Growth Strategy · Asset Audit
The Assets Were There. The Question Was Whether They Were the Right Ones.
Before a company commits to a growth adjacency, the harder question is not whether it can enter. It's whether the assets it plans to lean on will actually hold up once it's in — a question strategic management research has had a rigorous answer to since 1991.
The Real Framework Behind This Question
Jay Barney's 1991 paper, "Firm Resources and Sustained Competitive Advantage," published in the Journal of Management, is one of the most cited works in the field's history and the foundation of what's now called the Resource-Based View of the firm. Barney's argument was specific: owning a resource is not the same as owning a competitive advantage from it. For a resource to actually produce a sustained advantage, it has to pass four tests — later formalized as the VRIN framework, and refined further in 1995 into VRIO.
The fourth test is the one most adjacency decisions skip entirely. A resource can be valuable, rare, and difficult to imitate, and still produce no advantage at all if the organization isn't structured — in incentives, in reporting lines, in where budget authority sits — to actually deploy it.
A related stream of research on IT resources specifically — Mata, Fuerst, and Barney's 1995 follow-up study — found that many technical resources widely assumed to confer advantage, like standard hardware or off-the-shelf software, are actually imitable and rarely meet the VRIN bar on their own. The broader lesson generalizes past IT: the resources a company assumes are its differentiators are frequently not the ones that would survive rigorous testing, and the ones that would survive are frequently not the ones getting cited in the internal business case.
Owning a resource and being organized to exploit it are two different conditions. Most failed adjacencies fail on the second one, not the first.
What This Looks Like Applied to an Adjacency Decision
Every adjacency decision implicitly bets that a specific set of assets will transfer — a technical capability, a customer relationship, a piece of process knowledge. Running each candidate asset through Barney's four tests, explicitly and before capital is committed, turns an assumption into something testable. Most of the time, some assets pass cleanly and others don't, regardless of how related the two categories look on paper — and the assets that fail are frequently the ones the original internal case leaned on hardest.
A Real, Well-Documented Case
Kodak engineered the first digital camera in 1975. The company held foundational patents in the technology that would eventually displace its own core film business, and by any conventional resource inventory, that capability was valuable, rare, and difficult for competitors to replicate at the time. Kodak filed for bankruptcy in 2012. The widely cited explanation isn't that Kodak lacked the technology — it's that the organization was structured around, and incentivized by, its film business, and was never restructured to exploit the digital capability it already owned. In VRIO terms: Kodak passed Valuable, Rare, and arguably Inimitable, and failed decisively on Organized.
What Vaxa Calls This Test
Running Barney's four questions against a real adjacency decision, under real time pressure, is what Vaxa calls the Capability Transfer Audit — a six-step process for testing every asset an adjacency business case actually depends on, and deciding what to do about the ones that don't yet fit, before capital moves. It isn't a separate invention from Barney's research; it's that research applied specifically to the moment a company is about to bet on an adjacency, sequenced for a live decision rather than a general inventory exercise.
No adjacency ever produces a perfect fit. Some assets will pass cleanly, some will fail outright, and most will land somewhere in between — valuable and rare, but not yet organized for this specific new context. That's the expected outcome of a real audit, not a sign it went wrong.
The build-buy-partner decision has real academic grounding of its own: Oliver Williamson's transaction cost economics — work that earned him the 2009 Nobel Memorial Prize in Economic Sciences — is the foundational research on when an organization should produce a capability internally versus acquire it through the market. What that research doesn't resolve on its own is time. Building typically takes the longest but leaves the most control; buying is usually fastest but concentrates risk in integration; partnering sits between the two on both dimensions. Most gaps have more than one viable path to closing them, and the right choice depends as much on the adjacency's actual timeline as on cost.
The audit surfaces three outcomes for each asset tested: a clean pass, a clean failure, or — the case that does the most damage when missed — a partial pass, where an asset is valuable and rare but the organization isn't actually structured to exploit it yet. That third category is where Kodak's digital camera technology sat for over a decade, and it's the category most internal reviews collapse into a simple yes.
01
Inventory
List every asset the business case actually depends on — not just the ones named in the pitch, but every one an outside observer would ask about.
02
Prioritize & Test
Sequence which assets get tested first when time is limited — the ones the business case leans on hardest, before the ones it barely mentions. Then score each one against Barney's four VRIO criteria relative to the specific adjacency: Valuable — does it help increase value delivered or reduce cost? Rare — do few or no competitors possess it? Inimitable — is it genuinely costly or slow to copy? Organized — is the company structured to exploit it? The same asset can pass for one adjacency and fail for another.
03
Resolve
For every gap found, determine whether it's organizational and fixable, or structural and disqualifying — the distinction most internal reviews skip.
04
Close & Rebuild
For every fixable gap, decide the path to close it — build the capability internally, buy it, or partner for it, and how long each path actually takes. Then translate the results into a revised, time-sequenced entry plan built on real assets and real gap-closing decisions — not the ones the original case assumed.
Why the Audit Needs Both Theories at Once
Barney's four criteria tell you whether an asset is genuinely valuable, rare, hard to imitate, and organized to exploit — a test of fit. Williamson's transaction cost economics tells you, once a gap is found, whether to build, buy, or partner to close it — a test of timing and control. Neither theory answers the other's question. Running the audit on fit alone tells a company what's missing without saying what to do about it; running it on build-buy-partner logic alone assumes the fit question has already been answered, when in most adjacency decisions it hasn't.
Two Theories, No Clock Between Them
VRIO and transaction cost economics are both public, foundational research on their own — any team can apply either one directly. Neither tells you how to connect them: which assets to test first when time is short, how to treat a partial pass, or how fast a build, a buy, or a partner deal actually needs to move for a given adjacency. The Capability Transfer Audit's six-step sequence, built through Strategic Innovation — Vaxa's proprietary methodology referenced across engagements including Nokia, Intel, DuPont, and P&G — is what puts a working clock on the decision instead of treating all three paths as interchangeable.
The Actual Question
The categories looked related enough on paper. That's rarely the test that matters. The test that matters is whether the specific assets the business case depends on would actually pass Barney's four questions relative to this specific adjacency — and for the ones that don't yet, whether the fastest real path to closing that gap is to build it, buy it, or partner for it.
How Growth Strategy if applies
Related Material
Barney, J.B., "Firm Resources and Sustained Competitive Advantage," Journal of Management, 17(1), 1991, pp. 99–120 — origin of the VRIN framework.
Barney, J.B., "Looking Inside for Competitive Advantage," Academy of Management Executive, 1995 — refinement to VRIO. · Mata, F.J., Fuerst, W.L. & Barney, J.B., "Information Technology and Sustained Competitive Advantage: A Resource-Based Analysis," MIS Quarterly, 1995.
Williamson, O.E. — transaction cost economics; 2009 Nobel Memorial Prize in Economic Sciences, on the make-versus-buy decision. · Kodak — widely documented case of the 1975 digital camera invention and the company's 2012 bankruptcy.