What we’re thinking
We integrate resources in order to make progress; our progress stumbles when we lack them; and we offer them to others in exchange for other resources we need to make progress.
They are fundamental to the progress economy thinking – but what are resources?
The literature and everyday language give us a muddled view, so we’ll define resources as:
resources: carriers of capabilities that are integrated during progress-making activities
These capabilities often include skills and knowledge, but they can also be other things such as physical attributes, like strength (carried by humans, machines, or a combination), natural attributes, like power (carried by wind), or more abstract, for example availability (carried by time).
It is helpful to categorise resources, not as tangible/intangible, but based on how they are involved in making progress. We categorise them as:
- operant resources – these, such as employees, act on other resources to make progress and are seen as source of strategic benefit
- operand resources – these, such as tools, need to be acted upon for progress to be made (which in traditional view are often see as the source of competitive advantage)
Importantly, to The Progress Economy, resources can be substituted if they carry the same capability, though the swap may not be one-to-one. For example, hanging a picture might be done by a handyman (a resource with many capabilities), or you might attempt it yourself. In the later case, you need to assemble and integrate a variety of tools, skills and knowledge.
Aligning with our view of value, we note that resources have no value themselves, only the potential to help make progress (from which value emerges).
Innovation, then, looks to enable us to make better progress, or progress better, through some combination of:
- generating new resource(s)
- discovering novel combinations of existing resources
- swapping resources
Let’s explore resources!
Editing below here
What are resources?
Resources are the things we integrate together in order to make progress. A call centre employee interacting with a customer to solve their problem; the sun irradiating a solar panel to generate electricity; a hammer hitting a nail to secure two pieces of wood together, etc.
As highlighted by Vargo et al (2010), human ingenuity continues to spawn “countless resources” that “continues to drive the market and society”. De Gregori’s “Resources are not; they become: an institutional theory” nicely walks us through the fascinating story of resource bootstrapping through human life-time.
Resources are fundamental to the progress economy. Without resources to integrate we can make no progress!
The traditional view – tangible vs intangible
To understand resources, we let’s first turn to the traditional view. Hunt’s “resource advantage theory of competition” tells us resources are:
the tangible and intangible entities available to an actor
Hunt, S. (1997) “Competing Through Relationships: Grounding Relationship Marketing in Resource-Advantage Theory”
So in this view, they are physical items like tools, as well as intangibles like skills, knowledge, and relationships. But this tangible/intangible focus of the definition risks keeping our thinking rooted in goods-dominant.
Peters gives us the perspective that resources are carriers of capabilities:
…no tangible or intangible item represents a resource in its own right; rather a resource is a “property of things…”. In this sense, a resource is a carrier of capabilities
Peters L.D., Löbler, H., Brodie R. and Briedbach, C. (2014) “Theorizing about resource integration though S-D Logic”
Capabilities encompass a wide range of things, including:
- skills and knowledge
- physical attributes like strength
- organisational traits such as culture
- and many others.
Common resources are: seekers, helpers, progress propositions, goods, locations. Additionally, resources can be beyond human control, such as time and weather (as discussed in Vargo, Lush and Akaka’s “Advancing service science with service-dominant logic“).
The progress economy view – carriers of capability
We embrace the view that resources are carriers of capability. So we start our definition of a resource as:
resource: a carrier of capability…
But we also want to emphasise that something happens with resources. That is to say we integrate them. Successfully integration leads us to make progress; which in turn means value emerges. Therefore our full definition of resource is:
resource: a carrier of capability that can be integrated in one or more progress-making activities.
It’s interesting to note that if we have two different resources carrying the same capability, we can swap them. And in the progress economy, the scope for this is wider than what is obvious in the goods economy. We could swap a goods for an employee (servitisation). Or a system for an employee (applying generative AI, for example). This is something we’ll discuss more when looking at the progress resource mix.
Our attention on capability and carrying them opens the door for us to replace traditional tangible/intangible classifications. We will classify resources based on how they help make progress. They are either operant or operand resources as we’ll see.
There is a little issue, though…
The resource-capability confusion
We find that both the literature and our everyday language are somewhat fluid when using concepts of resource and capabilities. If you agree with our view that resources are carriers of capabilities, then the world sometimes refers to capabilities as resources. Here’s some examples:
- skills – these should be capabilities that can be carried by, for example, the following resources: human, system, or frozen in goods; but we often refer to them as resources
- strength – again a capability carried by humans and animals, but we often refer to as a resource, or human-augmenting machines, where we do think of it as a capability
- wind – we often refer to as a resource although technically it is a capability carried by the resource we know as the atmosphere
Yet, interestingly, we don’t make this ‘confusion’ with, for example, water, which we clearly see as a resource that has the capability to move things (current).
This linguistic short-cut, which likely stems from how we see ourselves as using capabilities and thus seeing them as resources, is something we just have to live with.
They are a competitive advantage
Hunt’s resource-advantage theory of competition tells us a firm gains a competitive advantage by having superior resources. Weaker firms look to improve their resources through “better management of existing resources or by acquisition, imitation, substitution or major innovation” (Hunt, S. (1997) “Competing Through Relationships: Grounding Relationship Marketing in Resource-Advantage Theory”).
In our progress economy, we see seekers as primarily trying to make progress. When they lack of resource to progress themselves, they the look to progress helpers. Progress helpers offer propositions (bundles of supplementary resources) intended to help seekers progress. They make these offers in order to exchange for service, often indirectly, they are looking for.
So we should think that a seeker is primarily looking to have superior resources. And they may turn to a progress helper for those. As such, a helper should be looking to have superior resources themselves.
We like to expand on that and rephrase in terms of progress, giving us:
* inner quote from Hunt, S. (1997) “Competing Through Relationships: Grounding Relationship Marketing in Resource-Advantage Theory
- a progress seeker looks to have superior resources in order to make progress. Weaker seekers look to improve their resources through either:
- “better management of existing resources or by acquisition, imitation, substitution or major innovation”*, or
- engaging a progress helper that offers appropriate supplementary resources
- a progress helper looks to have superior resources and capabilities to maximise service exchanges they partake in. Weaker firms look to improve their resources through
- “better management of existing resources or by acquisition, imitation, substitution or major innovation”*
What does superior mean? It can only be that the resources do one or more of the following:
- help make current progress potential in a better way
- help make better progress towards individual seeker’s progress sought
- reduce one or more of the 6 progress hurdles
And that just happens to be part of the progress economy’s definition of innovation.
Allocative control
An essential characteristic of most resources is allocative control, denoting the ability and freedom to determine when resources are employed.
allocative control (of resource) – the ability and freedom to control when a resource is used
Allocative control can be temporarily transferred to another actor, highlighting a crucial distinction between goods and physical resources in a helper’s resource mix. Physical resources are essentially goods whose allocative control is temporarily delegated to another actor.
Classifying better – by How they help make progress
In the progress economy we classify resources by how they help make progress. They are either operant or operand resources.
Operant Resource*
acts on other resources resulting in progress being made
Operand Resource*
need to be acted upon for progress to be made
* definitions adapted for the progress economy from Constantin & Lush 1994’s book “Understanding Resource Management: How to Deploy Your People, Products and Processes for Maximum Productivity“.
For instance, in the progress attempt “John drives the car to get to the office”, John is an operant resource acting (integrating his skills and knowledge of driving) on the operand resource of the car (which needs to be driven for progress to be made).
Interestingly, we find that a resource’s classification can vary depending on the specific capability we are looking to harness.
Consider water. It carries both the capability to quench thirst and turn a turbine. Each capability is different according to our definitions:
- force/movement capability implies water is an operand resource – the water acts upon turbine blades to make progress
- quenching our thirst implies water is an operant resource – we need drink (act on) the water in order for progress to be made
Temptingly I wonder if capabilities rather than resources are operand or operant; but lets not go there yet.
OK, let’s delve into both these types of resources, starting with operant, and see what they are, what seekers and helpers typically have and how they gain new resources.
Let’s progress together through discussion…