Measuring Competencies in Lean and Innovative Companies

R&D Metrics Dashboards Should Include Pure Innovation, Advanced Development, IP, & Competency Measures, July 21, 2011, discusses four areas of R&D and Product Development where the need to measure is increasing due to the increasing importance of the activity.

One of these areas is “competency measurement.” While there are hundreds if not thousands of competencies that companies may be concerned about, and those competencies differ significantly by industry and by a company’s competitive strategy and position, the subject can be simplified by thinking of two basic types that apply in all cases. In short, there are “Core Competencies” and “Functional or Technical Competencies.”

In most companies, there is still little distinction between these two groups. That is perhaps to be expected because initial codification did not appear in literature until the early 1990s and the subject matter is still relatively new. There are great differences between these two groups however.

Core Competencies refer to the “handful or less of the capabilities of a given company that enable it to compete and succeed in its industry and/or relative to its competitors.”  The best description and context that I have come across for Core Competencies was published by C. K. Prahalad in his 1994 book entitled “Competing For The Future: Breakthrough Strategies For Seizing Control Of Your Industry And Creating The Markets Of Tomorrow,“ which he co-wrote with Gary Hamel.  In their book, the authors offer that even the largest of companies have only one to three Core Competencies.

In contrast are the myriad of functional and technical competencies that must be built and maintained for individuals, cost centers, departments, and business units for the company to compete and succeed.  Functional and technical competencies generally enable the resultant core competencies.  In rare cases a functional or technical competency may also be a core competency, but usually not.

Measuring Competencies in Lean and Innovative Companies [Machine Design – October 10, 2013], discusses key factors that are driving the growth in functional and technical competency measurement.  Lean practices started the ball rolling in the 1990s.  Globalization changed the basis of competition for many company companies in the 2000s.  The need for repeatable “factory-like” product innovation is putting the capstone in place in the 2010s.  Seasoned product developers are having different reactions than are folks that have entered the work force more recently.