For an industry that prides itself on its analytical ability and abstract mental processing, we often don't do a great job applying that mental skill to the most important element of the programmer's tool chest: ourselves.

The phrase “core competence” or “core competency” has been one that seems to have been around forever. In fact, it's been so widely used that it feels like it's lost its original meaning which was: a strategy to drive business development and expansion.


In 1980, Michael Porter wrote Competitive Strategies, a book that described different forms of competition across all sorts of endeavors and industries. In the book, he described “the five forces of competition,” putting into place a basic framework for how corporations interact and compete against one another. From understanding these five forces, he stakes out ground for describing three generic strategies for sustainable competitive advantage.

As a reaction to his work (which I'll talk about in a future column), two other writers, Gary Hamel and C.K. Prahalad, chose to take a diametrically different perspective to their investigation; where Porter chose to see the competition as something purely between corporate entities and driven by three generic strategies, Hamel and Prahalad chose a specific corporation, looking inside for the competitive advantages that a corporation brings to its customers. These advantages, which they termed “core competencies,” were the key things that a corporation did well, and were the levers by which a corporation could gain an advantage in other related, but not identical, markets.

For Example…

All of these discussions around competition and competitive strategies were taking place during the 80s and early 90s, when American manufacturers were finding themselves under assault from Japanese competitors. After World War II when Japan's industry was (quite literally) flattened rubble, American manufacturing was clearly the king of the landscape. But within just thirty or forty years, Japanese products were not only of higher quality than their American counterparts, but of lower price. Conventional wisdom had always held that lower-priced goods had necessarily to be of inferior materials or construction, and therefore an inferior product; the Japanese experience was clearly disproving that.

Initially, Western companies were taken off-guard by this surge of Japanese goods, but over time, managed to catch up in both quality and price. At the time when Hamel and Prahalad began their study, the Japanese were staging a flanking maneuver by expanding into other markets. Western firms weren't able to engage with them in those other markets, and as a result, it felt like Pearl Harbor all over again. How could this happen?

The secret, Hamel and Prahalad insisted, was not that the Japanese had better managers or better technical capability - any deficiencies between Western and Japanese firms on that score had been erased by this point. The secret was instead that the top management within the Western firms simply didn't see what their basic competitive advantage was. They didn't see where the company's core competencies - the things that they did better than anyone else - lay.

Consider, for a moment, the case of Honda, a car manufacturer. A significant amount of material goes into the manufacture of an automobile, but whereas Honda saw its core competency in the engine and power train, Chrysler saw those as “just components” and frequently outsourced them. Then, when Honda leveraged their expertise in engines and powertrains to create (as an example) four-wheeled off-road buggies, Chrysler had to find entirely new suppliers to produce the necessary engines and powertrains to create the competing off-road buggies, usually at greater cost and inferior quality than what Honda could produce.


A core competency is, according to Wikipedia, “a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace.” Or, put in a more generic way, something that an entity (a firm, but this could easily apply to individuals) does far better than most others. It consists of three characteristics:

  1. It provides potential access to a wide variety of markets.
  2. It makes significant contribution to the perceived customer benefits of the end product.
  3. It's difficult for competitors to imitate.

At the corporate level, core competencies include things like the manufacture of small electric motors (Black & Decker), optics and precision mechanics (Canon), or making chemical compounds that stick “just enough” for a particular task (3M). In each of these cases, the companies that own those particular core competencies are able to leverage those abilities to enter (or in some cases, create) alternative markets that don't require changing the way in which they do business but are extensions of what they already do very very well.

They key thing to note here is that a company that makes a single, ordinary component very very well doesn't really qualify as a core competency. Imagine for a moment that you own the firm that makes small pushpins for tacking paper onto a corkboard: Not only are pushpins pretty easily imitated by competitors, but pushpins can't really be said to “significantly contribute” to the customer. One pushpin is pretty much like any other pushpin.

Consider another case nearer and dearer to our own hearts: Apple. If we were to begin to analyze Apple's core competencies, the iPod and the iPhone would easily be case studies #1 and #2. With the iPod, Apple was clearly entering an already-saturated market, where established players had already eked out their single-digit-percentage market share and jealously refused to surrender. On top of that, new players were entering (literally) each day. The same thing was true of the iPhone. In each case, however, Apple not only survived, but came to dominate that market within twelve to twenty-four months (depending on when you start counting).

The secret (it seems to me) was that Apple recognized their core competency as not being either an electronics or a computer corporation, but as a “user-experience firm.” In other words, Apple took its experience building user interfaces (for the Mac, for example) and more importantly, seeing how consumers interacted with their devices, and leveraged that to create a device that wasn't something that competitors could easily imitate. The iPod, remember, originally came out in just one flavor, and just one size. While competitors were throwing features and a variety of options at consumers, the iPod was strikingly simple: You could get it in one of two sizes. The Zune could pick up AM and FM radio; the iPod never even bothered.

In hindsight, it seems fairly obvious. But then again, hindsight is always 20/20.

... and Practice

So what does all this talk of core competency do for us as software developers?

There are two levels to apply this conversation:

What is your company's core competency? If you work for a firm that hasn't really established what its core competencies are, bringing this up to your senior management and asking them this question can help them to establish what those are - or perhaps begin the realization that your company is headed down the wrong path. For example, many software consulting companies dive into software product development because they believe that “we have smart people who know how to build software for other people, so let's build software for ourselves that we can sell.” (I've personally been a part of two firms that went down this path; in neither case has it been spectacularly successful.) This implies, then, that the consulting company sees its core competency entirely in terms of the people they have working for them, which is dangerous, because turnover rates are horrendous within our industry, and that means the company's core competency is always in deep danger of walking out the door. (And, quite frankly, “our employees” doesn't fit the three criteria established above 98% of the time.) Firms need to find what their core competencies are before branching into alternative markets, because without that, upper management is just throwing money and effort into a dark well, hoping that a fish will leap into the net.

What is your core competency? Individuals have core competencies, too, and figuring out what those are (there are usually only a few, so if your list stretches on to more than a dozen, you're missing something about the concept) makes it vastly easier to write your resume and figure out whether you're vulnerable in the next round of layoffs.

For sake of discussion, let's assume that you're currently a developer working on a company's e-commerce portal. What are your core competencies? If your first answer is “C#,” consider the three criteria again. The language certainly gains you access to additional markets (places at which you can sell your skills), but how that manages to bring significant benefit to the customer's perceived value chain is not clear when, really, any language could provide the same benefit. (E-commerce portals are written in just about every programming language under the sun.) And it clearly fails the third criteria, because it's easily imitated: New C# programmers emerge every day.

But if you consider your core competency to be “Expertise with e-commerce portal development,” now you begin to gain some ground. Lots of companies need e-commerce systems (access to additional markets). Those companies will need people who understand what the various security concerns are, the different tooling options, and what the different interstate and international implications might be (significant contribution to the perceived customer benefits of the end product). Finally, all that knowledge that resides in your head would be difficult to write down and hand off to somebody else that might be brought in to replace you (difficult for others to imitate).


Core competencies aren't always unique - Honda and Kia are both competitors in the automobile market, for example - but each may see their core competencies as different. Theoretically, a company establishes internally the vision around its core competencies through a “strategic vision” or “mission statement”… but that only works if the people developing that statement really understand the concept of what a core competency is and have identified those competencies that fit the three criteria.

Regardless of what the company sees as its core competencies, as an individual, you can choose to establish your own core competencies. And from that point forward, when any new technology or new tool or new idea emerges, you have a measuring stick - a “crap-meter,” if you will (as in “do I give a crap”) - against which to measure the new thing, to determine if it is something that affects your core competency. And that helps you better define who you are and what you do, which in turn makes it that much easier to explain it to those who consume our work: our management and/or our customers and/or our clients.

What's your core competency?