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December 2006 Identifying and Developing Core Competencies in Small Businesses Brian Baldus Marriott School of Management Brigham Young University.

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Presentation on theme: "December 2006 Identifying and Developing Core Competencies in Small Businesses Brian Baldus Marriott School of Management Brigham Young University."— Presentation transcript:

1 December 2006 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 1.What skills gives your company potential access to wide variety of markets? 2.Of those, what about it makes a significant contribution to the customer value? 3.Of those, which of them are difficult for competitors to imitate?

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

11 Discovering Meta competencies Cost EfficiencyReliable Systems InnovationClose External Relationships Agility Strategy Structure Systems Style Staff Shared Values Skills Source: Shirish Srivastava (used with permission)

12 Discovering Meta competencies Cost EfficiencyReliable Systems InnovationClose External Relationships Agility Strategy Structure Systems Style Staff Shared Values Skills Organizational Components Source: Shirish Srivastava HardSoft

13 Discovering Meta competencies Cost EfficiencyReliable Systems InnovationClose External Relationships Agility Strategy Structure Systems Style Staff Shared Values Skills Competitive Aspects Source: Shirish Srivastava

14 Example – Ideal Hardware Cost EfficiencyReliable Systems InnovationClose Ext. Relationships Agility Strategy Purchasing (buy bulk/discount), sell at higher price Handymen salespeople Structure Flat organizational structure Several key knowledgeable employees Systems Reliable computer and communication system Communication system Style Traditional feel, fun displays Staff Handymen, Conflict: low wages Handymen Shared Values Conflict: low wagesCustomer service is key Skills Handymen

15 Discovering Meta competencies Cost EfficiencyReliable Systems InnovationClose External Relationships Agility Strategy Structure Systems Style Staff Shared Values Skills 1.Identify firms capabilities 2.Link each capability to one of the 7 S’s 3.Write the capability under the column that best describes the capability’s competitive advantage to the firm (can occur more than once) 4.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 Nurture New Outdated Company and Market Fit Implement Develop Abandon Existing Sustained Competitive Advantage Adapted from Shirish Srivastava Skills, Resources, and Competencies Pool

18 Implementing 1.Define Meta Competency 2.Level 5 Leadership Style 3.Assemble the team 4.Attract and Retain Resources 5.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 Stephen R. Covey. The 7 Habits of Highly Effective People, C.K. Prahalad & Gary Hamel. The Core Competence of the Corporation. HBR, May-June 1990, pp Jim Collins. Good to Great, Jim Collins. Good to Great and the Social Sectors: A Monograph to Accompany Good to Great, Shirish Srivastava. Managing Core Competence of the Organization. Vikalpa: The Journal for Decision Makers, 2005, Oct.-Dec. 2005, pp

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