To succeed in business, you must address a specific market need in a uniquely valuable way for customers that competitors are unable to easily copy. Most businesses struggle to achieve this because they lack the core competencies needed for competitive advantage. What is your core competency?
What is a core competency?
A core competency is the way that you deliberately organise, integrate and coordinate resources to differentiate what you offer customers. It provides the perceived value that competitors find difficult to imitate. These skill sets reside in your people and processes and reflect the way you operate your business.
Some of the best examples of core competencies are Apple, Netflix, and Singapore Airlines. What does Apple do best that customers value? Outstanding design and marketing. Netflix’s core competency is convenient content delivery. Singapore Airlines is stellar service.
How to develop it
Creating a core competency is a great achievement. But how do you do it. The starting point is to consider two questions:
1) Who are our ideal or preferred customers, and why?
2) Under what conditions would these customers choose us exclusively, without considering competitors?
If you know why customers prefer you and how this could lead to “sticky” customers that become brand loyal, your value proposition becomes clearer. Then identify the foundations that underpin this value proposition: the specific skill sets, processes, systems and interactions to optimise what you offer. In particular, look at what your business does best and how this could be leveraged or improved to increase perceived customer value.
A core competency is embedded knowledge
A core competency is a valuable resource that you can turn into a sustainable competitive advantage if you know how to leverage explicit, implicit, and tacit knowledge and embed it across your business.
Just remember that a core competency must be a resource that is valuable to customers, hard to find but in demand, difficult for competitors to copy or imitate, and something you can organise into your systems, processes, structure and culture.
Many business fail to develop a core competency because they do not take the time to understand what customers really value. Those that do find new ways to offer customers unique value. But it takes time to develop a core competency. And many businesses will be lucky to have more than one.
Choose partners who have one
Why not consider partnering with companies who have core competencies in areas you don’t. Apple isn’t a manufacturer but needs to create high quality products at scale. So it partners with the world’s biggest electronics contract manufacturer Foxconn.
Your value proposition and business model may be more attractive to customers if you find the right partners. Identifying like-minded businesses whose skills sets are complementary enables you to create a networked enterprise that can create network effects. Customers are drawn to ecosystems where their needs are better met.
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