Knowledge-Driven Creative Destruction, or Leveraging Knowledge for Competitive Advantage

Abstract

In today's globalizing and hypercompetitive marketplace, knowledge and learning are the only capabilities that can provide sustained competitive advantage. ‘Knowledge’ is the content of learning, and a firm gains competitive superiority either by knowing something that its competitors do not know or by having a certain type of knowledge that cannot easily be replicated. ‘Learning’ is the process of gaining new knowledge, so that the firm is constantly accumulating and assimilating knowledge and this becomes the basis for creating and improving organizational routines. Learning is the also the basis of what strategists are calling firms' ‘dynamic capabilities’ (Tushman and Rosenkopf, 1992), which enable them to build new competences in an evolutionary cycle to maintain an edge in an ever-changing industrial environment. This paper explores conceptually and attempts to validate empirically the nature and dynamics of strategic knowledge arbitrage and serendipity (SKARSE) as real options drivers (RODs). The author reviews and assesses how, why and when SKARSE serve as high value adding RODs and identifies critical success and failure factors in designing and implementing real options that leverage SKARSE. He also examines the lessons learned from actual mergers and acquisitions. Finally, he addresses the operation of SKARSE in the context of a complex evolutionary ecosystem shaped by the dynamics of co-opetition, co-evolution and co-specialization.