The Core Competence of the Corporation
The Core Competence of the
Corporation
C.K. Prahalad and Gary Hamel
Harvard Business Review
90311
HBR
MAY–JUNE 1990
The Core Competence of the
Corporation
C.K. Prahalad and Gary Hamel
The most powerful way to prevail in global competition is still invisible to many companies. During the 1980s, top executives were judged on their ability to restructure, declutter, and delayer their corporations. In the 1990s, they’ll be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible— indeed, they’ll have to rethink the concept of the corporation itself.
Consider the last ten years of GTE and NEC. In the early 1980s, GTE was well positioned to become a major player in the evolving information technology industry. It was active in telecommunications.
Its operations spanned a variety of businesses including telephones, switching and transmission systems, digital PABX, semiconductors, packet switching, satellites, defense systems, and lighting products. And
GTE’s Entertainment Products Group, which produced Sylvania color TVs, had a position in related display technologies. In 1980, GTE’s sales were $9.98 billion, and net cash flow was $1.73 billion. NEC, in contrast, was much smaller, at $3.8 billion in sales. It had a comparable technological base and computer
C.K. Prahalad is professor of corporate strategy and international business at the University of Michigan. Gary Hamel is lecturer in business policy and management at the London Business School.
Their most recent HBR article, ‘‘Strategic Intent’’ (May–June
1989), won the 1989 McKinsey Award for excellence. This article is based on research funded by the Gatsby Charitable Foundation.
Copyright
businesses, but it had no experience as an operating telecommunications company.
Yet look at the positions of GTE and NEC in
1988. GTE’s 1988 sales were $16.46 billion, and
NEC’s sales were considerably higher at $21.89
billion.
Corporation
C.K. Prahalad and Gary Hamel
Harvard Business Review
90311
HBR
MAY–JUNE 1990
The Core Competence of the
Corporation
C.K. Prahalad and Gary Hamel
The most powerful way to prevail in global competition is still invisible to many companies. During the 1980s, top executives were judged on their ability to restructure, declutter, and delayer their corporations. In the 1990s, they’ll be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible— indeed, they’ll have to rethink the concept of the corporation itself.
Consider the last ten years of GTE and NEC. In the early 1980s, GTE was well positioned to become a major player in the evolving information technology industry. It was active in telecommunications.
Its operations spanned a variety of businesses including telephones, switching and transmission systems, digital PABX, semiconductors, packet switching, satellites, defense systems, and lighting products. And
GTE’s Entertainment Products Group, which produced Sylvania color TVs, had a position in related display technologies. In 1980, GTE’s sales were $9.98 billion, and net cash flow was $1.73 billion. NEC, in contrast, was much smaller, at $3.8 billion in sales. It had a comparable technological base and computer
C.K. Prahalad is professor of corporate strategy and international business at the University of Michigan. Gary Hamel is lecturer in business policy and management at the London Business School.
Their most recent HBR article, ‘‘Strategic Intent’’ (May–June
1989), won the 1989 McKinsey Award for excellence. This article is based on research funded by the Gatsby Charitable Foundation.
Copyright
businesses, but it had no experience as an operating telecommunications company.
Yet look at the positions of GTE and NEC in
1988. GTE’s 1988 sales were $16.46 billion, and
NEC’s sales were considerably higher at $21.89
billion.