Core Competencies Analysis

In short, your key (or ‘core’) competencies is what your company does better that anything else. Something that it specializes in. Something that makes it special. Unique capabilities, skills, know-how, technologies, etc. These competencies, indeed, form the ‘core’ of your company and manifest themselves in your UVP, brands, products and services.

This ‘corporate core’, however, is flexible. Core competencies can – and must – be developed or, more often, acquired. They are the means, not the end; your tools, not your constraints.

Hence, you do not begin your strategic planning process with your core competencies. Instead, you start with your KEF; develop your corporate vision statement, define your strategic objectives, develop your corporate strategies, your strategic plans, define your target markets, write your UVP statements and only then start thinking about what core competencies you will need to accomplish your objectives and to implement your visions.

Our world changes fast; some core competencies (like manufacturing of VHS tapes, film cameras, floppy disks, dot-matrix printers, etc.) become obsolete and must be discarded; others (manufacturing of tablets, cell phones, etc.) need to be developed or  acquired.

Therefore, in our fast-paced world, companies must constantly ‘reinvent’ and reengineer themselves, discarding some core competencies and acquiring or developing others. Google started with but one core competency – Web search – and then expanded into many more – office software, Web analytics, operating systems, Web browsers, Earth maps, etc. Microsoft started with operating systems and programming languages and then expanded into office software, Web browsers, database management systems and even hardware – cell phones and tablets.

These examples demonstrate that a business entity seldom stops at just one core competency. Usually, over time it develops several (hence the plural form). Consequently, your company will most likely sooner or later develop a portfolio of core competencies. And when we are mentioning a portfolio of some objects, we immediately become concerned with the synergy between components of this portfolio. In this case, between your core competencies.

They also show that developing, acquiring and discarding your core competencies must be your ongoing corporate activity. Which requires a highly competent manager (and maybe even a core competencies management team) that follows a highly efficient methodology and process of managing your core competencies.

One of the challenges of managing your core competencies is their proper definition and description – which must be neither too broad to become useless nor too specific. Which makes it not just science but to a certain extent, an art. Like many other issues in corporate management. 

Another important issue in managing your core competencies is ensuring the stability of each one. Which is actually a part of your risk management function. In other words, you need to assess the risks of losing each of your core competencies (e.g., due to losing a corresponding professional) and develop measures to prevent this from happening. Naturally, the total costs of these preventive measures must be many times lower than estimated financial lossesfrom losing a specific core competency.  

Obviously, your core competencies must match your KEF, your corporate vision statement, your corporate strategies, strategic objectives, strategic plans, your UVP system and needs and desires of your corresponding stakeholders. The latter means that every core competency must be a know-how in creating aggregate value for your stakeholders – financial, functional and/or emotional.

Like it is the case with your corporate strategies, your target markets, and your UVP, your always have actual, unwritten core competencies – even if you do not have declared, written ones. Therefore, one of the primary objective of managing your core competencies is making sure that these two sets of core competencies match each other.

Again, your core competencies by themselves are useless. To be useful and valuable to your company this function must be tightly integrated into your strategic and operational management process. In other words, you need to develop and deploy a highly efficient corporate process of using your core competencies in your strategic and operational management.