Balanced Scorecard Benchmarking Business Process Reengineering Collaborative Innovation Core Competencies Customer Relationship Management Customer Segmentation Decision Rights Tools Downsizing Growth Strategy Tools Knowledge Management Lean Six Sigma Loyalty Management Mergers and Acquisitions Mission and Vision Statements Online Communities Outsourcing Price Optimization Models Scenario and Contingency Planning Shared Service Centers Strategic Alliances Strategic Planning Supply Chain Management Total Quality Management Voice of the Customer Innovation Related topics Core Capabilities Key Success Factors Description A Core Competency is a deep proficiency that enables a company to deliver unique value to customers. It embodies an organization's collective learning, particularly of how to coordinate diverse production skills and integrate multiple technologies. Such a Core Competency creates sustainable competitive advantage for a company and helps it branch into a wide variety of related markets. Core Competencies also contribute substantially to the benefits a company's products offer customers. The litmus test of a Core Competency? It's hard for competitors to copy or procure. Understanding Core Competencies allows companies to invest in the strengths that differentiate them and set strategies that unify their entire organization. Methodology To develop Core Competencies a company must: Isolate its key abilities and hone them into organizationwide strengths; Compare itself with other companies with the same skills, to ensure that it is developing unique capabilities; Develop an understanding of what capabilities its customers truly value, and invest accordingly to develop and sustain valued strengths; Create an organizational road map that sets goals for competence building; Pursue alliances, acquisitions and licensing arrangements that will further build the organization's strengths in core areas; Encourage communication and involvement in core capability development across the organization; Preserve core strengths even as management expands and redefines the business; Outsource or divest noncore capabilities to free up resources that can be used to deepen core capabilities. Common uses Core Competencies capture the collective learning in an organization. They can be used to: Design competitive positions and strategies that capitalize on corporate strengths; Unify the company across business units and functional units, and improve the transfer of knowledge and skills among them; Help employees understand management's priorities; Integrate the use of technology in carrying out business processes; Decide where to allocate resources; Make outsourcing, divestment and partnering decisions; Widen the domain in which the company innovates, and spawn new products and services; Invent new markets and quickly enter emerging markets; Enhance image and build customer loyalty. Related Bain capabilities Capability sourcing Core growth Corporate Strategy Selected references Alai, David, Diana Kramer, and Richard Montier. "Competency Models Develop Top Performance." T + D, July 2006, pp. 47-50. Andrews, Kenneth. The Concept of Corporate Strategy, 3d ed. Dow Jones/Richard D. Irwin, 1987. Campbell, Andrew, and Kathleen Sommers-Luch. Core Competency Based Strategy. International Thompson Business Press, 1997. Critelli, Michael J. "Back Where We Belong." Harvard Business Review. May 2005, pp. 47-54. Drejer, Anders. Strategic Management and Core Competencies: Theory and Applications. Quorum Books, 2002. Hamel, Gary, and C.K. Prahalad. Competing for the Future. Harvard Business School Press, 1994. Quinn, James Brian. Intelligent Enterprise. Free Press, 1992. Quinn, James Brian, and Frederick G. Hilmer. "Strategic Outsourcing." Sloan Management Review, Summer 1994, pp. 43-45. Schoemaker, Paul J.H. "How to Link Strategic Vision to Core Capabilities." Sloan Management Review, Fall 1992, pp. 67-81. Zook, Chris. "Finding Your Next Core Business." Harvard Business Review. April 2007, pp. 66-75.