398 Part 3: Strategic Actions: Strategy Implementation
are understood when selecting strategies and then emphasized when implementing those
strategies. This suggests, for example, that with respect to their strategies, Apple empha-
sizes its design competence, while Netflix recognizes and concentrates on its competence
of being able to deliver physical, digital, and original content.^90
Core competencies are developed over time as firms learn from the results of the
competitive actions and responses taken during the course of competing with rivals. On
the basis of what they learn, firms continuously reshape their capabilities for the purpose
of verifying that they are, indeed, the path through which core competencies are being
developed and used to establish one or more competitive advantages.
Dan Akerson became CEO of GM in July 2009, a time when the firm required a
transformation in order to survive as the foundation for then being able to compete
successfully against its global rivals. One of the first decisions Akerson made was to allo-
cate resources for the purpose of building new capabilities in technology development
and in marketing, especially in customer service. Akerson helped to turnaround the
company, bringing it out of bankruptcy and trying to enrich its core competencies. Now,
as explained in the Strategic Focus, Mary Barra is changing the culture and trying to
increase the efficiency of GM. In addition, she is trying to gain the trust of human capi-
tal (e.g., by paying special bonuses to blue collar workers) thereby building her internal
social capital. Strong human capital and social capital are critical for GM to develop and
maintain strong core competencies.As we discuss next, human capital and social capital
are critical to a firm’s success. This is the case for GM as the firm strives to continuously
improve its performance. One reason for human capital’s importance is that it is the
resource through which core competencies are developed and used.Developing Human Capital and Social Capital
Human capital refers to the knowledge and skills of a firm’s entire workforce. From the
perspective of human capital, employees are viewed as a capital resource requiring con-
tinuous investment.^91
Bringing talented human capital into the firm and then developing that capital has
the potential to yield positive outcomes. A key reason for this is that individuals’ knowl-
edge and skills are proving to be critical to the success of many global industries (e.g.,
automobile manufacturing) as well as industries within countries (e.g., leather and shoe
manufacturing in Italy). This fact suggests that “as the dynamics of competition accel-
erate, people are perhaps the only truly sustainable source of competitive advantage.”^92
In all types of organizations—large and small, new and established, and so forth—human
capital’s increasing importance suggests a significant role for the firm’s human resource
management function.^93 As one of a firm’s support functions on which firms rely to cre-
ate value (see Chapter 3), human resource management practices facilitate selecting and
especially implementing the firm’s strategies.^94
Effective training and development programs increase the probability that some of
the firm’s human capital will become effective strategic leaders. Increasingly, the link
between effective programs and firm success is becoming stronger because the knowl-
edge gained by participating in these programs is integral to forming and then sustaining
a firm’s competitive advantage.^95 In addition to building human capital’s knowledge and
skills, these programs inculcate a common set of core values and present a systematic
view of the organization, thus promoting its vision and helping form an effective organi-
zational culture.
Effective training and development programs also contribute positively to the firm’s
efforts to form core competencies.^96 Furthermore, the programs help strategic leaders
improve skills that are critical to completing other tasks associated with effective strategic
leadership, such as determining the firm’s strategic direction, exploiting and maintainingHuman capital refers to
the knowledge and skills of a
firm’s entire workforce. From
the perspective of human
capital, employees are viewed
as a capital resource requiring
continuous investment.