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Strategy Dynamics Course - Class 2 – Resources drive performance

The fundamental message of this class is that a small set of easy-to-understand "resources" drives business performance – customers drive demand and revenue; capacity, staff and products enable us to build and satisfy that demand, and drive costs.

The class starts by showing how to lay out a simple but quantified causal diagram connecting the performance indicator we want to improve back to those resources that drive it. This rigorous, causal relationship does not just apply at any point in time, but at all times – so time-charts on all items explain exactly what has happened up to today, and what could happen in future.

Key issues addressed

Clients, staff and service quality for an IT support provider, over 36 months
  • Laying out a simple Income Statement (Profit & Loss) to show where revenue, costs and profits come from.
  • How customers drive demand and revenue, and staff, capacity and other simple resources drive costs.
  • Adding time-charts to show how resources drive performance over time – the key question we need to understand.
  • How the standard types of resource are understood in different kinds of business.
  • Important issues in dealing with resources properly.
  • How certain types of business may rely on specific types of resource that do not arise in other cases.

Lecture segments associated with this chapter are:

Class 2.0 - Summary. Resources drive Performance - (35 min)
The summary class uses three examples – a manufacturing business, an airline, and an IT-support provider, to explain the principles of the approach.
Class 2.1 - Standard types of resource - (20 min)
How a few standard resources arise in most cases, and how to deal with them appropriately in different kinds of organisation.
Class 2.2 - Specific resource types - (15 min)
How specific types of business or industry need specific resources, which may be additional to, or replace, these standard types.
This course is supported by a series of worksheets provided in both PDF format and as Sysdea online models.
In the Summary class the following Sysdea models are used to demonstrate various points and links are provided when enrolled so you can experiment with them yourself. They are:
  • Manufacturing Company A: This model plays out how customers drive sales, and staff and machines drive costs to determine the revenue and profit path for this company, as described in the class video. The model is set up with default values for future growth in sales/month per customer and future unit price for the product (see instructions in the model). Change either or both of these to explore alternative future results from month 24.
  • Ryanair A: This model shows how customers drive passenger-journeys and revenue, and how staff/aircraft/airports/routes drive costs for Ryanair, from 2006 to 2012 and out to 2017.
  • IT Support company A: This model plays out the links from clients and staff to the service quality of this company. The model is set up with "default" values for how the numbers of clients and staff change over time, as described in the class video. Instructions in the model explain how to change these values as you run the model to explore alternative outcomes.

free access for teachers - login or register Additional materials are available to registered teachers as well as free access to the complete course. Login here or register here for more information.

Other resources and links

Books

Jay Barney, Gaining and Sustaining Competitive Advantage, 2nd Edition, (2002), Prentice-Hall: Upper Saddle River NJ, Chapter 2
Amazon.com   Amazon UK   Amazon Canada

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