Apple has an announcement scheduled for this Tuesday. There is much speculation of innovations within the MacBook line, including potentially a low cost product line. As a Mac user, I am eagerly awaiting what is next. Whatever their announcement is, one can be sure it will continue to build on Apple’s core competencies.

Core competency originates from C. K. Prahalad and Gary Hamel in their 1990 paper “The Core Competence of the Corporation.” Prahalad and Hamel highlight core competency as a source of uniqueness that a company can do uniquely well, offering a competitive advantage as competitors can’t quickly copy. A core competency can take various forms: know how, process, manufacturing, relationship, development methodology, culture, talent management, branding, marketing, distribution, research & development, …

Prahalad and Hamel emphasize 3 conditions to test if a competence is true core competence. It is possible to have core competency that doesn’t meet all the required criteria, however any competitive advantaged gained will only be temporary.

1. Must be relevant — core competence must be uniquely valued by your customers, so that they will not only choose your product but be willing to pay more for them. If not, it has no effect on your competitive position.
2. Difficult to imitate — core competence must be difficult for competitors to imitate, as it ensures your products are better than your competitors. It also enables you to sustain your competitive position as you continue to improve your competency.
3. Leveraged to many products and markets — core competency must enable entrance into new markets to sustain growth.

As I mentioned before, Steve Jobs’ core value of developing easy-to-use technology for individuals, coupled with his love of design excellence (where design is the function), has shaped Apple’s innovation strategy: shape the technology to the customer’s needs, instead of forcing the user to adapt to the technology. Apple’s design philosophy starts with the belief, understanding that the purpose of the design is to create things that benefit people.

Apple’s core competencies of innovative culture, successful entry into new markets, human centered design and development have contributed to Apple’s successful execution. I expect the new product line to be attractive, following on Apple’s tradition. Studies have shown that we respond positively towards attractive things and tolerate their minor annoyances: they work better, create positive emotions, encourage creativity and the attractiveness produces positive emotions, causing mental processes to be more creative. For those who watched Jobs’ iPod announcement during the September event, you might remember Jobs’ highlighted Apple’s environmentally friendly design changes to iPod line: packaging, materials, high degree of recyclability, … The core competency of environmentally friendly design and packaging has been a visible focus area of Apple over the years. I am looking forward to hearing more about this during tomorrow’s event.

Understanding and developing your core competencies is all about focus, recognizing where your uniqueness is valued by your customers, where your competitors cannot catch up, and learning to stop being all things to everyone. Building your core competencies takes time. So, recognizing what you will need to work on today to be more successful tomorrow is just as important in your core competency analysis. The following steps will help identify the core competencies that you currently have as well as those you need to start building for tomorrow.

1. Brainstorm a list of your existing competencies, your strengths as well as factors that you feel are important to your business, to your customers and to your market. Identify and cluster any common themes from this activity.
2. For each of the common theme identified, take it a step further and determine the driving competence in that area. Your ‘relationship management‘ might really highlight the strength of your ‘customer data and analytics tools‘, your ‘retail partners‘ might be driven by your ‘retail partner training programs‘, ‘embedded development‘ might be more about your ‘home grown tools and optimization suite for performance and quality assurance.’
3. Once your list is complete, evaluate each of these items against Prahalad and Hamel’s 3 conditions to test if a competence would be considered a true core competence.
4. Review the final list that only has true core competencies and build an action plan for each item.
• If the competency identified is one of your existing competencies and strengths, great! Put together a development plan to further that competency and exploit it effectively.
• If the competency identified is not a current capability, then evaluate if a) it should be developed internally; or b) if you could partner/outsource to obtain it.

I heard somewhere that it takes 10 years for someone to be recognized as an expert in her field. Regardless of the time, building your core competency and ensuring that it provides sustainable differentiation takes effort and focus. Make sure to have the proper focus and development plan to maintain your competitive edge.

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