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A Competency Trap

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A competency trap is the false belief that the same practice that led to a past success, it will necessary lead to a future one. Even though this term was introduced in management literature, “competency trap” is wide in scope and can be applied in different fields such as business, military and in the personal.

Competency traps derive from excessive specialization, “Competency traps represent a tendency to maintain existing and familiar technologies and routines (Levinthal and March 1993).”; and this focus on standardized rules do not motivate employees to experiment new things, “once a successful practice is codified, employees have no incentive to experiment further with actions that could lead to even higher performance (Lee and Van den Steen 2007)”In addition, competency traps are associated with core competences when they become core rigidities. This happens as a result of an overcommitment to a particular core competence. For example, in the 1980s and early 1990s, GM reinforced the mistaken belief that cars are status symbols and that styling is more important than quality. Consequently, its market share has been eroded from its Japanese competitors.

Competency trap is also called “myopia of learning”, because “by simplifying experience and specializing adaptive responses, learning improves organizational performance, on average. However, the same mechanisms of learning that lead to the improvements also lead to limits to those improvements (Levinthal and March 1993).”In the military field, competency traps are dangerous as well, “An overly detailed, list-based approach could result in professional military education that is contrary to that which is actually needed.” Beyond rules and specifications, personal judgment is always necessary in the field, “…we want leaders to be decisive, yet also contemplative. Such ambiguities and paradoxes are rarely captured in trait lists (Red and Bullis 20004).”In the personal field, competency trap may inhibit the success of top performers. This is because star performers get into a circle of confidence and they believe that “their insights are unique and rarely vulnerable (Jacobs 2005).” Consequently, the person can become arrogant in the process and fall into mediocrity.

On the other hand, competency traps give advantage to late entrants, “Being second gives the company a chance to modify and adjust the product or service offering according to market demands. A late mover can benefit from the market education the first mover has already carried out and learn from their mistakes. Financial risk and chance of failure can be reduced by the “wait and see strategy (Zamantılı 2005).”In summary, in order to avoid “the competency trap”, it is important to understand that a “great strength can become a greatest weakness when circumstances change.” Therefore it is important to take into consideration a continuous improvement approach in order to prevent any of these traps.

“Competency trap” is not only business term, but also applies to others fields. The following paragraphs summarize fifteen papers on which associate this term with several connotations:1) In the study, “Managing Know how”, explains how codifying best practices may lead to a strong competency trap. This is because setting on stone guidelines discourages employees to experiment and come up with new practices that may result in higher performance. Therefore, according to the author, the dilemma between exploiting current best practices and experimenting are solved if the firm is able to control the flow of information. For example, communicating its “best practices” within one plant and letting other plants to experiment. Additionally, the paper also examines how changing environments impact the optimal management of the know-how. Therefore, in slow changing environments the success is given by just following the best practices; conversely, in fast changing environments, past experiences will become obsolete. [1]2)

“Organizational learning from performance feedback: A behavioral Perspective on Innovation and change”, the study explains how companies react to performance feedback. The author considers two approaches: the search for solutions when the company is doing badly and the failure of successful companies looking for ways to improve. The latter one leads to the so called “competency trap”. For example, in the 1980s, GM invested 40 billion dollars in new projects that did not contribute to maintain its leadership in the US market because the company only focused more on style than quality. The research concludes saying that there are not proofs that performance feedback is a mechanism of change. [2]3) In the paper, “Mapping the Route of Leadership Education: Caution Ahead”, with a focus in the military field, the authors criticize the mapping approach to leadership education because this theory assumes that certain attributes such as motives, attitudes, values and skills can be identified and replicated like an assembly line approach through training and education; but so far, researchers have shown no relationship between individual traits and effectiveness.

Competency traps show up when a model is followed without continuous review and then it becomes indifferent from what it is really needed in the field. The competency trap can be summarized in this paper with the following words: “The danger of prescriptive lists is that they create the impression that success can be assured by mastering specific competencies.” The author concludes suggesting the use of a double-loop learning approach and the application of multiple perspectives to leadership study. [3]4) “Learning from experience in high hazard organizations” This study shows the importance of learning in high hazard organizations where high reliability is preferable over efficiency. Competence trap arises in these organizations due to the nature of the industry: High-hazard organizations are strongly compliance oriented; heavily regulated and concerned with reliable operations and prevention of accidents rather than exploration of new opportunities.

Therefore, the study proposes a model of organizational learning reflecting different approaches and taking into account both elements: control and learning. Basically, the authors recommend having an investigation team that separates assumptions from reality and develops new learning capabilities. [4]5) “Market orientation and successful new product innovation: The role of competency traps” mainly explains the adverse consequences of competency traps in new product development processes. It is said that start ups are less likely to avoid competency traps since these firms look for a higher degree of innovation, risk and proactiveness in comparison with the existing ones. Finally, the study alerts managers who are only customer oriented that the approach diminishes the creativity of new products and also recommends taking advantage of good competency traps, such as routinization (using standardized procedures) and reducing bad competency traps, such as vision traps (bias or overconfidence), in order to improve their new product innovation rate. [5]6)

“Rethinking competence systems for knowledge based organizations” this paper discusses about the difference amid knowledge-based and job-based organizations as part of competence systems. In knowledge-based organizations rules and innovation exist in order to find a balance between “exploitation” and “exploration”. If there is no new knowledge, competence traps can be developed. Therefore in order to avoid them, the study suggests moving toward knowledge-based organizations utilizing the interest of employees, empowering them to make decisions beyond their job functions; and finally, encouraging them to share knowledge. [6]7) “Myopia of Learning” In this paper, it is analyzed the processes of empirical learning as part of organizational intelligence. There are two mechanisms of learning which are simplification and specialization; both look for simplify processes and focus attention in narrow competences. Additionally, learning processes are powerful as a basis for strategic advantage; however, there are limits to learning.

These limits are the so called competency traps that in this paper are related to problems of myopia which compromise the effectiveness of the learning process: temporal myopia (learning tends to sacrifice the long term by the short term), spatial myopia (learning tends to favor effects that happen near the learner) and failure myopia (learning overestimating success and underestimating failures). The author recommends having conservative expectations in order to elaborate a more realistic evaluation of the role of learning in organizational intelligence. [7]8) “Strategic flexibility: Organizational preparedness to reverse ineffective strategic decisions” The objective of this paper is to help managers understand the importance of developing strategic flexibility. “Strategic flexibility can be defined as an organization’s capability to identify major changes in the external environment, to quickly commit resources to new courses of action in response to change, and to recognize and act promptly when it is time to halt or reverse such resource commitments.”

The competency trap is explained through a vicious cycle of strategic rigidity (see Figure 1) where overconfident managers assume that their decisions are unlikely to fail and involuntarily ignore negative signs of mistakes, then this negative information results in bias assessments and therefore, negative outcome will be interpreted as positive. Some recommendations for strategic flexibility are: measuring and monitoring decision outcomes, simulating a decision making process incorporating a devil’s advocate, creating dynamic mechanisms to get new ideas and considering decision portfolios. [8]9) “The Innovator’s Dilemma as a Problem of Organizational Competence” The author place emphasis in the disruptive innovation model as a theory that can be used for describing the impact of new technologies on an existing firm. Some authors believed that senior teams who fail to invest in disruptive innovations are irrational because they should have made the appropriate investments and they were blinded by current customers’ opinions and larger margins, while others support the idea that managers act rational in the firm’s best interest.

However, the author argues that organizational competencies developed through experience, with the existing technology, make difficult to evaluate change and therefore, the senior team is not prepared with the information they might need to make an appropriate decision. [9]10) “Inertia and transformation” The author explains that inertia can be considered a problem when a firm’s practices are inefficient. Then, five main sources of inertia are explained: distorted perception (change may be inhibited by wrong perceptions), dulled motivation (the need is not felt due to lack of motivation), failed creative response (firms frozen when things happen so fast), political deadlocks (waste of time and energy in power struggle), action disconnects (forces that prevent actions like routines). Finally the author recommends that managers become aware of the need for change and begin to work in new directions.

Then, the company should be fragmented into smaller departments in order to reduce interdependencies; these actions will reduce the routine and also eliminate inertias that have impeded action. [10]11) “Core competence and core rigidity: Organizational memory perspective” according to this paper, companies face the contradiction of core capability and core rigidity, which produces inertia and therefore, resistance to change. Competency traps can develop when core capabilities turn into core rigidities due to inefficient allocation of resources and nature of routines. Therefore, the author place great importance in combining existing and new knowledge. [11]12) “Paradox of success” Dianne Jacobs mentions that the qualities which make successful top executives can also deter the ability to step up to the next level or be caught into mediocrity.

The author quotes Jack Welch words: “change before you have to” to define the term of competency traps because usually when things are going well there seems to be no reason to change. Finally, the article ends up suggesting that star performers should work in continuous development. Improvement should not be about changing the person’s strengths, but the way the person performs. [12]13) “Advantage of followers in emerging markets” this study explains how a late entrant company may compete successfully with first movers by identifying their mistakes and giving different advantages to the market. “First movers may become too secure about their own knowledge and established routines and therefore, they fall into the so called competency trap” For example, SONY wanted to maintain its leadership in the VCR market, but in its rush to be the leader lost vision of its fundamentals and then JVC and Matsushita took advantage and developed the successful VHS standard. Those followers that can identify the mistakes that first movers often make can eventually become market leaders in emerging markets. [13]14) Who moved my cheese?

A good metaphor of the competency trap concept is described in this book. Basically this book explains the typical reactions to change in the work place and life with two mice and two species of “little people” and their chase for cheese. The little people and the mice had already their daily routine to hunt for cheese at the same place until one day there was not more cheese left. The mice were not surprised because they were already looking for new places, but the little people, Hem and Haw, were unprepared and overreacted when they did not find any cheese. Haw moved on quickly, but Hem did not. Therefore, Hem’s reaction represented the term of competency trap because he became arrogant in the process and reluctant to change. He expected different results doing the same routine. [14]15) “Strategy, capabilities and corporate coherence: Exploring some dynamics of learning”According to the paper, “A firm exhibits coherence when its line of business is related, in the sense that there are certain characteristics common to each.

A firm’s coherence increases as the number of common technological and market characteristics found in each product line increases.” The incidence of competency traps becomes evident when each standard task is viewed as a collection of routines; leading to specialization of routines. This causes organizations to focus on that aspect and not giving enough attention to other superior procedures. The proposal to avoid this problem is focus in three learning activities: management based activities, technological based activities and market based activities. Finally, the concept of coherence does not only refer to the coherence in products by itself, but also involves the balancing of learning activities.

References:

Deishin Lee and Eric Van den Steen, “Managing Know-How” Harvard Business School (December 2006). Retrieved from: http://www.hbs.edu/research/pdf/07-039.pdf[2] Henrich R. Greve, “Organizational learning from performance feedback: A behavioral Perspective on Innovation and change” Published by Cambridge University Press (July 2003) (Hardcover)[3] George Red, Craig Bullis, Ruth Collins and Christopher Paparone “Mapping the Route of Leadership Education: Caution Ahead” (2004) Retrieved from: http://www.carlisle.army.mil/USAWC/parameters/04autumn/reed.pdf[4] John S. Carrol, Jenny Rudolph, Sachi Hatakenaka, “Learning from experience in high hazard organizations” MIT Sloan School of Management (2000)[5] Susan Yinghong, “Market orientation and successful new product innovation: The role of competency traps” (2006). Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1260431[6] Rikard Lindgren, Dick Stenmark and Jan Ljungberg “Rethinking competence systems for knowledge based organizations” (2003) Retrieved from JSTOR[7] Daniel A. Levinthal and James G. March, “The Myopia of Learning” Strategic Management Journal Vol. 14 (1993) Retrieved from: JSTOR[8] Katsuhiko Shimizu and Michael A. Hitt, “Strategic flexibility: Organizational preparedness to reverse ineffective strategic decisions” (2004). Retrieved from: http://faculty.business.utsa.edu/kshimizu/Publication/Preparedness%20(AME%202004).pdf[9] Rebeca Henderson, “The Innovator’s Dilemma as a Problem of Organizational Competence” (2006) Retrieved from JSTOR[10] Richard Rumelt, “Inertia and Transformation” Kluwer Academic Publishers (1995) Retrieved from:http://www.anderson.ucla.edu/faculty/dick.rumelt/Docs/Papers/berkeley_precis.pdf[11] Chen-Yi Tsai, Lin, Julia L., Chen, Ching-Hsiang, “Core competence and core rigidity: Organizational memory perspective” (2005) Retrieved from JSTOR[12] Dianne Jacobs, “Paradox of success” Goldman Sachs (2005) Retrieved from http://www.gsjbw.com/Documents/About/DiversityEquality/ParadoxOfSuccess_Aug05.pdf[13] Dilek Zamantılı Nayır, “Advantage of followers in emerging markets” (2003) Retrieved from JSTOR[14] Spencer Johnson and Kenneth Blanchard, “Who moved my cheese” (1998) (Hardcover)[15] Fredrick Tell, “Strategy, capabilities and corporate coherence: Exploring some dynamics of learning”

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