Managing the Process: Four traits concerning core competencies and competitive capabilities are

important in successfully managing the organization-building process:

a. Core competences and competitive capabilities are bundles of skills and know-how that most
often grow out of the combined efforts of cross-functional work groups and departments
performing complementary activities at different locations in the firms value chain
b. Normally, a core competence or capability emerges incrementally out of company efforts
either to bolster skills that contributed to earlier successes or to respond to customer
problems, new technological and market opportunities, and the competitive maneuverings of
rivals
c. The key to leveraging a core competence into a distinctive competence or a capability into a
competitively superior capability is concentrating more effort and more talent than rivals on
deepening and strengthening the competence or capability so as to achieve the dominance
needed for competitive advantage
d. Evolving changes in customers needs and competitive conditions often require tweaking and
adjusting a companys portfolio of competences and intellectual capital to keep its
capabilities fresh honed and on the cutting edge
4. Managerial actions to develop core competences and competitive capabilities generally take one
of two forms:
a. Strengthening the companys base of skills, knowledge, and intellect
b. Coordinating and networking the efforts of the various work groups and departments
5. One organization-building question is whether to develop the desired competences and
capabilities internally or to outsource them by partnering with key suppliers or forming strategic
alliances. The answer depends on what can be safely delegated to outsides suppliers or allies
versus what internal capabilities are key to the companys long-term success.
6. Sometimes the tediousness of internal organization building can be shortcut by buying a company
that has the requisites capability and integrating its competences into the firms value chain.
Capabilities-motivated acquisitions are essential when a market opportunity can slip by faster
than a needed capability can be created internally and when industry conditions, technology, or
competitors are moving at such a rapid clip that time is of the essence.