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Gary Cokins
Gary Cokins
Founder and CEO - Analytics-Based Performance Management LLC

Analytics-Based Performance Managent LLC
Manager, Performance Management Solutions

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Core Competencies and Business Analytics

Posted about 4 years ago

The recent death of C. K. Prahalad, a proponent of that organizations should build core competencies, is a sad loss. He was the co-author with Gary Hamel of the book Competing for the Future. His message was that a core competency is a specific factor that a business sees as being central to the way it, or its employees, works that fulfills three key criteria:

1. It provides consumer benefits
2. It is not easy for competitors to imitate
3. It can be leveraged widely to many products and markets.

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Wikipedia describes core competencies as particular strengths relative to other organizations in the industry which provide the fundamental basis for the provision of added value. Core competencies are the collective learning in organizations, and involve how to coordinate diverse production skills and integrate multiple streams of technologies. It is communication, an involvement and a deep commitment to working across organizational boundaries.

What is a core competence that organizations should be building now? A strong candidate should be business analytics. With hindsight, I should have included Prahalad in my article What Will be the Next Management Breakthrough? In this article I stated that Professor Tom Davenport of Babson College authored a January, 2006 Harvard Business Review article (and subsequent book) proposing that the next differentiator for competitive advantage will be predictive analytics. He has coined the phrase, “competing on analytics.” His premise is that change at all levels has accelerated so much that reacting after-the-fact is too late and risky. He asserts that organizations must anticipate change to be pro-active, and the primary way is through robust quantitative analysis. This is now feasible due to the combination of massive amounts of economically stored business intelligence and powerful statistical software that can provide previously undetected patterns and reliable forecasts.

Those organizations that embrace building the application of business analytics will enjoy a sustainable competitive advantage. Will I be correct? Let’s see about five years from now which organizations are ahead and which have fallen behind. To learn more about why organizations fail, read my article Why Do Once Successful Companies Fail?

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