I, The Absolute

Archive for June 15th, 2005

Core competence

Posted by itheabsolute on June 15, 2005

The strategy Prof tells that the article by name “the Core Competence of the Corporation” is the highest sold article ever published by HBR. The term “ Core Competence” was coined by Hamel-Prahalad duo in 1990 leading to the publishing of this article. The article heavily criticizes the American model of management (I am being very careless in using this phrase, but for the sake of understanding I choose to retain this phrase) in general and SBU modeled organization structure in particular. What they claim is that in a SBU modeled organization people do not rally around the organization’s core competence, if ever it is detected or built, but around the SBU focused and inward looking strategies which will hurt the organizations in the long run. Lack of focus on core competence, either in identifying or nurturing it, is a major flaw of the prevalent models of management. Japanese companies, in contrast, have built themselves around their core competencies. Core competence is something which is translatable into many products, scalable and is carry-forwardable into future. All of a company’s products emanate from core competence. Last but not least, the people who are bearers of this knowledge are the key differentiators and organizations have failed in managing and leveraging people.

Organizations can have core competence. Organizations are extensions of human beings. Can human beings have core competence too? Yes. I have my own core competence. But do I know what it is? If I know what it is, have I built my life, career, and my leisure time activities around my core competence? These are the questions that come to my mind. If my core competence was ability to relate to people there is no point being in an industry or job where I never interact with people. If analytical skills are my core competence then, try however much I want, I will not succeed in a people oriented job. Same rules apply for personal life too. So it is quintessential that I discover my core competence and rally around it to building and bettering my life. How do I know what my core competence is? Descartes, the famous Mathematician-Philosopher, says that he sat meditating one day thinking about each day of his entire life and when he woke up (after many hours), he had become enlightened. It is a good, but not the easiest, way to discover what one is. Other tools are MBTI tests or some personality profiling tests. But these alone, without some amount of reflection, will not help. Here I go, back to my desk to define my core competence.

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The purpose of my ISB-life

Posted by itheabsolute on June 15, 2005

Global Economics (GE) is my favorite subject for the Term II. Perhaps I should have become an economist. The reasons for my liking are a, the subject gives a macro framework within which all firms – hence managers – operate; b, I have much better chance of handling this subject than the others.

An aside: People working in dealing rooms would know, the US comes out with scores of economic data. There is one data release almost every day. And every FOMC (meeting of Federal Bank members) meeting is highly awaited because it decides the FED rate (akin to our Bank rate announced by RBI). Why do the US data affect Indian players? We operate in global economy. Foreign Exchange market is the largest market in the world and huge amounts of profits, or losses, are made on foreign exchange trading. US$ – Indian Rupee (INR) movements are highly affected by the US data. So is the stock market. The FII (foreign institutional investor) inflow into stock markets will depend on the interest rate differential between the US and India (even after adjusting for inflation). In perfect markets, there is no arbitrage; but there are no perfect markets. The FII inflow will decide how much of INR is available in the market, which in turn will decide bond rates and call rates.

In nutshell, the entire economic-financial system is an intricate web, the understanding of which is ‘far from easy’ and a ‘highly desirable thing’. These are the kinds of things which I will learn in GE. What I have known is, what can be called, the tip of an iceberg. I look forward to knowing more of GE. I will give more updates on GE as the term progresses.

Not to say that Competitive Strategy (CS) is any less important and interesting. I spent a whole lot of time browsing the past issues of Harvard Business Review (HBR). There is a huge wealth of information and rich stock of ideas on strategy. But Strategy is not science. It is an art, or shall I call it intuitive. If Porter says one thing; Hamel & Prahalad say something else. Late Sumantra Ghosal has his own views. It is quite easy to get lost in the deluge of these ideas, each great by its own measure, and end up getting confused on what strategy is or what strategy is not.

As far as this term and the coming terms are concerned, I have ‘decided’ that I am going to change my approach to studying. I am not going to stick to the prescribed syllabus and readings. I am going to go beyond these and dig deeper into the related, well-known books and articles. The important objective is to get a thorough hang of the subjects through which I will develop “my own independent ideas” on each of the topics/subjects. Because when I go back to the industry and make decisions, I cannot keep resorting to a Porter/ Kotler /Galbraith model to help me make and explain my decisions, of which I will be the owner and the consequences for which I will be responsible.

Having made this decision and discovered the true purpose of my ISB-life, I feel extremely happy and satisfied.

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