HAMEL & PRAHALAD MODEL

Leveraging Core Competencies

DEFINITIONS

Building core competences, resource strengths & organisational capabilities which rivals cannot match is the best way to outperform them Core Competencies rarely consist of narrow skills or the work efforts of a single department More often they are bundles of skills & know how growing out of the combined efforts of cross-functional work groups along the value chain of the company

DEFINITIONS

Since they reside in collective efforts it is the top management to build/nurture core competencies Leveraging them mean concentration of more effort & talent than rivals on deepening/strengthening these competencies Since requirements of competencies vary widely bases of competencies need to be broad & flexible

STRATEGIC INTENT
Staking

out a particular business position Big, hairy, audacious goals BEHAG Very long term ( 20/30 years) Komatsu in the 60s was one-third the size of Caterpillar, with little presence outside Japan depending on small bulldozers- but strategic intent was to encircle Caterpillar

STRATEGIC INTENT

Lotus in software & Honda in small engines leveraged the expertise of their talent pool by frequently re-forming high intensity teams and re-using key people n special projects The experiences of such companies tell u that the usual keys to building core competencies are superior selection of employees, training & retraining, cultural influences, networking, empowerment, incentives, organisational flexibility, short deadlines, databases and not big operating budgets

SEARCH FOR STRATEGYCRITICAL ACTIVITIES

Identify strategy-critical activities- administrative and support functions are generally routine activities Among primary value chain activities are often crucial functions which have to be performed exceedingly well like fast check in/check out, room service, food service in a hotel, purchasing, production, promotion in chocolate industry, buying quality cocoa beans at low prices reduction of a cent per bar can mean a seven figure improvement in the bottom-line

REASONS FOR OUTSOURCING STRATEGY NON-CRITICALS

Managers often spend lots of energy and time on bureaucratic support groups and that distracts them from strategy-critical activities Each supporting activity in the value chain is a service which constitute the bulk of the overhead costs Outsourcing them leads to lower costs, speeds decision making, sharpens focus on critical activities and cuts bureaucracies

PARTNERING
Partnerships add to the firms arsenal of capabilities and competencies leading to sharper strategy execution Coke & Pepsi cultivate their bottlers and distributors Automakers regularly work with their suppliers for advancing design and functioning of auto parts McDonalds work closely with their franchisees

STRATEGY CRITICALS AS BUILDING BLOCKS

A change of strategy leads to emergence of new critical activities, competencies Hence a changed or new strategy cannot be executed with an old structure- need for Strategy-Structure fit Some strategy-critical activities- filling customer orders accurately and promptly, speeding new products to market, improving quality of product and service, SCM, effective use of the Internet. Getting feedback from customers

DESIGNING THE FUTURE

Whose future are we stepping into?- designed by us or others How do w design the future? Todays competitors are the collaborators in planning and designing the collective future- the products which will be in use, say, 15/20 years down the road- competitors can compete in future again while designing the future from that point of time

EXPEDITIONARY MARKETING
Exploratory

Marketing assumes that time will wait for us. Will it? As the things keep on speeding up in the future every marketing research/exploration will be through floating a new product The products will be in a state of continuous redesign- mass customisation