The Core Competence 20 Years Later

I was so inspired after reading the famous article “The Core Competence of the Corporation” by C.K. Prahalad and Gary Hamel (http://hbr.org/1990/05/the-core-competence-of-the-corporation/ar/1). More than 20 years after originally published in Harvard Business Review magazine (May-June 1990 edition), it’s still considered one of the must-read management classics on strategy.

Sure, there is a lot of hype about it, but what is it actually about?

In short, it says that an efficient organization should be focused around its core competencies, not business units. Core competencies, which are defined as collective knowledge about how to coordinate diverse production skills and technologies, are the flesh and bone of a company, upon which all activities are built. Knowing it clearly, a company will no longer struggle to answer the question “what should we do”. It’s similar to a farm wanting to sell on the internet. Should they build a business unit to handle the technology, or, should they leave that to the experts?

This idea does not only apply to the organization but also to the individual. In today’s world there are too many people who don’t realize what they’re good at, which strength they possess or even what weakness they should seek out help for. More often than not, people try to follow other models that may not even apply to themselves. The problem with this thinking is that those people eventually fail to realize their potential. Most of the time they will end up wrestling with the question “ why can’t I achieve the same performance as my competitor?”

The good news is that it’s never too late to discover your core competencies and make it work for you. To identify and put core competencies to use,  C.K. Prahalad and Gary Hamel suggest that an organization should follow the 3-step process outlined below. .

1.  Clarify core competencies
2.  Build competencies
3.  Cultivate a core competency mindset

The last step is extremely important. Many companies have spent a great deal of resources to clarify and build competencies, only to let the good work fade out by not having a strategy to incorporate them to everyday life. Similarly, many people after working out their strengths see themselves going back to the good old ways. Only when the core competencies are made into daily breath will they become sustainable. This process requires persistence and determination as well as continuous revision and update. Today’s competency may become tomorrow’s incompetency and there is no exception to any person or organization.

Has your organization identified the core competencies it needs to compete in today world? Have you identified any strength that will distinguish you from the rest?  Have you identified the competencies that are useful, but not core to your business that you should be looking to professionals to implement for you?

Please share your opinion with us. 

41 comment(s)

I was so inspired after reading the famous article “The Core Competence of the Corporation” by C.K. Prahalad and Gary Hamel (http://hbr.org/1990/05/the-core-competence-of-the-corporation/ar/1). More than 20 years after originally published in Harvard Business Review magazine (May-June 1990 edition), it’s still considered one of the must-read management classics on strategy.

Sure, there is a lot of hype about it, but what is it actually about?

In short, it says that an efficient organization should be focused around its core competencies, not business units. Core competencies, which are defined as collective knowledge about how to coordinate diverse production skills and technologies, are the flesh and bone of a company, upon which all activities are built. Knowing it clearly, a company will no longer struggle to answer the question “what should we do”. It’s similar to a farm wanting to sell on the internet. Should they build a business unit to handle the technology, or, should they leave that to the experts?

This idea does not only apply to the organization but also to the individual. In today’s world there are too many people who don’t realize what they’re good at, which strength they possess or even what weakness they should seek out help for. More often than not, people try to follow other models that may not even apply to themselves. The problem with this thinking is that those people eventually fail to realize their potential. Most of the time they will end up wrestling with the question “ why can’t I achieve the same performance as my competitor?”

The good news is that it’s never too late to discover your core competencies and make it work for you. To identify and put core competencies to use,  C.K. Prahalad and Gary Hamel suggest that an organization should follow the 3-step process outlined below. .