Core competence and outsourcing

Little did strategy scholars C K Prahalad and Gary Hamel think in 1990 that "core competence" would become so central to the outsourcing decision and global B2B and supply chains just just over  a decade later when Thomas Friedman  declared that the "World is Flat."

Robert Weisman does a great job of highlighting how core competence perceptions by organization managers has been changing. From contractors cleaning facilities and managing food in the cafeteria today you have contractors doing part or whole of HR (including payroll,recruiting,evaluations,training), Finance and Accounting,IT, manufacturing, procurement, sales, new product development,customer service etc.etc.

So I decided to look up the latest web definitions of core competence. Currently the wikipedia definition states : A company’s core competency is the one thing that it can do better than its competitors. A core competency can be anything from product development to employee dedication. Earlier formulations of Core Competence  somehow had the notion of "doing it yourself" embedded in the concept. Today it is not important for a firm to actually "do" anything in-house – even if it is a "core competence". So long as you can protect your core competence from competitors through effective intellectual property management (eg. GE and Pfizer) and "not easy to duplicate" execution (as in Wal-Mart) you really can get everything done globally by networks of suppliers who are simply part of your "extended" organization. Indeed, wonderful opportunities for all involved in B2B whether as buyers or sellers.

Leave a Reply

%d bloggers like this: