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A concept developed in the early 90s by professors C.K. Prahalad and Gary Hamel, core competencies are a company's unique collection of world class resources, talents and skills.
Identifying your company’s core competencies will help you determine on what products and services you should focus, and what aspects of your business you should outsource. Your company’s core competencies help you define your strengths and how you can win in the marketplace; future product development and business decisions should leverage your core competencies.
According to Coyne, Hall, and Clifford, "a core competence is a combination of complementary skills and knowledge bases embedded in a group or team that results in the ability to execute one or more critical processes to a world class standard." Two ideas are especially important here. The skills or knowledge must be complementary, and taken together they should make it possible to provide a superior product."
How do you define your core competency? A core competencies possesses three major characteristics:
• It provides potential access to a wide variety of markets,
• It increases perceived customer benefits and
• It is hard for competitors to imitate.
For example, Black and Decker’s core technological competency is designing and manufacturing 200 to 600 watt electric motors. All of their products run on these motors, and are variations of this basic technology (with the exception of their work benches, flash lights, battery charging systems, toaster ovens, and coffee percolators).
Core competency could be proprietary technology, a niche product, or the ability to provide superior customer service in your field. It could be the ability to deftly incorporate pre-existing technology to your product line, or it could be a unique marketing edge. Whatever it is, your core competency will drive the future of your business.
Works Cited
Coyne, Kevin P., J.D. Hall, and Patricia Gorman Clifford. "Is your Core Competence a Mirage?" McKinsey Quarterly (Mar. 1, 1997): 40-55.
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