Relevance and importance

A core competence is an activity or process that gives advantage because it fundamentally underpins value in the product or service, is performed better than competitors and is difficult for competitors to imitate. Design and technology have potential to create, enable or destroy core competence.

In today's demanding business environment staying competitive requires constant attention to the improvement of business processes and/or products and services. An important element in this ongoing effort is to identify and apply new design and technology to your business. For the SME technological developments may present both a threat and an opportunity. An SME must attempt to not be put at a disadvantage by new developments but at the same time, if it is agile, it may be better placed to make rapid progress in this area.

Overview

Acquiring design or technology expertise can take place in three ways

In house development

	Favoured method if the technology or design is key to competitive advantage.
	Feasible if the company already has knowledge of the technology/design and the market opportunities.
	Appropriate if first-mover advantage is sought.
	Possible if the complexity is not too great.
	Requires financial and commercial risk.

Alliances / collaboration

	Appropriate if technology/design, although important, are not underpinning competitive advantage.
	Favoured if company is looking to follow rather than lead.
	Useful if there is too much complexity or market knowledge is insufficient. Organisational learning can take place and risks are shared.

Acquisition of competitors or rights/licences

	Appropriate if speed is very important and there is not enough time for learning
	Favoured if complexity is high or the credibility and source of the technology/design are important.

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Recommendations and practical tips

	Fully identify the technology/design needed. You will then be in a better position to execute the best acquisition strategy.
	Have a general awareness of the applicable technology/design.
	Understand the capability, scope and breadth of experience of your IT and design staff.
	Consider the importance of the technology/design to your core competence.
	Understand the risks involved in the acquisition strategy and the willingness of the company to take those risks.
	Decide whether you wish to be a follower or a leader and how important the time scale will be.

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Warnings and potential pitfalls

Ensure your IT/design staff are not stretched too thin and have sufficient depth of product knowledge in the relevant technology/design.

Understand the implications and demands on the company and management if you decide to produce in-house, under licence, an established technology.

The fruits of your efforts may be short-lived. Consider how long it will be before the technology or design will need to be renewed and the acquisition strategy will have to begin once more.

Future developments in the market may not be tied to just one dominant technology or design. It could be risky to put all your eggs in one basket.

The technology or design is not necessarily a core competence in itself and may be imitated by competitors. Rather the advantage may be found in the process of linking various technologies or designs.

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