Core competencies are the defining capabilities, skills, processes, and other resources required to deliver on a company’s core business.
Simply put, core competencies are the skills your business needs to become successful.
Too often business owners say, “Let’s improve our business,” but they don’t know where to start. So,We’re going to address:
- Where to start to improve your business.
- How to future-proof your business and gain competitive edge.
Examples of core competencies for an SME
Let’s use a bakery business as an example. If your business is selling cakes, breads, and pastries, one of the competencies (or skills) your business needs is knowing how to bake.
One of the less obvious competencies – but just as critical – is purchasing. Your business will need to buy baking products from other suppliers.
You will also need someone who can sell, because you’ll want customers to buy your products to make your business successful.
It’s important to first identify what skills or competencies your business needs for success and then focus on developing those competencies.
Core competencies, if developed well, lead to operational efficiency and let you distinguish your company from its competitors.
They are how you can differentiate your business, even in a crowded market.
Differentiating your business for competitive advantage
Let’s look at an example of how core competencies can lead to gaining a strategic edge over your competition.
Car companies like BMW, Mercedes, Volvo, and Tesla all make cars that get you from point A to point B. However, they are all known for very different things.
- What is BMW known for? Driving excellence.
- What is Mercedes known for? Luxury.
- Volvo is well-known for safety.
- Tesla is becoming very well-known for its efficient electric cars.
How did these companies who are all selling cars become known for very different things?
The answer is simple. They each decided what they wanted to be known for. Then they identified what skills they needed to be the best at their point of difference.
They focused on developing those skills as part of their manufacturing process. They use these competencies when marketing their cars to potential customers.
Developing core competencies in your business
So, how do you do it for your business?
Start by looking at what your business does and what you want to be known for. It can also help to look at your Vision, Mission, Values and Culture statements for clues.
Ask yourself, “What skills/competencies do we need to know to deliver on these things?” What do you want to be known for? If you want to be the best negotiator in town, you need the best negotiation skills.
In summary, once you have identified what your business does and what you want your business to be known for, make a list of the skills your business needs to fulfill that brand promise.
Once you know what skills you need, you can work out how to acquire those competencies or what training you need to become the best at those skills.
Lastly, here’s the real secret to make yourself stand out in a crowded marketplace and to future-proof your business.
Once you have become the best at each of your core competencies, then market those skills to your potential and current customers. You need the world to know your business is the best at what you do.
Get in touch with StrategyX for more information on how you can differentiate your business, even in a crowded market.