Core Competencies And Why We Must Manage Them

Core competencies
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Andrew Coles, lecturer of International Business Strategy of the MScIB at ESCI-UPF, explains how a company’s skill set (core competencies) is that which sets it apart from the rest, those key areas in which the firm has an edge over its competitors and are not easily replicable.

However, all too often, companies are unaware of the sources of their core competencies and confuse them with key business functions. In addition, these assets can be ephemeral or volatile in nature, as they are constantly evolving through different applications. This leads to companies being unable to identify accurately where their talents lie and leaves them poorly placed to harness adequately the skills that come with them. If we don’t know where our talents lie, how can we distribute the skill pool in the most advantageous manner to the company? Not only in terms of sales, but also with regard to talent acquisition.

First of all, it’s paramount to understand what core competencies are and address them to our customers’ needs. C.K. Prahalad & Gary Hamel baptized them as ‘people-embodied skills’. They suggest we should initially identify our key members of staff who carry these skills and make an inventory of the skill sets embodied within these key talents. It certainly makes sense that once we have a clear picture of who can do what within the company, we can start thinking strategically and matching different talents from different units to achieve new, previously unmet goals.

A company that cannot see itself nor its competition in terms of core competencies and link them with market demands is destined to mediocrity at best and failure at worst. Companies systematically miss out on business opportunities, the advent of MTV is a good example, why didn’t CBS that owned a television network and a successful recording business, see the opportunity for Music Television?¹ Failure to foresee these gaps, or failure to have good core competency identification,  allows news entrants and competitors to innovate in a field in which the company already held all the key skills necessary to meet the market’s requirements with little additional investment in research and development required.

Identifying and nurturing your company’s core competencies will contribute to sustaining your company’s long-term competitive advantage. Companies can become more responsive to market needs if they know where their talents lie and more specifically, how to deploy them. Another consideration however, is that these skill pools should be flexible and mobile enough and can indeed be partnered with other skills within the corporation in a timely manner to develop new products and meet future market demands. Through agile learning, staff can quickly adapt one talent set to another requirement. Too often, department chiefs are over-protective of their key talents and don’t want to share them with other parts of the corporation for fear of losing them. To ensure this doesn’t happen, a good corporate strategic view and communication is vital to instill a sense of belonging and a desire to achieve an overall objective, bigger than just one department.

Companies that have a clear idea of what skills they possess and where those skills reside, will inevitably be better positioned to take the lion’s share of any emerging opportunity that requires a certain combination of its talents to produce. Given the magnitude of research and development budgets in large corporations these days, making the most of existing skill pools makes good business sense, however, proactively encouraging this behavior to maximize good core competency management across the corporation, will only serve to help ensure the sustainable competitive advantage of the company, a goal any CEO will be happy to achieve.



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