Competence-based management

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Competence-based Strategic Management is a relatively new way of thinking about how organizations gain high performance for a significant period of time. Established as a theory in the early 1990’s, competence-based strategic management theory explains how organizations can develop competitive advantage in a systematic and structural way. In other words, a competent organization has the ability [being capable of] to structurally and systematically coordinate and commit resources for respectively the realization of the organizations goals and objectives and the creation and distribution of customer value, in order to develop competitive advantage. For developing an integrated system of resources, management needs extraordinary analytic and appraisal skills. Furthermore, the idea behind competence-based strategic management is that the difference of the mix available resources between organizations, the speed with which resources are exploited and are develop, plus the costs which are involved, is determinative for the realisation of the organizations competitive advantage. Resources are all elements, tangible or intangible, which an organization can use for the arrangement of products and bring services on the market. The resources an organization can use may be either organization-specific of organization-addressable. An organization from a competence-based perspective is seen as an open social system. Open social system = dynamic and complex collection of elements, interacting as a structured functional entity that continuously interacts with its environment.

Five challenges play a central role in the application of competence-based strategic management in order to realize continuous value creation and distribution (strategic logic):

  • Recognize market opportunities
  • Define product offers that create value for customers with targeted preferences
  • Attract, retain and improve the best available resources for creating and realizing product offers
  • Manage uncertainties in creating and realizing product offers
  • Distribute value created to providers of required resources

When managing these challenges management can choose two approaches: statically and dynamically. The focus of the static approach to competence-based management is at entirely exploiting existing resources to develop competitive advantage in the short term. In this case strategy means a maximum exploitation of the current organizational competences of the organization. Answering the three central questions from the static interpretation the central issue is to maintain the existing resources of the organization in order to develop competitive advantage.

The primary aim of the dynamic approach of the competence-based management is realising competitive advantage by constantly improving the existing resources and obtaining new resources. In this case strategy means a fit between exploiting the available resources and obtaining and developing [modify] new resources. At answering the three central questions from the dynamic interpretation the central issue is not only to maintain the existing resources of the organization but also the replacement or modification of these resources, in order to develop competitive advantage.


[edit] References

  • Sanchez, R. 2002, Understanding competence-based management, Identifying and managing five modes of competence, Journal of Business Research, Volume 57, pp. 518- 532.
  • Sanchez, R., Freiling, J. 2005, A Focused Issue on The Marketing Process in Organizational Competence, nr. 1, Elsevier Science Ltd.
  • Sanchez, R., Heene, A., Thomas, H. 1996, Dynamics of Competence Based Competition: Theory and Practice in the New Strategic Management, Elsevier Science Ltd.
  • Sanchez, R., Heene, A. 2004, The New Strategic Management: Organizations, Competition and Competence, John Wiley & Sons.
  • Sanchez, R., Heene, A. 2005, A Focused Issue on Managing Knowledge Assets and Organizational Learning, nr. 2, Elsevier Science Ltd.
  • Sanchez, R., Heene, A. 2005, A Focused Issue on Understanding Growth: Entrepreneurship, Innovation and Diversification, nr. 3, Elsevier Science Ltd.
  • Sanchez, R., Heene, A., Morecroft, J. 2002, Systems Perspectives on Resources, Capabilities, and Management Processes, Elsevier Science Ltd.
  • Vermeylen, S., Heene, A. 1999, De stille kracht van de onderneming: Competentiedenken in strategisch management, Lannoo.
  • Vernhout, A. 2004, Strategisch werken met competenties: de theorie en praktijk van het competentiedenken, Nelissen.
  • Vernhout, A. 2007, Management challenges in the competence-based organization.
  • Vernhout, A. 2007, Competence-based Strategic Management.