Good Times | Competency Times!
Business competition used to be a lot like traditional theater: On stage, the actors had clearly defined roles, and the customers paid for their tickets, sat back, and watched passively. In business, companies, distributors, and suppliers understood and adhered to their well-defined roles in a corporate relationship. Now the scene has changed; everyone and anyone can be part of the action. Major business discontinuities such as deregulation, globalization, technological convergence, and the rapid evolution of the Internet have blurred the roles that companies play in their dealings with other businesses. The market has become a forum in which consumers play an active role in creating and competing for value. The distinguishing feature of this new marketplace is that consumers become a new source of competence for the corporation. The competence that customers bring is a function of the knowledge and skills they possess, their willingness to learn and experiment, and their ability to engage in an active dialogue. A company's competitiveness thus derives from its core competencies and core products. Core competence is the collective learning in the organization, especially the capacity to coordinate diverse production skills and integrate streams of technologies. 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. Hence, organizations today realize that in order to harness the boom time, the competence of their human resources should exceed the expectations of their customers consistently.
Locus of Competency
The concept of competence as a source of competitive advantage is key to surviving the tumultuous times of today and tomorrow. Today, a company is nothing but a collection of competencies rather than a portfolio of business units. Thus, for a company to effectively address any new business opportunities, it needs to find new ways to deploy the company's intellectual assets. Managers eventually came to realize that the corporation could also draw on the competencies of its supply-chain partners. During the last decade, managers have extended the search for competencies even further; they now draw on a broad network of suppliers and distributors. Over time, then, the unit of strategic analysis has moved from the single company to a family of businesses, and finally to what people call the "extended enterprise," which consists of a central firm supported by a constellation of suppliers. But the recognition that consumers are a source of competence forces managers to cast an even wider net: competence now is a function of the collective knowledge available to the whole system—an enhanced network of traditional suppliers, manufacturers, partners, investors, and customers. Here's how the locus of organizational competency has shifted:
The Shifting Locus of Core Competencies
- The company
- Family/network of companies
- Enhanced network
Unit of analysis:
- The company
- The extended enterprise—the company, its suppliers, and its partners
- The whole system—the company, its suppliers, its partners, and its customers
Resources:
- What is available within the company
- Access to other companies' competencies and investments
- Access to other companies' competencies and investments as well as customers' competencies and investments of time and effort
Basis for access to competence:
- Internal company-specific processes
- Privileged access to companies within the network
- Infrastructure for active ongoing dialogue with diverse customers
Value added of managers:
- Nurture and build competencies
- Manage collaborative partnerships
- Harness customer competence, manage personalized experiences, and shape customer expectations
Value Creation:
- Autonomous
- Collaborate with partner companies
- Collaborate with partner companies and with active customers
Sources of managerial tension:
- Business-unit autonomy versus leveraging core competencies
- Partner is both collaborator and competitor for value
- Customer is both collaborator and competitor for value
Energizing Competence
Energizing people for the competence levels needed elevates the game significantly, to the point that many employees/partners go well beyond leaders' expectations, individual accountabilities, financial results, and short-term market objectives. It's imperative for each extended organization to unleash the full individual and collective potential of people—at the front line and across the broad middle—to achieve and sustain higher levels of competence than the workers themselves thought possible, than management or customers expected, and than competitors can realistically achieve. Organizations need to develop innovative means to tap into worker fulfillment to develop the extra quotient of emotional commitment that deeply energizes many people to be competent well beyond conventional norms. These peak workforce competence initiatives need to be pursued within an integrated organizational approach or path that generates widespread emotional energy and is disciplined about how that energy is aligned to overall business goals. The energy sources and channels of alignment are supported by mechanisms that simultaneously impact competence and fulfillment.
Business competition used to be a lot like traditional theater: On stage, the actors had clearly defined roles, and the customers paid for their tickets, sat back, and watched passively. In business, companies, distributors, and suppliers understood and adhered to their well-defined roles in a corporate relationship. Now the scene has changed; everyone and anyone can be part of the action. Major business discontinuities such as deregulation, globalization, technological convergence, and the rapid evolution of the Internet have blurred the roles that companies play in their dealings with other businesses. The market has become a forum in which consumers play an active role in creating and competing for value. The distinguishing feature of this new marketplace is that consumers become a new source of competence for the corporation. The competence that customers bring is a function of the knowledge and skills they possess, their willingness to learn and experiment, and their ability to engage in an active dialogue. A company's competitiveness thus derives from its core competencies and core products. Core competence is the collective learning in the organization, especially the capacity to coordinate diverse production skills and integrate streams of technologies. 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. Hence, organizations today realize that in order to harness the boom time, the competence of their human resources should exceed the expectations of their customers consistently.
Locus of Competency
The concept of competence as a source of competitive advantage is key to surviving the tumultuous times of today and tomorrow. Today, a company is nothing but a collection of competencies rather than a portfolio of business units. Thus, for a company to effectively address any new business opportunities, it needs to find new ways to deploy the company's intellectual assets. Managers eventually came to realize that the corporation could also draw on the competencies of its supply-chain partners. During the last decade, managers have extended the search for competencies even further; they now draw on a broad network of suppliers and distributors. Over time, then, the unit of strategic analysis has moved from the single company to a family of businesses, and finally to what people call the "extended enterprise," which consists of a central firm supported by a constellation of suppliers. But the recognition that consumers are a source of competence forces managers to cast an even wider net: competence now is a function of the collective knowledge available to the whole system—an enhanced network of traditional suppliers, manufacturers, partners, investors, and customers. Here's how the locus of organizational competency has shifted:
The Shifting Locus of Core Competencies
- The company
- Family/network of companies
- Enhanced network
Unit of analysis:
- The company
- The extended enterprise—the company, its suppliers, and its partners
- The whole system—the company, its suppliers, its partners, and its customers
Resources:
- What is available within the company
- Access to other companies' competencies and investments
- Access to other companies' competencies and investments as well as customers' competencies and investments of time and effort
Basis for access to competence:
- Internal company-specific processes
- Privileged access to companies within the network
- Infrastructure for active ongoing dialogue with diverse customers
Value added of managers:
- Nurture and build competencies
- Manage collaborative partnerships
- Harness customer competence, manage personalized experiences, and shape customer expectations
Value Creation:
- Autonomous
- Collaborate with partner companies
- Collaborate with partner companies and with active customers
Sources of managerial tension:
- Business-unit autonomy versus leveraging core competencies
- Partner is both collaborator and competitor for value
- Customer is both collaborator and competitor for value
Energizing Competence
Energizing people for the competence levels needed elevates the game significantly, to the point that many employees/partners go well beyond leaders' expectations, individual accountabilities, financial results, and short-term market objectives. It's imperative for each extended organization to unleash the full individual and collective potential of people—at the front line and across the broad middle—to achieve and sustain higher levels of competence than the workers themselves thought possible, than management or customers expected, and than competitors can realistically achieve. Organizations need to develop innovative means to tap into worker fulfillment to develop the extra quotient of emotional commitment that deeply energizes many people to be competent well beyond conventional norms. These peak workforce competence initiatives need to be pursued within an integrated organizational approach or path that generates widespread emotional energy and is disciplined about how that energy is aligned to overall business goals. The energy sources and channels of alignment are supported by mechanisms that simultaneously impact competence and fulfillment.