Core Value and Core Competency

The concept of core competency has been a central idea of management theory for many years. The central idea is, that in order to gain competitive advantage an organization must focus its energies on the activities or tasks that will create the greatest customer value. This is the only way in which to generate sustained competitive advantage.

Essentially there are three ideas. First, find out what the customer values, this is what Geoffrey Moore terms core value. Second, organize your company and focus your energies around the activities or core compentencies that deliver core value in the most efficient and effective way possible. Third, leverage core competencies to deliver more core value over time.

This conceptualization closely ties core value to core competency. And clearly, core value comes first. What often happens however, is that organizations will incorrectly place core competency ahead of core value. Companies assume that customers will value that which they already do well. It is a very easy, but dangerous mistake to make.

This happens because all core activities which generate superior value are eventually matched in the marketplace and become what Moore calls context, necessary but not worth a marketplace premium. The force that over time makes core activities into context activities is powerful and cannot be readily stopped. Activities that may have been core, eventually become context. Organizations are structured to deliver not only core but context activities. Groups who may have once been prime movers in core value delivery, but who are now engaged in context activities are not usually willing to recognize this, and give up power and resources to groups focusing on core activities. This is one reason, large corporations often fail, they lack the ability to adjust their core compentencies to deliver core value.