Capability and Business Strategy

In their book The Only Sustainable Edge, John Hagel and John Seely Brown describe two main schools of business strategy: the Core Competence school and the Leverage school. The approach advocated by Hagel and Seely-Brown represents a synthesis of these two schools. A closely related approach is advocated by David Alberts ("Power to the Edge").

	Core Competence	Leverage	Sustainable Edge
Focus	Resource-Based	Network-Based	Edge-Based
Source of Strategic Advantage	Identifying and strengthening core competences within the firm	Mobilizing resources outside the firm	Taking power to the edge of the organization.
Key advocates	Gary Hamel and C.K. Prahalad	Adam Brandenburger and Barry Nalebuff, James Moore	John Hagel and John Seely Brown, David Alberts.

Whereas the Core Competence school operates with a fixed notion of the required capability of the firm, the Sustainable Edge school involves dynamic specialization, connectivity and leveraged capability building. In other words, a successful business organization requires meta-capability – the capability to build capability, and the capability to build capability-building partnerships.

In our view, this kind of meta-capability is essential for the adaptive enterprise – after all, the defining capability of the adaptive enterprise is the capacity to adapt. However, in order to implement the adaptive enterprise, it is necessary to be specific about the nature of adaptation and adaptive capability required in a given context.

The capability model allows us to reason about which capabilities (or meta-capabilities) should be regarded as core competences.

 

Extract from Business Modeling for SOA - Part 1 What the Business Does (January 2006). See also Business-Driven SOA (May 2004), Business-Driven SOA 2 (June 2004), Business Systems Planning for SOA (May 2006). All available from CBDI Journal Archive.