ANALYZING THE COMPANY AS A PORTFOLIO OF CORE COMPETENCIES INVITES IN OPPORTUNITIES.

ANALYZING THE COMPANY AS A PORTFOLIO OF CORE COMPETENCIES

BY VIEWING AND ANALYZING THE COMPANY AS A PORTFOLIO OF CORE COMPETENCIES, SENIOR EXECUTIVES EXPOSE THE COMPANY TO A WHOLE NEW RANGE OF OPPORTUNITIES.

The quest for industry foresight leadership transcends mere scenario building and forecasting which often starts with a study and analysis of current factors and conditions and then gears up to anticipate or predict future conditions. By viewing and analyzing the company as a portfolio of core competencies, the senior managers of the company step up their quest for industry foresight leadership. Imagining the future, contemplating how the future could be and then focusing backwards to determine the necessary conditions that would support the imagined future becomes the next step.

Industry foresight must not only be based on trends in lifestyle, technology, demographics and geopolitics, but it should also be rooted in imagination. Imagining the future is a crucial step in creating it. Creating a powerful visual and verbal representation of an imagined future helps a company to create the future. Disney imagined a fun city of tomorrow dotted with run-down horse ranches. That dream materialised into EPCOT, a popular worldwide tourist destination. Much of the future will be obscure to any firm that is trapped in the myopia of its currently “served market” and the tradition of current product or service concepts and existing price-performance relationships.

For a company to compete in the future successfully, it must rise up to enlarge its “opportunity horizon.” A means of achieving this is for senior executives to view their company as a portfolio of core competencies instead of a portfolio of individual business units. This broad concept of a company transcends the narrow, specific product-market focus of business units. It is proactive for a company not to define itself in terms of a specific set of end product-markets, in order to free itself from the eventuality of declining fortunes of that market. Markets tend to mature while competencies evolve. Honda started out in the motorcycle business and then leveraged on its competencies in engines and powertrains to move into the lawnmower, garden tractor, marine engine and generator business. By viewing and analyzing the company as a portfolio of core competencies, senior executives expose the company to a whole new range of opportunities. A company gets at success by searching for opportunities that leverage its core competencies and by not allowing its search for new opportunities to be constrained by existing business definitions.

A firm’s current industry view is revealed by its idea of the boundaries and definitions of its business units. This limited view of their company often blinds business unit managers to emerging opportunities, especially when there are no structures for considering such opportunities.

To lever itself into a strong competitive position and actualise its vision of the future, a company often synthesises skills cutting across different businesses. Kodak championed this process with its “photo-CD.”

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