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Core competenciesCore competencies


Core competencies are...

Skills and technologies that enable an organization to satisfy its customers better than its competitors.

 Core competencies

Examples of core competencies are:

Boeing – jet technology (e.g. 747).

Sony – miniaturization (e.g. PlayStation).

Apple – innovation and design (e.g. iPod).

Coca-Cola (pictured right) – marketing of its brand.

BMW – engineering.

The term core competencies was created by two business professors, Gary Hamel and C.K. Prahalad in their book, Competing for the Future (1994).

An alternative name is “distinctive capabilities” used by the Scottish professor, John Kay.

A resource based strategy fully exploits an organization’s core competencies.


How to create a core competencyCore competencies


1. Put customers first

Core competencies must provide benefits to present and future customers better than competitors

(for example, James Dyson’s ,pictured right, engineering skills that invented the bagless vacuum cleaner).


2. Be creative and innovative

Core competencies give customers new solutions to their problems now and in the future, being a “gateway to tomorrow’s markets” (say Hamel and Prahalad).


3. Corporate culture and employees

 Core competencies are created by innovative, customer driven employees.

Employees must have:

  • ability (helped by effective teamwork and continuous learning and training).
  • inspiration (from challenging aims, motivational leadership and a shared culture that prioritizes a passion for excellence, innovation and customer satisfaction).


4. Look at your 7 S’s

Core competencies come from what you’re good at, so they will be found in the organization’s 7 S’s:

  • strategy and structure.
  • systems (how well things are done).
  • staff and skills.
  • style (of management).


Key quotes explained

Core competencies


“Every organization needs one core competency: innovation”,

- Peter Drucker (American management writer, pictured right).

This reflects Drucker’s view in his book, The Practice of Management (1954) that an organization’s most important activities are:

  • marketing (customer satisfaction).
  • innovation.

Drucker also said that great companies “get their strengths together and make their weaknesses irrelevant”.


Core competencies

“Character cannot replace competence”,

- Max De Pree (American boss, pictured right)

Do something brilliantly (competence) but also do what’s right (character).

Ability without honour is useless”, said the Roman philosopher, Cicero.


Core competencies

“Opportunism without competence is a path to fairyland”,

- Kenneth Andrew (American management professor, pictured right)

An organization must not only identify market opportunities but also have the ability to exploit them better than competitors.

“Ability is nothing without opportunity”, Napoleon said.


Best books

Core competencies


Gary Hamel (pictured right) and C.K. Prahalad (pictured below), Competing for the Future (1994)

Core competencies should gain entry to a wide variety of markets, significantly increase value for customers and be difficult for companies to imitate. Core competencies

They result from a long period of continuous improvement (usually over 10 years).

(see for more detail Competing for the Future in the Business Books section)



John Kay (pictured right), Foundations of Corporate Success (1994)Core competencies

Business success comes from applying “distinctive capabilities” in a particular market that competitors don’t have.

These come from innovation and effective long-term relationships with customers, employees and suppliers that give the organization brand loyalty and an excellent reputation.

(see for more detail Foundations of Corporate Success in the Business Books section) 

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