Organizations compete on the basis of their resources. The strongest organizations usu ally win the competitive battles if their managers develop effective strategies and implement them well. To be com petitive, managers use the organiza tion's resources to create capabilities to act. A critical component of these capabilities is knowledge. In fact, Bill Breen of Fast Company sug gests that "Companies compete with their brains as well as their brawn. Organizations today must not only outgun and outhustle competitors, they must also outthink them. Compa- nies win with ideas." -108 Given the importance of knowl edge in gaining a competitive advan tage, learning is critical to organiza tional success. Managers and associ ates must continuously learn if they are to stay ahead of the competition, Perception is a key component of learning. It is particularly important to top executives, as they must carefully and thoroughly analyze their organi zation's external environment, with special emphasis on competitors. If they do not perceive their environment correctly, these executives may formu late ineffective strategies and cause the organization to lose its competi tive advantage. Understanding the concepts of learning and perception, then, is absolutely essential to the ef fective operation of an organization. Critical Thinking Questions 1. How does the knowledge held by managers and associates affect the performance of an organization?