The core
context

To address this issue, at Capgemini Engineering, we use the Core-Context model. This was introduced by Geoffrey Moore in 2006, to help C-suite executives make smart, informed prioritizations. The model is based on the rationale that the value of a company is tightly tied to the competitive advantage it has over its competitors, both in terms of Competitive Advantage Gap (CAG), which represents the difference with the competition, and Competitive Advantage Period (CAP), which defines the time this competitive advantage will be kept.

This implies that CxOs should focus the scarce resources of their companies on creating and maintaining this competitive advantage, and that puts the processes into two main categories:

Core: any process that contributes directly to the competitive advantage (CAG or CAP).
Context: all other processes required to fulfill commitments made to one or more stakeholders in the enterprise.

CxOs need to lead a dynamic and continuous analysis of the Core/Context situation to ensure CAG and CAP over time, if they are to increase the company’s value for its shareholders. Central to that is determining the best practices for continuously adapting company technology and technical operations to suit the changing Core/Context environment.

The main prescription is clear:

Insource the leadership of the Core.
Outsource or automate the Context.

Furthermore, there are two lessons that CxOs must take into account when implementing this prescription:

Core and Context interact to create quality, and both of them are necessary.
Whatever your Context is, it for sure is someone else`s Core. Companies have to identify where these activities are Core, and outsource there.

The challenge comes when deciding what technologies will be the main focus of the Core. The enormous number of innovations, and the speed at which they are happening, together with the simultaneous maturity of digital technologies (from niche to mainstream in AI, universal connectivity, and computing speed), opens a vast array of possibilities that could be instrumental to developing a competitive advantage for the coming years. But which should an engineering leader prioritize for investment to secure that future competitive advantage? That is a challenging question for the technical leadership of any company, and one that should be addressed through a highly structured approach.