VRIO

In looking at a firms resources and capabilities, one method is the VRIO framework. VRIO stands for value, rarity, imitability, and organization. These four questions can be applied to determine whether a resource can add competitive advantage to a firm. New Belgium believes that their people are one of their most valuable assets as they recently decided to become 100% employee owned.  In producing a unique product like beer, the employees producing the beer are one of the main keys to the product and hence are valuable.  It is possible to argue that high quality beer producing employees are not rare, but I would argue the contrary.  The skills needed to produce beer are fairly unique requiring specialized training, thus making them a rarity.  Other breweries do attempt to imitate the employee resource but not often with the success of New Belgium.  The Unique Historical Condition that grew out of Kim Jordan and Jeff Lebesch deciding that employees should have ownership in the company, is difficult to reproduce in an existing brewery as this started at the hiring of some of their first employees.  The fourth question of Organization goes back to the beginning of this post.  Kim Jordan feels so strongly that the employees are such a key asset to the company that she sold her controlling share to the employees, so clearly the organization bases its entire success on this resource.  Based on the VRIO Framework as applied to the employee resource at New Belgium, they should be able to produce a sustained competitive advantage from their employees.

 

Addendum to last week:  I noted that New Belgium is distributing to 38 states and cited their current website data.  Since that post, I noticed that New Belgium has applied the new data and now distributes to 45 states.  The craft beer world moves fast and its hard to keep up.