ROI Case File No.292 | 'AdNova's Invisible Competitive Advantage'

Chapter One: An Undecidable Decision—Three Candidates, Invisible Differences

The week after SafeConstruct's 5WHYS case was resolved, a consultation arrived from central Tokyo regarding an advertising agency's strategic partner selection. Episode 292 of Volume 24 "Proof of Reproducibility" is a story of visualizing the invisible "value of resources" through four questions.

"Detective, we're searching for an appropriate production partner. We have three candidates. Each has strengths. But we can't decide which to choose. Cost, speed, responsiveness... Is there no perfect partner that satisfies everything?"

Misaki Kitagawa, business development manager at AdNova, a native of Shibuya, visited 221B Baker Street unable to hide her confusion. In her hands were proposal documents from three companies and, in stark contrast, an approval document marked "Selection Pending."

"We operate an advertising agency for mid-sized companies in Tokyo. We rely on outsourcing for creative production, but we're feeling the limits of our current partners. We're looking for new partners, but..."

AdNova's Partner Selection Impasse: - Founded: 2012 (advertising agency) - Annual revenue: ¥1.8 billion - Employees: 32 - Outsourcing ratio: 85% of production work - Current partners: 4 companies - New candidates: 3 companies (6 months of consideration) - Selection criteria: "Balance of cost, speed, and responsiveness" - Decision status: Pending (6 months)

There was deep anxiety in Kitagawa's expression.

"The problem is that each of the three companies has 'good points.' Company A has the lowest price. Company B delivers fastest. Company C has flexible responsiveness. But no company has everything. I can't judge what to prioritize."

Comparison of Three Candidates:

Company A (Cost-focused): - Production cost: 70% of industry average - Delivery time: Standard (2 weeks) - Responsiveness: Normal (specification changes incur additional fees)

Company B (Speed-focused): - Production cost: 120% of industry average - Delivery time: Fastest (3-day response possible) - Responsiveness: Normal

Company C (Flexible Response): - Production cost: 110% of industry average - Delivery time: Standard (2 weeks) - Responsiveness: High (flexible with specification changes)

"Management says 'reduce costs.' Sales demands 'priority on delivery time.' The creative team emphasizes 'flexibility.' I don't know whose opinion is correct."

Chapter Two: Resources as Weapons—Four Questions Measuring Invisible Value

"Ms. Kitagawa, what strategy is current advertising implementation based on?"

To my question, Kitagawa answered.

"Basically 'comprehensive evaluation.' We score cost, speed, and responsiveness, and choose the company with the highest total points. But the three companies are so close in score that we can't decide."

Current Evaluation Method (Superficial): - Evaluation items: Cost, delivery time, responsiveness - Evaluation method: Score each item out of 5 points - Result: Company A 13 points, Company B 13 points, Company C 14 points (close) - Problem: Anything chosen seems "correct"

I explained the essence of competitive advantage.

"Choosing a partner is choosing your company's weapons. VRIO analysis—Value, Rarity, Imitability, Organization. These four questions illuminate truly valuable resources."

⬜️ ChatGPT | Catalyst of Conception

"Those who try to get everything get nothing. Choose your weapon, with VRIO"

🟧 Claude | Alchemist of Narrative

"Resources are invisible. But four questions make their outline emerge"

🟦 Gemini | Compass of Reason

"VRIO is selection technology. Measure value, identify rarity, determine imitability, confirm utilization capability"

The three team members began analysis. Gemini deployed the "VRIO Analysis Framework" on the whiteboard.

VRIO's Four Questions: 1. Value: Does this resource truly create value? 2. Rarity: Is this resource rare? 3. Imitability: Can competitors easily imitate it? 4. Organization: Can our company leverage this resource?

"Ms. Kitagawa, let's identify truly valuable resources for AdNova with VRIO."

Chapter Three: Four Interrogations—Exposing the True Value of Resources

Phase 1: Value Verification

First, we verified whether each company's "strengths" truly create value.

Does Company A's "Low Cost" Create Value?

We analyzed the past year's projects.

Data Analysis: - AdNova's average project price: ¥2.8 million - Production cost (outsourced): Average ¥840,000 (30%) - Reduction amount if switching to Company A: ¥4.2 million annually

However: - AdNova's operating profit margin: 8% (industry average 12%) - Main competitors: Don't engage in price competition - Customer selection reason: "Planning ability" 1st (78%), price 3rd (12%)

Kitagawa realized.

"So our customers don't prioritize cost. They choose us for planning ability. Then reducing production costs won't create competitive advantage..."

Company A's Judgment: Limited value

Does Company B's "Speed" Create Value?

We surveyed customer voices regarding delivery time.

Customer Interviews (20 companies): - "Speed of delivery is selection reason": 2 companies (10%) - "Normal delivery time is fine": 16 companies (80%) - "Would rather prioritize quality": 2 companies (10%)

However: - Emergency projects: 8 cases per year (5% of total) - Opportunity loss in those cases: Estimated ¥6.8 million annually

Kitagawa pondered.

"So it's unnecessary for 95% of projects, but has significant value in the 5% emergency cases..."

Company B's Judgment: Value exists but only in limited situations

Does Company C's "Flexible Responsiveness" Create Value?

We analyzed the frequency of specification changes.

Data Analysis: - Specification changes during projects: Average 42 cases annually - Current partners: Unable to respond to changes, resulting in re-orders (additional costs) - Loss from re-orders: Average ¥8.8 million annually

Furthermore: - Customer satisfaction survey: "Flexible response" is 2nd evaluation reason (45%) - Repeat rate: 18% higher for flexible response projects

Kitagawa's eyes lit up.

"Flexibility directly connects to customer satisfaction. And it prevents opportunity loss."

Company C's Judgment: Clear value exists

Phase 2: Rarity Verification

Next, we verified whether each company's strengths are "rare."

Market Survey (100 production companies): - Low-cost response possible: 68 companies (68%) - Speed response possible: 22 companies (22%) - Flexible response possible: 9 companies (9%)

Company C's Judgment: High rarity

Phase 3: Imitability Verification

We verified whether competitors can easily imitate.

Company A's Cost Advantage: - Implementation method: Offshore utilization (Philippines) - Imitability: Easy (possible with funding)

Company B's Speed: - Implementation method: Night shift system - Imitability: Possible (achievable with personnel and cost)

Company C's Flexibility: - Implementation method: Small elite veteran team, accumulated experience - Imitability: Difficult (requires 5-10 years for talent development)

Company C's Judgment: High inimitability

Phase 4: Organization Verification

Finally, we verified whether AdNova can leverage the resource.

AdNova's Sales System: - Customer relationships: Long-term (average transaction period 5.2 years) - Proposal style: Careful listening type - Strength: "Ability to draw out customers' true intentions"

Compatibility with Company C: - Draw out customers' true intentions → Specification changes occur midway - Company C's flexibility → Responds to changes, customer satisfaction improves - Result: Maximizes AdNova's strengths

Company C's Judgment: High organizational compatibility

Chapter Four: Conviction of Choice—The Sole Answer VRIO Leads To

VRIO Analysis Conclusion:

Holmes summarized the analysis.

"Ms. Kitagawa, the answer is clear. Company C's 'flexible responsiveness' is the resource that brings true competitive advantage to AdNova. It has value, is rare, is difficult to imitate, and fits your organization. This is the answer VRIO shows."

Results After 6 Months:

After selecting Company C as the main partner:

Business Metrics: - Re-orders due to specification changes: 42 cases annually → 3 cases (93% reduction) - Opportunity loss: ¥8.8 million annually → ¥800,000 - Customer satisfaction: 3.8 → 4.6 - Repeat rate: 68% → 82%

Competitive Advantage Established: - Differentiation from competitors: "Agency that can handle any changes" - New customer acquisition: 12 companies annually (85% year-over-year increase) - Project price: ¥2.8 million → ¥3.4 million (value recognized, price increase succeeded)

Organizational Change: - Sales team: Proposes with "flexibility" as weapon - Collaboration with Company C: Monthly regular meetings strengthen relationship - New service: "Midway Change OK Guarantee Plan" commercialized

Chapter Five: Detective's Diagnosis—Resources Are Chosen, Created

That night, I reflected on the essence of competitive advantage.

The true value of VRIO lies in preventing resignation.

If one tries to "obtain everything," ultimately nothing is obtained. However, by identifying "the most valuable one" and concentrating there, sustained advantage emerges.

AdNova chose Company C as a resource. But simultaneously, they also prepared an organizational system to leverage that resource.

"Resources aren't given. They're identified, chosen, and leveraged. That is strategy."

The next case will also depict the moment when VRIO guides corporate choice.

"Those who try to get everything get nothing. Only those who identify one rare resource obtain sustained advantage"—From the detective's notebook

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