Thursday, March 08, 2007

Kevin is so Cool

I'm taking a lot of courses this term. Some I have enrolled, some I'm attending just for fun. ICA (Industry Competitive Analysis) is one of them. I'm pretty far down the waitlist, and auditing is not authorized. I might get kicked out, we'll see.

Anyway I had great expectations coming in ICA, to see what Karen Cool is about. So far, so good. He was a great storyteller. Very passionate about his class, quite demanding too. I don't know why but all P4 Professors have decided that cold calling would be the norm...

In a nutshell, today's story was about Creating and Sustaining above-normal returns. He gave the example of champagne. If you ask producers, they would say that champagne is more expensive that sparkling wine because of traditions, savoir-faire, and the soil. To Kevin, only the latest is valid. Indeed, there are 700 or so champagne producers in Champagne, so "it must not be that difficult to make it" and blind tests show that sparkling wines can be very well graded too. In that regard, he argues, while strategic theory has focused on competitive advantage -"the savoir-faire", assets -"the unusual fertile land" can be just as powerful to create a rent, or above-normal return. And it's sustainable. And it's not replicable. Economist David Ricardo was the first to study that, so Kevin referred to him as the Patron of Bad Business...
Very insightful. Of course the name of the ICA game is to create that fertile land.

I just hope that I won't be kicked out now...

To learn more about Ricardo's theories:

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