The Science of Building Companies: A Key Capabilities Comparison between Classical and Scientific Businesses

Building a successful company requires identifying and developing key capabilities that support the firm’s competitive advantage. Identifying key capabilities can be complex and requires a combination of methods. In this article, we will compare building classical companies to building scientific companies and explore the different key capabilities required for each type of business.

Key Capabilities for Classical Companies

Classical companies, such as manufacturing or service companies, require identifying key capabilities that support their competitive advantage. These key capabilities may include supply chain management, marketing, or customer service. To identify key capabilities, businesses can use a combination of three methods: the checklist method, using a conceptual framework and using business sense.

According to a report by McKinsey & Company, companies that focus on building key capabilities are more likely to achieve long-term success. The report found that companies that prioritize building capabilities and invest in developing them outperform their peers. Specifically, companies that invest in building capabilities grow their revenue 1.8 times faster [1] than companies that do not.

A study by PwC found that 73% of consumers consider customer service a crucial factor when deciding to do business with a company. Furthermore, 54% of consumers will stop doing business with a company after just one bad experience with customer service [2].

Effective supply chain management can also lead to significant cost savings. A study by Deloitte found that companies that prioritize supply chain management reduce their operational costs by 10–20%, on average [3].

Key capabilities are crucial for any classical company to remain competitive in their respective industry. These capabilities vary from company to company, but some common examples include:

1. Supply chain management: This capability involves managing the flow of goods and services from suppliers to customers. Companies that effectively manage their supply chain can reduce costs, improve product quality, and increase customer satisfaction.

2. Marketing: This capability involves promoting and selling products or services to customers. Companies that effectively market their products or services can increase brand awareness, attract new customers, and retain existing ones.

3. Customer service: This capability involves providing excellent customer support and resolving customer complaints. Companies that can provide exceptional customer service can increase customer loyalty and retention.

Figures such as Michael Porter’s activity map or value chain can help identify key capabilities by isolating bundles of value-adding activities that are key to competitive success. For example, the value chain can help a manufacturing company identify key production, supply chain management, and distribution capabilities. An activity map can help a service company identify key marketing, customer service, and operations capabilities.

In addition, using business sense and cross-checking it with the first two methods can help keep the focus on the most important capabilities. By leveraging these three methods, classical companies can identify and develop key capabilities to support their competitive advantage and contribute to their long-term success.

Key Capabilities for Scientific Companies

Scientific companies, on the other hand, require a different set of key capabilities. Scientific companies are characterized by their reliance on advanced technology and scientific methods to create breakthrough innovations. The key capabilities required for building a scientific company include strong research and development (R&D), data analysis, and experimental design. These capabilities are essential for scientific companies to develop and commercialize innovative products or services.

1. Research and development (R&D): This capability involves conducting research to develop new products or improve existing ones. Scientific companies must be able to conduct research that is innovative, rigorous, and aligned with their business goals.

2. Data analysis: This capability involves analyzing large amounts of data to identify patterns, insights, and opportunities. Scientific companies must be able to collect and analyze data from multiple sources to drive innovation and improve performance.

3. Experimental design: This capability involves designing and conducting experiments to test hypotheses and validate new ideas. Scientific companies must be able to design experiments that are efficient, effective, and produce reliable results.

In addition to these key capabilities, scientific-based companies require stronger validations than classical companies. The products or services developed by scientific companies require more extensive testing to ensure safety and efficacy. This validation process may involve clinical trials, regulatory approvals, and other forms of scientific validation.

For example, Moderna, a biotechnology company that develops mRNA-based vaccines, has built key capabilities in R&D, data analysis, and experimental design. The company’s mRNA technology platform enables the rapid development of vaccines for a range of infectious diseases, including COVID-19 [4]. Moderna has conducted extensive clinical trials to validate the safety and efficacy of its vaccines.

Another example is Tesla, an electric vehicle and clean energy company, which has built key capabilities in R&D and data analysis. Tesla’s R&D efforts have led to breakthrough innovations in battery technology, autonomous driving, and renewable energy [5]. The company collects and analyzes vehicle data to improve performance and optimize customer experiences.

By building these key capabilities, scientific-based companies can create breakthrough innovations and disrupt industries.

Augmenting Exponential Companies (ExO) Capabilities for Scientific Companies

Augmenting exponential companies’ (ExO) capabilities can enhance the key capabilities required for scientific companies. ExO capabilities, such as community and crowd, can help scientific companies to gather and analyze large amounts of data from a broad range of sources. The global life science analytics market size was valued at USD 9.0 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 7.6% from 2023 to 2030 [6].

Thoughts and conclusions

Building successful companies requires identifying and developing key capabilities that support competitive advantage. While classical companies require key capabilities such as supply chain management and customer service, scientific companies require strong R&D, data analysis, and experimental design capabilities. Augmenting ExO capabilities can enhance the key capabilities required for scientific companies. Scientific-based companies are growing faster than the global economy, indicating the importance of developing these key capabilities for future success.

In a glance at the future, as the world continues to evolve, new technologies such as quantum technologies are emerging and will undoubtedly require the development of new key capabilities. Quantum technologies have the potential to disrupt multiple industries, from healthcare to finance, and companies that can develop the necessary key capabilities in this field are likely to experience significant growth and success. As we look to the future, it is essential for companies to stay ahead of the curve and continue to develop the key capabilities necessary to thrive in a rapidly changing business landscape.

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[1] https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/unlocking-success-in-digital-transformations
[2] https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence-series/future-of-customer-experience.html
[3] https://www2.deloitte.com/content/dam/Deloitte/us/Documents/process-and-operations/us-cons-enterprise-cost-management-survey-report-.pdf
[4] https://www.modernatx.com/
[5] https://www.reuters.com/business/autos-transportation/inside-teslas-drive-keep-musks-battery-promise-2022-09-06/.
[6] https://www.grandviewresearch.com/industry-analysis/life-science-analytics-market

Originally published at: https://medium.com/hadox-human-networks/the-science-of-building-companies-a-key-capabilities-comparison-between-classical-and-scientific-60d50510ffb5

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