Strategic core competencies of the organization. Competence model. How to use the model
Key competencies provide a strong competitive position for the company and profitability levels above the industry average. Key competencies are determined based on the competitive capabilities and resources of the company and allow you to form competitive advantages... The competitive advantage formation pyramid is shown in Fig. 7.1.
The process logic includes the following stages:
1) the organization, having a certain level of resources, develops the ability to act, which will form the opportunity;
2) as experience is gained, the opportunity is transformed into competence - a set of skills, knowledge, know-how, resources and technologies of individual functional areas;
3) unique competence creates the basis for competitive advantage when noticed by consumers.
Rice. 7.1. Formation of the company's competitive advantage
Let's consider the individual components of the pyramid.
1. Resource creates a competitive advantage if:
Difficult to reproduce
Has the possibility of long-term use,
Possesses excellence
It is resistant to neutralization.
2. Key competencies have the following features:
Competence is broader than technology or one component of a key characteristic;
Competencies rarely rely on the experience or activities of one direction (more often they arise as a result of synergy);
Formation and improvement of competencies is the task of top management;
To turn key competencies into advantages, it is necessary to invest in their creation more than competitors;
The competencies should be broad and flexible enough;
A core competency provides a competitive advantage only if it is unique compared to the same competence of competitors.
Spent ones - were adopted by the main competitors and turned into industry standards (they are a prerequisite for survival in the market);
Unpromising - at the moment they remain in force, but in the near future they may become widely available;
Sustainable - can serve as the basis for the formation of the company's strategy.
The existing terms “competence” and “competence” somewhat repeat each other. Let's try to figure it out.
Competence of the company- a set of characteristics of the company, which makes it professional at the level of competitors. Competence consists of individual competencies and is generally based on competitive and leading technologies. Each of the competencies is an element of general competence.
The term “competence” was introduced into circulation by V. McElville in 1982. According to McElville, competence is a range of problems, a field of activity in which a given person has knowledge and experience; set of powers, rights and obligations official, public organization.
Company competence (business competence)- a set of interrelated skills, abilities and technologies that provide the company with an effective solution to certain problems and situations.
Standard competence of the company- a set of advantages, technologies, abilities, knowledge and skills that allows the company to solve typical this segment market tasks, to carry out operational processes at the level accepted as a standard.
Since the majority of competitors have standard competencies, the absence of standard competencies leads to the rapid disappearance of the company from the market.
Many standard competencies are confirmed by licenses and certificates.
Sometimes competencies are mistakenly referred to as company resources.
For successful competition, it is necessary to formulate all the competencies of the company and highlight the key ones.
Key(distinctive, basic, exceptional, basic, unique, business competence) company competence(the term “critical factor of the company's success”, KFU is also used) - such competence, the presence of which allows the company to solve problems that are beyond the strength of most other market players, establishes new standard activities in the industry and thus provides the owner competitive advantage.
According to G. Khamel and S.K. combination of key competencies- skills, abilities, technologies that allow the company to provide its customers with certain values.
The key competence is the company's strategic potential. Operational management of the company (the ability to effectively conduct business) is a way to capitalize on potential.
Key competency attributes:
· Significance for consumers, their willingness to pay for competence as for the majority of the acquired value;
· The ability to change and adapt to new market requirements;
· Uniqueness, low probability of repetition by competitors;
Based on knowledge, not coincidence
· Relatedness to multiple activities or products;
· Relevance, compliance with the strategic aspirations of the market and the company;
· The possibility of partnership to create a new core competence;
· Clarity, accessibility of the formulation of competence for unambiguous interpretation.
Key competencies can be:
Knowledge of market needs and the ability to regularly obtain this knowledge;
- the ability to put into practice the proposals required by the market;
- the ability to constantly build up and develop their core competencies.
Creation of exceptional customer value, which is the resulting element of the market orientation of the enterprise, presupposes effective cooperation between all functional divisions of the enterprise. Market orientation aims to remove traditional barriers between different functional units to create customer value.
Consumer value is the benefits received from the product minus the cost of purchasing it. Benefits include: the product itself, accompanying service, experience gained in the process of receiving the product, and personal impressions of the product. Cost is the money spent on the purchase, the time and effort spent, and the moral cost (the risk associated with the product). Exceptional customer value is characterized by a high degree of superiority of the favorable consumer experience over initial customer expectations and the customer value offered by competitors. Most effective ways customer value creation is determined based on the competencies of the enterprise. Measures to increase consumer value contribute to the formation of the market orientation of the enterprise and the strengthening of its key competencies
Term "Core competencies" became widely known after the publication of works by G. Hamel and K. Prahalad. They give it two definitions.
The first is "the skills and abilities that enable a company to deliver fundamental benefits to consumers."
The second is a set of skills and technologies, knowledge and experience accumulated by the organization, which become the basis for successful competition.
The competence of the company appears as a result of long-term work, careful selection of personnel, accumulation necessary knowledge and skills, organizing teamwork to achieve high productivity.
When all these metrics reach enough high degree, we can say that the company has moved to a higher level of quality, since at the same costs, knowledge and experience were transformed into genuine competence, turned into a competitive opportunity that consumers noticed.
Features of key competencies
A specific core competency is always individual, because is present only within the framework of one business system with an individual set of resources and abilities inherent only in it.
Key competencies for a company can be:
Knowledge of market needs and the ability to regularly obtain this knowledge;
Ability to put into practice the proposals required by the market;
Ability to continuously build up and develop their core competencies.
Key competencies are created through quality management labor resources, knowledge bases and intellectual capital, as well as by coordinating and uniting the efforts of working groups, departments and external partners. At the same time, the company's competencies must be flexible in order to meet any market requirements.
Competitive advantage
Today, most companies have standard competencies, so they cannot become the key to successful activities.
For successful competition, it is necessary to formulate a key unique competence that will allow the company, firstly, to solve problems that are inaccessible to most other market players, and secondly, to establish a new standard of activity in the industry and thereby ensure competitive advantage.
A competitive advantage is understood as a set of characteristics of a company, which allows it to produce goods that are of great value to the consumer at lower costs than those of competitors. There are many ways to achieve a competitive advantage, including offering quality products or services for low prices, high-quality goods at high prices, goods with an optimal combination of price, quality, consumer properties, service level, etc.
Factors shaping a competitive advantage
The factors capable of providing a competitive advantage are subdivided into internal and external.
Internal include:
Economies of scale;
- experience effect;
- concentration effect;
- the effect of resource-saving technologies;
- synergy effect;
- the effect of vertical integration.
External include:
Improving the components of the Porter value chain;
- improving market segmentation;
- improvement of the components of the extended product concept.
Benefits of core competencies
The core competency has the following benefits:
Relevant to consumers who are willing to pay for competency as for most of the value they acquire;
- able to change and adapt to new market requirements;
- is unique, it is unlikely that competitors will be able to repeat it;
- is based on knowledge, and not on the coincidence of circumstances;
- is associated with several activities or products;
- relevant, because matches the strategic aspirations of the market and the company;
- enables partnerships to create new core competencies;
- the clarity and accessibility of the formulation of the competence makes it possible for an unambiguous interpretation.
Links
This is a preparation of an enitsklopedic article on this topic. You can contribute to the development of the project by improving and supplementing the text of the publication in accordance with the rules of the project. You can find the user manual
Root competence company Is a special combination of three
factors:
1) competitive(ideally - unique)
technological skills, which - as a special technology of activity
- are applied on the scale of a given company when creating it
specific products;
2) competitive(ideally - unique)
non-technological skills that are used on the scale of this
companies, first of all, for the implementation of created specific
products;
3) collective learning, which on the scale of this company
turns into learning effective knowledge, skills and abilities.
Supplementing Definition 1 with quotes from modern gurus
strategy.
“The core competence is what corresponds to its
name - abilities, skills and abilities ”.
The core competence is rather a knot of skills and "technologies",
not a single discrete skill or a single discrete skill
"technology".
“The core competence is the individual collective
learning in a given organization; especially teaching how
coordinate skills that provide diversified
product manufacturing, and how to integrate such skills with
numerous progressive development trends
appropriate "technologies" ".
“Root competencies are specific accessible paths
to future opportunities ”.
“It is clear that the most valuable specific core competencies are
these are the competencies that represent the available paths to broad
variety of potential food markets ”.
“Core competencies always consist of a combination of the following
components:
Complex, multicomponent "technologies"
(hard and soft);
Collective learning (multilevel,
multifunctional);
The ability to spread (beyond the
traditional businesses, beyond geographic boundaries) ”6.
Even simple primary analysis already given material on
competencies, and even more so deep dive into this
problematics, show: to identify, correctly identify and
pinpoint specific core competencies this company
− It is not simple .
widely known, the so-called three-element Hamel test −
Prahalada .
First test(element) - checking a specific population
skills of the given company - according to the criterion "Value for the consumer".
According to this criterion, the specific root competence of this
company in this particular situation - must make most
huge contribution- in the value perceived by the consumer. For example, G. Hamel and K. Prahalad note that know-how
Honda in the field creation and production of engines- yes,
it is her root competence... And Honda's business skills she
uses it in the system of its relations with dealers - no.
Second test- checking a specific set of skills for a given
companies - according to the criterion "Difficulty of reproduction for competitors."
The key question for this test is - how difficult competitors,
in this particular situation, reproduce a specific root
competence of this company?
The practice of working with competencies has shown that all real
core competencies were very difficult to imitate from outside
competitors. Moreover, the "spectrum" practical answers on the
the question posed ranged from “difficult, but quite possible” (min)
- to “almost impossible to reproduce” (max).
Checking this test helps to identify
individual competences - as simple or only competitive ,
and others like unique .
Wherein the weakest competencies turned out to be -
competitive core competencies;
but the strongest − practically unreproducible unique
core competencies.
Third test- checking a specific set of skills
the given company - according to the criterion "Potential of market realization".
Checking according to this criterion is a study, for each
competence, opportunities expanded production and
extended implementation maximum product line, based on
which is the specific core competence of a given company.
Such testing should be completed not only by one of
alternative conclusions like "Yes" or "No". But, in the case
conclusion "Yes", - preliminary assessment real opportunities
expanded production and successful expanded sales at
old and new markets corresponding root and final
products - for each specific root competence given
companies, both tactically and strategically.
“Competence is truly the core competence
only when it defines a specific real basis for
portfolio of core competencies, especially competencies of high
level is never big. Even at large companies, which
are considered universally recognized world leaders, the dimension of such
portfolio does not exceed 4 − 6 positions.
For example, in his book Competing for the Future G. Hamel
and K. Prahalad present the core competencies portfolio in detail
by Canon. In their opinion, the basis of the entire huge nomenclature
Canon products, by 1994, accounted for only four root
competencies: 1) precision mechanics; 2) high quality
optics; 3) microelectronics; 4) electronic image transmission .
In their works, G. Hamel and K. Prahalad, as well as their followers
give many examples of specific core competencies
specific companies. In order that when setting out specific
examples of how to say "do not spread the thought along the tree."
To date, several examples can already be cited
identified core competencies and according to Russian
companies.
So, the Irkut company (UAC) has creation and production
unique amphibious aircraft .
The core competence of Sistema-Hals is land acquisition ,
those. ability to receive and quickly register for construction
promising land plots within the boundaries of the city of Moscow.
Unique the core competence of Izhevsk Mechanical
plant "- creation of a new model of a gun, i.e. fast deep
integrated process of development and production of a new model
guns (from project to series).
As our teaching and consulting practice has shown,
to identify, identify and, most importantly, to deep and detailed
comprehending the entire content of each specific competence
this company - you should use the so-called formula
root competence .
Elaboration on this formula all specific "candidates" for
We recommend completing the title "Root Competence of the Company"
full original description each specific competence of a given
company and its portfolio of core competencies generally.
The relevant working paper may be named, for example,
"Description (initial formalization) of the portfolio of core competencies
company "Gamma" ".
Competence as the roots of competitiveness
In her most famous article, Root Competencies
Corporations "1 G. Hamel and K. Prahalad through the original
of a beautiful image (Figure 5.3.3) are represented at once by two main
moment of its concept.
First, Figure 5.3.3 shows a comparison of modern
company with a tree. And therefore the products of this company ( root
and final) "Grow" out of specific core competencies of a given
companies.
That is, Scheme 5.3.3 clearly demonstrates the relationship between the root
the competence of the company with its specific products, as well as why
some of the specific competencies of the company were named precisely
root .
Second, since real products are considered,
which are successfully sold in certain markets, then
the competitiveness of specific company products
determined special properties the respective specific
core competencies of this specific company .
Root competence (Core Competence) specific company −
it is a complex nonlinear system that includes the following elements:
1) a certain set (subsystem) specific competitive
(Ideally − unique) technological business skills this company;
2) the corresponding population (subsystem) specific
competitive (Ideally − unique) non-tech business skills
this company;
3) the corresponding population (subsystem) specific
competitive (Ideally − unique) business skills teaching
this particular company .
Analysis of the later works of G. Hamel and K. Prahalad and, most importantly,
implementation practices Root Competence Strategy Models ,
made it possible to distinguish two main types of core competencies.
The first type is the core competencies that provide
only situationally necessary
competitive level, clearly not distinguishing such products among
similar competing products.
The second type is core competencies that provide
given specific products - situationally sufficient
competitive level- due to the special properties of such products,
allowing them to be clearly distinguished from their analogues - how unique .
Two relevant terms appear: competitive
core competencies this company and unique root
competence of this company.
to another key point of the concept of G. Hamel and
K. Prahalada. Its essence lies in the fact that hardly reproducible
for competitors (by definition), unique core competencies
- This one of the most important foundations – strategically sustainable
competitiveness- this particular company.
Therefore, modern companies - when developing and implementing
their common strategies – follows priority
navigate – to identify, strengthen and develop - their
core competencies; and first of all - unique
core competencies .
“The core competencies of this company are its
individual source for future product development. They are
are the “roots” of competitiveness, and specific products
and services - "fruits" ... A team of top managers of any specific
a company that is unable to take responsibility for
creation and development of its core competencies - spontaneously
risks - the future of this company. "
“Core competencies are a life-giving source of new
business development opportunities. They must constitute a special
general corporate focus of the corporation's strategy ”.
Specific corporation (company) − like a tree − grows from its own special roots.
Root products nurtured by root competencies generate
business units that produce final products .
| Company | Competence |
| Sony | Miniaturization |
| Federal express | Supply management; routing of parcels and their delivery |
| Wal-mart | Supply management |
| Motorola | Wireless communications, digital data compression, flat panel display manufacturing and power supply technology, and fast cycle times |
| Merck | Drug development |
| Marriott | Restaurant and building management |
| Honda | Manufacture of engines and electric trains |
| ZM | Production of adhesives, substrates and new materials |
| EDS | System integration |
| Hewlett-Packard | Measurement, computer data processing and communication |
| Nike | Procurement, Quality Design, Product Development, Athlete Support, Distribution Networks |
The most common is the division of competencies into tangible and intangible (by analogy with assets). Tangible and intangible assets serve as components of a firm's core competencies; and more intangible elements such as organizational processes and culture shape it when added coordinated asset and resource allocation function... The creation of competencies is called "organizational alchemy", as they are built on the intangible, hard to buy and hard to copy the abilities of organizations. It is much more difficult for a firm to create a new competency than it is to gain access to resources and assets. The complex human and behavioral aspects of an organization can be more challenging not only to imitate, but also to manage and transform. There are three fundamental forms of competence: knowledge, know-how and attitude.
According to experts, the internal and external competencies of a company should include only those factors that provide it with significant competitive advantages and cannot be easily copied by competitors. Typically, these are factors that require significant industry experience to create. For example, to internal competences include the following:
- know-how, unique technologies, the ability to create competitive products;
- well-developed and effective business processes (project management, quality management, sales, marketing, planning, budgeting, staff motivation ...);
- availability of qualified personnel who are difficult to find in the labor market and which takes a lot of time to train.
To external competences relate:
- presence of stable relations with suppliers and consumers (agents, dealers and distributors);
- opportunities for lobbying their interests (having connections with authorities government controlled);
- the ability to provide funding in the required amount, in as soon as possible and at an affordable price (having stable relationships with financial institutions and investors).
Competence typology
| Competence | Examples of |
| Independent assets: tangible and intangible | Equipment, buildings, goods, software, trade marks |
| Cognitive opportunities: individual and collective, explainable and non-verbal | Knowledge, skills, know-how, technologies, patents |
| Organizational Processes and Day-to-Day Operations: Associated with the coordinated deployment of R. Sanchez, A. Heen and H. Thomas (1996) | Coordination mechanisms in an organization that combine individual actions into collective functioning |
| Organizational structure: may facilitate or hinder the firm's ability to adapt to certain changes | Designing the structure of the organization and its connections with the outside world (suppliers, customers, etc.) |
| Identity: can promote or hinder the adaptive capacity of the firm | Behavioral and cultural characteristics. Signs of identity: shared values, beliefs, rituals and taboos. |
A clear understanding of key competencies makes it possible to create a new competitive space, develop new types of business. This will avoid the "tyranny of the serviced market". To achieve only parity with competitors is clearly not enough; companies must move from satisfying needs to anticipating them all the time; to lead consumers with them; from focusing on a core business to diversification around core competencies.
Thus, the company's strategy should be aimed at creating and strengthening its competencies, as well as developing its dynamic capabilities.
Lecture 10: The main types of business strategies ( strategic model Porter). Content and distinctive features of business strategies. Cost leadership strategy: essence, necessary market conditions, main risks of application. Strategic analysis cost and value chain. Outsourcing as a method of value chain management.
The strategy at the business unit level usually defines how to proceed in competitive environment within their industry to succeed.
« Competition strategy, - Porter writes, "These are defensive or offensive actions aimed at gaining a strong position in the industry, successfully overcoming the five competitive forces and thereby generating higher investment returns." Strategy development has three facets: deciding where the firm has the greatest chance of winning the competition; development of such characteristics of the offered products that are able to attract the buyer and distinguish the company from among other competitors; neutralization of competitive measures of opponents.
While Porter admits that companies have demonstrated a lot of different ways achieving this goal, he insists that only internally consistent and successful strategies can be used to outperform other firms. These are the typical strategies.