The Trap of Core Competence: When Focusing on What You Do Best Sets You Up to Fail

Focusing on core competence is among the most popular business mantras—yet it’s also one of the most dangerous when misapplied. A global tech company, confident in its ability to market and assemble products, decides to outsource the microprocessor and software to 'specialists.' At the time, these components are seen as peripheral—someone else’s problem. The move is praised for efficiency. But fast forward, and suddenly, industry profits swirl around those 'specialists,' who now control the highest-value parts of the business. The original assembler is left scrambling for relevance.

This mistake happens everyday in services, education, and retail. What is 'non-core' today may, as the market shifts or new technology arrives, become the foundation of customer value. The company chasing focus for the sake of focus risks missing new profit pools and ceding future advantages to others. Conversely, what seems central can evaporate as automation or customer trends reshape demand entirely.

Sound decision-making, then, means using theory—examining how value creation is likely to evolve—and not letting today’s comfort zone define tomorrow’s survival. The best leaders don’t outsource or integrate based solely on internal perceptions of core competence; they ground the call in thoughtful forecasts about how markets and technology are moving.

List the activities you currently label as 'core' or 'noncore,' then look ahead—envision how each could impact your future, especially if technology or customer needs shift unpredictably. For every major sourcing decision, pause and consider where real value will be created or lost in years to come. Don’t hand off tomorrow’s growth engine to a partner just because it’s not central today—let your allocation of attention and investment be driven by clear, customer-centric theory, not habit.