RESOURCE LEVERAGE MEANS DOING MORE WITH LESS.
A striking example of resource leverage was demonstrated by the North Vietnamese army in their conflict with U.S military might. Understanding that they must outmanoeuvre the enemy rather than overpower them, they built their bridges just below the water line to evade airborne threats. The construction was such that allowed them to move men and materials so freely across rivers to the befuddlement of the U.S forces. Resource scarcity often fosters tactical creativity.
Resource leverage, doing more with less, often means changing the rules of the game rather than playing by the rules of the incumbents and searching for loopholes rather than confronting the competitor in well-defined market segments. It also includes investing in a relatively small number of core competencies that would guarantee the prospect of becoming a world leader in particular sectors, reducing product development times and attendant costs, nurturing cross-functional communication, encouraging the growth of a vigorous and capable supplier base, reducing management layers and viewing every employee as a contributor and seeking a deeper consensus on strategic goals.
When ambition out-matches resources, a company gears up for advantage building through resource leverage. Senior managers must rise to reinvent leadership and get out a version appropriate to their fast-changing industry and also provide their employees with a new stretching ambition. Pursuing opportunities leads to better resource leverage. Complacency often arises in the wake of the belief by employees that their company is the industry leader.
Winning companies are those with an aspiration and a capacity for resource multiplication. Companies can be described as a portfolio of resources that breaks into technical, financial, human and so forth, as well as a portfolio of products or market-focused business units. Achievement of global leadership is not necessarily encumbered by resource constraints nor is it facilitated by abundant resources. IBM, Xerox and Texas Instruments faltered along despite the enormous resources at their disposal. A firm can improve its capacity for resource leverage by downsizing its research and development budget in a manner that still permits it to maintain its technological leadership of the industry, spending less in advertising to build brand loyalty, expanding its distribution network cost-effectively and committing fewer dollars to customer service.
Resource leverage is all about achieving the strategic objectives through means that do not make intensive demands on the resources of a firm.
Resource leverage often means the pursuit of a single strategic intent with a long-term approach. This converges the efforts of individuals, functional departments and the entire businesses on the same goal. Multiple competing goals sabotages the drive for resource leverage, as it leads to resource sub-optimization. There should be harmony amongst the beliefs of business unit managers, concerning their industry future and structure, and the appropriate strategic intent of the company.
At a particular given time, focused attention on a few key operational goals ensures that improvements are not watered down to an extent capable of turning the firm into a laggard in every critical performance area. At one time, Komatsu focused exclusively on quality and having achieved that, it gradually shifted its focus to value engineering, manufacturing rationalization, product development and creating variety at low cost, while still keeping quality in view.
Resource Leverage leaps to effectiveness when resources are targeted to areas that make the most difference to customers. By targeting activities where customer perceived value is maximised, a firm enhances the amplitude of its resource leverage. To get at success, here, is to ensure that the value perceived by the customer is much higher than the cost of creating that value. In this regard, British Airways provided an elegant arrivals lounge at Heathrow where disembarking passengers from overnight flights could shower, have their clothes ironed, and eat breakfast before moving off.