The Distinctive Capabilities Framework, developed John Kay, captures the capabilities a firm has which cannot be replicated by competition. There are 3 such "Distinctive Capabilities"-- Architecture, Reputation, and Innovation--are the source of superior performance and sustainable competitive advantage for successful firms.

This framework developed created after extensive research by Kay into the origin of corporate and industrial success. He interviewed many successful business owners and analyzed corporate earnings, annual reports and case studies. Through his research, he determined success is dependent on the relationship a business maintains with its suppliers, customers, shareholders, and employees. Continuity and stability in these relationships is essential for a flexible and collaborative response to change.

This framework can be used in the process of defining a company's strategy, to broaden awareness of the sources of competitive advantage, and to find ways to sustain them.

Conventional resource-based strategy theory focuses on establishing competitive advantage by commanding strategic assets. This model takes a relationship-based view.

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