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Core Competencies
November 13, 2007
One of the things we touched on was core competency. A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
1. It provides customer benefits
2. It is hard for competitors to imitate
3. It can be leveraged widely to many products and markets.
When I worked for Kroehler Manufacturing Co. many years ago, everything was handled by the employees. We had maintenance men, janitors, grounds keepers, employees that ran the cafeteria; everyone in the building worked for the company.
You couldn’t outsource benefits administration 15 years ago because there weren’t organizations that could do this. Thirty years ago there wasn’t anyone you could outsource landscaping to, and every company had a janitor who had two lawn mowers.
Companies decided they needed to become more efficient, and so they cut the staff doing non-core tasks. Today there are people that can do benefits, payroll, or cut the grass for you, and they do it much better and much cheaper than you because this is their core competency. Modern business theories suggest that most activities that are not part of a company’s core competency should be outsourced.
Companies are managing what is important to them, things that affect the service of their customers. You now have a list of numbers to call for services, janitorial, maintenance, yard, electrical or plumbing. We no longer have to do it all.
This has decreased the actual number of company employees; however this has aided the start up of many small businesses. Core competency is the trend to do what you do best, devote your time and energy to make the core of your business exception, to surpass your competition.
Posted by Mary Walker on November 13, 2007 | Comments (0)