Strategy Two Core Versus Context

NVOs have a fanatical focus on core competencies. Supporting or context competencies are quickly outsourced or done away with entirely whenever it is possible. NVOs rely on multiple partners to perform business functions that are required to deliver products and services. By partnering with other organizations that have complementary core competencies, an organization can achieve the benefits of industry scale and innovation that it could not achieve if it tried to do everything by itself.

Core is all about providing new competitive advantage in the market. It is not core business or core competencies. It is the new offerings that an organization makes to drive a competitive edge. Context is all the processes required to run the organization and to fulfill commitments.

As described in the previous section, context tasks can be easily identified based on their relationship to revenue production or differentiation. If the task under consideration adds value to the organization either by increasing revenues (either directly or prospectively) or by decreasing costs, it can be assumed to be a core skill. If the task only consumes resources without conferring an advantage or by adding incremental revenue, it should be outsourced or out-tasked.

As has been noted before, out-tasking and outsourcing are different:

■ Out-tasking: The NVO organization plays an active role in defining and overseeing the function used by shared partnerships and systems.

■ Outsourcing: A partner manages and oversees an entire process.

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