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GO IT ALONE!

to customers.” This definition, which is appropriate for a Fortune 500 firm, can be adapted for our purposes: The core competence of a go-it-alone firm typically lies in the skill or skills that enable the firm to provide a benefit to customers. Or: It is what you do best that allows you to create something that is valuable to a customer.

It’s particularly useful to take note of the other central ideas presented by Hamel and Prahalad. First, the idea of core competence is in part meant to encourage focus. They note that “there must be some sense of what activities really contribute to long-term corporate prosperity.” They also suggested that “to be considered a core competence a skill must meet three tests”:

  • Customer value: “A core competence must make a disproportionate contribution to customer-perceived value.” In essence, a core competence must be a central reason a customer chooses the products or services of a specific company. (Example: Mr. Trademark’s expertise in trademark searches.)

  • Competitor differentiation: A core competence “must also be competitively unique.” This means that it is a capability that helps to set the business apart from its competition. (Example: Mr. Trademark provides searches faster and lower-priced than competitors.)

  • Extendability: From the perspective of “tomorrow’s markets,” a core competence should lead a company to imagine “an array of new products or services issuing from the competence.” (Example: Mr. Trademark starts assisting with trademark applications in addition to performing searches.)



Core Competencies in Action

As you consider a go-it-alone initiative, the central point here is to have a clear understanding of the skill—the core compe-tence—that will underlie the success of the business in question.

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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.