarked by Kraaijenbrink (2010) researchers do not even agree whether the RBV was meant to be descriptive or prescriptive (Lado, 2006) and this remains an ongoing issue (van de Ven, 2007).
This study will however build on Barney’s (2014) premise that there are in fact plenty of managerial implications to the RBV and will focus on (non-tautological) aspects that can be analysed by a researcher, which, possibly combined with interdisciplinary knowledge, will have performance implications for small firms. It is important to realise though, that a correspondence to a construct like competitive advantage or even performance is not the same as actually increasing performance. The lack of knowledge of how to change in a way that increases performance implies a lack of understanding how a firm may succeed within its competitive environment and thus a lack of strategy (Besanko, 2013). For these reasons this qualitative study will focus on actual changes based on various types of strategic information.
The difficulty will be in interpreting how an RC may be utilised to improve competitiveness. If for example there is a special bond between the personnel and the customers that could be considered VRIN the question is how to enhance this. Or if a VRIN RC is a complicated mix of resources it may not necessarily be clear if adding or removing a resource will make that RC a better or a worse (but still) VRIN RC. Prior research into the RBV does not answer these questions. It will therefore be very interesting to learn from the SBO’s decision making process by providing insight into heterogeneous resources and inquire about the changes this will induce by means of a thorough qualitative research. Moreover it will be interesting to learn if customer value is taken into consideration as well.
2.4 The Outside-In View (OI)
Where the essence of the inside-out view is best summarised as the need for unique resource combinations the essence of the outside-in view may be best summarised by a quote from Jeff Bezos: “If you are competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.”. It thus assumes that superior customer focus may allow a firm to deliver more value, more relevant products and is more capable of adjusting itself by staying up to date on the customers’ needs.
According to the outside-in view, strategy is designed around the market and focussed on achieving, sustaining and profiting from customer value. Deep market insights are used as a guide in this respect (Day & Moorman, 2010). With this more is meant than just asking customers what they want. It means understanding what they want by “living with the customers”. By continuous dialogue as well as observing and experiencing what the customers really do in everyday life it becomes apparent what difficulties are faced and what solutions may be needed (Biemans, 2010). It is thereby not enough to simply ask what customers want or need. Day & Moorman (2010) give a good example in this respect related to Ford’s production of the Windstar minivan. When asked about the minivan’s attributes, only 30% of buyers thought a sliding door was a good idea which prompted Ford to forego this feature. Competition with in-depth customer insight however did realise this feature actually solved customer problems, did
add this 5th door and were so successful that Ford had to redesign its van in order to keep up
with the competition which cost Ford over half a billion USD. Narver et al. (2004) support the need for deep market insights by providing empirical support for the role of proactive market orientation in new-product success. Drechsler et al. (2013) linked the ability to translate customer needs into product characteristics indirectly to firm innovation performance. Gourville
(2006) makes another different but excellent point as to why customers have to be understood when introducing a new product on the market. Customers on average appear to have the tendency to value what they have 3x more than what they do not have regardless of anything else. Similarly companies have a tendency to overvalue their own products by a factor 3 leading to a potential discrepancy in value perception that is 9x. A closer understanding of the psychology and value perception of the customer and the company may thus provide better strategic focus to a company.
2.4.1 How to change? The advantage of outside-in thinking is that when deep customer
insight is obtained it will be obvious what can be changed to better accommodate the customers. It is however less obvious whether this should actually be tried. Questions that may need to be answered before making such a decision could be “Can customers afford it?”, “Is it actually feasible to accommodate the customers?” (do we have the resources?), “Can it be profitable?”, “Can we do it more efficiently and effectively than the competition?”, “How long will this change provide benefits?”. When advising the SBO about customer values and when asking whether this information will prompt the owner to make strategic changes it will be worthwhile to inquire about the cognitive process behind the SBO’s answer and whether other strategic elements such as the former play a role as well.
2.5 Outside-In & Inside-Out (OI & IO)
value in the business model but at the same time suggests business model design to start with selecting technologies and features (Teece, 2010: figure1) which is clearly an inside-out approach. The subtleties involved that are needed to make proper use of both theories are not explained and the field of business models remains fragmented with various definitions of what a business model actually is (Zott et al., 2011).
The point where inside-out and outside-in meet is a matter of perception and control. In the outside-in view customers value whatever they value, and fulfilling this value serves as an objective, regardless of what resources a firm actually controls towards this end. If a company however does have the resources or bundle of resources that match a customer value and competition does not control these resources and has difficulty acquiring such control it can be that customer value and rare resources are one and the same.
2.5.1 How to change? When information of both customer values and VRIN RCs is
presented there are a number of possible responses. If the goods or services that customers value is the same as the identified VRIN RCs there is a strong indication, with the support of both IO and OI theories that these are worth investing in and worth developing. On the other hand it is also conceivable that the customers value something that can by itself not be linked to a VRIN RC. This could for example be the availability of coca cola in a cafe. This will be easy to imitate and can therefore not be called a VRIN resource but is likely to be missed when not available nonetheless. In this case it is expected that the SBO will invest in such a customer value based on the wisdom of the OI view only. The other way around the SBO may invest in VRIN RCs even if there is no direct indication from the customers that it would be worth doing so. It should be noted that the SBO may have detailed practical information beyond that of what the researcher is able to gather through IO and OI analysis which could assist in the change decision making process. It is e.g. possible that necessary investments do not match the available budget, are not practical or not feasible for deeper reasons. It is also possible that certain bundles of VRIN RCs are carefully constructed based on preconceptions, that investments are made based on a deep knowledge of the customers or a combination of these. The response of the SBO is therefore expected to provide rich learning for the IO and OI views.
2.6 Mission
the larger environment. According to Strong (1997) a mission is the organisation’s vision of its future position and how it will be achieved. Different authors have different opinions what exactly should constitute a mission statement but a few elements will be summarised. According to
Ackoff (1986) a mission statement should contain goals and define the role of all stakeholder
groups. Abell et al. (1980) propose to include the customer groups to be satisfied, the customer needs to be satisfied and how to satisfy these needs. Kotler (1984) suggests among other elements to include environmental considerations, available resources and distinctive competencies. Furthermore Drucker (1973) states “Only a clear definition of the mission and purpose can enable the organization to achieve a realistic business objective”. It does appear that both the RBV and customer values may be tied to the mission and therefore the mission will be included as an element of this research.
2.7 Conclusion
In business, change is frequently necessary yet there is no good understanding of how strategic change decisions are made. To this end business models may involve resources and customer values but it is not clear when to consider each of these. Also mission statements seem to be involved in strategic change and may also deal with resources and customer values as well as a firm’s goals. In the course of this research, for the two cafes that will be analysed, these three elements will be systematically and thoroughly identified according to different perspectives (see Research Design, table 5). The results will then be systematically presented to the respective SBO’s while asking for the changes these induce (see Research Design table 6 and 7). By recording and analysing the answers more insight will be gained in potential preferences for, differences in and preferred sequence of OI and or IO strategic information.
3. Research Design
3.1 Introduction - Dynamics and Perspectives
Current study will gather various strategic information through multiple perspectives and intends to identify the strategic changes this will effect.
3.2 Population Sample
For the current in-depth qualitative study 2 small companies will be analysed. For this purpose 2 cafes will be chosen as this concerns an industry with many competitors. In this environment strategy is assumed to be important in gaining a competitive advantage (Besanko, 2013). Furthermore, the advantage of choosing small businesses is that it is more likely that the owner/ manager can be interviewed. These are expected to be most qualified in answering accurately on the survey questions (Newbert, 2008).
In order to take into account owner motivations and the possibility that the company is run in a non-entrepreneurial fashion, only companies with an owner intent on strengthening the firm’s strategic position will be analysed.
3.3 Data Gathering
The researcher will in this study take a dual role of analyst and consultant to the owner of the firm. For both companies the resources that are controlled will be identified as well as how these are bundled and whether these are VRIN. To this end the information sources provided in table 2 will be addressed.
Source Purpose
Observation (1s) Exploration of resources controlled
SBO interview (1st) 1) Exploration of resources controlled
2) Understanding how resources are bundled
Customer interviews (10 customers, 1st) 1) Exploration of resources controlled
2) Understanding how resources are bundled
Observation (2nd) Understanding how resources are bundled
Friendly stranger (1st) 1) External validation of resources controlled 2) External validation of how resources can be bundled
SBO interview (2nd) 1) Understanding how resources are bundled 2) Match of RCs with empirical indicators (VRIN)
Observation (3rd) Understanding efficiency and effectiveness of RCs
Customer interviews (10 customers, 2nd)
Match of RCs with empirical indicators (VR)
Customer of the competitor interviews (10 customers of a competitor)
Match of RCs with empirical indicator (R)
Environment Match of RCs with empirical indicator (R)
Literature Match of RCs with empirical indicators (VR)
Friendly stranger (2nd) External validation of Match of RCs with empirical indicators (VRIN)
Table 2 - IO Identification phase – The various sources of information and their purpose in
adding to the IO information
For both companies information will also be gathered about what the customers value which is shown in table 3.
Source Purpose
SBO interview (1st) Customer value exploration – currently attended Customer value exploration – not attended
Customer interviews (10 customers, 2nd) Customer value exploration – currently attended Customer value exploration – not attended
Observation (4th) Customer value exploration
Customer of the competitor interviews (10 customers of a competitor)
Customer value exploration – currently attended Customer value exploration – not attended
Observation (5th) Customer value exploration
Questionnaire (all customers) Validation of customer values
Friendly stranger (2nd) External validation of customer values
Table 3 - OI Identification phase – The various sources of information and their purpose in
adding to the OI information
Detailed information on data gathering of IO and OI information may be found in table 5.
Gathered information will then be presented to the respective SBOs in a structured manner in a third interview in order to gather information about the changes this will induce. In case of the first company the presentation will be such:
Type Information presented Purpose
0 Nothing Establish a background against which to measure change
IO IO information Find out what changes will be made based on IO strategic
information / VRIN RCs
OI OI information Find out what changes will be made based on OI strategic
information / customer values
IO+OI IO and OI information Find out what changes will be made based on OI and IO strategic information / customer values and VRIN RCs, which is preferred and which sequence is preferred.
Table 4 - Consultation phase – Types of information that will be presented and their purpose
Detailed information on the questions that will be asked may be found in table 6. In case of the second company the presentation of IO and OI information will be turned around in order to understand the importance of receiving one these sets of information first (see table 7).
3.3.1 Identification phase. In the identification phase, information will be gathered
about which resources are available to the company, how they are bundled and which of these are rare, valuable, inimitable and non-substitutable as well as about the value perception of the customer. Information gathering will be through interviews with the owner, 10 customers and 10 customers of the competitor but also through observations inside and outside the company, questionnaires, literature research and through a conversation with an outsider (a friendly stranger; Miles and Huberman, 1994) who may provide fresh ideas and a fresh perspective. The involvement of a friendly stranger is useful for exploring additional avenues and eliminating plausible alternatives. A detailed approach for the identification phase is given in table 5. In the left column is a description of the information source being accessed while in the right column there is a description of the type of information that is pursued followed by how the information will be obtained or in case of an interview, the question that will be asked. Overall the approach is such that the various perspectives verify previous findings and add additional information. For reasons of efficiency, various types of strategic information (IO or OI) may be obtained in a single interview. Headings in the table indicate the type of information that is collected. The questions of the questionnaire have not been specified as this will be tailored to the previous findings. The customer questionnaire aims to validate what the customers value and would like to see developed thus adding to a deeper understanding of the customer.
3.3.1.1 Establishing owner motivation and perception. In the first interview with the
SBO (1-SBO), information will initially be gathered about the motivation and perception of the owner. This information will be used in the end to understand the reason for adoption or non-adoption of a strategy or idea as the predicted effect itself may not be a sufficient motivation for adoption.
3.3.1.2 IO (see table 2 for an overview). All steps towards gathering IO strategic
information are described in table 5 under the headers IO. In the first interview (1-SBO) information will be gathered about the available resources and the way these are bundled. These RCs are then compared to answers from 10 customers of that firm (2-C). The questions are such that the customers may also come up with resources and bundles of resources that are different from those of the SBO. The RCs identified in this way are subsequently discussed with the before mentioned friendly stranger (FS-1) and possible new insights in the RCs are then discussed with SBO (3-SBO). In the second interview with the SBO (3-SBO) it will also be
determined which RCs may be valuable, rare, inimitable and non-substitutable. Towards this end questions will be asked as stated in table 2 under 3-SBO which have been designed according to the previously stated definitions of V, R, I and N. These will thus determine whether identified RCs may increase efficiency and effectiveness, may be different from the competition, involve social complexities or unique historical conditions and whether substitutes are perceived to be available or not. Again the interview with the business owner will be validated against 10 customer perspectives (4-C) in a fashion that allows for new insights to be added to the previous. With the knowledge of which RCs should not be available at a competitor, 10 customers of the competitor (6-CC) will be interviewed in order to verify that the 3 most frequently named valuable and rare RCs are indeed not present at the competitor. As a background comparison 10 customers of the client will be asked the same questions as well (5-C). In order to get deeper insight into the available resources every interview is also followed by an observation (Observation 1-5) where the efficiency, effectiveness and uniqueness of the RCs can be experienced firsthand. For the same purpose an observation of the close environment (Environment) and a literature study (Literature) will follow. Finally the friendly stranger (FS-2) will be presented with the VRIN RCs that have been found and will be asked how this information may help develop the client’s competitive edge. These insights will be added to the previous information and together this will culminate into a report that will be presented to the SBO in the consultation phase.
3.3.1.3 OI (see table 3 for an overview). All steps towards gathering OI strategic
more ways than one. This will deliver further insights as well as add to the credibility of the research on the outside-in strategic analysis.
Establishing owner motivation and perception 1-SBO
Motivation: What is your mission?; What do you perceive as being performance?; How do you pursue performance?; How do you strengthen you position compared to the competition?
IO: Exploration of resources
Observation 1 Resource exploration: Observation of resources present
1-SBO
Resource exploration: Which are the most important resources of this company?
Resource identification: In each category (Financial, Human,
Intellectual, Organizational and Physical resources) which resources do you have?
IO: Verification of RCs
1-SBO
Resource bundling: Which resource bundles do you perceive? (i.e. which combinations of resources are there that together have a desired effect?)
Resource bundling: Do you think these resources may be bundled in this way? (examples are provided)
OI: Exploration of customer values 1-SBO
Customer value exploration: Why do customers come here?; What do they value most?
Unattended customer value exploration: What don't you have that the customers may value?
IO: Verification of RCs
2-C
Resource exploration: Which do you perceive to be the most important resources of this company?
Resource bundling: Which resource bundles do you perceive? (i.e.
which combinations of resources are there that together have a desired effect)
Resource bundling: Do you perceive these resources as being connected or individual? (examples are provided)
Observation 2 Resource bundling: Observation of the C to perceive the resource
bundles in practice
FS-1 External validation: The researcher will present the findings on the
resource bundles and the FS will comment
IO: Verification & Value and Rareness of the RCs
3-SBO
Resource bundling: Do you think these resources may be bundled in this way? (new examples are provided)
Rare RCs: Which RCs are different from the competition? (an overview
of the identified RCs is provided)
Rare RCs: Do you have any RCs that are different from the competition?
Valuable RCs: Which of these have helped or could help to increase efficiency and effectiveness of this firm? (an overview of the identified
RCs is provided)
Valuable RCs: Do you have any RCs that are both different from the competition and that have increased or can increase efficiency and effectiveness of this firm?
Imitability: Are there socially complex relationships between customers/ between customers and personnel or between the personnel? / Do these play a role in the previously identified RCs? Imitability: Have historical conditions contributed to forming the complex relationships or any of the previously identified RCs? Substitutability: Can any of the RCs identified RCs be substituted? 4-C
Rare RCs: What does this company have that is different compared to the competition?
Valuable RCs: What do you think the firm has that has increased or could increase efficiency and effectiveness of this firm?
Observation 3 Value of the resources: Observation on the efficiency and
effectiveness of current resources
OI: Exploration of customer values
4-C
Existing customer value: Why did you come here?
Existing customer value: What do you value most about this firm? Unattended customer value: What would you like to see developed by this company?
Observation 4 Customer value exploration: Observation of behaviour/issues/
problems
IO: Verification & Value and Rareness of the RCs
5-C Rare RCs: Does this company offer ...? (name top 3 of most mentioned
Rare RCs)
6-CC Rare RCs: Does this company offer ...? (name top 3 of most mentioned
Rare RCs)
OI: Exploration of customer values
6-CC
Customer value: Why did you come here?
Customer value: What do you value most about this (competing) company?
Unattended customer value: What would you like to see developed by this (competing) company?
Observation 5 Customer value exploration: Observation of behaviour/issues/
problems
IO: Verification & Value and Rareness of the RCs
Environment Rare RCs: Observation to find out if the same or similar RCs may be
found elsewhere
Literature
Rare RCs: Investigation of written sources to find out if the same or
similar RCs may be found elsewhere
Valuable RCs: Investigation of written sources on the efficiency and
effectiveness of current resources
FS-2 External validation: The researcher will present the findings on the
client’s control of VRIN RCs and asks the opinion of the FS
OI: Exploration of customer values
Questionnaire Validation among Customers: Customised
FS-2 External validation: The researcher will present the findings on the
customer values and asks the opinion of the FS
Table 5 – Research guide for the identification phase – Numbers in the first column preceding
acronyms stand for the individual interviews. This means e.g. that all lines that are indicated as 1-SBO all pertain to the same interview with the owner; C = Customer, CC = Customer of a Competitor, SBO = Small Business Owner, FS = Friendly Stranger, IO = Inside-Out view, OI = Outside-In view
3.3.2 Consultation phase. In order to be able to estimate the impact of IO and OI
strategic information on how the SBO is going to compete it will need to be known whether the SBO plans to make changes based on the various scenarios outlined in table 4. To this end in the consultation phase each type of strategic information will be presented to the SBO followed by a question inquiring about the changes this information may induce. This is detailed in table 6 for firm 1. For the combination of IO and OI types of strategic information it will specifically be inquired whether adding one type of information to the other induces a change in strategic management. The purpose is to investigate whether there are added benefits of the additional type of strategic information. It will also be considered whether one type of information can be considered superior to another and whether having both sets of information is actually preferable. If having both sets of information would indeed be preferred over one set of information it will then be considered if there is a chronological preference in learning about these types of information.
Nr. Strategic
information Question to owner
1 0 Based on no information from my side, do you plan to change the way you compete within the next three years?
2 IO I have found the following information on what your company has to offer
(researcher presents information on valuable and rare resources). Based on this information, do you plan to change the way you
compete within the next three years? If so, how? If not, why not?
3 OI Now please forget what I just told you about what your company has to
offer. I have found that customers value the following (researcher presents information on customer value).
Based on this information, do you plan to change the way you
compete within the next three years? If so, how? If not, why not?
4 IOOI Now please remember all the information about what your company has to
offer and that what the customers value.
Does adding the information of that which customers perceive to
be valuable to that what the company has to offer induce a change in the way you are going to compete in the next three years? If so, how? If not, why not?
Do you think there is an advantage of either set of information over
the other?
Do you think there is added value to having both sets of
information as opposed to only one set of information?
In case both sets of information together are thought to be superior to only one set of information:
Would you prefer to first learn about what the customers value or
about what you have that is different from the competition?; Why? Table 6 – Consultation phase - Research guide 1 - Interview with the owner aimed at
investigating the effect of various types of strategic information – IO strategic information is presented first
In order to study the difference in importance as well as the cognitive process involved in the strategy adoption process, the IO and OI information will be presented sequentially and this sequence will be reversed for the second company. This different approach for firm 2 is detailed in table 7.
Nr. Strategic information
Question to owner
1 0 Based on no information from my side, do you plan to change the way you compete within the next three years?
2 OI I have found that customers value the following (researcher presents
information on customer value).
Based on this information, do you plan to change the way you
compete within the next three years? If so, how? If not, why not?
3 IO Now please forget what I just told you about what the customers value. I
have found the following information on what your company has to offer (researcher presents information on valuable and rare resources).
Based on this information, do you plan to change the way you
compete within the next three years? If so, how? If not, why not?
4 OIIO Now please remember all the information about what your company has to
offer and that what the customers value.
Does adding the information of that what the company has to offer
to that which customers perceive to be valuable induce a change in the way you are going to compete in the next three years? If so, how?
Do you think there is an advantage of either set of information over
the other?
Do you think there is added value to having both sets of
information as opposed to only one set of information?
In case both sets of information together are thought to be superior to only one set of information:
Would you prefer to first learn about what you have that is different
from the competition or about what the customers value?; Why? Table 7 – Consultation phase - Research guide 2 - Interview with the owner of company aimed
at investigating the effect of various types of strategic information – OI strategic information is presented first
In order to more thoroughly study strategic change, ideas will be generated based on the IO, OI and IO + OI types of information. This will then be presented to the SBO with the question whether this information will induce a change.
3.4 Data Processing
3.4.1 Identification phase - IO. The IO information from the SBO will include a list of
resources, RCs with an explanation of what resources constitute those RCs and which RCs are perceived to be VRIN based on the theory from the literature analysis and why so. Then an overview will be provided of what RCs the customers perceived to be available and which of these are V and which are R. The overview will consist of three tables where the answers of the customers have been coded and the codes have been counted . The largest number of similar answers (the largest count of one code) will be sorted on top and the smallest at the bottom. For every such sorted table the top codes will be highlighted as being the most important: At least the top two codes with the highest count will be highlighted unless the count is lower than two; Also all the codes that have at least a count of half that of the largest will be highlighted and presented as important answers (and again counts of less than two will be excluded). The answers of the customers from the competition and of the customers of the client as to what makes up the three major R RCs will be coded, counted and sorted in a similar fashion. The IO observations will be presented as a bullet list showing the researcher’s impression of the VRIN RCs. Finally two pieces of information will be provided on how to improve efficiency and effectiveness based on literature.
3.4.2 Identification phase - OI. The presentation of the OI information from the SBO will
simply consist of restating the questions and answers as to why customers visit the client’s firm, what they value most and what is not present in the firm that may be valued nonetheless. Then the coded, counted and sorted answers from 10 customers of the competition and 10 customers of the client will be presented in the form of two times three tables relating to the respective questions (see table 5). Then an overview will be provided of the uncoded answers from the customers answering what they would like to see developed. Following will be a bullet list of observations related to what the researcher perceived as deficiencies in the value delivered to the customers.
The questionnaire to the customers (appendix 21 and 22) consists of open questions and closed questions based on a Likert scale from 1 to 5. For the closed questions averages will be
calculated for each answer. Then from all the averages together another average will be calculated against which each average is compared. A deviation of more than 5% from this average will be interpreted as above average or below average, depending on the question. The results from the open questions will be coded and counted. Both the high counts and below average scores will serve as bullet point issues that will be presented to the SBO.
3.4.3 Consultation phase. The answers provided by the SBO will in part answer the
research question. The changes that will be made will be counted and the number of IO and OI changes will be compared with each. The kind of changes will also be remarked on as this concerns qualitative research.
An overview will be made with the acceptance or rejection of the ideas presented in order get clarity into which ideas, based on IO, OI, IO+OI information were seen as more attractive.
Based on the results from the first company it was decided to make a few changes in the approach for the second company. The questions will now refer to changes to be made within one year and the information is not just presented by strategic type of information but also by source. An overview will thus be made indicating the changes not just by strategic information type but also by information source.
Another change that has been made is including specific questions on how each of the presented ideas fits with each aspect of the mission, customer value and resources controlled by the firm (see appendix 18 – Ideas). The results will be summarised together in one table to provide an overview of the fit of the various aspects in comparison to the acceptance or rejection of the idea.
3.5 Research Quality
3.5.1 Controllability. In order to efficiently and correctly retrieve the required data as
well as make current research repeatable by other researchers the former interview guides will be used as advised by Emans (2008).
Based on the analysis of the first firm it may be decided to change the interview structure in order to follow up on new insights. Established protocol will however be followed unless the interpretation of the results warrants changes.
3.5.2 Reliability. Researcher reliability will be increased by voice recording and
transcription. In order to further reduce the potential of researcher bias a fresh perspective will be obtained by conversing with a friendly stranger (Miles and Huberman, 1994). This will reduce the chance that important information is omitted and may break rigid cognitive patterns.
Respondent reliability will be improved by gathering information through various stakeholders and non-stakeholders including the small business owner, customers and customers of competitors. Choosing various respondents will also lead to more information due to the bounded rationality of any single respondent. By choosing to apply both interviews and observations potential instrument bias will be decreased. Situation bias on the other hand will be limited by interviewing various people in various locations on various times of the day while avoiding potentially distracting influences (e.g. rush hour, scheduled deliveries etc.). Furthermore the answers of the customer interviews will be coded in order to group similar answers and draw unbiased conclusions.
Reliability will also be improved by proper interviewing methodology. As articulation prior to reflection may influence consumer preferences (Hauser et al., 2014), it may be that people in general have a tendency to defend what they articulate. In the consultation phase it would therefore be conceivable that the SBO does not articulate a different change when presented with different information if the larger study has not been revealed and reflected on. To counter this effect, prior to interviewing the SBO in the consultation phase, the purpose of this study will be stated in which it is made clear that the subject of this research is to study whether additional or different strategic information will have an impact on actual strategic decision making. Furthermore the questions that are going to be asked will be summarised to the SBO prior to the actual questions being asked. Such preparation is expected to create an appropriate setting for reflecting freely on the various types of strategic information.
3.5.3 Validity. By choosing more than one company patterns discovered in the first
company can be tested on the second and by gathering information on the owner motivations (following Achtenhagen et al., 2010) as well as including various perspectives the chances are increased that the managerial implications that are pursued are actually present. Together this will give the current study a certain external validity with implications beyond a single firm. Internal validity will however be low as this is only the first step towards a new and more encompassing theory on strategy. Research on more companies also in more industries and more iterations where more propositions are generated and tested would greatly improve the validity of this research. Despite this, the current study will provide new insight in the application of two well-known strategies and does so in a novel but also particularly practical fashion.
4. Results
For both the analysis phase and the consultation phase the relevant research guides were followed and the data has been processed according to the previously described methods. The detailed approach and results of the interviews and observations can be found in appendix 1-23 and the transcripts of interviews with the SBOs in appendix D 1-6. Following is a summary of the findings.
4.1 Results Company 1 – Café de Doos
Cafe de Doos is a small party cafe on the Gelkingestraat 11, close to the Grote Markt, in the centre of Groningen. For the last 12 years it has been run by the same SBO who is the sole proprietor of this establishment. It attracts mainly students and with its high volume music, disco lights, smoke machine and relatively long bar it really is a combination of a disco and a cafe. There are 30 bar stools but often it is crowded causing people to stand. When entering, one may notice a dancing pole on the left hand which is intended for use by the customers and on the right side, at the beginning of the bar, a colourful wheel which may be spun for various drinking options against various prices (see figure 1).
Figure 1 - A snapshot of a student party in progress at cafe de Doos (left) and the wheel (right) 4.1.1 Mission.
• Becoming a place for going out and not just for parties • Attracting more of the right customers
• Making money
4.1.2 Identification phase.
4.1.2.1 IO.
4.1.2.1.1 Findings from the SBO.
RCs
Although there are a great many resources most were found to bundle into: 1. Atmosphere
2. Attracting customers 3. Management
However, when attracting customers on Facebook for example, the mood is already being set and although management may not directly impact the atmosphere, indirectly it definitely does as the personnel is trained to tailor to the customer and add to the atmosphere. The RCs are thus connected.
Valuable resources
Efficiency and effectiveness may be improved through training and control of the personnel and by delivering a consistent service.
Rare resources
Rare resources should be seen as a combination of service, atmosphere, location, attracting customers and more that together attract a unique crowd that is socially well adjusted to each other.
Inimitable resources
The atmosphere that is created by a large set of resources that together may be rare and valuable is difficult to imitate due to social complexities between customers, the customers and the personnel and between the personnel that cannot be found elsewhere.
The social complexities in the whole bundle of resources is further strengthened by unique historical conditions where bonds have been created over time and font memories have formed of parties in cafe de Doos.
