2. a bundle of skills integrated to make a company unique. the
engine for new business development, underlying component of a
companys competitive advantage. created from the coordination,
integration and harmonization of diverse skills and multiple
streams of technologies.
3. The critical task for management is to build product that
customers need but have not yet even imagined. Requires radical
change in the management of major companies. It is the principles
of management that are in need of reform . Understand the changing
basis for global leadership.
4. Management adopted an appropriate strategic architecture,
C&C, and then communicated its intent to the whole organization
and the outside world. Shift in thinking and resources to focus on
competencies Top management determined core product. Entered into
strategic alliances--- aimed at building competencies rapidly and
at low cost. R&D Director : From an investment standpoint, it
was much quicker and cheaper to use foreign technology. There wasnt
a need for us to develop new ideas. Now a world leader in consumer
electronics Image source: NEC
5. No strategic Architecture existed. Decentralization made it
difficult to focus on core competence. Senior managers worked as if
they were managing independent business unit. No mutual decision
was made - as to which competencies would be required to
compete.
6. Portfolio of competencies versus portfolio of Business:
Canon(personal copiers), Honda(from bikes to four wheelers). Sony,
Casio, Yamaha,Komatsu invented new devices. Japanese co. are
generating a blizzard of features and functional enhancements that
bring technological sophistication to everyday products. Real
sources of advantage --- Consolidating corporate-wide technologies,
resources and production skills into competencies.
7. In Short Run, company's competitiveness derives from
price/performance attributes of current products. In Long Run
company's competitiveness derives from an ability to build at lower
cost and more speedily than competitors. Diversified corporation is
a large tree.
8. If core competence is about harmonizing streams of
technology, it is also about the organisation of the work and the
delivery of value. Example : among Sonys competencies is
miniaturization. To bring this to its products, Sony must ensure
that technologists, engineers and marketers have a shared
understanding of customer needs and of technological
possibilities.
9. Cultivating core competence does not mean outspending rivals
on R&D. Example: Canon surpassed Xerox in worldwide unit market
share in the copier business, its R&D budget in reprographics
was but a small fraction of Xeroxs. Nor does it mean shared costs,
as when two or more SBUs use a common facility. Building core
competencies is more ambitious and different than integrating
vertically.
10. Companies judge competencies in terms of price/ performance
of end products--- making erosion of core competence or making too
little effort to enhance them
11. How to identify: Accessibility: provide potential access to
a variety of markets Value-creation: make a significant
contribution to perceived customer benefits of the end product
Uniqueness: Be difficult for competitors to imitate
12. How to lose: A Core Competency is lost: Through
outsourcing/OEM-supply relationships => Example: Chrysler vs
Honda Forgoing opportunities to establish competencies that are
evolving in existing businesses => Example: television
business
13. Lessons learned: The costs of losing a core competence can
be only partly calculated in advance. It is very difficult to enter
an emerging market if a company fails to invest in core competence
building.
14. Essential to make distinction because global competition is
played out by different rules and for different stakes at each
level. At the level of core competence the goal is to build world
leadership in the design and development of a particular class of
product functionality. Core products are the components that
actually contribute to the value of the end products. Example :
Hondas engines are core products that ultimately lead to
proliferation of end products.
16. The ineffectiveness of SBU model: Underinvestment in
Developing Core Competencies and Core Products :No single business
unit may feel responsible for maintaining a viable position in core
product nor be able to justify the investment required to develop
world leadership in some core competence. Imprisoned Resources :
The people who carry competencies do not get assigned to the most
exciting opportunities &their skills begin to get wasted away.
Bounded Innovation : if core competencies are not recognized, SBUs
will pursue only those innovations opportunities that are close at
hand.
17. A strategic architecture: Yields a definition of the
company & the market it serves. A road map of the future that
identifies which core competencies to build and related
technologies Create a managerial culture, team work, a capacity to
change, and a willingness to share resources, to protect
proprietary skills, and to think long term Consistency of resource
allocation, administrative infrastructure
18. WHAT A STRATEGIC ARCHITECURE SHOULD LOOK LIKE : The
architecture should provide a logic for the product & market
diversification. It should make a resource allocation priorities
transparent to the entire organisation. Help the lower level
managers understand the logic of allocation priorities
19. Reduce the investment needed to secure future market
leadership Provide a logic for product and market diversification
Reduce R&D costs. The task of creating a strategic architecture
forces the organization to identify & commit to the technical
& production linkages across SBUs that will provide a distinct
competitive advantage. It is tool for communicating with the
customers & other external constituents.
20. SBUs should bid for core competencies in the same way they
did for capital. Core competencies are corporate resources &
may be reallocated by corporate management. SBUs are entitled to
the services of individual employees as long they can defend why
they need certain talents. Example : When Canon identified an
opportunity in digital laser printers, it gave SBU managers the
right to raid other SBU to pull together the required pool of
talent.
21. Core competence are the wellspring of new business
development. If the company is conceived of as hierarchy of core
competencies, core product & market focused business units will
it be fit to fight. Top management must add value by enunciating
the strategic architecture that guides the competence acquisition
process. Managers have to win manufacturing leadership in core
products. Competence carriers should be regularly brought together
from across the corporation to trade notes and ideas.