The basic assumption behind this approach is, in the words of Mintzberg ‘ The outcome of strategic thinking is an integrated perspective of the enterprise… strategy making is a process interwoven with all that it takes to manage an organisation.’
If the tree analogy is used, then supporting the branches which bear the fruit (which are the products and markets to which the products are directed) is a trunk of core processes, which are in turn fed by the roots of core competencies. It is this underlying technical and organisational expertise, which provides the ability for the organisation to be fruitful with attractive products.
Capabilities have been defined as a ‘ set of business processes strategically understood’ and from this definition they can be equated to the core processes. In the tree analogy the core competencies make up the trunk of the tree.
The mission refers to the values that feed the organisation and can be described as the life force that animates the growth and shapes it. The importance of vision and values that are expressed in the mission statement is an essential part of the new thinking of strategy, according to Nicholls.
Both the mission and the core competencies form part of the basic ingredients necessary to guide the management of an organisation in achieving its fundamental purpose of delivering value to the customer. The core competencies and the vision and values of the mission are important in sustaining the escalation of the products and markets.
Scarce resources should be allocated to activities that strengthen the core competencies and help achieve the mission of the organisation.