Datalink Blog

How to Identify Core Competencies for Long-Term Success

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Allison Reid – Thursday, March 14, 2013

If you’ve expressed your core competency as great service, a talented team, or a patented product, you may be surprised to know these are not core competencies at all.  Why?  Because your competitor can also offer great service, hire a talented team, and patent a product that the market will love.  A core competency is that unique ability and strength of your company that is difficult, if not impossible, to duplicate.  A core competency is not something done somewhere in your organization by somebody, but instead it courses through the veins of the entire organization.

  This idea of core competency was introduced in 1990 by Prahalad and Hamel in a paper they wrote titled The Core Competence of the Corporation.  This concept is important today more than ever as the internet has reduced barriers of entry in just about every market you can think of, drastically increasing competition while empowering consumers.  In their paper, Prahalad and Hamel used a tree as an analogy.  The roots of the tree are the core competency, and they feed the tree which is the organization.  This allows the tree to grow branches and sprout leaves which are the products and services offered.  What makes up the roots of your organization?

Customer satisfaction, quality products, and efficient operations are the results of what you do.  Technology, skilled employees, unique materials, trademarks and patents are valuable resources that you have.  A core competency is what you can do. It is a unique ability to do or create something that cannot be attributed to a single factor, but rather several factors coming together.   

For instance, a competency of Wal-Mart is their ability to lower operating cost while generating high sales volume.  This allows them to provide low cost goods on a level that their competitors cannot duplicate.  This is a combination of scale as well as Just-in-Time inventory and supply-chain management that, again, cannot be duplicated. 

What are the unique abilities of your organization that elevates you above your competition?  You have to actively and purposefully create an identity that’s built on your core competencies in order to shape the perception of your target markets.

Identify Your Core Competencies

Long-term success comes through identifying your core competencies early on and making sure the right ingredients are in place for sustainability.   Answering these questions can help you to qualify what they are:

  • Why and how was your company established?
  • What can you do better than your competition that is unique?
  • What has been the reason for your success?
  • What are your strengths that can make you appealing in many markets?
  • If you are just getting started, what are the opportunities in your market that can be exploited to set you above the competition?  In this case, you will need to build a team with the right skills and knowledge to get you there

Once you have identified your core competencies, you must protect them like the treasure they are.  This means the decisions you make as you guide your company cannot infringe on the critical components of your core competencies.  Department and staff changes, for example, can impact the resources necessary to sustain your core competencies and negatively impact your business.  But keep in mind that core competencies are not, and should not be, set in stone.  Your organization must be able to adapt to changing market demands, and this means revisiting your core competencies to make sure you are always moving in the right direction.

Here’s my challenge to you.  Be really clear on what your core competencies are, because these are the roots that give you sustainable competitive advantage.  Then market yourself on those strengths.

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