How to Apply Core Competence Theory to Refocus Your Strategy [How-To Guide #019]

Apply the principles of The Core Competence of the Corporation by Gary Hamel and C.K. Prahalad

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What Is Core Competence Theory and Why It Matters

Origin: Introduced by Gary Hamel and C.K. Prahalad in their 1990 Harvard Business Review article, The Core Competence of the Corporation.

Core Idea: Long-term competitive advantage comes not from products or markets, but from a company’s unique, hard-to-replicate capabilities—its core competences.

Why It Matters: Most firms over-index on current products or market share. Core competence theory reorients strategy toward capabilities that can drive multiple future growth paths. It is a tool for resource focus and strategic clarity.

Use Case: Canon’s expertise in precision mechanics, optics, and microelectronics allowed it to enter new markets beyond cameras—including printers, scanners, and even medical imaging—without losing strategic focus.

Step-by-Step Guide: How to Implement Core Competence Thinking

Step 1: Define Your Core Competences

• What to do: Identify the few (2–5) deep capabilities that meet all three of Hamel & Prahalad’s criteria:

  • Provide access to a wide variety of markets

  • Make a significant contribution to perceived customer benefits

  • Are difficult for competitors to imitate

• How to do it: Run workshops with cross-functional teams. Analyse historical wins, R&D strengths, and cross-product enablers.

• Who: Strategy, product, and functional leadership.

• Time needed: 1–2 weeks.