The Core Competence of the Corporation by C.K. Prahalad and Gary Hamel

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The Core Competence of the Corporation
by C.K. Prahalad and Gary Hamel

Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 The Core Competence of the Corporation 15 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

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The Core Competence of the Corporation

The Idea in Brief
Diversified giant NEC competed in seemingly disparate businesses—semiconductors, telecommunications, computing, and consumer electronics—and dominated them all. How? It considered itself not a collection of strategic business units, but a portfolio of core competencies—the company’s collective knowledge about how to coordinate diverse production skills and technologies. NEC used its core competencies to achieve what most companies only attempt: Invent new markets, exploit emerging ones, delight customers with products they hadn’t even imagined—but definitely needed. Think of a diversified company as a tree: the trunk and major limbs as core products, smaller branches as business units, leaves and fruit as end products. Nourishing and stabilizing everything is the root system: core competencies. COPYRIGHT © 2003 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

The Idea in Practice
CLARIFY CORE COMPETENCIES When you clarify competencies, your entire organization knows how to support your competitive advantage—and readily allocates resources to build cross-unit technological and production links. Use these steps: Articulate a strategic intent that defines your company and its markets (e.g., NEC’s “exploit the convergence of computing and communications”). Identify core competencies that support that intent. Ask: • How long could we dominate our business if we didn’t control this competency? • What future opportunities would we lose without it? •...
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