Wednesday, December 05, 2007

Operations as a source of competitive advantage

I've just been reading Jesse's Operations is a source of competitive advantage.

As system operations are ubiquitous and common they should not be a source of strategic value. As Peter Nickolov quite correctly said in the comments "Operations is a price of entry and should *not* be a differentiator."

Despite this, there is always a silver lining. Firstly there are always huge cost advantages in any industry where everyone else is doing a poor job of it (unfortunately they tend to be short lived). Secondly, there are always incremental innovations which can provide further cost advantages (again, short lived)

So can operations be a source of competitive advantage? Well the short answer is Yes, but the long term answer is No - unless of course you are in the business of utility provision of computing resources.

For the rest of us though, my electricity provider being cheaper than yours is not a source of competitive advantage - it's a deviation which will quickly be resolved.

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