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Core competencies v core capabilities

11/17/09  8:00 AM 

I heard a useful distinction between core organizational competences and core organizational capabilities today. The core competences were described as the things an organization competes on (the 'what do we do better than anyone else?') and the example given was Sony's miniaturization of components. The core organizational competences were described as the attributes the organization needs to deliver the competence (the 'how do we retain our competitive edge?') and continuing the Sony example the capabilities described were speed to market, quality, and so on.

The speaker (Chris Worley from USC) made the point that to retain the competitiveness organizations must work to keep ahead in both competence and capability, and they often focus on either one or other aspect. In Sony's case miniaturization is a competence that can easily be imitated. The various capabilities involved can also be imitated, but it's the combination of the two that makes the resource a competitive advantage IF the combination of competence and capability is:

VALUABLE
1. Does this resource or capability provide a clear benefit for the customer or your organization?
2. Are customers willing to pay or bargain for what this resource or capability can provide?

RARE
1. Is your organization one of the few who own or have control over this resource or capability?
2. Is this resource relatively rare or unique among your competitors?

DIFFICULT OR COSTLY TO IMITATE
1. Does replicating this resource or capability require significant capital investment?
2. Does replicating this resource or capability require significant time investment?
3. Is it difficult to tell (from the outside) just how this resource or capability is used in the organization?
4. Does the efficient use of this resource or operation of this capability require significant amounts of learning?

OFFERS POSSIBILITIES FOR ORGANIZATION LEVERAGE
1. Does the organization focus attention and invest in this resource or capability?
2. Does the organization recognize the importance of this resource or capability?

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