Management Gurus: Hamel and Prahalad

1. Management Gurus:Hamel and Prahalad TU-91.110 Industrial Business Relations and Networks 24.4.2003 Group 10 Kimmo Jaakkola and Jari Ruokolainen

2. Coimbatore KrishnaraoPrahalad(Usually just C.K. Prahalad) Short personal history: Doctorate from Harvard Business School Professorships in University of Michigan, INSEAD, and IIM Co-founder of Praja Inc., where he tried his wings as an entrepreneur Gary Hamel Short personalhistory: Doctorate from the University of Michigan Professorship in London School of Economics Founder and president of Strategos, an international management consultancy C.K. Prahalad and G. Hamel in a Nutshell

3. C.K. Prahalad and G. Hamel Working Together • The two met in 1977 in Michigan • Hamel as a student, C.K. as an associate professor • In mid 1980’s started to publish together. • Their main works (in Harvard Business Review, which has been their forum of preference): • Strategic Intent (1989) • Collaborate with your Competetitors and Win (1989) (authoring also Y.L. Doz) • The Core Competence of the Corporation (1990) • Competing for the Future (1994) • Also published as a book by Harvard Business School Press in 1994

4. Central Questions & Ideas Evolving in Their Work (1/2) • ”Strategic fit” versus ”Leveraging Resources” – the two main strategy schools according to C.K.P & G.H • ”Maintaining strategic the fit” approach: • Trimming ambitions to match resources, search of sustainable advantages, financial goals • ”Levaraging resources” approach: • develop resources towards ambitions, emphasis on learning, developing core competencies – the approach preferred by the authors • Incrementalisms versus Revolution • C.K.P&G.H argue that playing the same game better is no way to success. Innovation and building on core competencies is the key! • Centralization versus Decentralization • The authors claim that SBU thinking (decentralization) is fundamentally against developing core competencies effectively

5. Central Questions & Ideas Evolving in Their Work (2/2) • The importance of ”strategic architecture” • top-level strategy for developing new core competencies, new functions, or evolving the existing competencies • Heavy future-orientation, though actions need to start now! • Core Competencies are the key to everything • Clarifying the core competencies, building on them, and ”cultivating” a culture of core competencies

6. Critique towards C.K. Prahalad and G. Hamel • Empirical evidence shows that ”leading the revolution”, or developing the core competencies first, does not necessarily lead to success • Competition can build competencies later and via incremental innovation win the game • Hamel&Prahalad are not clear, or even present contrading views, about the role of top management • Occasional emphasis on bottom-up, emergent views, even work place democracy, but at the same time heavy reliance on top management vision • Is ”strategic architecture” just a new name for ”strategic plan”?

7. C.K.Prahalad and G.Hamel and Industrial Business Networks • Competencies reach over company bounders • Collaboration in interaction among the companies is emphasized • especially from the learning perspective, on building core competencies • emphasis on learning on lower level of interaction (individual approch), not top-management • Network approach, both internally and between companies • ”..excellence is a complex web of ... integration with suppliers, value engineering ... It is difficult to exctract such a subtle competence ... but in a piecemeal fashion”

8. Concluding & Summarizing the Presentation • C.K. Prahalad and G. Hamel, influential thinkers in the field of strategy in 1990’s • Main contributions to the discipline: • The development of the concept of core competency • Both within the corporation and in a network of firms • The emphasis on long-term strategic architecture • Opposition to short term cost-cutting and incremental business development