A core competency is a specific resource that an organisation sees as being central to the way it works.
A core competence fulfils three criteria:
- It provides direct customer benefit
- It is not easy for competitors to replicate
- It can be leveraged widely to many products and markets (has scope).
A core competency can take various forms, including technical/subject matter know-how or a particular business process. It can also be the possession of a key resource such as close relationships with customers and other suppliers in the value chain. An important aspect of a core competence is its embedded nature in the organisation’s activities – true core competences are difficult to extract from an organisation in a simplistic way.
Core competencies are strengths relative to other organizations in the competitive environment that provides the fundamental basis of the added value the organisation provides. Core competences are usually to be found in the value added parts and processes of organisations and in the supporting infrastructure. Core competencies can be likened to the collective learning in organizations that takes place and involves how to coordinate diverse production skills and integrate multiple streams of technologies. Core competence in technology terms also accumulates over time and becomes embedded in the ways of working and practices of the everyday. In general few organisations are likely to build leadership in more than five or six fundamental competencies at any one time.