The idea was first introduced by C.K. Prahalad and Gary Hamel in their article “The Core Competence of the Corporation,” published in Harvard Business Review in 1990. It clearly stated the significance of the core competencies in business in developing core products to be used in its other products. The writers used the analogy of a large tree as ...
Identifying core or distinctive competencies is critical for any organization. It allows them to identify the characteristics that set them apart from the competition. Also, it boosts their confidence and motivates them to keep up the innovative work.
The core competencies of Apple include: Unique, innovative, and creative technology. Integration of software and devices.
Brands like Apple, Amazon, Starbucks, Nike, etc., have established themselves as the best in their respective field by identifying their core capabilities and introducing innovative core or end products.
The concept of distinctive competencies revolves around making a collective effort to achieve one goal, i.e., delivering the best output. People in an organization with diversified skills collaborate to manufacture or produce the desired end product. The business can then use this end product for its separate units and individual product lines.
In 1990 C.K. Prahalad and Gary Hamel published The Core Competence of the Corporation that to this day is the most reprinted article in the history of the Harvard Business Review (HBR). It keeps getting reprinted because its premise is still very relevant (perhaps more so today).
Look at 3M. What is 3M’s core competency? Answer – Adhesives/glues/sticky stuff. They make the best sticky stuff in the world. What customers, products, and/or industries use sticky stuff? All of them do. 3M has a core competency and is actually diversified and recessionary proof because of it.
Here is a final thought before you read the HBR article again. Supply chain management (SCM) has evolved into a core competency for several firms, especially manufacturing firms that deal with global competition, saturated markets, and thin margins. These firms outsource everything and SCM has to be a core competency, otherwise they fail.