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Identifying and Developing Core Competencies in Small Businesses

Identifying and Developing Core Competencies in Small Businesses. Brian Baldus Marriott School of Management Brigham Young University. Agenda. Introduction Trends you know What you’ve learned Competition Core Competencies Meta competencies Sustained Competitive Advantage.

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Identifying and Developing Core Competencies in Small Businesses

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  1. Identifying and Developing Core Competencies in Small Businesses Brian Baldus Marriott School of Management Brigham Young University

  2. Agenda • Introduction • Trends you know • What you’ve learned • Competition • Core Competencies • Meta competencies • Sustained Competitive Advantage

  3. Business Trends You Know • 1980’s Restructuring • 1990’s Cultivation of culture • 2000 and beyond • Increased Turnover • Decreasing Product Lifecycle • Expansion of Globalization

  4. What You’ve Learned • Past performance does not guarantee future performance • Many small businesses fail to compete effectively

  5. Competition • Competition is • Market Share • R&D Budget • Product Price/performance • Three planes Core Competencies Core Products End Products Source: Prahalad and Hamel

  6. Core Competencies Three-way test • Potential access to wide variety of markets • Make a significant contribution to the perceived customer benefits to consumer • Difficult for competitors to imitate Source: Prahalad and Hamel

  7. Meta competencies Name for a grouping of core competencies Source: Shirish Srivastava

  8. An Example Constituent skills – BARCODING – Packaging items Core Competencies – PACKAGE TRACKING – Rapid delivery – People Meta competency – Logistics Adapted from Shirish Srivastava

  9. Brainstorming • What skills gives your company potential access to wide variety of markets? • Of those, what about it makes a significant contribution to the customer value? • Of those, which of them are difficult for competitors to imitate?

  10. What Makes a core competency? Meta competencies (one to two) Core Competencies (dozen or less) Routine Skills, Resources, and Capabilities (many) Adapted from Shirish Srivastava

  11. Discovering Meta competencies Source: Shirish Srivastava (used with permission)

  12. Discovering Meta competencies Hard Soft Organizational Components Source: Shirish Srivastava

  13. Discovering Meta competencies Competitive Aspects Source: Shirish Srivastava

  14. Example – Ideal Hardware

  15. Discovering Meta competencies • Identify firms capabilities • Link each capability to one of the 7 S’s • Write the capability under the column that best describes the capability’s competitive advantage to the firm (can occur more than once) • Identify capabilities occurring in most/all of the 7 S’s Adapted from Shirish Srivastava

  16. New Focus • Look internally • Success depends on continually reevaluating

  17. Skills, Resources, and Competencies Pool Sustained Competitive Advantage Existing Develop Abandon Adapted from Shirish Srivastava

  18. Implementing • Define Meta Competency • Level 5 Leadership Style • Assemble the team • Attract and Retain Resources • Turning the Flywheel Adapted from Jim Collins, Good to Great Monograph

  19. Summary • Core competencies are a better measure of long-run competitive advantage • Core competencies can be grouped into larger groupings or meta competencies • Sustained competitive advantage comes seeing core competencies as a cycle

  20. Reading List • Craig M. Watson. Leadership, Management and the Seven Keys, The McKinsey Quarterly, Autumn 1983, pp. 44-52. • Stephen R. Covey.The 7 Habits of Highly Effective People, 1989. • C.K. Prahalad & Gary Hamel. The Core Competence of the Corporation. HBR, May-June 1990, pp. 79-91. • Jim Collins. Good to Great, 2001. • Jim Collins. Good to Great and the Social Sectors: A Monograph to Accompany Good to Great, 2005. • Shirish Srivastava. Managing Core Competence of the Organization. Vikalpa: The Journal for Decision Makers, 2005, Oct.-Dec. 2005, pp. 49-63.

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