One strategy for getting ahead is being incredibly good at a particular skill; you need to be world-class to stand out for that skill. In my case, I layered fairly average skills together until the combination became special. – Scott Adams
I’ve had two attempts at talking through resources and why they are important.
The first used an accounting approach but then started to get muddled because money is not a good representation of everything out there.
The second used a systems approach which got complicated pretty quickly.
I once tried to explain how a business could grow using systems dynamics to a room full of smart people – but failed entirely.
They looked at me, polite but puzzled, partly because it was complex stuff and mostly because I think I didn’t really understand it myself.
Anyway, today I’m going to take a final pass to see if I can come up with a simple approach to understanding resources because we need to close off after that by looking at competitive strategy and then into marketing as we carry on with this Getting Started book project
Why do resources matter?
Everything you do depends on the resources you have.
It’s the prosaic, down-to-earth, real life thing that will make or break your strategy.
Will power isn’t enough, determination isn’t enough – you need to have and use resources if you want to succeed.
What are resources anyway?
A resource is something you have.
Some resources are physical and some are intangible, existing only in our minds.
That doesn’t make them any less real.
If I were to ask you to list out resources that are important to you, you’d probably come up with things like money, time, knowledge, skills, network and energy.
The management literature includes things like the abilities of managers, relationships with customers and specific process or trade knowledge.
In the last post I tried to differentiate between different types of resources but I am not sure that helps a huge amount.
It probably easier to think of any resource as a stock – something you can increase or deplete.
You can increase your stock of money, for example, by doing things that other people want and are willing to pay for, and deplete your stock by spending money on things that don’t give you a return on that investment.
If we look at resources through that kind of lens – seeing a resource as something that we can fill and empty or something that is charged and discharged – we probably have enough flexibility to consider most kinds of resources that we’re going to analyse.
How to think about a resource
The image above is a simplified template to analyse your resources.
There are three parts to it.
First, there is the resource you want to think about.
Let’s take knowledge as an example.
What kind of knowledge do you need to start and run your business?
Well, that is probably a very long list – and includes things that you don’t know you need to know yet.
But let’s say your interest is in video production – you’d like to have a business based around that.
Some things you do will increase your stock of knowledge in that area.
Studying the body of knowledge that makes up the field is clearly a good start.
But that isn’t enough, you need to practise, to create material and work to improve.
You see what is possible by watching experts and trying to figure out how they work.
And you build your library of examples and inspiration by curating content and building swipe files – things you can go to when you’re looking for ideas on how to do things.
Now, this may seem obvious but how many people really do the things they need to do to build up their resources?
It’s far too easy to do the things that deplete those resources instead.
The simplest way to make what you know obsolete is to do nothing – apply what you’ve learned in a routine way, rely on old methods.
Most managers still use theory that was developed in the fifties.
We’re not even really using stuff that was developed in the 80s and 90s across organisations today.
Old thinking is easy thinking – it’s stuff that we assume is right because it’s been taught to everyone.
But it’s when someone comes along who has taken the trouble to study and develop a better knowledge resource that you realise just how depleted your own stocks are.
And then it’s time to worry, or get motivated and start to work again.
This resource analysis template is very “you” dependent – what are the things you can do to increase or deplete your relationships.
Take a network, for example.
You could grow your network by spending time making individual connections.
You could learn to advertise and spend money to make contact.
You could create useful and interesting content that attracts people to you.
Or you could do nothing and watch your existing connections wither and fade.
Or you could join groups that are polarised and divided, where you spend more time on politics than you do on your business.
All these things go on one side or the other of the resource analysis template – and once you put them down you can’t ignore the conclusions shouting out at you.
You need to do more of the things that increase your resources and less of the things that deplete them.
Use resources to increase other resources
One of the things to recognise is that resources can be used to increase other resources.
You do have to deplete the first resource to do that – but then you come around and fill it back up again.
For example, you’ll have to spend time to study to increase knowledge.
You’ll have to use knowledge to do work that creates money.
You’ll spend money to pay for the things that help you build knowledge.
Your resources are interrelated, connected by the decisions you make about where to allocate them.
These choices matter, which is why getting them down on paper, along with the things you do to affect them, is a good idea.
That will help you look at them clearly, both individually and at the way in which they relate to each other.
What good does it do knowing what resources you have?
This is what we’re going to cover in the next post, but in a nutshell there are two ways in which knowing what resources you have will help you get started.
The first is understanding whether you have enough resources to compete in the first place – do you meet a minimum standard.
If you don’t, then you have some more work to do to get there first.
Then, which resources help you stand out – which ones provide you with a competitive advantage?
Those are the ones you need to develop and build on, while keeping an eye out for changes that could make you obsolete at a stroke.
We’ll get into that in the next post.