Transfer Pricing Associates

Have You Leveraged Your Intangible Advantages?

post Tuesday October 2, 2012


Boston Consulting Group (BCG) has published a report titled “The Most Adaptive Companies 2012”. In the report, BCG explores the measures relating to how companies adapt to turbulence in their market environments and developed BCG Adaptive Advantage Index.

The report suggests that a new dynamic source of competitive advantage, called adaptive advantage, is needed for the companies to rise in turbulence. Adaptive companies adjust and learn better, faster and more economically than their rivals.

BCG proposes that adaptive advantage is rooted in the following five intangible adaptive capabilities:

·     Signal Advantage–the ability to read and act on change signals and react to them.

·     Experimentation Advantage–the ability to experiment rapidly and economically to learn new and better ways of coping with change. By increasing the volume of ideas converted to experiments, allocating appropriate amount of corporate resources to the experiments and speeding up their commercialization, companies are able to keep up with the volatile environment and to gain advantages over their innovations.

·     Organizational Advantage—the ability to organize in ways that promote adaptation, including enhancing knowledge flow, diversity, risk taking, collaboration, and flexibility.

·  Systems Advantage—the ability to harness the diversity and adaptive potential of multicompany ecosystems.

·     Ecosocial Advantage—the ability to continuously adapt the business model to changes in the ecological, social, and economic spheres over both the short and long term.

To help the companies build their capabilities in each of the five areas mentioned above, BCG proposed 3 steps to progress down the road to adaptive advantage:

Step 1: Identify the most adaptive players in your industry.
Step 2: Assess your adaptive capabilities, pinpointing strengths and identifying the gaps.
Step 3: Design and take measures to address any capability gaps.

The fast changing business environment today requires companies to uncover strategies and capabilities on the integrated organizational and ecosystem level. The powerful source of the intangible capabilities can help businesses proactively position itself to benefit during times of turbulence and sustain long-term development.
Have you leveraged your intangible advantages? You can read more on the report here.

Source: BCG Perspectives

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