an article titled The Core Competence of the Corporation by C.K.
Prahalad and Gary Hamel appeared in the May-June 1990 issue of Harvard
Business Review, few thought that it would become as influential
as Ted Levitt's 1960 article Marketing Myopia.
It has. As the term suggests, a company's core
competence is its inner success-making capability, which is a function
of its collective learning. There could be many, and they could
be created from thin air. The challenge is to ''identify, cultivate
and exploit'' these core competencies to meet corporate objectives.
Core competence has become standard business
terminology now, and its resonance across the corporate world has
resulted in several restructuring programmes. Many diversified conglomerates,
for example, have chosen to hive off non-competence businesses.
Yet, Prahalad, the Harvey Fruehauf Professor of business administration
at the Graduate School of Business, University of Michigan, Ann
Arbor, and Hamel, founder of the consultancy Strategos, have had
to worry about their idea becoming a victim of its own success.
This is because of the idea's vulnerability to misappropriation
by reductionists who confuse competencies with end products (which
could be manifestations of competencies, but are not the subject
of their exertions). To avoid the product fixation trap, they advise,
apply the triple-check competence identification test. Does it provide
access to a wide variety of markets? Does it contribute significantly
to the end-product benefits? Is it difficult for competitors to
Sony's miniaturisation competence, for instance,
can be applied across gizmo categories. Apple Computer's creativity-provoking
competence has granted it success in music transmission, and it
is immaterial whether it's the iPod device or iTunes e-shop that's
achieving its goals. In any case, the branding era has enlarged
the customer-engagement role of satisfaction-delivery attributes
that address more than just basic functional needs (a parity zone
in many categories). Intangible learnings and skills can be harmonised
to develop competencies for attributes that are valued by customers
in markets as diverse as, say, lightbulbs, soap, and software.
What's new, however, according to Prahalad,
is the technical possibility of extending the corporation's collective
learning to include the consumer's own learning, real time. Call
it co-opting customer competence.