Using core competences to develop new business

Abstract

A S THE INDUSTRIAL and economic climate of the 80s becomes history, the continued absolute and relative decline of key manufacturing industries in the US and Europe grows apparent. The doggedness of the recession and the continued fierce competition from Japan and other Asian countries, together with rapid technological change in many areas, produce an environment as harsh and demanding as any time since the end of World War II. In an environment such as this, the basic credo of new business development (NBD)-namely that ‘more of the same won’t do’becomes an axiom, a critical challenge to find and implement new strategies for growth. However, as described by Bakker and Wexler,’ NBD is a high-risk activity with a substantial likelihood of failure. Difficulties in developing new strategies for growth arise not from a corporation’s lack of initiative, but rather more often from the corporation’s inability to successfully identify the best strategies: ‘Without a proper diagnosis [of the business], managers cannot choose the best moves to defend or enhance the current position’ (p. 1).2 So much of the NBD activity in which companies engage is dominated by short-term thinking, lacking the fundamental underpinnings suitable for NBD strategy: ‘When faced with a business problem . . . company discussions on how to generate additional growth focus on only two options: new products and acquisitions [of companies]‘(p. 73.l Thus, this approach to the NBD process has commonly reflected the view that Hamel and Prahalad3 describe when discussing existing products as the ‘jumping-off point’ for business growth and that indeed most companies are still competing on the price/performance attributes of current products (with a new model/generation in the pipeline). The last few years have seen a shift from large scale diversified conglomerates to a concentration on core In the 1 ?$s, with thtto-daq’j3Bt) nsstrategic intent and misfii-imply strongly that the NBD process &elf should be considered an essential core competence for the modern cdrporatidn.