|
by Robert Malone, Contributing Editor   We all talk about how important it is for a company to put its core competency first and foremost. That deserves a second look. What, for instance, is Apple Computer's core competency? Is it Macs, or is it the music business and iPods? What is GE's core competency? Is it engines? Is it its credit business or power management products? Conventional wisdom demands that a company, no matter how many business processes it may outsource, never outsource its core competency. One assumes that in most cases core competency involves intellectual property -- and for Pete's sake, don't go mucking around with that. But intellectual property is not necessarily the same as core competency. Many successful companies appear to operate without any real intellectual property. Take Wal-Mart. Its core competency is simply its operational ability to roll over the competition. Is that intellectual property? Let's look at IBM. At one time IBM thought it was in the computer business. Then along came a consultant by the name of Marshall McLuhan, who told IBM it was actually in the information business. Its core competency shifted on the words of a consultant. Is IBM's core competency still information? Its basic and applied research still revolves around computing technology, communication technology, and chip development. However, it presents itself as a solutions provider. In fact, IBM's core competency may be its marketing, and that is more technique and attitude than intellectual property. Could core competency actually be the image a company builds for itself in the marketplace? Or is it the ability of a company to organize itself successfully? If we look at Eliyahu Goldratt's view of organization we see that performance is to be measured in three ways: by increasing throughput (sales), by decreasing inventory (assets), and by decreasing operating expenses. Perhaps a company's ability to organize these functions in a long-term application constitutes its core competency. Let's say a company finds its core incompetence -- can it reasonably expect to discover by reduction its core competence? What if a company totals up all of its incompetencies and finds there is nothing left over? Is it possible to be a profitable company with no core competency? Maybe the company is just less incompetent than its competitors, in which case its real core competence is its dominance of a market full of weaklings. In the land of the blind a one-eyed man is king. There is a nastier side to this. A company may nurture itself as a predator. Its competency may in fact be its ability to thwart competition. We've all heard of the less-than-nice predatory supply chain practice. This amounts to securing the sources for a product (or product category) to the exclusion of the competition. It really means cutting the competition's supply chain General Sherman style (destroy the enemy's supply chain, tear up the tracks, burn the warehouses, blockade the ports, seize the goods, etc.). No U.S. company would stoop to such a practice, right? If you come up with a good answer to these conundrums, please let us know as soon as possible. We certainly don't want to see a lot of core competencies floating around without a company -- or companies operating without a competency. |