idea

Core and context separates in a business what is truly differentiating for the customer (the core) and all the other activities it needs to stay alive (the context).

It illustrates a struggle between context, which tends to consume all resources because of urgency, and core which should get more than what it usually does because of importance.

Core is what customers want to pay for, like manufacturing, or the service itself. Context is everything else, like infrastructure, supply, etc. Focus on core: what your customers want. Context needs to be driven down or commoditized - you don’t have any business driving core.

links

Wardley maps can be used to determine what is core and what is context, and as a consequence what can be commoditized and what should be focused on.

P/PC balance is an orthogonal scale. Consequence of spending time and money on:

	Production	Production Capacity
Core	Improved through incremental results (more differentiated output). Linear differentiation in customers' eyes, short term revenue boost.	Improve through R&D and scientific loop. Quadratic differentiation, longer term revenue boost
Context	More non-differentiated output. Short-term improvement of non-differentiating activities for the customer	Commoditization or outsourcing Long term cost reduction of context activities

In simplified words:

	Production	Production Capacity
Core	Customer value generation, revenue boost	Investment on revenue increase
Context	Cost center	Investment on cost reduction

references

The Unicorn Project, Gene Kim is discussing commoditization as a way to focus on the important, which itself is how to make money.