Here is a simple exercise to demonstrate competitive advantage on the first day of class. Hold up a crisp $20 bill and ask “Who wants this?” When people look puzzled, ask, “I mean, who really wants this?” and then “Does anyone want this?” Continue this way (repeating this in different ways) until someone actually gets up, walks over, and takes the $20 from your hand. Then the discussion focuses on why this particular person got the money. How did their motivation differ? Did they have different information or perception of the opportunity? Did they have a positional advantage based on where they were sitting? Other personal attributes (e.g., entrepreneurial)? The main question, then, is why do some people/firms perform better than others? This simple exercise gets at the nexus of perceived opportunity, position, resources, and other factors that operate both at the individual and firm level. Note that instructors should tell the class not to share this with other students. However, if you do have a student who has heard about the exercise (and grabs the money), asymmetric information about an opportunity is certainly one aspect of the discussion. The following “vine” might also help drive home the point about money and resources…
Contributed by Rich Makadok
Carpenter Strategy Toolbox 
This is a fantastic exercise that I’ve used in my entrepreneurship and strategic management of innovation classes ever since I first saw Rich Makadok use it in his classroom. In particular, I use it early on in the semester to motivate the following ideas, which help set the tone for the semester: 1) the importance of the right questions/frameworks, and 2) being mindful of opportunities and taking initiative.
In terms of the right questions/frameworks, given that a class will typically generate a laundry list of potential explanations for why the one person “won the prize,” or exhibited a competitive advantage (including reasons that map on to analogous strategic considerations of a firm’s external environment or internal resources), the exercise helps to highlight two related points: 1) while there is no “magic bullet” explanation for success, 2) there are several external and internal factors that can help inform these understandings, and, importantly, that the situational relevance of their independent and interactive effects to a firm need to be understood .
In terms of being mindful of opportunities and taking initiative, I also use the exercise (particularly in my entrepreneurship class) to encourage students to reflect carefully on why they didn’t get the prize, but their classmate did–emphasizing that the classmate who “won” was sitting in the very same class and exposed to the very same rules as they were. “So why wasn’t it you?” In other words, I use the exercise as more of a personal conviction to try to push students to be more mindful of opportunities and ready to take initiative on them.