When 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 imitate?

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.