Leach, David
(2010)
“Are the Core Competencies of Cosmic Solutions sufficiently dynamic to enable the firm’s strategic vision?”.
[Dissertation (University of Nottingham only)]
(Unpublished)
Abstract
Hamel and Prahalad (1990) state core competences are the ‘collective learning in the organisation’ and that they are the result of ‘complex harmonisation of individual technologies and production skills.’ However, this is a point in time assessment and sustained strategic advantage is gained from an ability to evolve over time, Teece et al, (1997) state ‘the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments’ is key for sustained strategic advantage - they call this dynamic capabilities.
This work states that competencies can be seen as entry barriers, a firm needs certain competencies to be competitive and to join the market, but to gain competitive advantage, the firms competencies need to be embedded into the core operations of the firm. Hamel and Prahalad (1990) state core competences are the ‘collective learning in the organisation.’ and that they are the result of ‘complex harmonisation of individual technologies and production skills’ However, in order to get sustained strategic advantage, a firm must evolve and change with its external environment, this is where Dynamic Capabilities are needed.
Cosmic solutions are a successful, market leading software development and consultancy firm who have competitive differentiation through its core competencies. Analysing the fieldwork results against Barney (1991) VRIO framework; we can see that the core competencies of Cosmic are Software Development, Sales Processing and Data Management Services. These core competencies provide a competitive differentiator for Cosmic today, but this work asks can they deliver sustained competitive advantage?
The conclusions of the work draw on analysis of the fieldwork results against best practise methodologies across Software development, sales processing and account management before defining that the working practises are sufficiently aligned to the external environment to suggest that Cosmic do have the Dynamic Capabilities needed to deliver sustained strategic advantage. The business has recognised that its core assets are its people and they have engineered the whole sales and account management operations to maximise the value this asset can bring to the organisation.
The work moves from its conclusions to recommend that moving forward Cosmic should;
• Start working on a way to segregate the sales and technical resource without losing all of the current benefits of having highly technical staff talking to the customer.
• Develop ways of creating open innovation, to open up more customer driven innovation
• Reduce organisational risk by harnessing some of the retained knowledge of the staff and turn it into explicit knowledge in the form of manuals and process definitions
• Recruit on the basis of behaviours and not solely technical skills. The ability to engage with customers and work within a rapid prototyping environment is key to enabling the competitive differentiation
• Continue to use the Agile Software Development methodology for customer facing work, but start to use the Waterfall methodology for the development of Range Master V2 and include customer feedback in the design and build process.
The work moves on to acknowledging that having access to a limited set of resource at Cosmic, may have provided a biased judgement on the way the business operates and that interviewing clients and customers upstream and downstream of Cosmic would be interesting to see if the perceived value created by the product is the reality in the eyes of the customer. This information would provide a good insight into how well Cosmic are adapting to the changing external environment.
The project closes by identifying future research opportunities:
1. Research how much of the development of business process was based on senior management experience and how much was based on best practise and staff feedback. This would be interesting to see how these decisions to work in a certain way have been taken and how the staff are involved in providing feedback on what works well and what does not work so well. By undertaking this additional research, a more complete picture would be created on how the organisation learns and adapts.
2. A wider review of products in the market have provided further refined insight into what is the key strategic differentiator – is it the product or the approach of the company.
3. Undertaking the same interview questions in twelve and twenty-four months and to undertake the VRIO analysis again to see if the core competencies have changed. To support this it would be beneficial to include interviews with clients to gain their perception on how well Cosmic adapt to a changing market.
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