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Unformatted text preview: Abstract: The article examines the origins of the concept of core capabilities, how it remained dormant for a number of years, and why it has reemerged as a powerful strategic concept in organizational dynamics. As a legal entity, the corporation was created to have a separate existence from the individuals who run it. Theoretically, a corporate form of organization could exist in perpetuity, unfettered by the biological limitations of human life spans. Strategy, when viewed as portfolio planning, often puts management into the role of bankers or traders, expected to buy and sell or manipulate financial resource allocations between strategic business units to inflate stock prices, all in the name of increasing shareholder value. Capability-based organizations take the traditional strategic task of finding the best fit between a firm's resources and existing business conditions and markets to a new level. They define their resources in terms of the capabilities they have developed for adding value for their customers and other stakeholders. To become capability based, organizations need to explore their value chain in two ways. First, they must search for the specific points along the value chain where the margins are greatest between the value stakeholders' place on what is added and the cost of adding it. Second, they need to learn how to fashion a series of business processes into feedback loops that begin and end with the needs of the customer and other stakeholders, thereby determining what special capabilities are critical to meeting the needs of their key stakeholder groups. Strategy planning that depends on making structural changes in a company's portfolio of products and markets to create value can be very misleading. Author Affiliations: 1 Managing partner, Long & Vickers Inc. 2 Certified Management Consultant (CMC), Institute of Management Consultants 3 Member, Association for Quality and Participation, the international Registry of Organization Development Consultants 4 Member, American Academy of Political Science 5 Member, Association for Quality and Participation, and Women Executives Full Text Word Count: 7655 ISSN: 0090-2616 Accession Number: 9508221941 Persistent link to this record (Permalink): http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9508221941&site=bsi- live Cut and Paste: <A href=" http://search.ebscohost.com/login.aspx? direct=true&db=bth&AN=9508221941&site=bsi-live ">Using Core Capabilities to Create Competitive Advantage.</A> Database: Business Source Complete USING CORE CAPABILITIES TO CREATE COMPETITIVE ADVANTAGE The standard planning question, "What business are we in?" has become obsolete. The more cogent question is this: "What capabilities do we need to develop and nurture to take advantage of changing conditions?" The traditional approach to strategic planning has taken some hard hits of late. Many companies are dismantling their large, formal planning departments, and Henry Mintzberg devotes five of...
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This note was uploaded on 01/14/2011 for the course MBA 581 taught by Professor David during the Spring '10 term at University of Phoenix.
- Spring '10