We will take a resource-based perspective and look at the interaction between a company’s resources and its environment.
Resources refer to company-specific assets that are difficult to imitate (e.g. because of tacit or unspoken knowledge that exists but is not always paramount) unlike undifferentiated inputs such as unskilled labour and capital. How management sees the interaction between the resource and the environment shapes the strategies that the company chooses. Thus, sustainable competitive advantage is built by the company as a whole, learning about processes that translate into knowledge and skills that are difficult to imitate and that can be applied to various types of markets and products.
The resources of a firm are the tangible and intangible assets it owns or has access to, e.g. plant and equipment, workers, machines, the amount of money tied up in fixed capital, stocks and savings accounts.
A tangible asset is something you can touch, like a building or a machine. An intangible asset is something that is less physical, like staff knowledge and expertise (human capital). However, these assets or resources on their own do not give the complete picture. It is how they are used that makes the difference, and this is known as the capability of the company.
So, if resources are the physical, financial and human inputs that are required for your idea to be realised, then your capabilities are the skills, knowledge and ability to coordinate and make effective use of your resources. Analysing your idea in terms of operations, tasks, capabilities and resources not only provides more clarity but is also an essential step in its transformation into a real product.
This is not to say that all the necessary resources must be within your organisation. You may prefer to operate by yourself from home, or with a loosely organised team of colleagues, or as a virtual organisation linked by the internet, or, indeed, you may wish to start your own firm that employs others or even to sell the idea of your innovation to an existing firm.
Whatever form you think is right for the implementation of your idea, business is a social activity and you will need resources in addition to your own knowledge and skills.
It is common for rural businesses to support one another in this way. Indeed, many operate a bartering system where they exchange goods or services in a cost-effective way. These companies find one another through local networks; they build trust and do business together (social capital).
Let us start by looking at the crucial resources you already have – yourself and the people you know.