TheCoreCompetenceoftheCorporationC.K.PrahaladandGaryHamelTheimportanceandcharactersofcorecompetencies.2Fromcorecompetenciestocoreproducts4IdentifycorecompetenciesandLosethem.3SBUandDevelopingStrategicArchitecture5RedeployingtoExploitCompetencies.6ACaseofNECandGTE.1StructureofthisarticleC.K.Prahalad•OneofthegreatestIndianbusinessthinkers•ProfessorofcorporatestrategyandinternationalbusinessattheUniversityofMichigan.•Focusonnextpractices,corporatestrategyandtheroleofmanagementindiversifiedmultinationalcorporationsGaryHamel•CEOofStrategos,DirectoroftheWoodsideInstitute,andvisitingprofessorofstrategicmanagementatLondonBusinessschool•Concepts:“corecompetence,”“strategicintent,”and“industryrevolution”•Createdrule-breakingstrategiesthathavegeneratedbillionsofdollarsinnewwealth.Whatiscorecompetence?KnowledgeSkillsAttitudesCoreCompetenceCorecompetenciesaretheorganization'scollectivelearningandabilitytocoordinateandintegratemultipleproductionskillsandtechnologystreams.Theyarealsoabouttheorganizationofworkanddeliveryofvalueinservicesandmanufacturing.NECVS.GTE(1980)NECGTEBusinessPortfoliosTelephoneSwitchingandtransmissionsystemsLightingproductsSylvaniaTVSatellitesSemi-conductorsDefensesystemsDigitalPABXPacketswitchingTelenet•Onlycomparableintechnologicalbaseandcomputerbusinesses•NoexperienceintelecommunicationsGTENEC21.8916.461980198819801988Acase:NECVS.GTE3.89.98$billionNECVS.GTE(1988)GTEBusinessUnitsTelephoneSwitchingandtransmissionsystemsLightingproductsSylvaniaTVSatellitesSemi-conductorsDefensesystemsDigitalPABXPacketswitchingTelenetSemiconductorsFirst-tierplayerNECTelecommunicationsproductsComputersMobiletelephonesFacsimilemachinesLaptopcomputersWordleaderNewenterNEC:Why?•Strategicintentandstrategicarchitectureof“C&C”(Computer&Communication)•Constituteda“C&CCommittee”•Identifiedthreeinterrelatedstreamsoftechnologyandmarketevolution•Caredabout“coreproduct”andbuiltstrategicalliancesStructure:Theimportanceofcorecompetencies.1Thecharactersofcorecompetencies.2Hownottothinkofcompetence?3(1)TheRootsofCompetitiveAdvantage•NEC:•GTE:VSaportfolioofcompetenciesaportfolioofbusiness-repeatedacrossmanyindustryFrom1980to1988,theachievementsofJapanesecompanies-﹡Lowcostandhighquality;﹡Inventingnewmarkets,creatingnewproducts,andenhancingtheminvanguard(前卫的)markets;﹡Inestablishedmarket,theyalsomadegreatchallengetowesterncompanies.Manyexamplesaregivenhere.What’stheprobleminmanywesterncompanies?NotTheirseniorexecutivesarelesscapablethanthoseinJapan.NotJapanesecompaniespossesgreatertechnicalcapabilities.YesTheylimittheabilityofindividualbusinessestofullyexploitthedeeptechnologicalcapability.Inthelongrun,competitivenessderivesfromanabilitytobuildthecorecompetenciesatlowercostandfasterthancompetitors.TheprobleminmanywesterncompaniesEndProductsBusinessUnitsCoreProductsCoreCompetence.Corporationprovidesnourishment,sustenanceandstabilityCorecompetenciesarethecollectivelearningintheorganization,especiallyhowtocoordinatediverseproductionskillsandintegratemultiplestreamsoftechnologies.Itisalsoabouttheorganizationofworkandthediversityofvalue.Corecompetenciesarecommunication,involvementanddeepcommitmenttoworkingacrossorganizationalboundaries.Involvesmanylevelsofpeopleandallfunctions.Doesnotdiminishwithuse.Andcorecompetenciesarealsotheengineforthenewbusinessdevelopment.Patternsofdiversificationandmarketentrymybeguidedbythem.(2)TheCharactersofCoreCompetencesDigitalTechnologyVLSISystemintegrationskillsNECEnginesPowertrainsHondaOpticsImagingMicroprocessorCanonSomecompaniesandcorecompetenciesCultivatingcorecompetencedoesnotmeanoutspendingrivalsonresearchanddevelopment.Corecompetencedoesnotmeansharedcosts,aswhenatwoormoreSBUsuseacommonfacility-aplant,servicefacility,orsalesforce-orshareacommoncomponent.(3)HowNottoThinkofCompetenceSohowtoidentifycorecompetencies?Structure:Identifycorecompetencies1Losecorecompetencies23FromcorecompetenciestocoreproductsIdentifycorecompetencies——threetestsCoreCompetenciesIdentifyCorecompetenciesprovidepotentialaccesstoawidevarietyofmarketCorecompetenciesshouldmakeasignificantcontributiontotheperceivedcustomerbenefitsoftheendproductsCorecompetenciesshouldbediffucultforcompetitorstoimitateLosingcorecompetenciesCoreCompetenciesLoseOutsourcingthecorecompetenciesHavinganallianceorwithoutknowingwheretobuiltcompetenceleadershipForgoingopportunitiestoestablishcompetenciesTwoLessons(教训)•Thecostsoflosingacorecompetencecanbeonlypartlycalculatedinadvance.•Acompanyhasfailedtoinvestincorecompetencebuildingwillfinditverydifficulttoenteranemergingmarket.ThrowoutababywithbathwaterindivestmentdecisionsWhenitcomestocorecompetencies,itisdifficulttogetoffthetrain,walktothestation,andthenreboard.FromCoreCompetenciestoCoreProductsCoreCompetenciesCoreProductsEndproductsLinchpin(关键)ThephysicalembodimentsofcorecompetenciesThecomponentsorsubassembliesactuallycontributingtothevalueoftheendproductsGlobalCompetitionatEachLevelCoreCompetenciesCoreProductsEndproductsBuildordefendleadershipoveralongtimeBuildworldleadershipinthedesignanddevelopmentofapart