Links Of London Did Not Achieve A Sustainable Advantage Simply
Substitutabilities
SubstitutabilitiesAlso, as the theory suggests, the Geox case also provides evidence of bad interactions, i.e. activities/choices that work as substitutes, not as complements. Notably, this kind of interaction weakens business performance and renders the simultaneous adoption of the corresponding choices less attractive. For example, inconsistencies were evident in the IT implementation area and in the management of the indirect distribution network. (http://www.linksoflondon4lover.com/charms-115-c-4.html)
We realized that even the simple misperception of interactions among choices can affect a firms performance or, more generally, undermine the ability of a firm to evolve successfully in the face of environmental change. From this perspective, we shared with Geoxs managers the belief that the relative costs of misperceiving the interaction effects among activities/choices can be significant and derive from various sources. For instance, an ill-designed incentive system may lead decision makers to neglect or undervalue externalities they impose on other decision makers in the firm. Similarly, managers often can not fully assess the consequent effects on other functions of such choices as moving production around the world, and tend to make such decisions on the basis of misperceptions.
In many mature industries there is a somewhat general, though tacit, conviction that strategic innovation is an impossible mission. After studying the Geox case, we came to believe that different and profitable strategic positions can be identified and explored, even in these mature industries. The general implication is that, within a given industry, firms need not race towards one ideal configuration of optimal activity choices. Instead, they have to pursue the creation of difference as the strategy which can lead to competitive advantage.
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Unfortunately, new and unique strategic positions are neither known a priori nor readily available to choose. And, as the Geox story illustrates, finding them requires creativity, tenacity, risk taking and resources to invest. Of course the success of Geox is grounded in product innovation, but our analysis shows that its competitive advantage does not stem from this single activity. Geox did not achieve a sustainable advantage simply because it devised an innovative product (the shoe that breathes) or because of its timely investment in Romania (reducing production costs). Operational excellence in single activities is important, but generates advantages which usually are visible targets of imitation and do not allow sustained market-leading performance. Instead, sustainable advantages rely on internally consistent configurations of activities.
These "complementarities" occur when performing one activity has not only a direct effect on performance, but it also positively impacts performance indirectly, creating larger benefits through interaction with other interdependent activities. When companies integrate a wide set of activities within the business it is difficult to identify the source of this advantage, as it is often rooted more in the relationships among the activities than in the activities themselves. Rivals find it hard to match the whole system because the relationships among complementary variables are opaque (causal ambiguity) and intangible (social complexity and embeddedness). And, until they are able to reverse engineer and achieve the whole system, they don't generate the returns. This advantage seems to be evident in the Geox case.
Many have tried to mimic its strategy, copying the sole-shoe technology or proposing other unique features, but no firm has been able to match its results. Only the Chinese footwear giants have done as well as Geox or even better, but they compete on a completely different basis.
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