Management Gurus:Management Gurus:Hamel and PrahaladHamel and Prahalad

TU-91.110 Industrial Business Relations and TU-91.110 Industrial Business Relations and NetworksNetworks24.4.200324.4.2003

Group 10 Kimmo Jaakkola and Jari RuokolainenGroup 10 Kimmo Jaakkola and Jari Ruokolainen

C.K. Prahalad and G. Hamel in C.K. Prahalad and G. Hamel in a Nutshella Nutshell

• Coimbatore KrishnaraoCoimbatore KrishnaraoPrahaladPrahalad(Usually just C.K. Prahalad)(Usually just C.K. Prahalad)

• Short personal history:Short personal history:– Doctorate from Harvard Doctorate from Harvard

Business SchoolBusiness School– Professorships in Professorships in

University of Michigan, University of Michigan, INSEAD, and IIMINSEAD, and IIM

– Co-founder of Co-founder of PrajaPraja Inc., Inc., where he tried his wings where he tried his wings as an entrepreneuras an entrepreneur

• Gary HamelGary Hamel

• Short personalShort personalhistory:history:– Doctorate from the Doctorate from the

University of MichiganUniversity of Michigan– Professorship in London Professorship in London

School of EconomicsSchool of Economics– Founder and president Founder and president

of of StrategosStrategos, an , an international international management management consultancyconsultancy

C.K. Prahalad and G. Hamel C.K. Prahalad and G. Hamel Working TogetherWorking Together• The two met in 1977 in MichiganThe two met in 1977 in Michigan

– Hamel as a student, C.K. as an associate professorHamel as a student, C.K. as an associate professor

• In mid 1980’s started to publish together. In mid 1980’s started to publish together. • Their main works (in Their main works (in Harvard Business ReviewHarvard Business Review, ,

which has been their forum of preference):which has been their forum of preference):– Strategic Intent (1989)Strategic Intent (1989)– Collaborate with your Competetitors and Win (1989) Collaborate with your Competetitors and Win (1989)

(authoring also Y.L. Doz)(authoring also Y.L. Doz)

– The Core Competence of the Corporation (1990)The Core Competence of the Corporation (1990)– Competing for the Future (1994)Competing for the Future (1994)

• Also published as a book by Harvard Business School Press Also published as a book by Harvard Business School Press in 1994in 1994

Central Questions & Ideas Central Questions & Ideas Evolving in Their Work (1/2)Evolving in Their Work (1/2)• ””Strategic fit” Strategic fit” versusversus ”Leveraging Resources” ”Leveraging Resources” – –

the two main strategy schools according to C.K.P & the two main strategy schools according to C.K.P & G.HG.H– ””Maintaining strategic the fit” approach:Maintaining strategic the fit” approach:

• Trimming ambitions to match resources, search of sustainable Trimming ambitions to match resources, search of sustainable advantages, financial goalsadvantages, financial goals

– ””Levaraging resources” approach:Levaraging resources” approach:• develop resources towards ambitions, emphasis on learning, develop resources towards ambitions, emphasis on learning,

developing core competencies – the approach preferred by the developing core competencies – the approach preferred by the authorsauthors

• Incrementalisms Incrementalisms versus versus RevolutionRevolution– C.K.P&G.H argue that playing the same game better is no C.K.P&G.H argue that playing the same game better is no

way to success. Innovation and building on core way to success. Innovation and building on core competencies is the key!competencies is the key!

• Centralization Centralization versusversus Decentralization Decentralization– The authors claim that SBU thinking (decentralization) is The authors claim that SBU thinking (decentralization) is

fundamentally against developing core competencies fundamentally against developing core competencies effectivelyeffectively

Central Questions & Ideas Central Questions & Ideas Evolving in Their Work (2/2)Evolving in Their Work (2/2)• The importance of ”The importance of ”strategic architecturestrategic architecture””

– top-level strategy for developing new core top-level strategy for developing new core competencies, new functions, or evolving the competencies, new functions, or evolving the existing competenciesexisting competencies

– Heavy future-orientation, though actions need to Heavy future-orientation, though actions need to start now!start now!

• Core Competencies Core Competencies are the key to everythingare the key to everything– Clarifying the core competencies, building on them, Clarifying the core competencies, building on them,

and ”cultivating” a culture of core competenciesand ”cultivating” a culture of core competencies

Critique towards C.K. Prahalad Critique towards C.K. Prahalad and G. Hameland G. Hamel• Empirical evidence shows that ”leading the Empirical evidence shows that ”leading the

revolution”, or developing the core revolution”, or developing the core competencies first, does not necessarily lead competencies first, does not necessarily lead to successto success– Competition can build competencies later and via Competition can build competencies later and via

incremental innovation win the gameincremental innovation win the game• Hamel&Prahalad are not clear, or even Hamel&Prahalad are not clear, or even

present contrading views, about the role of present contrading views, about the role of top managementtop management– Occasional emphasis on bottom-up, emergent Occasional emphasis on bottom-up, emergent

views, even work place democracy, but at the views, even work place democracy, but at the same time heavy reliance on top management same time heavy reliance on top management visionvision

• Is ”strategic architecture” just a new name for Is ”strategic architecture” just a new name for ”strategic plan”?”strategic plan”?

C.K.Prahalad and G.Hamel and C.K.Prahalad and G.Hamel and Industrial Business NetworksIndustrial Business Networks• Competencies reach over company boundersCompetencies reach over company bounders• CollaborationCollaboration in interaction among the in interaction among the

companies is emphasizedcompanies is emphasized– especially from the learning perspective, on building especially from the learning perspective, on building

core competenciescore competencies– emphasis on learning on lower level of interaction emphasis on learning on lower level of interaction

(individual approch), not top-management(individual approch), not top-management

• Network approach, both internally and between Network approach, both internally and between companiescompanies– ””..excellence is a complex web of ... integration with ..excellence is a complex web of ... integration with

suppliers, value engineering ... It is difficult to exctract suppliers, value engineering ... It is difficult to exctract such a subtle competence ... but in a piecemeal fashion”such a subtle competence ... but in a piecemeal fashion”

Concluding & Summarizing the Concluding & Summarizing the PresentationPresentation

• C.K. Prahalad and G. Hamel, influential C.K. Prahalad and G. Hamel, influential thinkers in the field of strategy in 1990’sthinkers in the field of strategy in 1990’s

• Main contributions to the discipline:Main contributions to the discipline:– The development of the concept of The development of the concept of core core

competencycompetency• Both within the corporation and in a network of firmsBoth within the corporation and in a network of firms

– The emphasis on long-term strategic The emphasis on long-term strategic architecturearchitecture

– Opposition to short term cost-cutting and Opposition to short term cost-cutting and incremental business developmentincremental business development