Core competence—the idea that a company can succeed without a structural competitive advantage by becoming the best at a few key skills or in a few knowledge areas—has enjoyed enormous popularity over the past six years. The article that introduced the concept1 has been one of the most requested reprints in the Harvard Business Review's history. Executive management programs and MBA curricula routinely devote hours to the subject, and executives often refer to their own and competitors' core competences as key drivers of strategy.
But despite all the attention this concept has received, its tangible impact on corporate performance has been mixed at best, as these statements attest:
"Core competence has too often become a 'feel good' exercise that no one fails."2
"True core competences are hard to define precisely and are often discovered retrospectively. That is, as you experiment, you define your competences by simply describing your successes and failures."3
"We talked to [core competence experts] and asked them to help us identify our core competences. But after having them work with our senior management, leading them through some group exercises, we really had a mess on our hands. We could not define what was...