Established model
VRIO
Jay B. Barney · 1991
Four questions that decide whether something a company has is an advantage or just an expense.
Its place in the frameworkBusiness Core›Core Competencies
What it does
Is it valuable, is it rare, is it costly to imitate, and is the organisation arranged to exploit it. Only what passes all four supports advantage that lasts; passing the first two gives you parity or a temporary lead. The fourth question is the one companies fail — holding something genuinely rare and being organised in a way that wastes it.
- Reach for it when
- As a sorting test across a list of claimed strengths, when everything on the list has been called a strength by the person who owns it.
- Where it stops
- The answers are judgements, and imitability in particular can only really be assessed backwards. It structures an argument rather than settling one.
Jay B. Barney, “Firm Resources and Sustained Competitive Advantage”, Journal of Management, 1991.
Why it sits at Core Competencies
The things the organisation does better than most, that customers value and competitors struggle to copy. Not everything it is good at — only the few that produce advantage.
A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:
- IdentificationPrahalad and Hamel’s original three tests: access to markets, contribution to customer benefit, and difficulty of imitation.
- Testing for advantageBarney’s VRIO framework, the standard instrument for separating a strength from a source of sustained advantage.
- BuildingThe build-buy-partner decision in strategy and in transaction cost economics.
- ProtectingWork on the distinction between individual and organisational capability, and on knowledge embedded in routines rather than in people.
What it touches elsewhere
Nothing in a business is decided on its own. A conclusion reached with this model at Core Competencies lands in these other cores, whether or not anyone follows it there.
- Goal CoreA strategic goal that requires a competency the organisation lacks is a decision to build or buy it.
- Market CoreRarity is judged against competitors, not against the organisation’s own past.
- Brand CoreA positioning claim unsupported by a real competency is one the operation cannot keep.
- Business CoreWhat is not core is a candidate for partners or for the supply chain.
Filed at the same place
These answer questions that arise at Core Competencies too. Where they disagree with this one, the disagreement is the useful part.
- Core competenceThe few things a company knows how to do that open more than one market and are hard to copy.
Elsewhere in Business Core
- Tuckman’s stages of group development
- Belbin Team Roles
- Herzberg’s two-factor theory
- Jobs to be done
- The Kano model
- The value proposition canvas
- The business model canvas
- The Van Westendorp price sensitivity meter
- Value-based pricing
- The resource-based view
- The theory of constraints
- Lean thinking
- Co-opetition and the value net
- Transaction cost economics
- Stakeholder theory
- The power–interest grid
- DuPont analysis
- Break-even and cost–volume–profit analysis
- Unit economics
- The Kraljic Matrix
- The bullwhip effect
- The SCOR Model
- On-time in-full
- Overall equipment effectiveness
- Value stream mapping
- The three lines model
- ISO 31000 risk management
- Maslow’s hierarchy of needs
- Kotter’s eight-step change model
- Situational leadership
- The Lean Startup
- Design thinking
- Porter’s value chain
- The McKinsey 7S framework
- The growth–share matrix
- Six Sigma and DMAIC
These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.
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