On Core Competence

A happy coincidence occurred today: I finished my Implementation of Strategy classes yesterday, and checked out the Dell World 2012 website for updates. I see on the speakers list we now have Gary Hamel (and a bunch of other people who are also probably very interesting, but I’m not going to write about them now).

First, a small aside.

Dell, when you update your convention website with information about new and interesting people who’ll be speaking, you might want to send out a press release to people who might be interested in writing about it. Like bloggers you invited. I’ll have more to say about the… imprecise… way things have been communicated later.

Back to the main story.

Gary Hamel, as you are unlikely to know, wrote a little article in 1990 called The Core Competence of the Corporation. It was published in the Harvard Business Review, which is a well regarded journal of management thought, despite its occasional publication of utter drivel. Perhaps it’s a sort of test.

Anyway, Core Competence is, in my opinion, one of the trickiest ideas to understand in strategy. It’s taken me a year to wrap my brain around it, and while I’m not super-smart, I’m not an idiot either. It was explained again to me by my latest strategy lecturer, and this time all the pieces clicked together.

A core competence is not an ability to do one thing well. It’s a management ability to coordinate multiple activities that your company does quite well so that their combination is amazingly good. And no one else can match it.

The example used most recently was for Canon. I didn’t know this, but apparently Canon make the laser assembly for something like 99% of the world’s laser printers. That requires a combination of great optics, excellent micro-mechanics, and tremendous skill in precision electronics. Canon isn’t the best at any of those things.

The best optics are made by Germans like Zeiss. The best micro-mechinics is done by  other Japanese firms, and the best precision electronics are made by the Americans.

But Canon are the best at combining them all together. That’s a core competence. The other are core capabilities, and they’re more limited and easier to copy than a core competence.

At least, that’s my current understanding. I’m hoping I’ll be able to have a quick chat with Mr. Hamel and see if I’ve got it right. And I’m hoping that it’s a dull enough and obscure enough topic that everyone else will be too busy trying to talk to Bill Clinton or the Freakonomics guys.

Bookmark the permalink.

Comments are closed