Thoughts on Strategy - C K Prahalad (Prof. of Business, University of Michigan) - "exploiting the opportunity horizon is what leads to profitable growth …"

Here are three insightful quotations from Prof. Prahalad.

"If the only model we use represents the company as a portfolio of businesses, then cost reduction within those businesses appears to be the primary task, sometimes followed by focus on product line extensions. When we model the corporation as a portfolio of core competencies, we tend to focus on new application opportunities. This perspective enhances the focus of management on new business development."

"Managing the served market is important, but exploiting the opportunity horizon is what leads to profitable growth. We must not just defend markets, but create markets. Instead of incrementalism in price-performance there must be stretch price-performance goals; instead of simply benchmarking, currently popular with many firms, we must outpace the competition. We want to move from satisfying needs to anticipating needs; from being close to customers to leading customers; from thinking in terms of products to focusing on functionality and rapid market incursions; from focusing on core business to diversifying around core competencies. This is a very different mindset."

"... conclude with the following thoughts:

1. Growth is the agenda - not restructuring.
2. Dramatic growth will not take place if we focus on technology; it will take place when we focus on the organisation, with technology as a part of it.
3. Dramatic growth requires a radical rethinking of current management paradigms."

Extracted from article: "The Role of Core Competencies in the Corporation" (Research Technology Management - Volume 36 No. 6 - November-December 1993) C K Prahalad, Harvey C Fruehauf Professor of Business, Graduate School of Business Administration, University of Michigan.

Editor: Ron Wells