core competence

JP Castlin wrote a blog post titled Cores & Competencies: Introducing Prahalad and Hamel.

« Today, we are heading into corporate strategy to discuss the notion of core competence, a term first formally introduced by C.K. Prahalad and Gary Hamel in the 1990 Harvard Business Review article The Core Competence of the Corporation.  »

« At its core, no pun intended, Prahalad and Hamel’s case is centered around their conclusion that modern competition is less about strategic leaps than incremental innovation that exploits developed organizational capabilities. These core competencies are… collective knowledge of how to coordinate and best take advantage of the skills and any thereto relevant technologies. Or to put it in plain English, the skills and their support systems (technology, management and culture). »

« The authors’ analogy of choice is that of a tree. The trunk and major limbs are the core products, smaller branches are business units, and leaves and fruit the end products. Nourishing and stabilizing it is the root system of core competencies. »

« The establishment of core competencies tends to start with the definition of a strategic intent that delimits the company and its potential markets.  »

« By instead viewing the competency as an asset of the corporation (as opposed to the individual SBU), the authors argue, managers are able to identify the people who embody critical competencies and move them across organizational boundaries to where they can do most good. »

« The complications… But as the business adapts and evolves over time, an additional set of core competencies will emerge (if they do not, one would have to worry about the organization’s ability to learn). These will have been enabled by a myriad of uncontrollable factors and thus impossible to replicate in detail. As they are also only ever visible in retrospect, they cannot be created through planning – indeed, it is this that makes them so valuable. »

« Consequently, the true core competencies of a resilient organization are likely to change as the context changes; they are not exclusively the result of strategic decision-making and planning, but also emergence and co-evolution. This goes counter to the central control and grand vision that Prahalad and Hamel argue for and leads us to the second issue… »