Presented at the Renaissance Forum for CEOs
“Core Competency is an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity.” CK Prahalad and Gary Hamel
That definition by the initiators of this concept is a little tough for me so let me offer this thought. “Stick with what you are good at.” A core competency is something that a firm can do well, provides customer benefits, is hard for competitors to imitate and can be leveraged widely to many products and markets. Clearly these provide a competitive advantage…if you stick to them and use them. Funny, how one has to add that last line in there because so many companies stray and engage in what is known as strategic creep. The result is that they end up far a field from their real core competencies and they pay the price.
Your strategic plan should identify your core competencies and how to use them most effectively. Most fall into three overall categories of strategic focus. They are low price, technological advantage and customer service. Within each of those are many more specific core competencies that enable the company to deliver on that particular strategic focus.
"Modern business theory suggests that most activities that are not part of a company’s core competency should be outsourced.” Alex Meinhoff
Here is an example from the sports world of what can happen when you don’t do this and I know that all of you have seen similar examples.
Garo Yepremian, Miami Dolphins field goal kicker, despite all of his success, is remembered by many people for an embarrassing incident in Super Bowel VII. Yepremian was sent in to kick a field goal. The field goal attempt was blocked and Yepremian managed to get to the ball. He picked it up. Rather than just fall on it he attempted to throw a pass. The ball slipped from his hands and went into the arms of Redskins cornerback Mike Bass, who returned it for a touchdown. You may recall that this was the Dolphin’s undefeated season. Yepremian’s gaff made the score 14-7 Dolphins. They hung on to win but think what could have happened.
“What it will come down to…is that we will try to do what we do best. We will go with our strengths.”
Vince Lombardi (They won 5 NFL titles and the first two Super Bowls)
Honda is known for their expertise in engines and they have expanded that core competency from lawn mowers, to outboard motors to motor cycles and to automobiles. Volvo is known for its safety core competency. Both are sticking to what they are good at.
In the 1990s, Sears Roebuck divested itself of Allstate Insurance, Dean Witter, and its real estate brokerage activities to focus on its core competency, which was retailing general merchandise.
Mercedes is divesting Chrysler and Ford is selling off Jaguar and its other luxury car businesses.
Wendy’s divested Tim Horton’s doughnuts.
Chainsaw Al Dunlop divested almost everything in his companies but that’s another story.
“Baseball was okay but let’s get back to the court with the Bulls.”
Michael Jordon
What are your personal core competencies?
What are the core competencies of your company?
John Maver
Maver Management Group
(925) 648-7561
Maver Management
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