How do you determine your core competencies?
I was recently asked how someone should go about determining their core competencies. I had actually never thought about that question deeply. Any time it has come up, it either seemed obvious, or we just hacked our way to a determination based on some informed argument.
So I gave it a lot of thought, and I share it now because I’d like to solicit your experiences and opinions about how you would answer the same question.
1. Scan
I think it starts with scanning your environment. You need to build a list. Think big, small, and broad. Cover everything. What are your candidates? Ask people who have been there a long time, and in particular, ask the new guy? If someone is new to the organization, there is a good chance they are trying to figure that out for themselves anyway. And coming from the outside, they usually have some other experiences to compare you to.
2. Determine value
What is this worth to you? What does it allow you to do? If everyone does it, that doesn’t make it valuable. How does it help you compete (hence, competitive advantage)? Just because you’re good at it, doesn’t make it a competitive advantage. You must connect your capability to your customer, your market, or some other frame of competing.
3. Can you buy it?
This often quickly narrows the list. Can you buy the capability off the shelf somewhere? You might be great at it and it might be important, but if there are a dozen other places that can say the same thing AND you could pay them to do it for you, then its not really a competitive advantage. Why? Because anyone else could buy it too.
There are a lot of subtleties in this question. For example, you might be able to buy it, but at a 40% markup. Will that change your margins? Sure. But if it changes how you compete, then it remains a competitive advantage. You might do it better than others. This is often what we tell ourselves to be convinced we have competitive advantages. But does the customer care, meaning is it our distinction of quality, or theirs?
Why does all this matter? Because your competitive advantages is where you double-down. You protect them, you invest in them, and you find new ways to leverage them.
So, how do you determine your competitive advantages?
In the 2015 revision of the ISO 9001 standard, I like the fact that they want companies to determine what their “Context” is. It seems like there is a lot of synergies between the approach you recommend for determining an organization’s core competence and determining your context.