Editor's Note: Take a look at our featured best practice, Organizational Design and Capability Analysis (31-slide PowerPoint presentation). Organizational Design involves the creation of roles, processes, and structures to ensure that the organization's goals can be realized. Organizational Design span across various levels of the organization. This framework focuses on the following 3 initial steps of the full 10-step Organizational [read more]
Core Competence Model
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With ubiquitous Disruption threatening the technology infrastructure and Operating Models of organizations on a consistent basis, it’s an unrelenting challenge for senior leadership to create an enterprise proficient in introducing offerings in line with customers’ requirements and of desirable utility. This can only be possible by developing competencies compulsory to innovate premium-quality offerings that are hard for the rivals to create.
Core Competencies are defined as the collective organizational knowledge integral to produce market-winning product or service offerings. Specifically, Core Competencies necessitate coordinating diverse manufacturing skills and incorporating several technology streams to develop end products. The ability of senior leaders to recognize, foster, and take advantage of the Core Competencies critical for growth is a real metric of their proficiency in this digital age.
Creation of Core Competencies involve across-the-board interaction, participation, and dedication. To achieve this, experts suggest inculcating a thinking of organization as something more than a gamut of separate departments. It also necessitates unification of sourcing strategies.
Introduced by Prahalad and Hamel, two renowned business academics, the Core Competency concept laid the foundation for how a modern organization should operate and how it should outsource. The model warrants a leadership mindset that considers the organization much more than a pool of separate Strategic Business Units (SBUs).
The model enables the management to make business and market needs their center of attention, and ascertain in-house functions—vital for Business Continuity—and non-core functions appropriate for outsourcing. The theory assists in creating amazing offerings at a rate faster than the competitors, by employing Core Competencies across the entire organization’s portfolio of technologies and production capabilities. The emphasis of the Core Competence Model is on applying together personal, shared, and applied learning, capabilities, and behaviors.
The Core Competence Model benefits the organization by creating a collaborative culture of shared values, knowledge and learning, and enables a feeling of community with the partners and customers.
The Core Competence Model comprises of 4 key variables:
- Competitive Advantage
Let’s delve deeper into the details of these key variables.
The foremost variable pertains to the sources integral for the creation and procurement of competencies and technologies.
The next variable evaluates the opportunities available to build Core Competencies.
The third variable involves overcoming the challenge to achieve the maximum potential market share of core products.
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About Mark BridgesMark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.
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