Gary Hamel

The Core Competence of the Corporation

Development of a firms core competencies is identified as the key for global leadership and competitiveness in the 1990s. NEC, Honda, and Canon are used as exemplars of firms that conceive of themselves in terms of core competencies. Core competencies are the organizations collective learning and ability to coordinate and integrate multiple production skills and technology streams; they are also about the organization of work and delivery of value in services and manufacturing. A firm must conceive of itself as a portfolios of competencies, instead of a portfolio of strategic business units (SBUs). The latter limit the ability of firms to exploit their technological capabilities; they are often dependent on external resources. The real source of advantage lies in managements ability to consolidate corporate-wide technologies and production skills into competencies, which will allow individual businesses to adapt to emerging opportunities. Cultivating core competencies does not mean outspending rivals on RD (2) they significantly contribute to the customer benefits of the end-product; and (3) they should be difficult for competitors to imitate. Cultivating core competencies also means benefiting from alliances and establishing competencies that are evolving in existing businesses. The tangible links between core competencies and end products are core products, which embody one or more core competencies. Companies must maximize their world manufacturing share in core products. Global leadership is won by core competence, core products, and end products; global brands are built by proliferating products out of core competencies. Firms must avoid the tyranny of the SBU, the costs of which are (1) under investment in developing core competencies and core products, (2) imprisoned resources, and (3) bounded innovation. Top management must add value to a firm by developing strategic architecture, which will avoid fragmenting core competencies, establish objectives for competence building, make resource allocation priorities transparent and consistent, ensure competencies are corporate resources, reward competence carriers (personnel who embody core competencies), and focus strategy at the corporate level. A firm must be conceived of as a hierarchy of core competences, core products, and market-focused business units. Obsession with competence building will mark the global winners of the 1990s. (TNM)

The Challenge Today: Changing the Rules of the Game

As the information age takes over from the industrial age and change accelerates, the key challenge for each company is to become the architect of revolution in its industry, leaving other companies to play catch-up. The author argues that the key competitive advantage for companies intent on winning in the new economy is non-linear innovation. Companies need to shift from a product-centric view of innovation to a systemic view of innovation: ie innovation of the business model itself. This article is derived from the last of the 1998 Stockton Lectures, delivered in April.

Leading the revolution

In this interview, international strategy guru Gary Hamel explains the thinking behind his new book, Leading the Revolution. He believes that the impetus for radical change in a business must come from the ideas and energies of the people within the company, not from consultants or external advisors. He also believes that innovation and radical change will be necessary for wealth creation in the coming years – change not only in products and processes, but change in entire business models as well. The interview includes Hamel’s guidelines for those at any level of an organization who may have ideas about new opportunities that can revolutionize the company or the industry.

The

Around the world, productivity growth has stalled out. While some hope that a “second machine age” will reverse the slump, we think that wringing bureaucracy out of the economy offers a more promising and less speculative route to boosting productivity. By our calculations, busting bureaucracy would add

3 Trillion Prize for Busting Bureaucracy (and How to Claim it)

3 trillion to economic growth in the US alone. Dismantling bureaucracy won’t be easy, but it has to happen — bureaucracy must die. This paper provides a detailed blueprint for abolishing the bureaucracy tax in organizations and everywhere else.