Building Core Competencies and Competitive

Capabilities
Based on Thompson and Strickland's Book

Building core competencies and competitive capabilities is a time-consuming

development activity that involves three stages:

(1) Developing the ability to do something as novice act as a team.

(2) Learning from the initial performances, and developing methods to perform the
activity consistently well at marketable and profitable costs, setting the stage to transform
the ability into a tried-and-true business getting competence or capability; and

(3) Continuing to polish and refine the organization's know-how and otherwise sharpen
performance such that it becomes better than competitors at performing the activity, and
make efforts to raise it to the core competence level (or capability) or to the rank of a
distinctive competence (or competitively superior capability) thus opening an avenue to
competitive advantage. Many companies manage to get through stages 1 and 2 but
comparatively few achieve sufficient proficiency to qualify for the third stage. The idea of
top three in any industry illustrates this idea of many not being able to develop that
superiority in competitive scenario.

Four ideas regarding the process of developing core competencies or capabilities

1. Core competencies grow out of combined efforts of many in the department. Core
capabilities grow out of the combined efforts of cross-functional work groups.
2. A core competence and capability emerges incrementally out of company efforts to
strengthen skills that contributed to successful customer related outcomes.
3. Only by concentrating more effort and talent than rivals in deepening the knowledge
and skills that a company develops core competence and capability.
4. Evolving changes in customer needs and competitor successes demand changes in
competencies and the organization has to recognize the change in the environment and
determine the new competencies required and start taking steps to put into motion the
three steps - Do as novice - Make it market acceptable - Develop it into competency and
then into core competency.