design team (the prospective supplier’s ability to meet the needed technical specs), project management (the supplier’s ability to execute projects on time), procurement (the supplier’s ability

to meet cost budgets), and top management (the supplier’s history with other projects). After choosing suppliers, Boeing developed an audit procedure to check not only the end-products, but

the process through which they were produced at the suppliers. This audit involved weekly visits to some of its suppliers. Suppliers had to develop a planning system for their projects and had

to adhere to a protocol for safety and configuration management (how proposed design changes were to be managed and communicated). Suppliers were required to -provide extensive

documentation to Boeing. Electronic mail was not used for communication because of potential piracy. To facilitate communication and coordination, all suppliers were placed on a common

software platform developed by Dassault and a computer-aided design package that allowed concurrent three-dimensional interactive design capability.

Developing a Close External Relationship Competence
Firms can use early acquisitions to buy relationships that would be time-consuming and prohibitively expensive to develop from scratch. Firms that develop relationships from scratch can offer

potential partners their capability to serve international markets. They can use an existing relationship to develop a relationship with another party. Their existing competencies can be offered

in a prospective relationship or the lack of a competence can be the motivator to form a relationship to attract the needed resources. In order to effectively build a relationship, firms make a

commitment to understanding and satisfying the various needs that exist in their partner’s organization. This commitment can involve creating a team led by a high-level sales manager

personally responsible for serving larger partners’ accounts. This team can be implanted in the partner’s organization to identify its various needs and better satisfy them. As firms increase in

size, they can seek to broaden and deepen relationships with suppliers and buyers through, for example, longerterm contracts, purchasing economies, or joint research and development. Being

an early entrant also gives the firm more time under less competition in which to build relationships with potential partners. Citicorp’s origins can be traced back to 1791. As early as 1890, its

President James Stillman articulated a vision to provide numerous special services as a partner to big business. By 1921, this vision of becoming the first full-service bank to businesses was

accomplished. Citicorp then expanded its vision to encompass individuals as well, who up to that time had been handled by a separate set of savings banks. Citicorp grew through several

acquisitions both domestically and internationally. These early acquisitions gave it not only a quick national and international presence, but brought with it numerous relationships with the

clients

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Dynamics of Cone Competencies in Leading Multinational Companies

T A B L E 4 . Dynamic Shift in Competencies (total number of existing planned competencies by type)

Time Period Technological Know-How
Existing Planned 21 (42%) 1 (9%)

Type of Competence Reliable Processes
16 (32%) 2(18%)

Close External Relationships
13(26%) 8 (73%)

Total
50(100%) 11(100%)

of the acquired banks. Access to these clients would have been time-consuming and costly to develop from scratch. The international acquisitions also gave Citicorp the opportunity to devote

its energy to cementing relationships with new clients rather than to the lengthy process of trying to gain approvals for entering into foreign markets. Innovation at Citicorp generated many

new products that were used to obtain new clients and to cross-sell to existing clients. Citicorp was the first bank to introduce: travelers’ checks; interest-bearing savings accounts that

individuals could with as little as one dollar; negotiable CDs (certificates of deposit); ATM teller machines; credit cards with revolving credit, photo identification, risk-adjusted pricing; and

worldwide consumer banking that enables customers to make deposits in a choice of countries and currencies. The bank employed the umbrella brand name prefix Citi with its new products

(e.g., Citicard, CitiTeller). This practice branded generic products and showed customers that Citicorp provided an innovative, one-stop shopping service for all their needs that could be

reported on one unified financial statement. The proliferation of ventures into new products and markets was encouraged by the bank’s emphasis on revenue growth over profitability.

A Dynamic Shift in Competence Types
Table 4 reports the frequency of existing competence types across all firms as well as the new competencies being planned for the future. A fundamental finding is that these firms, though they

may be leaders in their field, are not standing still or resting on their prior competencies. Leading firms are constantly being challenged by ascendants. Consequently, those leaders are changing

by developing new competencies. A new emphasis is emerging on external relationship competencies. These new relationship competencies can complement a firm’s traditional competencies

and enable it to cope with the demands of globalization, mass customization and higher quality, and shorter product cycles. Relationship competencies help firms extend their traditional

technological and reliable process

CALIFORNIA MANAGEMENT REVIEW VOL 40, NO. 4 SUMMER 1998