Core IN-Competencies

Riley NayMarriott School of Management

Brigham Young UniversityApril 2010

Agenda• Core Competencies• Test for Competency• Core products (activity)• Core IN-Competencies• Developing Core Competencies

What is a Core Competency?• A unique bundle of skills and technologies

that enables a firm to provide particular benefits to customers.

• Core Competencies give firms competitive advantage.

• Think of a business as a tree…– Leaves-end products– Branches-smaller business units– Trunk-core products– Roots-core competencies

Importance of Core Competencies

Source: Prahalad & Hamel

Core Products

Source: Prahalad & Hamel

Test for Competencies• There are three questions a company will

ask themselves when determining if an activity is a core competency1. Provide access to a wide variety of markets2. Contribute significantly to the end-product

benefits3. Is difficult for competitors to imitate

Source: Prahalad & Hamel

Activity

What is a Core IN-Competency?• An incapability in a business that inhibits

competition.• Negative Inertia

Core IN-Competencies• Examples of core IN-competencies– Change resistance– Cultural or operational inhibiters– Focus shifts– Forgoing Opportunities

Change Resistance• Resistance seeks to challenge, disrupt, or

invert prevailing assumptions discourses, and power relationships.

Source: Fiedler

Type of Resistance Reasons for Resistance

Generic Resistance Culture of rejection, of refusal

Person-based Resistance Personality as a rejective person (“nay-sayer”)

Provoked Resistance Too much pressure, overload due to change requirements and implications

Argumentative Resistance Weakness of the intended Concept

Exercise• In your groups, come up with a timeline of

your business and document the significant changes your business has been through.

• After developing the timeline, discuss how employees handled the changes.

Cultural Inhibiters• GM• They have been known to have

“adversarial” relationships with their suppliers.

• A GM executive: – “We don’t know what a supplier relationship

gets you. It just locks you in. We don’t even like using the word partner.”

Source: Enright

Focus Shifts• Toyota• Once known for its quality standards,

Toyota has shifted its focus.

Quality Cost

Forgoing Opportunities• Companies like GE, Thorn, Motorola, and

GEC left the color TV business in the 1970’s and 1980’s.

• They regarded the industry as “mature.”

Source: Prahalad & Hamel

Developing Core Competencies• Refined definition-Core competencies are

the collective learning in the organization.• Companies need to harmonize streams of

technology.– Marketing, Engineering, R & D, etc.

Source: Prahalad & Hamel

Strategic Architecture• Executives in companies need to construct

their corporate culture around competence building.

• Executives need to eliminate or manage properly their core IN-competencies

Source: Prahalad & Hamel

ExerciseCore Competencies Core IN-competencies

Summary• Understand what core competencies are and

their importance in organizations.• Understand what core IN-competencies are and

how to identify them within your own company.• Develop your core competencies through

collective learning.• Build your corporate strategic architecture

around your core competencies.

Readings• Gary Hamel and C. K. Prahalad, (1990) "The Core Competence of the

Corporation", Harvard Business Review, vol. 68, no. 3, May-June 1990, pp 79-93.

• Michael Enright, (2003) “Buyer-Supplier Relationships”, The Centre for Asian Business Cases, The University of Hong Kong

• Stefan Fiedler, (2010) “Managing Resistance in an Organizational transformation: A case study from a mobile operator company”, International Journal of Project Management, vol. 28, iss. 4, May 2010, pp 370-383

• http://www.businessdictionary.com/definition/core-competencies.html• http://ivythesis.typepad.com/term_paper_topics/2009/12/core-

competency.html• http://www.quickmba.com/strategy/core-competencies/