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Sadly, a lot of companies around the world are not too well versed with the concept of core
competencies or fail to recognize actual competencies which may help them with long term.
Strategic intent
The process of developing core competencies starts with the strategic intent of being a leader in
the market by leveraging the resources. This thought of being a leader in the market is called
strategic intent. This concept points out to identifying various opportunity gaps. It is an
obsession with writing a competitive agenda, for a long period of time, which is shared with the
whole organization.
Strategic intent provides a basis for stretching the goals of the organization with barrier breaking
initiatives.
Competitors positioning
This exercise allows managers to maintain consistency in their efforts and provides logic for
managing linkages across business units. It is helpful in more than one way. Apart from being
a useful tool for managing innovation, it also helps in identifying alliances and acquisitions of
strategic importance. Internally, this helps the lower management to allocate resources and
upper management to keep focus. Leveraging resources and thereafter the development of core
competencies requires investment in three different things:
a) Technology
b) Governance process
c) Collective learning
Companies should invest in all three of them. If not, then you will hamper the development of
core competencies. Thus, a company should invest in good governance and learning environment
and not just technology.
Last but not least, core competencies make a company focus on extensive R&D.
Case studies
Multiple examples from around the world can be cited in support of the concept of core
competencies:
NEC asserts that they use 18% of their earnings for R&D. NEC of Japan investigates its
core competencies every 5 years. With a spending of 18% in R&D they have a boastful
array of 36 core techniques in total.
Apple as an organization developed products which are rich in design and user
experience. This gave them a distinguished brand image in the market, which stands even
now in the face of multiple competitors. Apple products are sold with high margins.
Canon cornered the copier market in 1990s by investing a lot in core competencies.
Before PC copiers became available in 1982, copying was done on a departmental basis
within companies and through commercial copy centers. Copy centers served a range of
copying needs, from small copying jobs to large, high speed/high volume projects
involving document preparation. Satisfaction of copying needs depend on a copiers
price, quality, performance, features, maintenance, and after-sales support. Those factors
became the basis for defining various market segments. The most profitable segment was
of course the large volume one in which Xerox was the market leader. Thus a gap existed
between the companies performance and the opportunity in terms of small volume copier
market. In other words companies around the world were placing a high value on getting
a small, relatively inexpensive personal copier and thus an easy-to-use, durable, low
priced, and maintenance-free small copier awaited innovation. Canon approached the
problem by assembling a task force of 200 people and developed a series of core
products; disposable cartridges, instant toner fusers, and other components to decrease
the size as well as the cost. Thus, an entirely new product was born which was reliable
and required less servicing. This product was developed and launched in less than 3
years, which really put Canon towards becoming a competent player in printer
technology.
End notes
Core competency is a fairly hard concept to grasp. The resources and patience required for the
development of even a single competency is huge. A strategic mindset and focus on achieving a
long term global leadership is important to develop a strategic intent.
We think our readers should kind in mind one thing. Core competencies are needed to develop a
global leadership and long term competitive advantages. A company may be highly profitable
even without developing a core competency, but only for a short period of time.