CORE COMPETENCIES RESOURCE

MSOD 617 - Assignment 2 By: Alex Amissah, Liz Landon, Rob Lo and Sara Mailloux

Table of Contents: Page 3 - What are Core Competencies? Page 4 - Why are Core Competencies important? 9 types of Core Competencies: ● Page 6 - Capability ● Page 7 - Competitive ● Page 8 - Congruency ● Page 9 - Distinctive ● Page 10 - Front Line Execution ● Page 11 - Functional ● Page 12 - Individual ● Page 13 - Insight and Foresight ● Page 14 - Strategic

Page 15 & 16 - Resources

What are Core Competencies? Evolving strategy that originated in 1990 from a broad perspective of harmonizing processes

with technology. It then expanded to drive more focus around competitive advantage of

products and human capital.

Prahalad and Hamel (1990) introduced the concept in a Harvard Business Review article

Core competency is "an area of specialized expertise that is the result of harmonizing complex streams of technology

and work activity."

Gallon, Stillman, and Coates (1995) made it explicit that core competencies are more than the traits of individuals

Core competencies are defined as "aggregates of capabilities, where synergy is created that has sustainable value

and broad applicability."

Coyne, Hall, and Clifford (1997) proposed that skills or knowledge must be complementary

“A core competence is a combination of complementary skills and knowledge bases embedded in a group or team

that results in the ability to execute one or more critical processes to a world class standard."

Why are Core Competencies important? There has been much discussion and debate around the concept of Core Competencies,

challenging the framework and the application. Ultimately corporations must use some ‘version’

of core competencies to keep an external view of their business in order to know if current

competencies are eroding or growing.

Erosion:

● Few companies understand how to leverage existing core competencies to create new competitive space. Fewer still have a

clear, well articulated agenda for building entirely new core competences.

● It is too easy for a company to rest easy on an asset or infrastructure based advantage and underinvest in building unique

competencies. (Hamel and Prahalad, 1994)

Growth:

● Companies use Core Competencies to unify the organization across business and functional units, improving the transfer of

knowledge and skills among them.

● Employees better understand management’s priorities.

● Helps managers to decide where to allocate resources. (Bain & Company, 2015)

9 Types of Core Competencies

DEFINITION

APPLICATIONS

OD USAGE

● Routines are the building blocks of organizations and promote sustained competitive advantage.

● Firms will enjoy sustained competitive advantage only if their capabilities are valuable and rare, lack substitutes and are

difficult to imitate which will allow them to outperform rivals

Capability

A set of competencies that every organization or individual possesses as something that they are good at.

(Gilgeous V. & Parveen K. 2001).

Outlining or mapping out identifiable capabilities of the organization and labelling those which contribute the most to high firm

performance in order to nurture and exploit them to advantage.

DEFINITION

APPLICATIONS

OD USAGE

Competitive

● Identify the key operating criteria on which a company needs, or chooses, to compete.

● Use the most current benchmark data in the relevant industry sector to establish the gap between its own, and

“competent” performance.

● Identify the “missing” competence the organization needs to develop or acquire to close the gap.

Measures the extent to which the core business processes of a company measure up to an acknowledged best practice

standard within its industry through the process of benchmarking (Baker et al 1997).

Establish an operational improvement strategy which will lead to competitive competence. The operative link is to understand the

relationship between an enabling competence, a sub-process, which is likely to have a positive influence on its chosen competitive

criteria.

DEFINITION

APPLICATIONS

OD USAGE

Congruency

● Logic of leverage and sharing applies only when two LB’s both exhibit the same pattern and intensively exploit a shared

resource benefiting from their combined scale.

● Congruent lines of business are characterized by comparable approaches to competing.

● Synergies can be achieved by transferring resources from one LB with that resource to a sister LB = resource divergence.

The degree to which the resource allocation patterns of a Line of Business (LB) resemble those of sister LB’s.

Congruent lines of business within a firm that creates competitive advantage for each other by allowing resource sharing

(Daveni, Ravenscraft and Anderson, 2004).

Identify and cluster LB’s with similar resources to build the needed synergies using the same logistical network.

DEFINITION

APPLICATIONS

OD USAGE

Distinctive

Link competencies to aspirations/goals to form a strategic business model.

● Distinctiveness of patterns of competencies

● Link on a ‘cause map’ between competencies and goals

● Identifies technologies and services that make a company stand out

Distinctive competency criteria are difficult to substitute, rare among a firm’s competition, imperfectly inimitable, and

valuable (Mooney 2015, Eden & Ackerman, 2000).

Create a ‘Cause Map’ to examine the logic of relationships between competencies,

identifying detractors and supporters - Distinctive Competencies will emerge in patterns.

● Clusters of competencies, identify isolated & disconnected competencies

● Analyze for feedback loops, potency and centrality

DEFINITION

APPLICATIONS

OD USAGE

Front Line Execution

Actions of great supervisors and managers at the frontline:

● Create & implement a vision, facilitate change, monitor employees, gather & evaluate info,

communicate with others, make decisions, build relationships, control workplace climate

● Traits of effective managers are interpersonal skills, leadership, conflict resolution, etc.

Arises in cases where the quality of an end product or service can vary appreciably according to activities of frontline

personnel (Holl, 2013).

Offering of courses/training programs honing in on unique characteristics and responsibilities of

successful managers; core competencies are therefore: Leadership techniques, problem solving,

developing staff and effective communication.

DEFINITION

APPLICATIONS

OD USAGE

Functional

Unique functional applications range widely but can include:

● Technical or operational (ie. Backing up a database or Java programming)

● Operations (ie competence, service mentality/aptitude of individual employees, etc)

● Product development and characteristics (ie scalability, performance, simplicity, etc)

Analyze how functions interact looking for areas of improvement:

● In processes: Teamwork, Problem Solving, Decision Making, Professionalism, Integrity and Communication

● In products: Tech knowledge, Innovation, Prospecting, Market Knowledge, Technical Knowledge, Productivity, Quality, etc.

Skills enabling uniqueness and giving the product or service a distinctive customer benefits that fit between company priorities

and strengths within a particular function (Gilgeous V. & Parveen K. 2001, Sprecher, J).

DEFINITION

APPLICATIONS

OD USAGE

Individual

Spencer and Spencer (1993) propose human competence as layers of an iceberg:

● Layers include: Observable knowledge and skills, social, communicative

skills, insights, basic approaches to work, problem solving, values,

standards, ethics, and personal characteristics.

The set of skills and knowledge that an individual needs in order to perform a

specified job effectively (Gilgeous V. & Parveen K. 2001).

Developing new competencies for management including:

● A series of business policies, rules and processes which will form a set of instruments for the organization

● Design an instrument to define individual competencies assigned to a set of responsibilities

● Structure them an appropriate manner to create the linkages to the organizational core competencies

DEFINITION

APPLICATIONS

OD USAGE

Insight and Foresight

● Technical or scientific knowledge that produce a string of inventions (ie Canon's optics knowledge)

● Creative flair in inventing successful products (ie Walt Disney animated films)

● Identification of future successful distribution channels or locations (ie Restaurant sites and accessibility)

● Identifying untapped market desire (ie Creation of Apple computers and products)

The ability to discover or learn facts or patterns that create first-mover advantages (Gilgeous, V. & Parveen, K., 2001).

Facilitate an insight channel:

1) Anomalies Deviations from the norm

2) Confluence Macro trends

3) Frustrations Deficiencies in the system

4) Orthodoxies Question conventions

5) Extremities Exploit Deviance

6) Voyages Learn from immersion elsewhere

7) Analogies Borrow from other industries

(Sawhney, M., & Khosla, S., 2014)

DEFINITION

APPLICATIONS

OD USAGE

Strategic

The goodness of fit between a company's business strategy and the external competitive

environment which emphasizes synthesis, using intuition and creativity. (Thompson & Cole, 1997)

Develop Strategic Core Competencies to promote change and sustain effectiveness in:

● Operating Efficiencies - Monitoring, Measuring, Continuous Improvement and Innovation

● Change Management Competencies - summarized in 8 competencies featured in Figure 6

Must include content, change management, and learning.

● Technical competences enable the organization to add value and innovate.

● Managing continuous and discontinuous change and understand a dynamic environment.

● Learning from stakeholders, including suppliers, distributors, customers and competitors.

Resources 1. Bain & Company. (2015). Management Tools - Core Competencies. Retrieved from

2. http://www.bain.com/publications/articles/management-tools-core-competencies.aspx

3. Baker, J.C., Mapes, J. New C.C., and Szwejczewski, M. (1997). A hierarchical model of business competence. Integrated

Manufacturing Systems, Vol. 8 Iss 5 pp.265-272.

4. Bonn, Ingrid. 2001. Developing strategic thinking as a core competency. Management Decision 39/1. pp. 63-70.

5. Claudy, A. (2008). Human Resource Development and the Resource-Based Model of Core Competencies: Methods for

Diagnosis and Assessment. Human Resource Development Review. 7 (4), 387-407.

6. Coyne, Kevin P., J.D. Hall, & Patricia Gorman Clifford. "Is your Core Competence a Mirage?" McKinsey Quarterly (Mar. 1,

1997): 40-55.

7. Daveni, R.A., Ravenscraft, D.J., and Anderson, P.( 2004). From Corporate Strategy to business level advantage: Relatedness

as resource congruence. Managerial and Decision Economics. 25(6-7), 265-381.

8. Duhaime, I. M., Stimpert L.V. and Chesley, J.A. (2012). Strategic thinking: Today’s business imperative. New York. Routleedge

9. Eden, C. and Ackermann, F. (2000). Mapping Distinctive Competencies: A Systemic Approach. The Journal of the Operational

Research Society, Vol. 51, No.1, Part Special Issue: OR and Strategy, pp. 12-20.

10. Eisenhart K.M. & Martin, J.A. (2000). dynamic Capabilities: What are they? Strategic Management Journal. 21 (1105- 1121)

11. Gallon, Mark, Harold M. Stillman, & David Coates. "Putting Core Competency Thinking Into Practice." Research Technology

Management 38, no. 3 (May/June 1995): 20-29.

12. Gilgeous, V. & Parveen, K. (2001). Core Competency Requirements for manufacturing effectiveness. Integrated manufacturing

systems, Vol. 12 Iss 3 pp. 217-227.

13. Godbout, A. 1994. Intellectual Property Management Framework and Sustainable Development, Canadian International

Development Agency, Hull.

Resources

14. Godbout, A. 2000. Managing Core Competencies: The Impact of Knowledge Management on Human Resources Practices in

Leading-edge Organizations. Knowledge and Process Management. Volume 7: Number 2. pp 76-86.

15. Hamel, G. and Prahalad, C.K. (1994). Competing for the Future. Harvard Business School Publishing. Boston MA.

16. Holl, A. (2013). What Competencies should great frontline managers have?. Retrieved from

www.yourtrainingprovider.com/blog_various/bid/185890/What-Competencies-Should-Great-Front-Line-Managers-Have

17. Kandampully, J. (2002). Innovation as the core competency of a service organization: the role of technology, knowledge and

networks. Leading-edge Organizations. Knowledge and Process Management Volume 7, Number 2 (2000): pp 76–86.

18. Mooney A. (2007) Core Competence, Distinctive Competence, and Competitive Advantage: What is the Difference? Stevens

Institute of Technology. Journal of Education for Business. Hoboken, New Jersey.

19. Prahalad, C.K., and Gary Hamel. "The Core Competence of the Corporation." Harvard Business Review 68, no. 3 (May/June

1990): 79-91.

20. Sawhney, M., & Khosla, S. (2014). Managing Yourself. Where to Look for Insight. Harvard Business Review, 92(11), 126-129.

21. Spencer, L.M. and Spencer S.M. (1993) Competence at Work, Wiley, New York.

22. Sprecher, Jeffrey C. Competency Framework Report: Core Competencies. Retrieved from

https://www.theice.com/publicdocs/ICE_Competency_Framework.pdf

23. Thompson John, and Melissa Cole. 1997. Strategic competency – the learning challenge. Journal of Workplace Learning.

Volume9, Number 5. pp. 153–162