Industry Data & Market Research

Strategic Planning with the Core Competence - Collective Learning in the Organization Framework

Core Competence - Collective Learning in the Organization is a technique that enables better strategic planning in business.

Core competencies are the collective learning in the organization. Unlike physical assets, which do deteriorate over time, competencies are enhanced as they are applied and shared. First companies must identify core competencies, which provide potential access to a wide variety of markets, make a contribution to the customer benefits of the product, and are difficult for competitors to imitate. Next companies must reorganize to learn from alliances and focus on internal development.

Core competencies can be determined with the following three tests:

  • A core competence provides potential access to a wide variety of markets.
  • A core competence makes a significant contribution to the perceived customer benefits of the end product.
  • A core competence is difficult for competitors to imitate because it is a complex harmonization of individual technologies and production skills.

The core competence idea was useful to managers not only for focusing them on the essentials, but also for identifying those things that were not at the core. Why, management might ask, were these non-essential things being allowed to consume valuable resources?

The drive to identify core competencies moved in line with the growing popularity of outsourcing. When companies were suddenly able to outsource almost any process that came under their corporate umbrella, they needed to know what lay in the hard core of activities that they were uniquely well qualified to carry out, the activities that it made no sense for them to hand over to a third party. In some cases the answer was very few.

Other Strategic Planning Frameworks

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