Core Competencies

Companies today outsource less-critical resources if they can obtain better quality or lower cost.

The key is to own and nurture the resources and competencies that make up the essence of the business.

A core competency has three characteristics:

1. it is a source of competitive advantage and makes a significant contribution to perceived customer benefits;
2. it has applications in a wide variety of markets; and
3. it is difficult for competitors to imitate.

Competitive advantage also accompanies distinctive capabilities or excellence in broader business processes. Wharton’s George Day sees market-driven organizations as excelling in three distinctive capabilities: market sensing, customer linking, and channel bonding.

In terms of market sensing, Day believes tremendous opportunities and threats often begin as “weak signals” from the “periphery” of a business

He suggests systematically developing peripheral vision by asking three questions related to learning from the past, evaluating the present, and envisioning the future.

Over time, businesses may need to realign themselves to maximize core competencies, by (re)defining the business concept or “big idea,” (re)shaping the business scope, and (re)positioning the company’s brand identity.