In 1990, management “gurus” Prahalad and Hamel coined, the concept of Core Competencies. Probably one of the most important concepts for any CEO and Board of Directors. In their words “[Leveraging your organization’s Core Competencies is] The most powerful way to prevail in global competition, [and] is still invisible to many companies.” Furthermore, a CEO who does not leverage his organization’s Core Competencies does not know what she is doing! This concept, fascinates me, so elusive and so there, so intangible and delivers so many tangible advantages a real pilar of fire in the VUCA desert.
Three Compasses to guide: Core Competencies + Strategy + Vision
There are 3 interconnected “compasses”, to help navigate the VUCA turmoil: Vision, Core Competencies and Strategic Thinking. Strategic Thinking is the oldest and most popular of these three concepts.
Vision is the ideal future to which your company aspires, is the answer to what is the impact your company wishes to make in the future? Is the inspiration of the organization, it delivers one of the most important human drives: meaning.
Strategy is the plan (based on research and think-time) to leverage the Core Competencies in order to achieve the Vision of the organization. Strategy, therefore is a bridge (or a ladder) between your organization’s Core Competencies and its Vision.
How do Core Competences affect your Innovation drive?
First, by making innovation a core competence. For how to make this refer to our OT2I, corporate transformation process. Once innovation is a core competence your organization has taken a quantum leap in every aspect. While Apple has shown innovation as a core competence (hence they can produce the largest internet music store along with a laptop and a mobile phone).
Second, core competences are your first idea screening criteria. Any new idea raised should first pass your core competence filter. If it does fit your core competences (or the ones you want to develop) there is a go. If it does not fit your core competences, no go. Even if it is the greatest idea on Earth. The wish to develop an idea for which your company does not have the core competence for it, is a death wish for your idea (or your company as Kodak showed with the digital camera idea).
Third, your innovation efforts should be coherent with leveraging your core competences, creating a multiplying effort effect. Perhaps one of the few areas where innovation and efficiency overlap.
If a CEO who does not know the core competences of the company does not know what he or she is managing a CEO who does not know them and tries to innovate does not know what he is doing. As the delphi oracle aptly stated: know thyself.