CURSO UFRB

1. Forms of Incompetence
By Thomas DURAND
Professor, Ecole Centrale Paris, 92295 Châtenay Malabry, France
Tel : +33 (0)1 47 12 53 06 – Thomas.durand@ecp.fr
Published as a chapter in:
Sanchez, Ron, and Aimé Heene, editors (2000), Theory Development for Competence-Based
Management, Volume 6(A) in Advances in Applied Business Strategy, Lawrence Foster, series
editor, Greenwich, CT: JAI Press.
I-Introduction
This paper addresses the issue of documenting the concept of competence in organizations by
adopting the perspective of incompetence. The rationale of the research project behind this
paper stems from three preliminary comments serving as starting points for the analysis.
a-The competence-based management literature has focused much attention on learning, i.e.
knowledge and competence building, much less on the real nature of competence itself. Much
has been described about the process of learning in organizations, i.e. about the flux, much
less about the accumulated stock resulting from the flux, namely the competence base of the
organization.
The main reason for this may have to do with the difficulties encountered in grasping and
describing the real essence of organizational competence. This actually leads to the issue of
the epistemic status of the concept of competence. This is clearly the result of well-known
characteristics of competence, e.g. tacit versus articulated knowledge, individual vs.
organizational, etc.
b-A corollary feature of the competence-based literature in management is the lack of
empirical work. This point is quite striking. At this stage, too little has been done to document
and illustrate the existing theoretical contributions around the concept of competence ; not to
speak about empirically testing the validity of the whole theoretical constructs of the resource-
based view or the competence-based theory.
It seems to us that this has to do with the difficulties of operationalizing the concept, which
again directly relates to the specific nature of the concepts at hand. To be of interest, a theory
does not necessarily need to be operationalized nor even operationalizable. Yet, in
management research, some form of empirical validation or at least some documentation is
desirable.
c-The whole argument behind the competence-based theory is designed to apply at the level of
organizations. Yet, many contributions tend to implicitly or explicitly extrapolate what is
known for individuals, extending this knowledge to the organizational level.
This is actually one of the key elements of the epistemic challenge posed to management
researchers by this still emerging concept of competence. A very promising line of research is
currently being explored through the idea of interactionism (Durand, Mounoud, Ramanantsoa,
1996) or autopoeisis (Von Krogh & Roos, 1995). Yet, again, there is still a long way to go
before a self sustained, documented and empirically tested theory of organizational
competence is available.

2. - page 2 -
Although clearly debatable, these three comments tend to reinforce each other. In turn, they
led to the idea behind this paper:
"If you cannot tell them what they are good at, tell them what they are incompetent for". If it
seems so difficult to describe competence, what about incompetence? If the literature lacks
empirical work, why not attempting to empirically describe incompetence? If the individual
level is significantly more documented than organizational competence, why not approaching
and describing the incompetence of an organization?
A research project was designed to explore this line of research further. A case study was
organized in a large firm which over the years has become unable to innovate, especially when
dealing with new products.
In that sense this company is clearly ‘incompetent’ compared to its major competitors. The
company is (still) highly profitable, efficient in its operations but, when it comes to designing
developing and bringing new products to the market place, this company is evaluated as
helpless, incapable, i.e. incompetent, by its own top management.
The research project was designed and conducted as a way to analyze and document the
reasons behind this inability to innovate.
The methodology relied on in-depth interviews with key players within the organization. This
led to a diagnosis of the situation and in turn to an empirical exploration of the innovation-
related incompetence of this firm.
The paper first presents the case study. It aims at showing what organizational incompetence
may be. Some form of incompetence is thus illustrated and documented concretely. The paper
then briefly presents a framework model of competence built around three dimensions
(knowledge, know-how and attitudes), pointing out both the specificities and linkages of these
three interdependent elements of competence.
On that basis, the case study is revisited, analyzed and discussed in relation to the framework
model presented. Incompetence is then discussed in light of the model. Some theoretical and
applied implications are then drawn, including a development about the theme of unlearning.
Suggestions are also made for further investigation.
A brief conclusion ends the paper, advocating for more empirical work to help establish a
self-sustained, documented theory of competence in management.
II- The case of Antinnova Inc.
The context
Antinnova Inc is 2 b$ division of a major consumer goods, publicly owned, multinational
corporation. The division operates essentially in Europe. Antinnova is a leader in its markets
and owns widely recognized brands.
Antinnova designs, mass-manufactures and sells its products through various distribution
channels. Marketing and advertising is an essential component of the business.
The whole industry is currently going through significant technological changes associated to
a scientific revolution which occurred some years ago. Thus, in addition to its ‘development’
department, Antinnova has its own research center with scientists recognized as experts in
their field.
On a non-growing oligopolistic market, with a few smaller players focusing on niches,
Antinnova has a long track record of high profitability. The company is well respected in its
industry.

3. - page 3 -
Yet, the top management at Antinnova is well aware of the difficulties faced by the
organization when it comes to developing new products. Most of the products launched in the
last 5 years either have been failures or have generated limited sales, significantly below
expectations. More recently, the rate of development of new products has even slowed down.
This is a major problem for the management of Antinnova as the proclaimed strategy is
precisely to try to innovate on this non growing market as a way to search for growth. ‘The
only other option would indeed be to fight for market shares through a price war. Since we
are the market leader, that would in fact hurt the profitability of Antinnova before anything
else’ says the CEO. Innovation, and more specifically product innovation, is thus a strategic
priority for the firm.
The top management has some difficulties in grasping what goes wrong within the
organization but clearly considers that Antinnova, while still being profitable and otherwise
efficient, has developed some form of incompetence regarding product development.
Our research project selected this context in order to conduct an exploration of what was
identified ex ante as a case of organizational incompetence.
30 in depth interviews over a 3 month time span were conducted with managers in all major
functional departments (marketing, research, development, manufacturing, human resources)
as well as with top managers. Some of them were met several times.
Major findings
The interviews show that the representation of the concept of innovation is not shared among
Antinnova staff. Some managers primarily advocate for process innovation to cut
manufacturing costs. Others claim that ‘incremental adaptations of existing products is
essential’ as the priority is to fit the continuously changing requirements of demand. Some
others reject ‘me-too’ products as “non-innovative imitations” which cannot bring any
significant competitive advantage; in turn, they advocate for radical innovation based upon
“real research projects”.
In other words, right from the beginning, there is a clear misfit around the key word used by
the top management when attempting to promote innovation.
Antinnova’s research center is located on the division headquarters premises. The scientific
revolution which took place upstream of the business led to hiring basic scientists in order to
understand and transfer these new scientific developments into technological applications.
These experts are thus connected to the international scientific community, worldwide. They
tend to deny any real ability of the top management at Antinnova to understand and evaluate
their work. They tend to think evaluation in terms of peer review. They have been accustomed
to define their own research agenda, based on their own view of the ‘real’ research needs of
the company. (The top management explicitly recognized in private with us how difficult it is
to assess the relevance of the research projects which are submitted for approval). As a
consequence, the monitoring of the ongoing research projects is limited and deadlines are
uncertain and flexible.
The interviews clearly show that the leading researchers have a tendency to look down upon
the development engineers (the former have PhD’s while the latter hold engineering degrees)
and do not give much credit to the requirements coming from marketing. In addition they are
far away from the world of manufacturing.
Paradoxically, despite these distant feelings for their colleagues from other departments, the
researchers at Antinnova are nevertheless in bad need for recognition and respect from the rest
of the organization. This should not be regarded as a contradiction but more as the same
symptom of lack of trust and poor working relations between the research center and the other

4. - page 4 -
functions. It must be said clearly that no positive sign coming from the rest of the organization
in direction of the research center could be observed during the course of our investigations.
The marketing department at Antinnova is the leading player and behaves as such. Marketers
at Antinnova are more concerned with advertising campaigns to sustain their brands than with
new product developments. No or little strategic marketing is conducted. Most of the focus of
Marketing has to do with sales and communication issues. They view product innovation as
“difficult and costly in our [supposedly] mature market”. The marketing department claims
that they have good working relations with the engineers of the development department. The
truth of the matter is that the modus operandi between Marketing and Development reflects a
situation of domination of the latter obeying the former. As such, the marketing department
does not comply to its advocate position towards top management, as described by Freiling
(this volume): it actually takes over top management responsibility in defining strategic
objectives. Marketing views the research center as ‘operating on another planet, and happy to
stay there’. There is simply no contact whatsoever between Research and Marketing.
Strangely enough the ‘NIH’ syndrome known to strike usually in research units is obviously at
work within the marketing department. ‘Any new idea submitted to Marketing from anyone
else is immediately rejected’. In addition the normal career path of a marketer in the whole
Group of Antinnova means that he / she should not spend more than 18 to 24 months in the
same position in the same division. This thus generates a high turn-over within the
corresponding marketing departments. This has a clear consequence on the types of
innovation which marketers promote. Such a short time span means incremental, i.e.
cosmetic, innovations dealing with minor functionalities and marginal but visible adaptations
of the product, e.g. changes in packaging. Anything else goes beyond the normal scope of a
normally ambitious product manager. We clearly made the point by reconstructing analytically
the list of all product development briefs coming from Marketing over the last three years.
‘After five years of moving things around, we usually end up with a design of the product
looping back to what it was before; the problem is that in the meantime, Marketing has forced
us to reorganize our manufacturing lines several times to cope with their cosmetic
adaptations’ as the manufacturing manager put it.
Development does not understand why Marketing and Research would have to talk to one
another. Development engineers feel that any marketing need should be expressed to them,
thus leaving it up to Development to translate the marketing briefs into research needs,
whenever they feel that it is necessary. Development insists that process innovation is key for
manufacturing costs and thus as important as product innovation. The most striking point is
that Development runs the Development Committee with an objective of efficiency. All major
functions involved in product development indeed meet in this monthly committee but little
discussion goes on during the meeting as the Development manager has arranged all decisions
to be made ahead of time by the General Manager. The development committee is thus
extremely efficient, essentially making decisions already made elsewhere, without any real
confrontation of ideas, ‘hence saving a lot of lengthy, although really important discussion !’
as someone joked about it. While innovation requires creativity, interaction and iteration,
Development views product development projects as processes to be managed and run
efficiently. Development is thus short term and efficiency oriented. The competitive mode
implicitly defended by Development is operational, as opposed to entrepreneurial or
contractual (Haanes and Fjelstad, this volume). Nevertheless, Development engineers express
anger and frustration because Marketing does not pay enough attention to the proposals and
ideas coming from technicians.

5. - page 5 -
Manufacturing has been under heavy pressure to rationalize operations out of a decreasing
number of plants where the productivity gains have been spectacular over the years. Their
innovative thrust obviously goes for process improvement and productivity. From that
perspective, they appreciate the support of Development. Manufacturing has tried to establish
some linkages with Research as they wish to prepare actively for the implementation of new
production technologies stemming from the scientific revolution affecting the industry. Their
working relations with Marketing are minimum and rather difficult, given the continuous flow
of marginal product adaptations pushed by marketers, thus significantly disturbing the
organization of production “while in fact bringing little innovative value to the customers”.
Human resources mobility across functions within Antinnova are minimum. The worst
situation is found at the research center where no researcher has been in any other function at
Antinnova or elsewhere before. Some exceptions may be noted in other departments: the head
of Development spent some years in Manufacturing as the head of one of the largest plant;
one marketer was previously a development engineer. Nevertheless these few cases do not
seem to be sufficient to significantly improve the working relations across organizational
borders at Antinnova.
It should be stressed here that the quality and dedication of the staff of each of the functional
departments which we interviewed are not to be questioned. These are really very good
people, doing their best to contribute to Antinnova success. They are great individuals, active,
dedicated and even positive thinkers, nice to deal with, but collectively unable to cooperate
across organizational borders. It appears that collectively, the satff at Antinnova lacks many of
the Agile people attributes described by Amos and Saetre (this volume).
Stories of missed opportunities are many. ‘A few weeks after I arrived as the new marketing
manager, I organized a meeting with researchers. I did not do it twice. These guys are
strange’. On another occasion, Development carefully prepared proposals to be submitted at
the yearly key strategic planning meeting. ‘We did not get any feed back on what we
suggested, except a vague comment about keeping the focus on the core business’. 18 months
before we conducted our own investigation, the CEO decided to organize a creativity program
with various working groups across the organization to collect and assess ideas for new
products. 32 interesting items were pre-selected, out of which 8 priority themes were chosen.
This was put as a top priority on the agenda by the CEO. Nevertheless, none of the persons
whom we then interviewed on the issue of innovation mentioned this process to us; except the
CEO. We subsequently found out that no significant progress had been made on most of the 8
priority themes, every team “being too busy with other priorities”.
Summary findings about Antinnova’s incompetence
The major findings of our research at Antinnova show an organization dedicated to efficiency
in all respects, including efficiency in product development regardless of the needs for
informal interaction and creativity. All internal players are extremely busy (‘busy being busy’)
with no or little time and interest to listen to anyone else from other departments. Each
member of the organization is entrenched in his / her logic attached to his / her functional
position. Each function is convinced and claims that they understand the underlying strategic
dynamics of the business better than the others. Over the years, the degree of trust among staff
and managers from the various departments has come down to a minimum.
Antinnova is a rather rich company with significant resources. The organization is heavy with
a tendency to follow competitors innovations (me-too products), accepting to bet significant
amounts of resources for every product launch, especially for advertising campaigns despite
the high risks involved. The organization is obsessed by large and costly projects, rejecting

6. - page 6 -
any smaller idea and thus becoming extremely conservative and perfectionist, precisely
because of the risk attached to any product launch when so much is at stake.
All this led to very little capacity to accept iteration and interaction in the product design.
Antinnova’s competence to compete operationally has created an incompetence to compete
entrepreneurially (Haanes and Fjelstad, this volume).
In other words, this company has slowly built an internal culture, an organizational structure
and routines which made it unable to launch new products successfully. This company has
built a strong incompetence base for itself. One may call it "in-built incompetence". And this
incompetence is built to last. At least until the company runs into difficulties.
Let us now turn to a model of organizational competence which can serve as a theoretical
basis to analyze and discuss the case of Antinnova.

7. - page 7 -
III-A model of competence
We start by reviewing briefly the competence-based perspective as it stems from the
economics and management literature before presenting a model of organizational
competence integrating and articulating what we view as the main underlying dimensions of
the concept. This model will then make it possible to revisit the case study presented and thus
address the issue of incompetence.
The resource-based view and its corollary, the competence-based perspective
The Resource based theory of the firm arose after Penrose’s (1959) work and was developed
by Wernerfelt (1984), Rumelt (1984), Barney (1986), Collis (1991), Amit and Schoemaker
(1993), Grant (1996) and several other contributions. This perspective very rightly pointed out
that the firm's performance is not just the result of the external environment in the competitive
game (Porter's five forces, the external positioning, ...); the firm's performance also varies
according to the way resources are tapped and leveraged by the organization to satisfy clients'
needs on the market place.
Interestingly enough, the resource based view of the firm did not really raise any interest
among practitioners until Prahalad and Hamel (1990) published their core competence piece,
as Wernefelt (1995) suggests. In Prahalad and Hamel's terminology, to be "core", the
competencies have to meet three criteria, namely (1) offer real benefits to customers, (2) be
difficult to imitate and (3) provide access to a variety of markets.
The heart of the matter has precisely to do with the uniqueness of the various re-combinations
of core competencies which the firm may achieve, to design, manufacture and distribute
products and services to the customers on the market place. A higher level resource bundling
process is thus at work to create an offer which may be attractive to and valued by the clients,
Mc Gee (1995).
This clearly stresses that a unique combinaison of core competencies can indeed generate a
truly competitive advantage. In addition, Prahalad and Hamel suggested to re-think strategy in
terms of competence rather than for organizational SBU's.
In turn, the resource based view led to a knowledge-based perspective, Conner and Prahalad
(1996), Kogut and Zander (1996). At the same time an attempt was made to build a theory of
competence-based strategy. The term competence is meant here to enlarge the concept of
resource while building up on the resource-based perspective.
The Prahalad and Hamel (1990) core competencies lead to Hamel and Heene (1994) and
Sanchez, Heene and Thomas (1996) as well as to the Heene and Sanchez (1997) and Sanchez
and Heene (1997) volumes.
As Durand (1998) puts it: ‘In medieval times, alchemists were seeking to turn base metals into
gold. Today managers and firms seek to turn resources and assets into profit. A new form of
alchemy is needed in the organization. Let's call it competence’.
We follow Heene and Sanchez who advocate that the emerging competence theory has
something more to offer than the resource based view, bringing into the picture this
"organizational alchemy" which is necessary to properly leverage the resources and assets at
hand.
In any case, the line of reasoning behind the resource / competence based view of the firm
remains essentially as follows: the firm taps sources of resources and assets and combines
these into products and services for the clients through ad hoc management processes taking
place within the organization. We choose to use the generic word competence to describe
these capabilities to combine, bundle and integrate resources into products and services, what

8. - page 8 -
Heene, Sanchez and Thomas (1996) call the integrated coordinated deployment of resources
and assets.
Some of these competencies are distinctive enough to be labeled core competencies, i.e.
leveraging specific sets of capabilities and assets which give the firm a potentially significant
and sustainable competitive advantage over its competitors. In contrast some inability to
achieve part or all of this may be distinctive enough to be labeled incompetence.
Let us now try to clarify what we mean behind the concept of competence.
A model of organizational competence built round three generic forms of competence:
Knowledge, Know-how and Attitudes
From research on Education, we suggest (see Durand, 1998) to borrow the three key
dimensions of individual learning : knowledge, know-how and attitudes, following Pestalozzi
(1797) who referred to "head, hand and heart".
Knowledge corresponds to the structured sets of assimilated information which make it
possible to understand the world, obviously with partial and somewhat contradictory
interpretations. Knowledge thus encompasses the access to data, the ability to recognize them
as acceptable information and to integrate them into pre-existing schemes which obviously
evolve along the way.
Know-how relates to the ability to act in a concrete way according to predefined objectives or
processes. Know-how does not exclude knowledge but does not necessitate a full
understanding of why the skills and capabilities, when put to operations, actually work.
Know-how thus in part relates to empirism and tacitness.
Attitudes are too often neglected in the resource based view as well as in the competence
based theory of the firm. This may be due to the traditional lack of interest of economists in
behavioral and social aspects, although Barney (1986b), Fiol (1991) or Leonard-Barton (1992)
have touched upon this aspect. We believe that behavior but even more so identity and will
(determination) are essential part of the capability of an individual or an organization to
achieve anything. This view is supported by Amos and Saetre (this volume), who emphasize
the cultural dimension as key to organizational competence. This is a matter of choice in
defining concepts. We argue that a dedicated organization, eager to succeed, is more
competent than a demoralized, passive one with exactly the same knowledge and know-how.
These three dimensions are the generic axes of our competence referential. Figure 1 illustrates
some sub-dimensions worth of interest around these three principal axes, including the
distinction between techniques (essentially empirical) and technology (partly explained
scientifically), or between know how, know what and know why (Sanchez, 1996).
Going one step further, one should recognize that management is not necessarily capable of
acting upon these dimensions. Standard managerial levers are of a different nature:
Strategizing (strategic thinking leading to a strategic vision, a strategic logic thus relating to
the "know why", strategy deployment and strategic decision making). This relates to the
knowledge (know-what and know why) dimension.
Organizing (the organizational structure as well as management processes). This relates more
to the "know how" dimension.
Motivating (i.e. setting up incentives but also coaching, encouraging positive thinking and
behavior, promoting dedication and will). This thus relates to the "attitudes" dimension.
Figure 2 illustrates the respective positioning of each of these three main managerial levers for
action with respect to the proposed key dimensions of competence in our model. This thus
raises the issue of the interaction between managerial tasks and competence building and
leveraging. The links are obviously not so direct. How can management operate on the same
wavelength (according to the same dimensions) as the competence base in order to better

9. - page 9 -
build and leverage competence? This important issue will be discussed later in this paper for
the case of Antinnova.
Knowledge
Attitudes
Will
Know how
...
...
Managerial action and
the Competence Base
Strategy
Organization Motivation
Str
ate
gic
Lo
gicStr
ate
gic
Vis
ion
Strategic Deployment
Structure
Th
e
inf
or
ma
l
org
ani
zati
on
Pr
oce
sse
s
an
d
rou
tin
es
Figure 2
Knowledge
Attitudes
Know how
Technologies
Skills
Determination
Culture
BehaviourTechniques
Knowwhat
...
...
Threedimensions of
competence
Know why
Figure 1•Data
•Information
•Knowledge
•Skills
•Capabilities
•Know how
•Behavior
•Identity
•Will
Coordinated Deployment
Knowledge
AttitudesKnow-how
Shared Vision
Organizational
Structure
Management
Processes
and Routines
Identity
Figure 3

10. - page 10 -
The model also refines the heart of the concept of competence, the "organizational alchemy"
as we call it, which has to do with the coordinated deployment of resources and assets. Indeed,
while Sanchez, Heene and Thomas (1996) actually associate their coordinated deployment
function to the management processes only, the model extends the concept of competence to
integrate the cultural identity, the strategic vision and the organizational structure. The identity
(the shared values, revealed by the rites, taboos and beliefs) operate as a cement holding the
organizational pieces together at least as efficiently as any other coordinating and integrating
mechanism. Similarly, a shared vision also contributes to the coordinated deployment of
strategy, channeling people's energy, motivation and commitment. Finally, the organizational
structure is also a key element of the same coordinated deployment of assets and capabilities.
In other words, in our model, the content of the coordinated deployment concept is reviewed
and enlarged to encompass four elements: the management processes, the identity, the
strategic vision and the structure. This is shown on Figure 3. In so doing, our model clearly
relates to Strategor's (1997) tetrahedron of strategic management.
The model also includes the question of competence building. In a way, competence is a stock
accumulated as a result of an ongoing flux of learnings, reinforcing and enlarging the
competence base of the organization.
Table 1 extends to know-how and attitudes what Durand (1992) described for knowledge
building, suggesting a sequence of stages from data and information, to knowledge and
expertise as shown below :
Data Information Knowledge Expertise
accept assimilate transcend
Indeed, know-how is built through action which shapes skills and techniques. Similarly
attitudes are shaped through interaction when individuals conform to group or organizational
behavior, adopt the same cultural values and share the same basic commitments. Table 1
illustrates the parallelism which prevails in the way learning mechanisms operate for each
dimensions of the referential of the model. In this sense, learning stems from information,
action and interaction.
Expertise actually requires to go one step further. Expertise needs some form of quantic jump
in competence together with a merger of the three generic dimensions of competence. Figure 4
illustrates this idea graphically, detailing the learning processes at hand for each dimension of
the referential of competence.
At this stage, it is important to note that the pre-existing stock of competence (the knowledge
base, existing skills and identity) significantly affects the learning capabilities. It may operate
as a booster to build up competence fast. It may also transform itself into a source of bias and
inertia, hindering any real new learning. History indeed matters. The "installed base" counts.
This is also shown graphically on Figure 4. For each axis, the dotted arrows loop back on the
pre-existing competence base which in turn influences new learnings. The result of learning is
not just a function of the learning process. It also depends upon the pre-existing base of
competence.
This holds particularly true when the installed base of competence aims at cost reduction and
efficiency, whereas the new competence required emphasize creativity and innovativity
(Haanes and Fjelstad, this volume).
One final feature of our model of competence has to do with the idea that learning takes place
for the three generic dimensions of the model in a simultaneous and interdependent way. See
Figure 5. If knowledge building stems from exposure to and reception of external data which
has to be accepted as information and integrated into frameworks, if know-how is built
through action while attitudes are shaped through interaction in companionship, nevertheless,

11. - page 11 -
the three parallel modes of building up competence operate in an interrelated, simultaneous
way. This extends what Senge (1990) advocates, following Piaget : learning needs action.
A more detailed discussion of the model can be found in Durand (1998). The intent and focus
of the present paper require to turn now to the issue of incompetence, revisiting the story of
Antinnova.

12. - page 12 -
Knowledge Know-how Attitudes
Data Reception
Information
Knowledge
Action
Skills and capabilities
Know-how
Interaction
Behavior, culture, will
Attitudes
Expertise Expertise Expertise
Pa rallel le arn ing p roc esses an d stag es
Table 1
The d yn am ics
of c om pe te nc e b uild ing
Transcend
Expertise
K no w le dg e
K no w -Ho w A ttitude s
Info rm a tio n
• Formal training
• Existing knowledge ba se
• Learning by lea rning
Dat a
enact
assimilate
• Companionship
• Existing skills
• Learning by doing
Action
• Companionship
• Identity
• Learning by sharing
Interaction
S ki lls
c ap abi litie s
Be h avi o r /
Ide ntity / W ill
integrate adopt
Figure 4
conformpractice
• No real learning (know ledge
building) without action
• Know-how is v ulnerable without
knowle dge
• Knowle dge is sterile without being
embodied in attitudes
• Attitude s useless w ithout a meaning
• Weak collective know-how without the ability to
ope rate as a group (attitudes)
• Attitude s are usele ss w ithout know-how for action
Kno wled g e
A ttitu d esKno w-H o w
The th ree dim en sion s
of c om pe te nc e a re
inte r-d ep en den t
Figure 5

13. - page 13 -
IV- Revisiting the Case study : from Competence to Incompetence
The model presented above aimed at describing competence using an integrated set of three
generic and interdependent dimensions. Yet, the model may also be helpful in describing what
incompetence is about, thus in turn helping grasp the concept of competence from the
opposite perspective, as a mirror image.
Incompetence at Antinnova
One of the most striking aspects of the Antinnova case is probably the contrast between (a) the
quality and dedication of the company staff members and (b) the lack of trust and cooperation
among managers from different functional departments. The knowledge of the organization
regarding markets, client needs, competition, technologies, etc., is actually remarkable
(although it may surely be improved). Similarly, the available skills within the organization at
Antinnova are without any doubt at the fore front of the best demonstrated skills in the
industry (advertizing campaigns, lean manufacturing operations, etc.).
But when it comes to collective practices on new product development, Antinnova is just not
capable.
In that sense, the knowledge and functional know-how at Antinnova are most probably not the
problem. The problem comes from the “know how to work together” on non routine tasks.
We would argue that attitudes constitute the basis of the incompetence of the Antinnova
organization for product development.
In this instance, attitudes annihilate the knowledge and skills of the company. It is not a matter
of rare resources or assets which could be (or not be) acquired on the market from suppliers. It
is not a question of a piece of equipment or a technological process for which the blue print
would be missing. Instead, it is indeed a question of coordinated deployment of resources and
assets but going beyond management processes. The management processes are not the
problem per se. The trouble comes from the way the members of the organization play against
the management processes.
We argue that the past and current cultural behavior of this company has grown into an
organization fit for productivity and efficiency but unfit for creativity and innovation. Haanes
and Fjelstad (this volume) argue in the same direction. Distinguishing three modes of
competition, they show that the competence required for efficiency are very different than
those required for creativity. Teams are under pressure and work hard but antagonism and lack
of trust result in a streamlined but sterile product development process. How can innovation
projects be treated under similar time pressure as operations ? The development committee
and the way it is run is just the tip of the iceberg. It reflects the real nature of the culture
prevailing at Antinnova. This culture is at least twofold. On one hand the dominant values
have to do with productivity and efficiency, not creativity and trial and error. On the other
hand, historical fights and oppositions have generate a culture of suspicion and unopenness to
others’ ideas and suggestions.
It sounds like a cats and dogs story. If cats and dogs have been known to hate and fight each
other for ages, it does not mean that dogs are unable to live peacefully with other dogs or with
other animals. The same holds for cats. Some cats and some dogs can actually get along pretty
well. It is just a question of starting life on a different basis. But when a baby dog first meets a
cat, the dog usually learns the lesson once and for all. (Obviously, the same holds for cats the
other way around). Reforming these early training is known to be difficult.

14. - page 14 -
In such instances, trying to convince, explaining what the common goals are, deploying the
strategy, arguing, may not prove sufficient nor even relevant. A cognitive response to this type
of incompetence is just not adequate. This would focus on a wrong dimension of the
competence base, the knowledge axis of the referential.
Conversely, the “soon-to-be classical” literature on competence would suggest to reengineer
the management processes, typically adapting the structure and reengineering the product
development process. Yet, we argue that, in this instance, implementing new management
processes may not do the job either. The incompetence which we identify in this instance at
Antinnova is embedded in the heart (not in the hand) of the organization. It is a matter of
identity and culture which are rooted deep down in the collective behavior of the organization.
The disease may actually be even more difficult to treat. Indeed our model suggests that the
pre-existing competence base for each of the principal axes of the competence referential acts
as a filter, shaping and limiting any new learning. This holds especially true for the identity of
an organization which is known to constitute a major source of inertia.
In that sense, the model presented suggests that the incompetence encountered in the
Antinnova case is of a different nature than what conventional managerial wisdom would
indicate. This in turn would lead to recommend a different kind of managerial action. We
shall come back to this point.
All in all, the case of Antinnova thus illustrates how one single missing link among the three
generic element of competence (knowledge, know-how and attitudes) may affect the whole
performance of the organization. A major deficiency on one key dimension, namely attitudes,
and the whole ability to innovate of an otherwise efficient company turns out to be destroyed.
In addition, the classical managerial levers of figure 2, (a) strategizing (formulation and
communication of strategy which in this instance means explaining the importance of product
innovation) and (b) organizing (both the structure and the management processes) are most
probably ineffective, as they have proven to be so far for the top management of Antinnova.
Even (c) the ‘motivating’ part is not enough as it may sound as rhetoric to the staff.
Instead, what the model presented suggests in the case of Antinnova would be a different tack,
namely some attempt to transform the culture of the organization in order to generate new
attitudes more compatible with the specific needs of innovation.
However, transforming the identity in turn means unlearning part of the existing cutural base.
This raises the issue of unlearning which is most probably the core issue of the Antinnova
case.
This discussion of the case study of Antinnova thus suggests to proceed in two distinct but
complementary directions. First, we may use the model of competence presented above to
extend the theoretical analysis of incompetence to other situations than just the one discussed
empirically here. Second, we may use the same model to discuss unlearning.
Forms of incompetence
By analogy to the case study presented, our model of competence may help envision and
describe three generic forms of incompetence.
The first generic form of incompetence which we identify has to do with the lack of capability
of an organization for one or more of the three principal dimensions of competence.
We have just seen the case of a knowledgeable and skilled organization, nevertheless unable
to perform innovation tasks adequately due to the attitudes prevailing in the company. Other
situations may lead to similar dysfonctionning. A nice and smooth collective behavior of

15. - page 15 -
dedicated and skilled team members may be useless if no common strategic objective, no
shared vision, no knowledge of market needs and competitors’ position are available. Think of
a skilled orchestra without music to play or a football team without a tactics. Similarly, a well
defined strategy shared among a dedicated team of well behaved members may prove useless
if no technical and practical skill is available. Think of a well trained football team provided
with musical instruments and invited to perform a fine piece of music.
In other words a deficient and unbalanced portfolio of competence may be inadequate in many
instances.
The second generic form of incompetence which our model helps identify is the case of a
strong competence base unfit to new competitive conditions and operating as a source of
inertia, preventing the organization to adapt through new learning.
The stock of existing knowledge may impede new information acceptance. The psychology
literature suggests that individuals tend to reject data which do not fit their previous
knowledge while they overemphasize data which reinforce their existing understanding and
beliefs, Hogarth (1980), Schwenck (1984, 1988), Barnes (1984), Stubbart (1989).
The existing skills may impede new empirical action which would otherwise help build new
skills. The typist would find it difficult to adjust to a non standard key board and thus does not
even try. Routines entrench organizational skills in specific forms and, in so doing, hinder the
building of new skills.
The existing culture, the collective behavior of an organization may impede new forms of
interactions, thus making it difficult to adopt new behaviors. When the baby cat learnt the
lesson from the big dog, it was once and for all. Since suspicion arose years ago at Antinnova
among Marketing, Development, Research, Manufacturing, it is now difficult to generate
situations of positive interaction between functional departments, where new forms of trust
and confidence could be rebuilt.
In other words, too much inadequate competence (knowledge, know how, attitudes) may
impede learning and adaptation.
The third form of generic incompetence which our model helps identify corresponds to the
case of a managerial misfit. When management priorities and actions mismatch the
competence base, the conflicting dynamics most probably ends up in chaos. In such cases, the
organization is likely to be unable to achieve what the management desires while being
prevented from doing what it is good at. The organization is bound to behave as an
incompetent body. A law firm or an hospital may not necessarily perform best when managed
as a military unit.
In other words, incompetence may also stem from the misuse of managerial levers of an
otherwise competent organization.
See Table 2.
In a way the first of the generic forms of incompetence identified here relates to the lack of
one or several components of competence in an organization, as described in our referential of
competence. This first form of incompetence is a matter of deficiency (or unbalance) in the
competence base.
The second form relates to the existence of a sizeable base of inadequate competence which
impedes other learning and thus renewal. This second form of incompetence is a matter of too
much inadequate competence.
The third form relates to a mismatch between management priorities and competence. In such
instances, managerial action is not on the same wavelength as the competence base. This third
incompetence is in fact a matter of misuse of competence.

16. - page 16 -
The three generic forms of incompetence can in turn be linked to each one of the key
dimensions of our referential (knowledge, know how and attitudes), as a way to identify the
source of incompetence more precisely.
In light of these three categories of incompetence, the Antinnova case may in a way be
summarized as follows (See Table 3):
- the attitudes in the organization are not collaborative enough to permit product development
processes to operate smoothly. (first form of incompetence: deficient organizational behavior).

17. - page 17 -
Dia gn osis o f th e In no vation -related In com p eten ce at An tinn ova
Table 3
Competence Deficiency Competence Inadequacy Managerial M isfit
No collaborative attitudes
among functionnal
departments at Antinnova
Knowledge
Know How
Attitudes
Attitudes and culture shaped
by a permanent search for
productivity and efficiency
Strategic shift from focus
on productivity and
efficiency to creativity and
innovation, thus asking
Antinnova's organization
what it cannot deliver
Thre e Form s of Inc om pe te nc e
Table 2
Competence Deficiency Competence Inadequacy Managerial M isfit
Partial or global lack of
capability for one or several
dimensions of the
Competence Base
Not enough or unbalanced
Competence Base
Oversized inadequate
Competence Base impeding new
learning
Too much inadequate
Competence
Managerial priorities and actions
in contradiction to the
Competence Base
Misuse of the existing
Competence Base
Dim en sion s of th e D ia g nosis an d Re le van t leve rs for
m a na ge rial a ction Figure 6
Strategy
Organisation
Structure and Processes
Culture / Attitudes
(-) (+)
Difficulty of achieving change (increasing inertia)
If : Diagnosis
Then : Target
Thus : Relevant
Action
Suggested sequence of action in time (interrelated but sequential actions)
X X X
Divergence in strategic
objectives
Strategic convergence
Communication
Strategic deployment
Incentives / Constraints
Organisation is not
performing well
New structure, new
processes
Reorganize
Reengineer
Cultural Gap
among functions
Reconciliation
Cooperation
Unframing, Team
rebuilding, Reframing

18. - page 18 -
- the culture prevailing at Antinnova makes it extremely difficult for the organization to
reform itself. Productivity in operations, efficiency in project management and antagonism
among functional departments are dominant values (second form of incompetence: too strong
an inadequate culture, unfit to the requirements of innovation)
- the strategy adopted by the top management at Antinnova represents a U turn for the
organization which has been under heavy stress for productivity over the previous years, thus
becoming good at running lean operations, much less at innovating (third form of
incompetence: asking the organization what it cannot deliver)
One may thus go back to the initial aim of this paper and review the concept of competence
from the perspective of incompetence: One may indeed think of ways to promote and enrich
the competence of an organization just by looking at the mirror image of our three generic
forms of incompetence: (1) building a balanced, homogeneous competence base with all three
dimensions of our referential covered at the same time in an interrelated way (2) maintaining
the competence base open in order to keep new information, new action, new interaction and
thus new learning possible (3) adopting a strategy, an organization, a motivating scheme
(communication policy and incentives) in fit with the competence base in order to leverage the
potential of the firm instead of opposing it. On innovation matters, this is obviously not the
type of management of competence which took place at Antinnova.
In turn the diagnosis formulated on the Antinnova case leads to the issue of overcoming
incompetence. When it is just a matter of deficiency, learning mechanisms through
information, action and interaction may be activated. However, when it is a matter of
incompetence of the second or third form, the question of unlearning arises as well.
Unlearning
From an empirical study of 20 projects of product and process developments, Leonard-Barton
(1992) points out how much core competence may end up operate as core rigidities when
change affects the competence base now required. Interestingly enough, in such instances,
learning first means unlearning.
Hedberg (1981), Nystrom and Starbuck (1984), Durand (1992), McGill et Slocum (1993),
Rumelt (1995), Montgomery (1995), Bettis et Prahalad (1995) have all addressed the same
issue of obsolete competence and unlearning. When past experience and accumulated
competence are obsolete and constitute inertia, before any new learning can take place, it is
essential to unlearn.
Yet, unlearning is not a natural nor an easy move for an organization. This is actually one of
the most difficult task of management.
Seen from the perspective of our model of competence, this may be achieved in two
complementary ways. On one hand it is a matter of making sure that the existing competence
base fades away, e.g. through human resources mobility, retraining, deploying strategy,
reorganizing the structure, reengineering the management processes, etc. On the other hand, it
is also a matter of promoting new learning, escaping from the bias generated by the pre-
existing competence base as illustrated by the dotted, loop-back arrows of figure 4. New
information, new action and renewed interaction are the best ways to overcome the inertia of
obsolete competence. The organization has to move from single-loop to double-loop learning.
Yet, we argue that the three key dimensions of our referential of competence do not present
the same ability to resist change. More specifically, we argue that unlearning the culture of the
organization is more difficult than expelling an obsolete know how, which in turn is more

19. - page 19 -
difficult than getting rid of a useless piece of knowledge. In that sense, our referential of
competence is clearly asymmetrical.
In the case of Antinnova, this actually leads to suggesting that the sequence of managerial
action should be to treat the problem of inadequate culture first before trying to reorganize the
product development process and deploy the strategy. This is illustrated on figure 6.
Obviously these three elements of action have to take place in a coordinated way, but it would
most probably be irrelevant to continue what the top management of Antinnova has been
doing for years unsuccessfully, namely trying to convince the staff about the relevance of the
new strategy, i.e. the importance of innovation. Just reorganizing would not seem more
appropriate at this stage either. The urgent task is most probably to help the managers and
staff of each of the functional departments to unlearn their antagonism in order to be able to
work together again on a basis of trust and confidence. In as much as the problem is
essentially cultural, and thus embedded deeply in the heart of the organization, one probably
needs to aim at unfreezing the situation, unframing the players and attempting to have them
rebuild their modes of interaction on a different basis. It is a matter of team rebuilding. Before
this is done, no significant change should be expected at Antinnova regarding innovation.
In other words, once the diagnosis is available, one can think of a variety of solutions to
address the issue, which appears here to be a matter of reconciliating managers across
organizational borders. Understanding incompetence better may thus lead to more relevant
managerial action, concentrating first on the most important task of unlearning and then
turning to relearning.
V. Summary
We have started with three preliminary comments about the management literature on
competence, (a) pointing out to the focus of past research on learning while relatively less
attention has been paid to describing the stock of competence itself, (b) regretting the overall
lack of empirical contribution on competence and (c) suggesting that the concept of
organizational competence is more than a simple extension of individual competence. On that
basis, we have indicated that the objective of this chapter is an attempt to document
empirically the concept of organizational incompetence, as just another way of trying to grasp
the concept of organizational competence.
We have then started by presenting the case study of the Antinnova company. This highly
profitable firm, leader in its markets, has been unable to develop new products successfully in
the last years, thus showing a clear incompetence on innovation-related matters. We have
described the main findings of our field investigations showing how the firm has built for
itself an internal culture and organizational routines fit for productivity and efficiency but
unfit for creativity and innovation.
We have then turned to a model of competence as a way to analyze the incompetence of the
Antinnova company. We have first briefly reviewed the literature dealing with the resource-
based view and the competence-based perspective. We have then presented our model of
competence built around three key dimensions (knowledge, know-how and attitudes). We
have enlarged the content of the concept of coordinated deployment of assets and resources,
what we call the "organizational alchemy", to include not only management processes but also
the identity, a shared vision and the organizational structure.
We have also shown how managerial levers (strategizing, organizing, motivating) relate to the
three generic dimensions of our referential before introducing the dynamics of competence
building into the model, discussing the importance of the pre-existing competence base

20. - page 20 -
influencing the flow of new learning. We have finally suggested that the three generic
dimensions of competence in our model are interdependent, reinforcing each other as learning
takes place simultaneously in all directions through information, action and interaction.
On the basis of the model, we have then revisited the case study. Since the core problem of the
Antinnova organization is not an issue of a missing piece of knowledge or know-how but has
to do with attitudes and behavior, we have suggested that it thus requires more than strategy
deployment or process reengineering to treat the problem.
On that basis we have then described the three forms of incompetence which the model helped
us identify, namely (a) competence deficiency or unbalance, (b) competence inadequacy, and
(c) managerial misfit. We have further argued some form of asymmetry among the three key
dimensions of our referential as it appears to be more difficult to unlearn attitudes than to
unlearn obsolete know-how or even more so obsolete knowledge. Analyzing the various
forms of incompetence described by table 3 is indeed a way to grasp what competence is
about.
As an illustration, we have seen in more details the nature of the incompetence of Antinnova
when it comes to product development and have discussed the implications of this diagnosis
for potential managerial action.
All in all, this discussion is a typical example of a research aimed at helping build and
document a self-sustained competence based theory of the firm, recognizing that indeed more
work need to be conducted on the concept of organizational competence, especially with an
empirical intent.

21. - page 21 -
References
Amit R. and P.J. Schoemaker (1993), "Strategic Assets and Organizational Rent", Strategic
Management Journal, n°1, pp. 33-46
Arrow K. J. (1962), "The Economic Implications of Learning by Doing", Review of
Economic Studies, 29, pp. 155-173
Atkinson A.B. and J.E. Stiglitz (1969), "A New View of Technological Change", Economic
Journal, 76, pp. 573-578
Barnes J. (1984), "Cognitive Biases and their Impact on Strategic Planning", Strategic
Management Journal, 5, pp. 129-137
Barney J. B. (1986a), "Strategic Factor Markets: Expectations, Luck and Business Strategy",
Management Science, 32, pp. 1231-1241
Barney J.B. (1986b), "Organizational Culture: Can it be a Source of Sustained Competitive
Advantage?", Academy of Management Review, vol.11
Bettis A. R. and C.K.Prahalad (1995), "The Dominant Logic: Retrospective and Extension",
Strategic Management Journal, 16, pp. 5-14
Carlson (1995), personal communication
Collis J. (1991), "A Resource-Based Analysis of Global Competition: the Case of the Bearing
Industry", Strategic Management Journal, 12, pp. 49-68
Conner K. C and C.K. Prahalad (1996), "A Resource-Based Theory of the Firm:
Knowledge Versus Opportunism", Organization Science vol. 7, n°5, Sept-Oct.
Davenport T. H. and L. Prusak (1998), "Working Knowledge. How Organizations Manage
What they Know", Harvard Business School
Dosi G., D. Teece and S. Winter (1991), "Toward a Theory of Corporate Coherence", edited
by Dosi G., R. Gianetti and P. A. Toninelli, Technology and the Enterprise in a Historical
Perspective, Oxford University Press
Durand Thomas (1992), "The Dynamics of Cognitive Technological Maps", in Strategic
Processes, edited by P. Lorange, J. Roos, B. Chakravarty and A. Van de Ven, Blackwell
Business, April 92
Durand Thomas (1997), "Strategizing Innovation: Competence Analysis in Assessing
Strategic Change", in Competence-Based Strategic Management, A. Heene & R. Sanchez
editors, John Wiley
Durand Thomas and Silvia Guerra-Vieira (1997), "Competence-Based Strategies When
Facing Innovation. But What is Competence?", in Strategic Discovery: Competing in New
Arenas, edited by H. Thomas and D. O'Neal, John Wiley & Sons Ltd.
Durand Thomas (1998), "The Alchemy of Competence", in Strategic Flexibility: Managing
in a Turbulent Environment, Prahalad C.K., G. Hamel, D. O’Neil & H. Thomas editors, John
Wiley
Durand Th., E. Mounoud and B. Ramanantsoa (1996), "Uncovering Strategic
Assumptions: Understanding Managers' Ability to Build Representations", European
Management Journal, vol. 14, n°4, pp. 389-398
Fiol M. (1991), "Managing Culture as a Competitive Resource: an Identity-Based View of
Sustainable Competitive Advantage", Journal of Management, vol. 17, n° 1, 1991
Grant R. M. (1996), "Prospering in Dynamically-competitive Environments: Organizational
Capability as Knowledge Integration", Organization Science, vol. 7, n°4, July-August 1996
Hamel G. and A. Heene, editors (1994), Competence-Based Competition, John Wiley,
Chichester, UK
Hambrick D. (1989), "Putting Top Managers Back into the Strategy Picture", Strategic
Management Journal, Summer Special Issue, 10, pp. 5-15

22. - page 22 -
Hedlund and Nonaka (1992), "The Dynamics of Knowledge", in Strategic Processes, in P.
Lorange and al. Editors, Wiley
Heene A. and R. Sanchez (1997), in Competence-Based Strategic Management, A. Heene &
R. Sanchez editors, John Wiley & Sons
Kogut B. & U. Zander (1996), "What Firms Do ? Coordination, Identity and Learning",
Organization Science, vol. 7, n°5, Sept-Oct. 96
Leonard-Barton D. (1992), "Core Capabilities and Core Rigidities: a Paradox in Managing
New Product Development", Strategic Management Journal, vol. 13, 1992
Lowendahl B. (1997), "Strategic Management of Professional Service Firms",
Handelshojskolens Forlag, Copenhagen Business School Press
Lundvall B.A. (1988), "Innovation as an Interactive Process: from User-Producer Interaction
to the National System of Innovation"
Marino K.E. (1996), "Developing Consensus on Firm Competencies and Capabilities",
Academy of Management Executive, vol.10, 3, pp.40-51
Mc Gee J. (1995), communication at the Third International Workshop on Competence-
Based Competition, Ghent, November 1995
Moscovici S. (1988), "Notes Towards a Description of Social Representations", European
Journal of Social Psychology n°18, pp. 211-250
Penrose E. (1959), "the Theory of the Growth of the Firm", Oxford, Blackwell
Pestallozi J. H.. (1797), "Mes recherches sur la marche de la nature dans l’évolution du genre
humain", Traduction Michel Soëtard, Ed. Payot Lausanne
Prahalad C. K. and G. Hamel (1990), "The Core Competence of the Corporation", Harvard
Business Review, pp. 79-91
Rosenberg N. (1972), Technology and American Economic Growth, edited by Armouk, New
York
Rumelt R.P. (1984), "Towards a Strategic Theory of the Firm", in Competitive Strategic
Management, R. Lamb ediror, Prentice-Hall, Englewood Cliffs, pp. 556-570
Sanchez R. (1996), "Managing Articulated Knowledge in Competence-Based Competition",
in Dynamics of Competence-Based Competition, R. Sanchez, A. Heene & H. Thomas editors,
Elsevier, London
Sanchez R. and A. Heene (1997), "A Systems View of the Firm in Competence-Based
Competition", in Dynamics of Competence-Based Competition, R. Sanchez, A. Heene & H.
Thomas editors, Elsevier, London
Sanchez R., A. Heene and Thomas H. (1996), "Towards the Theory and Practice of
Competence-Based Competition", in Dynamics of Competence-Based Competition, R.
Sanchez, A. Heene & H. Thomas editors, Elsevier, London (forthcoming)
Senge (1990), "The Fifth Discipline"
Strategor (1993), "Stratégie, Structure, Décision, Identité - Politique Générale d'Entreprises",
ouvrage collectif, InterEditions
Schneider S. and R. Angelmar (1993), "Cognition in Organizational Analysis: Who's
Minding the Store?", Organization Studies, n°14, pp.347-374
Schwenk C. (1984), "Cognitive Simplification Processes in Strategic Decision-making",
Strategic Management Review, n°5, pp. 111-128
Schwenk C. (1988), "The Cognitive Perspective on Strategic Decision-making", Journal of
Management studies, n°25, pp. 41-55
Stubbart C. (1989), "Cognitive Science: a Missing Link in Strategic Management Research",
Journal of Management Review, 10, pp. 724-736
Teece D.J. and G.Pisano (1994), "The Dynamic Capabilities of Firms: An Introduction",
International Institute for Applied Systems Analysis, Laxenburg, Austria

23. - page 23 -
Von Hippel E. (1976), "The Dominant Role of Users in the Scientific Instrument Innovation
Process", Research Policy, 5
Wernerfelt B. (1984), "A Resource-Based View of the Firm", Strategic Management Journal,
5, pp. 171-180
Wernerfelt B. (1995), "The Resource-Based View of the Firm: Ten Years After", Strategic
Management Journal, vol. 16