By Jim Bandrowski
What makes your company special? One of the most important things you can do in your next strategic planning retreat is to discover your company’s core competency. It is defined as your bundle of skills and technologies that is unique, compelling to customers, and can be leveraged into new business opportunities. Honda’s core competency, for example, is the design and manufacture of high performance small engines. In fact, their advertisement some years ago declared: “Everyone needs as least four Hondas in their garage.” Can you think of any? How about an automobile, snowmobile, motorcycle, outboard motor, inboard motor, generator, lawn mower, chain saw, and other products. Their key competency is the design, manufacture and the marketing of the products into which their superb engines go. What confirms Honda’s core competency is that General Electric, the dominant manufacturer of airplane engines worldwide, approached Honda to discuss a joint venture on a new small aircraft engine. And Honda had just
begun designing and testing a six to seven passenger business jet with plans for first deliveries beginning in 2010. When GE wants to joint venture with you, you know you have a core competency.
Grow from your core
Your company’s core competency is the root cause of your past growth and profit, and the potential foundation for your future growth. It should be reflected in your unique reputation and brand, and be powerfully communicated by your company’s tag line. This will keep your employees focused and aligned. The most profitable large companies are superb at one thing and pursue dominant national if not global market share in it. For Federal Express, it is overnight delivery. For Wal-Mart, it is low prices, always. For Starbucks, it is superb coffee and tea based beverages in a socially inviting atmosphere.
Embellish your core
As your industry shifts and progresses, you may have to update your core competency and focus. Ideally you do this before your competition does it first. But if there is a tsunami of a shift in your industry technology, market demand, cost structure, or other strategic variable, you could be in for a core meltdown. You then have to reinvent your core competency just to survive. Kodak experienced this in the technology shift from film to digital. After considerable struggle, it is now number one in the U.S. in digital cameras, and number one in the world in photo printers for the home. If you recognize the need to reinvent your core early enough, you may even be able to make it into an unbeatable competitive weapon.
Leverage it into new businesses
When you diversify, it is wise to do so only into adjacent business segments that will benefit from your core. This way you bring competitive advantage to the initiative, reduce your risk, and dramatically increase your chances of success. The biggest and best growth companies take small steps from their cores when entering new businesses. SAP, the huge software company that originally served just the largest companies in the world, in 2006 began aggressively penetrating medium and small sized customers. SAP's advertising slogan clearly and simply communicates this: “SAP is for great companies, not just great big companies.” Netflix, the internet-mail order game company taking a big bite out of Blockbuster repeated its business model with GameFly, for computer games.
Discover your core competency now
"What makes your company special is your springboard to profitable growth."
What if you feel your company is not unique or compellingly special in anything? Often it takes a facilitator skilled in core competency discovery to help an organization crystallize it. But if you do find that your company lacks one, then you need to invent one. I will explain how to do that in a future article. For now, start with the presumption you have a core competency. Define it, seek maximum market share from it, and leverage it into new growth opportunities.
Jim Bandrowski is a Senior ECG Consultant and President of Strategic Action Associates. He is author of Corporate Imagination--Plus: Five Steps to Translating Innovative Strategies into Action (Simon & Schuster), and specializes in facilitating sessions on Breakthrough Strategy, Lean Six Sigma, and Change Leadership. Please feel free to contact Jim at jim@EverChangeGroup.com.
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