Leveraging Your Core Competencies: Know Thyself…

…was inscribed at the temple of Apollo at Delphi.   The ancient Greeks could teach the modern corporation a thing or two about running an enterprise.  In the context of business strategy, knowing thyself is the process of understanding your firm’s core competencies so you can compete more effectively and reduce risk.  A Core Competency is a deep and unique proficiency that enables a company to perform better than competition and deliver unique customer value. Strong competencies are always embodied in an organization’s culture, collective skills and shared experiences;  they ultimately will deliver market leadership and industry-leading profitability. 

Global leaders like Cisco, P&G, Goldman Sachs, Toyota, Google and Walmart regularly examine and leverage well-honed core competencies that sustain their competitive advantage.  Examples of their strengths include:  uniquely managing a complex supply chain (Walmart, Toyota); regularly bringing winning innovations to market (P&G, Goldman Sachs) or; seamlessly integrating acquisitions & technologies into the core business (Cisco, Google).  These firms not only understand their strengths and weaknesses; they also relentlessly augment and leverage their competencies through investment, employee recruiting and knowledge sharing.

There is considerable strategic and organizational value to understanding your firm’s Core Competencies, including:

  • Developing competitive and differentiated market positions and strategies that capitalize on corporate strengths;
  • Unifying the company’s lines of business and functional groups through a common market position;
  • Improving the transfer of knowledge and skills across the company;
  • Deciding and aligning around priorities and resource allocation;
  • Supporting decision making around outsourcing, divestment and strategic partnering;
  • Creating new markets while quickly enter emerging markets;
  • Enhancing the brand image and building customer loyalty.

I have worked with a number of firms who were challenged to define in concrete terms their strengths and weaknesses.  To assist them, we utilized an analytical framework that gathered and synthesized the collective learning within the organization as well as external best practices.  Our methodology includes the following steps:

  • Identify the firm’s key abilities and redefine them in terms of easily-understood, organization-wide strengths;
  • Benchmark the firm with other companies with the same skills to ensure that it is developing unique capabilities while acknowledging strategic gaps;
  • Uncover what capabilities its customers truly value, and invest accordingly to develop and sustain valued strengths;
  • Create a strategic road map that sets goals for competence building;
  • Encourage communication and involvement in core capability development across the organization;
  • Preserve core strengths even as management expands and redefines the business;
  • Outsource or divest noncore capabilities to free up scare resources that can be used to deepen core capabilities.

Understanding your company’s strengths and weaknesses is often easier said than done.  Many firms lack sufficient data to analyze their business.  There is often a reluctance or inability to share information between functional groups and divisions. And, some companies display institutional biases towards certain activities or plans.  In other cases, many organizations are unable to strategically focus or to adopt the steps necessary to transform their business. 

Recognizing what you do better than your competition may be the most important factor in consistently generating growth, maximizing financial returns and minimizing business risk.

For more information on our services and work, please visit www.quantaconsulting.com


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