The Strengths & Weaknesses of Core Competencies & Competitive Advantages
What is it that your company does better than anyone else? How do you get it to the market better, faster or cheaper than your competitors? Answer those two questions, and you have a good start on identifying your company’s core competencies and competitive advantages. These are two key components in strategic planning, and it pays to know them so you can allocate funding and resources to keep them strong and growing. However, you also need to monitor your competencies and advantages in light of the company’s overall performance, market trends and the larger business environment. Misidentifying, neglecting or relying too much on your strengths can turn them into weaknesses.
Core competencies are qualities or features inherent in a company that give it specialized expertise unequaled by its competitors. For Google, its core competency is developing powerful algorithms. For Disney, its outstanding competency is delighting customers and guests. You might think of your company’s core competencies as your “superpowers.” Unlike the movie variety of a superpower, a core competency can take time to develop. For example, having a seasoned and tested team of experienced managers is invaluable when a crisis hits, but experienced managers don’t grow on trees and don’t appear overnight. You can identify such a competency as a goal to be reached by recruiting experienced managers and developing from within to achieve the optimum blend of skills on the management team. In other words, core competencies are made, not bestowed.
Your competencies are the basis for your competitive advantage, but there’s more to it. It’s fine to be good at something, but you need to be the best. Position your company as the leader, the expert, the go-to source in your field, and you’re on your way. Become part of a greater vision, build a team of outstanding people, and make sure your customers are so happy with your product and service, so they’ll gladly bring more customers to you. These are all key strengths that can be made into winning competitive advantages.
Suppose Google had decided that putting cute little doodles on its homepage was a core competency, rather than building powerful algorithms. We might each have our collections of favorite doodles, but chances are we wouldn’t be able to use Google to find them because the Google in this alternative universe would hypothetically be long gone. Missing the mark when you identify your competencies and competitive advantages can lead to lost time, wasted resources and money poured down the wrong bottomless drain. That’s why it’s a good idea to review and update your strategic plans regularly. By doing so with an open mind, you should be able to catch and correct anything that seems to be drifting off track or was so mislabeled that it was never on track to begin with.
Will the core competencies and competitive advantages that you identify now still be working for you in two, five or 10 years? Competencies that are neglected or taken for granted can grow stale and dated. Not all advantages are sustainable. It’s fine to follow a trend, for example, but trends don’t last. Even long-term trends can be eclipsed by new technological developments, as Kodak found out when it persisted in making top-quality camera film while the rest of the world went digital. The best insurance against weakening your brand due to unsustainability is to maintain a strategic and forward-looking eye on the marketplace while continuing to hone your company’s innovative strengths, superior product development, and outstanding customer service and rapport.