Enterprise in Action: A Guide To Entrepreneurship

Chapter 2

Destination: Core Competence

The desire of established companies to concentrate on that indispensable thing that they believe they do best and to delegate the rest to outsiders is a change that has driven new business creation for more than 20 years. Indeed this outsourcing movement is a change that became a trend that has become an established philosophy.

But this change was a long time in the making and as Victor Hugo has remarked:

There is nothing more powerful than an idea whose time has come.

In other words it is worth looking at the genesis of the core competence movement.

Les trentes glorieuses

The French refer to the period after the Second World War (1939–1945) as les trentes glorieuses, the 30 glorious years of growing prosperity and economic expansion in the West.

Companies in the West could sell everything they could make. These companies did not have to be world class, just modestly capable. The challenge was to avoid any interruption of production caused by shortages or failures by suppliers or partners. The answer to the challenge was to internalise, to take into the company everything you could, believing this would make you more secure. Vertical integration was popular, where a company would integrate upstream by buying its suppliers or component manufacturers and downstream by acquiring the means of distribution. Some even bought their own PR firms and advertising agencies. And diversification was the fashion. After all, if in John F. Kennedy’s famous ...