The New Building Blocks: Core Competencies
With the collapse of Taylorism, which focused on task and process improvement, the natural inclination is to look for another structure to replace it. Unfortunately, there is no universal answer. Organizations must realize that they require a new paradigm that allows them to optimize across many divisions in parallel.
Project Portfolio management (PPM) theory is extending to the concept of Strategic Portfolio Management (SPM) to focus on techniques to select, plan and manage investments across the enterprise to achieve desired outcomes.
Core competencies are used today in many contexts. Gary Hamel and C. K. Prahalad define core competencies[i] as the skills and capabilities that give a company its unique flavor and cannot be easily imitated by rivals. Capabilities can be viewed as the collection of knowledge, processes, technologies, and organizational structure that gives the company its competitive edge.
However, the whole point is that core competencies are evaluated at a point in time. The business world is continuously evolving and consequently the required competencies are evolving. We will use the five underlying competencies to further understand the competencies model, and ask five questions:
- How far is the desired competency model from the current model?
- What is the level of uncertainty?
- How fragile is the new competency level?
- What is the time to desired competency?
- What is the roadmap?
The desired core competencies level is somewhat difficult to define, innovate and create. It must consider all aspects of the enterprise, not just a few areas of operations.
Another problem with core competencies is, that if conditions are changing and managers get stuck, things can easily degenerate into ‘core rigidities’. Using the language of the underlying structures they become extremely fragile, and they tend to become complacent.
Perhaps the biggest problem, however, is the basic conservatism of human nature. Most people continue thinking about the competencies in the same way as before, failing to adapt their thinking to new ways of working. Although they may buy new technologies, they will use the same processes and approaches to meet the needs of the same customers.
Competency-based portfolio management is a good approach if organizations can do it successfully. But simply having the ambitions is not enough, they still need to deliver.
[i] Gary Hamel and C.K. Prahalad, Competing for the Future, 1994