Edge Competencies
If value is increasingly created outside the boundary of the firm, through networks and communities, through peer production and connected consumers, then companies have to develop a new type of 'edge competencies' located at the interface between the firm and its outside environment.
Description
A definition and discussion from Bubble Generation, at http://www.bubblegeneration.com/2006/01/edge-competencies-what-do-googles-use.cfm
Edge Competencies
In a world of cheap coordination, the edge - the boundary between the firm and the external - is the new core. That's because, counterintuitively, the strategy that dominates the shrinking core is to leverage the edge: not to simply build complementarities between internal sources of value creation, but between both internal and external sources of value creation.
That is, edge competencies are focused on learning how to utilize the universe of value outside the firm – leveraging value creation external to the firm, and, in many cases, external to all firms.
Why are these modes of coordination hyperefficient? There are several reasons that obtain under the right conditions. First, they can build and maintain resources and undertake value activities far more efficiently than firms can. Second, they can allocate the firm’s resources more efficiently than execs, meetings, and memos can. Third, they can build and store capital that’s difficult for firms even to access, like social capital.
The bigger reason is that this hyperefficiency is difficult to achieve internally because many of the sources of value creation they enable are deeply at odds with the firm’s relatively inefficient coordination. Most of these sources of value creation wither and die when they’re traditionally “managed�?: they are regulated by kinds of coordination that simply can’t be achieved within the traditional boundaries of firms. Rather, they self-organize and self-regulate outside the boundaries of firms.
Edge competencies let firms internalize the manifold gains from these new modes of coordination, which are traditionally beyond the firm’s horizon – players who have built edge competencies have learned to marry, remix, and recombine markets, networks, communities, and, crucially, the firm, in new, radical ways.