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Core Competencies

Date: July 24 2000

Core Competencies

What Are Core Competencies?

The idea of core competencies came from the 1990 Harvard Business Review article "The Core Competence of the Corporation" by strategy theorists C.K. Prahalad and G. Hamel.

They believe that excellent organizations are "good" at some specific things.   For example that Honda is good at building engines, Sony at miniaturizing products and Boeing in understanding the aerodynamics of flight.

The implication is that companies should learn what their core competencies are and build strategy around core competencies.

How do they Relate to Personal Competencies?

They don´t-which can be confusing.   HR people need to be aware that a lot of managers will be familiar with Prahalad´s ideas about core corporate competencies which can muddy the waters when trying to talk about personal competencies.

What is HR´s Role in Developing Core Competencies?

While the main thrust of ideas around core competencies relate to how to direct business strategy, an obvious question is how organizations develop and maintain core competencies.   This is where HR comes in.

HR has a variety of tools to develop core competencies:

  • Training tactics to develop knowledge
  • Retention tactics to hold on to knowledge
  • "Communities of Practice" to do what training can not in knowledge development (watch for our John Seely Brown interview in a couple of weeks)

In fact, the whole weight of organizational development can be focused on building up core competencies.

What are the Drawbacks of Core Competencies?

The main thing to remember is that "core competencies" are just an idea not a fact of nature.   It´s one way of thinking about the company but that is all.   In some cases it can be a useful thinking tool.   Some organizations may want to use this as a central theme for defining their business and strategy-but most will not.


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