Thinking of this incredibly antagonistic business environment, a ‘distinctive’ capability seems quite out of reach, since it is highly probable that it has already been implemented by a competitor. This is just where Kay’s Distinctive Capabilities Framework can be used to address this issue. As its name implies, the framework was developed by John Kay, an economics professor at London Business School, in 1993 with “Foundations of Corporate Success”.
The framework describes distinctive capabilities as those unique features that can be used to create a Unique Selling Proposition (USP) to achieve a competitive advantage and outweigh competitors in the market. Kay has argued that distinctive capabilities can provide long-term success by establishing strong foundations that cannot be easily brought down by competitors in the marketplace.
Distinctive vs Non-Distinctive Capabilities
The model divides capabilities into distinctive and non-distinctive. Distinctive are the capabilities that carry long-term uniqueness and are compromised from features and competencies that are entirely unique to your business establishment. On the other hand, non-distinctive are the capabilities that are not unique to the company or can be easily imitated by competitors.
Kay has put forward three categories in which distinctive capabilities may fall under and each category is further examined below. A company should build upon at least one of these three capabilities a attain and sustain long-term success.
Without a doubt, brand image and perception significantly affect our decisions as buyers nowadays. Reputation comes down to the holistic experience customers go through as they engage with your products or services, ranging from functional aspects like quality to more intangible aspects like word of mouth. A strong reputation induces feelings of trust and trustworthiness in the consumers and can significantly influence buying decisions in seconds. Reputation is inimitable and even competitors attempt to imitate your products or services, they yet cannot imitate the reputation you have built over the years.
Another important factor outlined by Kay is the structure of your organization. This encapsulates various areas of the business including supplier relationships, partnerships, customers, employees, and all other third-party groups engaged. The structure of your organization is unique and can provide a significant step ahead of your competition. Although this factor is often overlooked by many companies, it can play a major role in your ability to attain an edge over competitors. Therefore, carefully establishing the hierarchy and structural elements within your business is considered a vital aspect of competitive advantage.
The organizations that are innovative and keep up with the current market trends are undeniably leaping forward from the competition. By continuously innovating your offerings and being agile as the market trends come and go, not only you will have your competition struggling to copycat your offerings, but you will also at the same time enhance your brand image and build brand loyalty. This will, in turn, feed your reputation, as described in the first category of Distinctive Capabilities.