Define yourself

Core competence – I rate this as one of the most pedestrian concepts that unfortunately gained considerable mind share among consultants, corporate sector and even the government. It is fundamentally flawed to consider an organization on lines similar to an individual. Unfortunately, this completely inappropriate comparison let loose a vast body of inane debates. Since the mid to late 1990s, when this concept gained currency, it has ruled the thinking of people working in or with the corporate sector, and the media, leading to such puerile questions such as ‘Is this in sync with your core competence?’ The environment had become so sterile that you could predict what some consultant would say: if a company were in multiple businesses they would be asked to focus and if they were in one line of business they would be asked to diversify. Yes, the other pole of core competence was diversification.

Building any business demands understanding of what works and an accumulation of the right skills. The key question is whether you can visualize its trajectory and take it further. Warren Buffet used to always maintain that he bought only those businesses that he understood. The entrepreneur or the CEO has to have the right blend of vision and granularity to see ahead and grasp the specifics to pull off a new venture. Great businesses are built around great ideas but will fall by the way side without robust execution. While an individual is limited by the amount of time he/she can devote to acquiring new skills in one lifetime, that is not applicable to an entity because, if it didn’t have the required skills, it could always acquire them through training for employees or just buy a business.

Any growing business will at some stage confront, among others, these related aspects: delegation, span of control and organization structure. Even a control-freak business leader will have to delegate! Span of control is more than just the number of people directly reporting to you. In an organization with growing and expanding businesses, it has to do with how much quality time senior management can allocate to all businesses and what kind of delegation is practised. This is why organization structure becomes an important dimension; many of you will recall the intense debate over flat structures, hierarchical structures, matrix structures and so on. For example, many conglomerates have found the holding company form an ideal vehicle to exercise control while facilitating growth.

The business of technology & its influence    

Ever since information technology became a leading business ushering in many other businesses as it matured, along with changes in other businesses especially automobiles, there has been a dramatic change in thinking about business. Businesses began to speak in terms of the range of possibilities opening up and the best way to seize them. Phrases like ‘serial entrepreneur’ became common currency as many realized that it was possible to set up more than one business, the key ingredient being the ability to marshal appropriate resources. Look at leading technology companies today; they have grown way beyond what they began with, responding to possibilities opened by their own technology and others’.

Among the earliest in this line of thinking was Microsoft when it ventured into the games business by creating Xbox, moving beyond its bread and butter business of operating system. Amazon moved from e-commerce to the cloud setting up a platform called EC2, which was simply elastic cloud computing, and later into entertainment by setting up Amazon Studios. Steve Jobs ventured into making animation movies. Not to mention one of the most decisive changes in global business – Apple getting into music and phones, moving from PCs and OS. And into film distribution!

Suddenly, the rigid lines considered sacrosanct between software and the physical world blurred. Google acquired Motorola getting into a physical business and later Microsoft launched Surface tablets. Nokia set up an operating system called Symbian. A social network such as Facebook went way beyond its original business to become a global giant in communication and social media and now something else. Underwritten by the huge cash flow from search, Google has ventured in all sorts of business including autonomous vehicles. In India, Reliance Industries have moved into so many other businesses each becoming a giant in itself.

Meanwhile, whole businesses just vanished, the most glaring being cameras; a high-end camera market continues though. Entrenched businesses just disappeared – Nokia and BlackBerry chief among them. All unsettled by technology and what it made possible, leading to dramatic changes in customer expectations, with what was once the most treasured feature of products becoming the cause of their downfall. BlackBerry, the most secure mobile phone in the world because it didn’t allow any third party apps lost precisely because of that. Nokia, known for its sturdy body, lost as customers preferred elegant and beautiful phones.

In general, ever since the commercialization of HTML, technology has been the most unsettling and enabling factor, deeply influencing customer expectations in the process, which, in itself, has caused changes.

New horizons

Boldness in thinking is now at a premium, supported by the ability to carry it off. Consider Sony’s intended move to make electric vehicles (EVs). According to The Wall Street Journal on January 5, 2022, (https://www.wsj.com/articles/sony-looks-to-sell-its-own-electric-vehicles-11641356899?mod=hp_featst_pos3), “Sony Group Corp. said it would create a car unit and explore entering the electric-vehicle market, in another sign of how the electronics and car businesses are overlapping”. As WSJ notes, “At the CES technology conference in Las Vegas, Sony showed off a prototype seven-seat electric sport-utility vehicle with all-wheel drive”. Sony does plan to sell vehicles under its own brand rather than merely supplying its technology to other car makers, establishing a company called Sony Mobility in the spring. Readers will recall that almost all auto companies are making EVs, although the most visible company in the game is Tesla. Sony has been thinking about it for a while. “In an interview in September 2020, Sony Chief Executive Kenichiro Yoshida expressed strong interest in getting into the vehicle market. He said he had felt for years that the maker of PlayStation videogame consoles and other electronics should “make something that moves””. What is more interesting is what he said now at the CES technology conference: “We believe Sony is well-positioned as a creative entertainment company to redefine mobility”. Again, as most of you will recall, companies are now in the business of mobility not transportation!

In a sense, this is not surprising because we know that software and electronics form the most substantial part of an automobile. According to media reports, Apple has explored entering the EV market for years, although it has never released details about its plans. Incidentally, Sony is a major Apple supplier because of its image-sensing business. Another Apple contract manufacturer, Foxconn Technology Group is also getting into the EV business. Chairman Young Liu has said it aims to supply three million electric vehicles annually by 2027, which he estimated would be about 10% of the global market then. I am sure we are in for many more ‘surprises’ but we will not be surprised because companies moving into completely different businesses will become the new normal. And the latest testimony to that is news that Apple TV+ has won the Best picture Award for Coda at the 2022 Oscars.

New vistas are opening up; seizing them and creating new successful businesses is the exciting challenge. Anyone who speaks about core competence, at least the way it has been so far articulated, is going to be consigned to oblivion. We need new ways of understanding and articulating business.

Takeaways

Core competence has stifled real debate

Technology has been unsettling and enabling factor

Boldness is the new need

We need new ways to articulate business