Competing With Ordinary Resources

One classic approach to strategy revolves around gaining competitive advantage through valuable, scarce and distinctive resources — such as a strong brand or innovative technology. But there’s also a case to be made for building your company’s strategy around the innovative use of quite ordinary resources.

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In July 2007, TomTom, a European personal navigation device manufacturer based in Amsterdam, launched a takeover bid for Tele Atlas, a Dutch provider of cartographic data. The initial offering was 21.25 euros per share, which represented a premium over the stock price at the time, and the supervisory and management boards of Tele Atlas announced their support of the offer.1 But in autumn of that year, Nokia, which at that point was a leading cellphone manufacturer, announced an agreement to acquire Chicago-based Navteq, Tele Atlas’ main competitor, for an astounding price of approximately $8.1 billion — a move that indicated that smartphones would include navigation services in the future. The control of cartographic databases suddenly became a strategic imperative in the GPS industry. In reaction, TomTom’s main competitor, Garmin, tried to secure its access to what was now considered as a strategic resource by announcing an offer for Tele Atlas in October 2007 at a higher price of 24.50 euros per share. TomTom raised the stakes to 30 euros per share and eventually acquired Tele Atlas for 2.9 billion euros.

However, the Tele Atlas acquisition proved to be an example of the “winner’s curse” — the idea that winners in auctions tend to overpay. TomTom had to borrow 1.6 billion euros to complete the acquisition of Tele Atlas and subsequently had to write down the value of the acquisition.2 Moreover, TomTom’s sales declined as the company faced increasing competition from GPS-enabled smartphones; during the period from fiscal 2008 through fiscal 2013, TomTom’s revenues fell more than 40%.

Meanwhile, the Israeli startup Waze launched its community-driven navigation smartphone application. Waze’s business model was quite different from TomTom’s: Waze’s cartographic data was directly collected from the users, at little cost, and Google acquired Waze in 2013 for a price in the neighborhood of $1 billion. Seven years after the takeover of Tele Atlas, it is clear that TomTom paid too much for a resource that seemed strategic and rare at the time.



1. M. van de Hoef and J. Kanner, “TomTom Agrees to Acquire Tele Atlas for Eu2 Billion (Update 10),” July 23, 2007,

2. “TomTom Lost $1.3 Bn in Fourth Quarter,” Financial Times, February 24, 2009,

3. J. Kraaijenbrink, J.-C. Spender and A.J. Groen, “The Resource-Based View: A Review and Assessment of Its Critiques,” Journal of Management 36, no. 1 (January 2010): 349-372.

4. R. Casadesus-Masanell and J.E. Ricart, “How to Design a Winning Business Model,” Harvard Business Review 89, no. 1 (January-February 2011): 100-107.

5. K.J. Boudreau and K.R. Lakhani, “How to Manage Outside Innovation,” MIT Sloan Management Review 50, no. 4 (summer 2009): 69-76.

6. Previous research has studied processes related to resources. Notable examples include R. Adner and C.E. Helfat, “Corporate Effects and Dynamic Managerial Capabilities,” Strategic Management. Journal 24, no. 10 (October 2003): 1011-1025; and D.G. Sirmon, M.A. Hitt and R.D. Ireland, “Managing Firm Resources in Dynamic Environments to Create Value: Looking Inside the Black Box,” Academy of Management Review 32, no. 1 (January 2007): 273-292. For a detailed account of this approach, see D.G. Sirmon, M.A. Hitt, R.D. Ireland and B.A. Gilbert, “Resource Orchestration to Create Competitive Advantage: Breadth, Depth, and Life Cycle Effects,” Journal of Management 37, no. 5 (September 2011): 1390-1412. In this paper we follow a similar path, while distinguishing between strategic and ordinary resources through a business model perspective.

7. S. Chudgar, “Airbnb’s Annual Report: We’re Still Growing,” February 8, 2013,; and R. Lawler, “Airbnb Tops 10 Million Guest Stays Since Launch, Now Has 550,000 Properties Listed Worldwide,” December 9, 2013,

8. J.B. Barney, “Gaining and Sustaining Competitive Advantage,” 4th ed. (Upper Saddle River, New Jersey: Prentice Hall, 2010).

9. R.W. Coff, “When Competitive Advantage Doesn’t Lead to Performance: The Resource-Based View and Stakeholder Bargaining Power,” Organization Science 10, no. 2 (March-April 1999): 119-133.

10. J. Bernstein, “Too Many Average Footballers Are Millionaires … They Drive Ferraris but They Deserve a Reliant Robin,” Daily Mail, January 9, 2011,

11. M. Bentham, “Even Football Stars Agree — They Are Paid Too Much,” The Telegraph, October 6, 2002,

12. R. Brody, “The Future of French Cinema,” The New Yorker, January 2, 2013,

13. F.W. Taylor, “The Principles of Scientific Management” (New York and London: Harper & Brothers, 1911).

14. S. Ghoshal and C.A. Bartlett, “The Individualized Corporation: A Fundamentally New Approach to Management” (New York: HarperBusiness, 1999).

15. G. Gavetti, R. Henderson and S. Giorgi, “Kodak and the Digital Revolution (A),” Harvard Business School case 9-705-448 (Boston, Harvard Business School Publishing, 2005); and “What’s Wrong With This Picture: Kodak’s 30-Year Slide Into Bankruptcy,” February 1, 2012,

16. N. Radjou, J. Prabhu and S. Ahuja, “Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth” (San Francisco, California: Jossey-Bass, 2012).

17. D. Sull and K.M. Eisenhardt, “Simple Rules for a Complex World,” Harvard Business Review 90, no. 9 (September 2012): 68-74.

18. C.A. Montgomery, “Of Diamonds and Rust: A New Look at Resources,” in “Resource-Based and Evolutionary Theories of the Firm: Towards a Synthesis,” ed. C.A. Montgomery (Norwell, Massachusetts: Kluwer Academic Publishers, 1995), 251-268.

19. A. Gawer and M.A. Cusumano, “Platform Leadership: How Intel, Microsoft and Cisco Drive Industry Innovation” (Boston, Massachusetts: Harvard Business Review Press, 2002).

20. S.G. Winter and G. Szulanski, “Replication as Strategy,” Organization Science 12, no. 6 (November- December 2001): 730-743.

21. R.I. Sutton and H. Rao, “Scaling Up Excellence: Getting to More Without Settling for Less” (New York: Crown Publishing, 2014).

22. V. Warnier, X. Weppe, and X. Lecocq, “Extending Resource-Based Theory: Considering Strategic, Ordinary and Junk Resources,” Management Decision 51, no. 7 (2013): 1359-1379.

23. Ibid.

24. A. Hagiu, “Strategic Decisions for Multisided Platforms,” MIT Sloan Management Review 55, no. 2 (winter 2014): 71-80.

25. K. Gittleson, “Ben Kaufman’s Quirky Quest to Transform Innovation,” September 1, 2013,

26. P.W. Anderson, “More Is Different,” Science 177, no. 4047 (August 4, 1972): 393-396.

27. C. Anderson, “The Long Tail: Why the Future of Business Is Selling Less of More” (New York: Hyperion, 2006).

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