The Resource-Process-Values (RPV) Framework
Diagnose why your organization cannot pursue disruptive opportunities despite wanting to
The Resource-Process-Values (RPV) Framework provides a diagnostic model for understanding organizational capability and explaining why companies that possess the resources to pursue new opportunities still fail to do so. Christensen argues that organizational capability resides in three factors: Resources (what the organization has—people, technology, cash, brand, relationships), Processes (how the organization does things—decision-making patterns, resource allocation routines, coordination mechanisms), and Values (what the organization prioritizes—gross margin requirements, market size thresholds, customer type preferences). While resources are flexible and can be redirected, processes and values are inherently rigid because they evolved to handle the organization existing business efficiently. Processes that optimize for current customers systematically filter out disruptive opportunities. Values that require large margins and large markets systematically deprioritize small-market innovations. The framework explains why acquiring resources (hiring smart people, buying technology) is insufficient for pursuing disruption—the processes and values of the acquiring organization will neutralize those resources unless structural separation is maintained.
- Resources are the most flexible factor—processes and values are the most constraining
- What an organization can do is determined less by what it has than by how it operates and what it prioritizes
- Processes that enabled past success become the barriers to future adaptation
- Values that drove profitable growth in existing markets systematically reject disruptive opportunities
- Structural separation is often the only solution to process and value constraints
- Audit Your ResourcesInventory the tangible and intangible resources your organization possesses: people (skills, experience, judgment), technology (patents, proprietary systems, R&D capabilities), cash and financial resources, brand reputation, customer relationships, and distribution channels. Resources are the most straightforward factor to assess and the easiest to change—they can be bought, hired, or developed. Most managers stop their capability assessment here, which is why they are surprised when abundant resources fail to enable new opportunities.Pro tipResources are necessary but insufficient—the real constraints are almost always in processes and values
- Map Your ProcessesIdentify the formal and informal processes that determine how work gets done: how are resources allocated? How are decisions made? What information flows to whom? How are new projects approved? How are employees rewarded? Focus especially on the processes that govern resource allocation—these are the most powerful determinants of what your organization actually does, regardless of what its strategy documents say. Processes that evolved to efficiently serve existing customers will systematically filter out disruptive opportunities because they look small, uncertain, and unprofitable by existing criteria.Pro tipFollow the money—trace how a dollar moves from revenue to R&D investment to understand what your organization actually prioritizes versus what it claims to prioritizeWarningThe most dangerous processes are the informal ones—unwritten rules about what gets funded and what gets killed in meetings
- Examine Your Values and Prioritization CriteriaDetermine the criteria your organization uses to set priorities: minimum market size to pursue, minimum gross margin required, preferred customer type, risk tolerance, and time horizon for returns. These values evolved to optimize for your current business and they work well in that context. But they become lethal when applied to disruptive opportunities that are initially small, low-margin, risky, and long-horizon. If your values require 40 percent margins and disruptive opportunities offer 20 percent, those opportunities will never survive your prioritization process no matter how strategically important they are.Pro tipAsk what opportunities have we killed in the last two years and why—the pattern of rejected opportunities reveals your operational values more honestly than any mission statementWarningValues feel like objective criteria but they are historical artifacts—what was right for your past market is not necessarily right for your future market
- Design the Organization to Match the OpportunityOnce you understand the RPV mismatches, design an organizational approach that addresses them. If only resources are mismatched, you can address this within the existing organization through hiring and investment. If processes are mismatched, you need new processes—which usually means a new or restructured team with different operating procedures. If values are mismatched, you need structural separation—an autonomous organization with its own cost structure, success metrics, and decision-making authority. The more fundamental the mismatch, the more structural separation you need.Pro tipWhen in doubt about how much separation is needed, err toward more—insufficient separation is the most common failure modeWarningReintegrating a separated unit too early, before the disruptive opportunity has matured, will kill it through exposure to the parent company processes and values
DEC was the leading minicomputer company with exceptional resources—brilliant engineers, advanced technology, strong finances, and deep customer relationships. But its processes were designed around building $200,000 minicomputers through a complex direct sales organization. Its values required 50 percent gross margins and enterprise-scale markets. When personal computers emerged, DEC had the resources and technology to compete but its processes could not build $2,000 products and its values could not accept 20 percent margins. DEC tried to pursue the PC opportunity within its existing organization and failed repeatedly because the organizational processes and values filtered it out.
Christensen developed the RPV Framework to answer a question that puzzled many managers: if our people are smart and our technology is good, why can we not pursue this new opportunity? He observed that managers consistently overestimated the role of resources in organizational capability and underestimated the role of processes and values. A large company could hire the best engineers and acquire the most advanced technology, but if its decision-making processes required multi-year business plans with demonstrated ROI, and its values required 40 percent gross margins and 100 million dollar markets, the disruptive opportunity would be killed before it could develop. The RPV Framework made visible the invisible organizational forces that determined what a company could and could not do, regardless of what its leaders wanted to do.