Core competency has to do with the degree of efficiency and expertise demonstrated in a particular area. While the term was really developed for use in business settings, it is used today in all sorts of settings. Along with use in corporations, references to core competency can be found in such diverse settings as faith-based organizations, non-profits, and even in the home.
Also referred to as core capability, core competency focuses on something that is done especially well by an individual or entity. In terms of a business setting, this type of competency is understood to exist when three specific elements exist. The company is proficient at providing consumer benefits, offers something that is unique and difficult for the competition to emulate, and has a product of service base that can serve a wide range of consumer markets.
It is important to note that core competency does not emerge full-blown. In most cases, it is necessary to actively cultivate and develop this level of business competence. A company may move toward this competency over a period of years, slowly refining operational and marketing processes, as well as enhancing the product line along the way. As the company’s competitive edge increases, it moves closer to a true state of core competency.
A core competency can develop in all facets of the business. For example, the company may develop such a strong management team that the leadership of the business allows the company to grow rapidly into new markets. The sales and marketing efforts may cultivate advertising campaigns and sales strategies that are different from the competition and are successful at capturing a wider range of consumers and markets. Even in the area of human resources, the competency can emerge as the human resource effort becomes proficient at maintaining high morale among the employees and thus reducing employee turnover significantly.
While the general idea of core competency has been around for a number of years, the process was first defined by C.K. Prahalad and Gary Hamel in 1990. Outlined in an article published by the Harvard Business Review, the authors defined the basics of the concept and also offered examples that were contemporary for the time. Over the years, these same fundamentals have come to be the benchmark that must be met in order for core competency to be present.