Distinctive Capabilities
(Kay)

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Foundations of corporate success. Explanation of Distinctive Capabilities of John Kay. 1993

What distinguishes the successful firm

How can business strategies add value? What distinguishes the successful firm is the fundamental question in business strategy, and one which most senior managers consistently ask themselves.

Companies with distinctive capabilities have attributes which others not have and cannot replicate, not even after they realize the benefit they offer to the company which originally possesses them.
 

In "Foundations of Corporate Success", John Kay argues that the best businesses derive their strength from a distinctive structure of relationships with employees, customers, and suppliers. He explains why continuity and stability in these relationships is essential for a flexible and co-operative response to change.

Three Distinctive Capabilities

According to John Kay, there are three Distinctive Capabilities which a company can possess to create added value and achieve competitive advantage through relationships:

• Architecture. A structure of relational contacts within or around the organization with employees and with customers and suppliers.

• Reputation. Built up through:

  • Customer's own experience.
  • Quality signals.
  • Demonstrations and free trials.
  • Warranty.
  • Guarantee.
  • Word of mouth spreading.
  • Association with other brands.
  • Staking the reputation once it is established.

• Innovation. Provided the innovation is translated to competitive advantage successfully.

Book: John Kay - Foundations of Corporate Success -

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Dynamic Capabilities

"Besides relationships, also other capabilites could be a source of competitive advantage. See for example the ability to strategically adapt to changing environment ("Dynamic Capabilities")."

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