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Atoms just aren’t scarce enough so it is increasingly difficult to base competitiveness on access to them.

Focusing on your core competences means sticking to what you excel at. A few years ago, if you drove a Toyota it was only 25 percent Toyota, whereas a GM car was 47 per- cent GM.14_{GM decided to add customer value and create a}

competitive edge by manufacturing its own car stereos. At Toyota, management argued that other companies such as Sony or Philips are much better at this so why bother – and then just how important is the car stereo when you buy a new car? We won’t embarrass GM with a table depicting its well-managed, gradual decline over the last 20 years.

Do it well. Do it fantastically well. And then stop. Nike has struck gold by not applying its slogan.15_{Instead of just}

doing it – the company just doesn’t do it. Funky Inc. brings in other people to do the rest. Many successful firms no longer make what they sell. Timberland, for instance, is a shoeless shoe company. Funky Inc. looks like the façades from an old Hollywood motion picture – nice on the outside, virtually empty on the inside, save for one thing: brains.

Look at the computer company Dell. It is a huge company that has come from absolutely nowhere. It is a huge company in terms of sales, but it does not have a single factory. There is no such place as a Dell factory. What founder Michael Dell realized was that, “IBM took $700-worth of parts, sold them to a dealer for $2000 who sold them for $3000. It was still $700-worth of parts.”16 _{By short-circuiting the market, by}

eliminating unnecessary actors who did not add any value to the customer, he created a business empire. Dell became an intelligent and flexible broker of parts, the professional pro- curement department of every single customer. “If this works for computers, it’s going to work for automobiles, furniture, carpets, appliances, anything,” says Larry Bossidy, CEO of Allied Signal, who recently invited Michael Dell to give a presentation to the management team of his organization.17

You can call this new firm virtual, hollow, a spider’s web, outsourced, a shamrock, or whatever you like. The impor- tant thing is that if we don’t slim down, our chances of surviving and thriving in an excess economy are just that – slim. Call it hollow, but don’t call it empty.

An organization may hollow itself in a number of dif- ferent ways. Quite often people only think about leaving more stuff to the suppliers – backward disintegration. But, hollowing out can also mean handing over activities to the customers – just think of IKEA. The typical Internet banks, for instance, enable us to pay our own bills – forward disintegration. Viewing the company as a collec- tion of Lego pieces, it is basically up to each and every part of the organization to design its own role in contributing to the value of the whole. It used to be a question of adding stuff – integration. Now we focus on subtracting activities – disintegration.

Funky Inc. may not incorporate an entire value chain, but it always has a position. In fact all companies have positions. It is just a question of what we buy and what we make. And by focusing on a few key value-adding processes and elimi- nating unnecessary actors, we make the rest of the value chain, as well as end-users, extremely dependent on us. And dependence equals dollars.

However, there is something beyond core competences. What is critical in the funky firm is perhaps not so much the core competences as the “core competents”. These are the limited numbers of people at a company who actually embody the skills that make the products and services unique – Mr and Mrs Indispensable. These are the Mick Jagger and Keith Richards of the corporate world. And most of them are way too competent to be wasted in management positions. They are critical because (a) they are super-smart, and/or (b) they know who is smart, where these people are located and how to get them to cooperate.

These “walking monopolies” will only stay as long as the organization can offer them something they want. If that is no longer the case they will leave to set up their own one- person companies. Remember that Karl Marx was right. The workers currently

own the most critical resources, the major assets of society. While competents personify prospective cores, it is

our experience that competences, at least as popularly defined and used, often represent retrospective scores. Instead of looking into the future, many companies look into the past.

Nathan Myhrvold of Microsoft argues that we’ve got to understand that in a knowledge-based society, the diffe- rence between the average and the really good is no longer a factor of 1:2, as it used to be. No, it is a factor of 1:100, or even 1:1000.18_{His boss, Bill, sometimes says that if 20}

people were to leave Microsoft, the company would risk bankruptcy. Hiroshi Yamauchi at Nintendo, the computer game company, echoes the same line of reasoning. He claims that an ordinary person cannot develop a really good game no matter how much he or she tries.19_{Or listen to what Sun}

Microsystems’ CEO Scott McNealy has to say about fellow founder Bill Joy: “AT&T has Bell Labs, and we have Bill Joy. We get a lot more for our money.”20

Core competents are omnipresent. In a recent study by the Corporate Leadership Council, a “computer” firm rec- ognized 100 core competents out of 16,000 employees; a “software” company had 10 out of 11,000; and a “trans- portation” group deemed 20 of its 33,000 employees as really critical. In other words, the percentage of core com- petents varied between 0.6 percent and 0.06 percent. No wonder that, despite high unemployment rates, so many organizations speak of an ongoing talent war.

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What is critical in the funky