Core competency

from Wikipedia, the free encyclopedia
This article or section needs to be revised. Details should be given on the talk page. Please help to improve it , and then remove this flag.

The core competence describes a skill or activity that a company can perform better than the competition and has thus achieved a competitive advantage . It is determined by the four characteristics of customer benefit , protection against imitation , differentiation and diversification . The concept is a variant of the resource-based approach that in the 1990s the market-based view of Michael Porter was opposed.

The focus on core competencies is a corporate strategy for expanding competitive advantages.

Identification of core competencies

Core competencies cannot be systematically generated; they develop over the long term from various resources and experiences. However, if you know your core competencies, you can systematically bundle, use and expand them. Possible ways of identification are the following questions:

  1. Customer benefit: Can sustainable added value be generated for the customer on the basis of this core competence ?
  2. Protection against imitation: Does the company have exclusive control over the core competence or can it be easily imitated by the competitor?
  3. Differentiation: Does the core ability lead to a sustainable advantage over the competition?
  4. Diversification: Do the core skills offer potential access to new markets?

If one compares the development of core competencies in companies, then Henry Mintzberg's definition of strategy becomes recognizable as a pattern in a stream of decisions . It is these developed skills that keep the company competitive in the present, and this is where its strategic importance lies.

VRIN method

Steps of the VRINO method to analyze core competencies

The VRIN method is used to analyze core competencies. VRIN stands for the dimensions considered

  • Value ("value / benefit"),
  • Rarity ("rarity"),
  • Imitability ("imitation") and
  • Non-substitutability (" non-substitutability ").

VRIO method

The VRIO method is the successor to the VRIN method. The dimension non-substitutability has been replaced by the dimension organization. The dimension of the organization considers whether the company is also able to use its core competencies due to its structural or process organization .

VRINO method

The VRINO method combines all dimensions of the VRIN and the VRIO methods, which enables a more comprehensive consideration of the relevant influencing variables in the core competence analysis. By sequentially answering questions about the individual dimension areas of the VRINO model, it can be determined whether a resource or ability results in a competitive disadvantage, a competitive advantage or a core competence of the company.

definition

After Prahalad / Hamel

According to CK Prahalad and Gary Hamel, denotes core competence in the context of business administration

"The skills that enable a firm to deliver a fundamental customer benefit"

"The skills that enable a company to deliver essential customer benefits."

The statement is often interpreted as the collective knowledge of an organization, which can refer to the technical knowledge, i.e. manufacturing techniques and the integration of different technology areas, but just as well to organizational knowledge, i.e. project management, internal communication, etc. "Knowledge" does not only refer to it the “book knowledge” ( explicit knowledge ), but also the experiences and skills acquired through application, ie tacit knowledge .

To decide what a core competency is, Prahalad and Hamel suggest three tests:

  1. Core competencies have the potential to enable access to a large number of markets.
  2. Core competencies should make a significant contribution to the perceived customer benefit of the end product.
  3. A core competency should be difficult to copy. Competitive companies cannot easily acquire core competencies, but have to build up these competencies slowly.

To illustrate how the core competencies work, Prahalad and Hamel designed the tree model. Here the core competencies form the roots on which the trunk, which is supposed to symbolize the core products, stands. The strategic business units (SBU) are represented by branches with leaves that correspond to the cyclically renewing products. A practical example is intended to show what such a structure can look like in reality: The core competence is the ability to develop and manufacture high-performance drive machines. This results in the core product combustion engines, which is split up into the strategic business units car engine, truck engine and motorcycle engine. A product that is manufactured by the SBU PKW-Motor can, for example, be a common rail diesel engine with 4 cylinders that is no longer manufactured after the end of the product life cycle and is replaced by another engine.

After Kotler / Bliemel

Philip Kotler and Friedhelm Bliemel find - building on Prahalad and Hamel - a very similar definition of the term, although they emphasize the importance of the competitive advantage associated with the core competence .

From this they develop the following three characteristics of a core competence:

  1. It is the source of a competitive advantage and makes a significant contribution to customer benefits.
  2. It has the potential for a wide range of applications in different markets.
  3. It is not easy to acquire from competitors by imitation.

According to Krüger / Homp

In 1997, Wilfried Krüger and Christian Homp chose a different approach by adopting the customer 's perspective . They identified the following essentials. The core competence must:

  1. be relevant to the customer
  2. Secure lasting competitive advantages
  3. be transferable to specific products and services
  4. be tied to the company and not to individual employees.

They also differentiate the core competencies according to different categories :

  1. Products / services : A core competence cannot be a product or service, as it represents a function that can be transferred to a wide variety of strategic business areas. However, a product equipped with a certain core competence can evoke the value rated by the customer as above average (relative to offers from competitors).
  2. Processes : This includes mastering the core processes of value creation and the support processes for the core business
  3. Management : Mastering management tasks and processes is part of this.

Management of core competencies

After the idea of ​​the core competencies of Prahalad and Hamel had been developed from the resource-oriented approach of strategic management, Krüger and Homp dealt with the management of the same. They developed procedures through which core competencies can be recognized and used. They understood core competence management as a circular process, which they represented in the model of the core competence management cycle .

In this way, strategies based on the core competencies can be designed, which establish a competitive advantage on the market through the optimal use of the company's resources and skills. Such strategies implied by core competencies are, for example, the separation of strategic business units that do not match one's own core competency or the transfer of existing competencies to a new business unit or a new product.

Core competencies and product development

Core competencies are linked to the product portfolio via the core products. Core products “contribute to the competitiveness of a wide range of end products. They are the physical embodiment of the core competencies. ”Approaches to analyze product portfolios taking into account the core competencies have existed for a few years. Danilovic and Leisner's approach is based on the use of design structure matrices to map competencies to products in the portfolio. With this method, “clusters” of competencies can be identified, which can then be defined as core competencies. A similar method by Bonjour and Micaelli enables the analysis of the extent to which a company has actually developed its core competencies. There is also an approach by Hein et al. a., which links core competencies with Clayton Christensen's “Capability” approach, which can be defined as a combination of resources, processes, and priorities. In this context, a method is presented to evaluate product architectures taking into account the current or future competence development.

criticism

The essay by Prahalad and Hamel has attracted a lot of attention, especially in management practice. Ian Turner of Henley Management College commented:

"After spending many hours in relentless pursuit of their company's core compentencies, managers often concluded that the concept, whilst enormously appealing in the abstract, in practice merely gives rise to frustration and bewilderment."

"After many hours of persistent search for the core competencies of their company, managers often conclude that the concept is very appealing in the abstract, but in practice only leads to frustration and confusion."

- Ian Turner : quoted in Stuart Crainer, 1998

According to Crainer (page 90 ff.) Turner points out some basic truths that were lost in the storm of enthusiasm:

  1. Core competencies are rare, they are not scattered like confetti
  2. The development of core competencies does not generally result from a one-off decision by the top of the company, but from a large number of different activities that ultimately led to the acquisition of these unique skills .
  3. In practice, measuring and testing an existing core competence does not necessarily include the availability of effective methods of maintaining and developing it.

Other critics complain that core competencies are difficult to measure and ultimately can only be determined in retrospect. The success factors of above-average successful companies are then defined as core competencies in the ex-post analysis.

Companies that identify core competencies that are unsuitable for the company itself or the market run the risk of suffering significant financial and strategic setbacks as a result of the strategic realignment on these “wrong” core competencies and the necessary investments.

Another effect of the concept is also described by Turner (see above): the reappearance of diversification (as the use of core competencies in various products) as an entrepreneurial “weapon”.

The concept of core competence has its limits in the age of mergers and acquisitions , open innovation and networks. The core competence trap can turn from the competitive advantage through core competence . A head start in competence can result in lock-in effects due to core rigidity or competency trap in the event of a sudden change in external requirements for the company. Examples are Motorola or Rubbermaid .

Therefore, many authors propose to replace the concept of core competence with a more abstract meta-concept, e.g. B. through a relational capabilities - or the dynamic capabilities approach . It is about the skills to learn to use external strategic resources - e.g. B. in the network, with cooperation partners or through acquisition - to make them compatible and sensibly integrated into your own organization as well as to coordinate and permanently reorganize the existing internal and external strategic competencies and resources. These resources include knowledge, business processes , human resources, and technology. Occasionally, other factors such as corporate architecture or reputation are also included.

See also

literature

Web links

Wiktionary: core competency  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. ^ H. Mintzberg: Research on Strategy-Making. Proceedings of the 32nd Annual Meeting of the Academy of Management, Minneapolis 1972.
  2. ^ A b c S. Reisinger, R. Gattringer, F. Strehl: Strategic Management - Basics for Study and Practice. Pearson, 2013, pp. 83-85.
  3. ^ A b CK Prahalad, Gary Hamel: The Core Competence of the Corporation. In: Harvard Business Review. May / June 1990, pp. 79-91.
  4. ^ Philip Kotler, Friedhelm Bliemel: Marketing Management. 10th edition. Schäffer-Poeschel, Stuttgart 2001, p. 102.
  5. ^ Christian Homp, Wilfried Krüger: Core competence management. Dr. Th. Gabler Verlag, 1997, ISBN 3-409-13022-5 .
  6. ^ Christian Homp, Wilfried Krüger: Core competence management. Dr. Th. Gabler Verlag, 1997, ISBN 3-409-13022-5 , p. 93.
  7. ^ M. Danilovic, P. Leisner: Analyzing core competence and core products for developing agile and adaptable corporation. In: Proceedings of the 9th Dependency Structure Matrix (DSM) International Conference, 16. – 18. October 2007, Munich.
  8. ↑ E. Bonjour, JP Micaelli: Design core competence diagnosis: a case from the car industry . (PDF) In: Engineering Management, IEEE Transactions on. Volume 57, No. 2, 2010, pp. 323-337.
  9. ↑ AM Hein, Y. Metsker, JC Sturm: Towards a Framework for Capability Systems Architecting and Technology Strategy . In: Proceedings of the 16th International DSM Conference 2014, Paris, France.
  10. ^ CM Christensen, SP Kaufman: Assessing Your Organization's Capabilities: Resources, Processes, and Priorities. In: RA Burgelman, CM Christensen, SC Wheelwright (Ed.): Strategic Management of Technology and Innovation. McGrawHill, 2006, ISBN 0-07-253695-0 , pp. 153-163.
  11. ^ A b Stuart Crainer: key management ideas. 3. Edition. Pearson Education, London 1998.
  12. ^ Ian Turner: The Myth of the Core Competence. In: Manger Update. Vol. 8, No. 4, Summer 1997.
  13. ^ H. Baum, A. Coenenberg, T. Günther: Strategisches Controlling. 4th edition. Schäffer-Pöschel, Stuttgart 2007, p. 272.
  14. ↑ C. Helfat, S. Finkelstein, W. Mitchell: Dynamic Capabilities. Malden MA, Blackwell 2007, p. 48; From innovation lead to competence trap. Daimler-Benz Foundation 2008. (daimler-benz-stiftung.de) (PDF)