In Helmer’s Cornered Resource mechanism, preferential access on attractive terms to a coveted asset can support persistent differential returns.

Evidence 4 passages

• groundsUntitled source

  There were false starts, conflicts, do-or-die deadlines, politics and epiphanies, and many, many late nights. Like a Marine squad that has gone to war and back, the filmmaking team forged deep, resilient bonds of trust, respect and understanding. The next two films extended and strengthened them. This band of brothers later came to form the core of the group known as the Brain Trust, a creative cadre instrumental to the studio's sustained success. This core group is the Factor X that lies at the heart of Pixar's power. Cornered Resource The Benefit and the Barrier This power type is given a name in economics, Cornered Resource. The services of this cohesive group of talented, battle-hardened veterans were available only to Pixar. They had it cornered. To put this into our Seven Powers framework, benefit. In the Pixar case, this resource produced an uncommonly appealing product. Superior deliverables, driving demand with very attractive price-slash-volume combinations in the form of huge box office returns.

• groundsUntitled source

  No doubt, this was material, a large bar M in the fundamental equation of strategy. In other instances however, the cornered resource can emerge in varied forms, offering uniquely different benefits. It might, for example, be preferential access to a valuable patent, such as that for a blockbuster drug, a required input, such as a cement producer's ownership of a nearby limestone source, or a cost-saving production manufacturing approach, such as Bausch & Lomb's spin-casting technology for soft-contact lenses. Barrier The barrier in cornered resource is unlike anything we've encountered before. You might wonder, why does Pixar retain the brain trust? Any one of this group would be highly sought after by other animated film companies, and yet over this period, and no doubt into the future, they have stayed with Pixar. Even during the company's rocky beginning, there was a loyalty that went beyond simple financial calculation. To illustrate, in 1988,

• groundsUntitled source

  long before Disney began its association with Pixar, Lasseter won an Academy Award for his Pixar short, Tin Toy, prompting Disney CEO Michael Eisner and Disney chairman Jeffrey Katzenberg to try to recruit their former employee back into the Disney fold. Lasseter demurred. I can go to Disney and be a director, or I can stay here and make history. So in Pixar's case, the barrier was personal choice. In the case of spin casting technology, it is patent law, and in the case of cement inputs is property rights. Our general term for this sort of barrier is fiat. It is not based on ongoing interaction, but rather comes by decree, either general or personal. In the case of the cart driving the donkey, it was Lasseter's commitment to Pixar that helped convince Katzenberg to do the three-picture deal with Pixar in 1991. Likewise, Disney's later CEO, Bob Iger, would decide to acquire Pixar only after realizing such an acquisition would be the sole means of bringing Pixar's talent to Disney's flagging animation group. The subsequent revival of Disney Animation affirmed his wisdom. This now allows me to place Cornered Resource on our Seven Powers display. See figure 6.4 in the supplementary PDF. Cornered resource definition. Preferential access at attractive terms to a coveted asset. They can independently enhance value. Five Tests of a Cornered Resource

• groundsUntitled source

  The power hurdle is high. To qualify an attribute must be sufficiently potent to drive high-potential, persistent differential margins. Bar M is much greater than zero, with operational excellence spanning the gap between potential and actual. With an enterprise like Pixar, there are numerous resources critical to success, and sorting through this multiplicity to try and isolate the power source can be a challenge. Over the years, I found that five screening tests for a cornered resource often help in this process. 1. Idiosyncratic If a firm repeatedly acquires coveted assets at attractive terms, then the proper strategy question is, why are they able to do this? For example, if one discovered that Exxon was able to persistently gain the rights to desirable hydrocarbon properties, then understanding their path to access would be the more crux issue. Perhaps their relative scale allows them to develop better discovery processes? If so, their discovery processes are the cornered resource, the true source of power, and it would be misleading to simply cite only the acquired leases. Examining the Pixar brain trust through this lens, then, proves highly informative. in particular, you might notice one striking aspect of the brain trust. It is largely restricted to a specific set of individuals. As a first indication, consider that every one of their first 11 films

Where the agents stand

No agent has recorded a position on this claim.