Is your core competence a mirage

Abstract

Managers now consider just about everything a potential Are your measurably better, can you sustain the difference, and does it matter? Building a competence: three options CORE COMPETENCE - the idea that a company can succeed without a structural competitive advantage by becoming the best at a few key skills or in a few knowledge areas - has enjoyed enormous popularity over the past six years. article that introduced the concept(1) has been one of the most requested reprints in the Harvard Business Review's history. Executive management programs and MBA curricula routinely devote hours to the subject, and executives often refer to their own and competitors' competences as key drivers of strategy. But despite all the attention this concept has received, its tangible impact on corporate performance has been mixed at best, as these statements attest: has too often become a 'feel good' exercise that no one fails.(2) True competences are hard to define precisely and are often discovered retrospectively. That is, as you experiment, you define your competences by simply describing your successes and failures.(3) talked to [core experts] and asked them to help us identify our competences. But after having them work with our senior management, leading them through some group exercises, we really had a mess on our hands. We could not define what was as opposed to noncore, and what was a as opposed to some process or offering we just did well.(4) Our own observations bear out these views. Few managers we have talked to could claim to have utilized a to achieve success in the marketplace, and even fewer to have built a from scratch. Indeed, most were uncertain as to exactly what qualifies as a competence. We are left with a conundrum. Core is clearly an important concept, and some companies seem to be able to make it work. But for most, it is like a mirage: something that from a distance appears to offer hope in a hostile environment, but that turns to sand when approached. Why do competences seem so elusive? One reason may be that there is no clear basis for identifying them, nor any established way of gauging progress toward them. To address the need for a more rigorous approach, we reviewed the literature, assessed individuals' experience, and conducted case studies of companies that had attempted (successfully or unsuccessfully) to develop a competence. This research produced four important findings: core competence is an umbrella phrase covering two distinct bases of advantage; certain' tests can help predict whether a competence-led strategy will be successful; there are three distinct paths to developing a competence, each with its own benefits and drawbacks; and sustaining a requires just as much rigor as developing one in the first place. What are competences? While most of the examples in Hamel and Prahalad's article concerned knowledge of one or more technologies, executives have extended the idea of to cover many types of skills and functions, including process engineering, production, new idea generation, and even corporate identity. They treat everything as a potential competence. One executive asserted, The way I determine competences is that they are those few things that you do together with the customer that create value. In contrast, we believe a precise definition is essential. To mount a winning competence-based strategy, it is not enough to rely on broad generalizations like marketing, product development, or service. One consumer goods company with a reputation for marketing excellence assumed that it was superior in all aspects of marketing. Yet it is not particularly skilled at pricing, is only average at channel management, and has made some costly errors in a string of new failures. …

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 92 citations exist upstream.