Core Competency Analysis

Synopsis

When you work in a crowded industry with aggressive competitors, you need to build momentum on your success and innovate fast to keep up. Our Core Competency Analysis deck helps you identify your organization's most unique and strategically valuable resources. Leverage them to create sustained competitive advantages and do more of what you're good at.

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How can companies implement the Core Competency Analysis framework in their operations to create sustained competitive advantages?

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Companies can implement the Core Competency Analysis framework in their operations to create sustained competitive advantages by first identifying their unique and strategically valuable resources. These could be skills, knowledge, or other assets that distinguish them in the marketplace. Once identified, these core competencies should be developed and leveraged to create value and differentiate the company from its competitors. This could involve investing in training and development, aligning business processes to support these competencies, and incorporating them into the company's strategic planning and decision-making processes. Over time, these actions can help the company build momentum on its success and innovate faster, thereby creating a sustained competitive advantage.

What are the practical applications of the Core Competency Analysis framework in a crowded industry?

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The Core Competency Analysis framework can be practically applied in a crowded industry in several ways. Firstly, it can help identify the unique resources and skills that set your organization apart from competitors. This can be leveraged to create sustained competitive advantages. Secondly, it can guide the development of new strategies and innovations based on these core competencies. Lastly, it can help in focusing on enhancing these competencies to further strengthen the organization's position in the market.

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Slide highlights

Core competencies create a foundation that can be used to identify new growth areas and create products that align with organizational strengths.(Slide 5)

A core competency checklist ensures the competencies selected align with organizational values and deliver unique value proposition to customers. (Slide 7)

A table analysis helps rank your core competencies against one another to compare their importance, defensibility, and strengths.(Slide 20)

Outcome

Build upon the unique resources that set your organization apart from its competition. Identify those existing or potential core competencies to invest in, improve or innovate on.

Core competency analysis can help you expand into new markets, serve new industries, or develop more innovative solutions. Investments in these strengths can give customers what they didn't even know they needed — and what competitors can't provide.

Application

Introduction

Core competencies introduce a combination of resources and skills that distinguish a business in its respective marketplace. It could be an organization's skills and knowledge base, managerial systems, or technical systems that form a series of values and norms. Core competency theory explains the success of household names like McDonald's, Walmart, Apple, and IKEA. All four brands have honed their mastery of core competencies to focus on what they do best even as they consistently reinvent themselves.(Slide 2)

Questions and answers

How have brands like McDonald's, Walmart, Apple, and IKEA used Core Competency Analysis to their advantage?

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Brands like McDonald's, Walmart, Apple, and IKEA have used Core Competency Analysis to identify and develop their unique strengths and capabilities that set them apart in the marketplace. McDonald's, for instance, has focused on its fast food service and global brand recognition. Walmart has honed its supply chain management and cost leadership. Apple has leveraged its innovation and design capabilities. IKEA has capitalized on its cost-effective, flat-pack furniture design and efficient retail operations. These core competencies have allowed these companies to maintain a competitive edge and continually reinvent themselves.

What are common challenges in applying Core Competency Analysis and how can they be overcome?

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Common challenges in applying Core Competency Analysis include identifying the true core competencies, avoiding overemphasis on certain competencies, and maintaining these competencies over time. To overcome these challenges, it's important to have a clear understanding of the business and its market, to balance the focus on different competencies, and to regularly review and update the competencies as the business and market evolve.

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Core competencies are often favorable conditions that make up the foundation of a company's competitiveness. They are different from competitive advantages, which are specific skills or knowledge that allows a company to gain a presence in multiple markets. Combine both, and you have a recipe for long-term success.(Slide 3)

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What are the practical applications of Core Competency Analysis in the business marketplace?

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Core Competency Analysis has several practical applications in the business marketplace. It helps organizations identify their unique strengths and capabilities that set them apart from competitors. This can guide strategic planning and decision-making, helping businesses to focus on areas where they can leverage their core competencies for competitive advantage. It can also inform talent management strategies, as businesses can identify the skills and knowledge that are central to their core competencies and prioritize their development. Furthermore, it can support diversification strategies, as businesses can identify new markets where their core competencies can be applied.

How can a Core Competency Analysis help in developing a company's unique resources and skills?

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A Core Competency Analysis can help in developing a company's unique resources and skills by identifying the key strengths that set the company apart from its competitors. These core competencies, which could be a unique process, specialized knowledge, or proprietary technology, form the foundation of a company's competitiveness. By identifying and focusing on these core competencies, a company can leverage them to gain a competitive advantage in the marketplace, potentially leading to long-term success.

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Mission and vision review

To start, identify your company's core mission and vision statement. Complete a job analysis of all active roles and survey employees to understand your company. Define internal capabilities that are strategically positioned to deliver sustainable value. Perform a core competency review throughout the organization and evaluate its strengths and weaknesses. Compare with other companies with similar capabilities to ensure the development of key competencies is targeted.

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Are there any case studies that demonstrate the effectiveness of Core Competency Analysis?

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Yes, there are numerous case studies that demonstrate the effectiveness of Core Competency Analysis. Companies like Apple, Google, and Amazon have used this analysis to identify their unique capabilities and leverage them for competitive advantage. For instance, Apple's core competency in design and innovation has been a key factor in its success in the tech industry. Similarly, Amazon's competency in logistics and customer service has helped it dominate the e-commerce sector. These case studies show how Core Competency Analysis can help organizations identify their strengths and strategically position themselves in the marketplace.

How can companies implement Core Competency Analysis in their operations?

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Companies can implement Core Competency Analysis in their operations by first identifying their core mission and vision statement. They should then complete a job analysis of all active roles and survey employees to understand the company better. Defining internal capabilities that are strategically positioned to deliver sustainable value is the next step. A core competency review should be performed throughout the organization to evaluate its strengths and weaknesses. Finally, companies should compare with other companies with similar capabilities to ensure the development of key competencies is targeted.

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Draft potential competencies and establish a roadmap for the organization to set goals for competence building. Promote all-inclusive participation in the development and validate those competencies with feedback from stakeholders like team members, investors or customers. Finally, preach the competencies so that they become common practice across the organization.(Slide 7)

Questions and answers

How does feedback from stakeholders like team members, investors or customers validate the competencies in Core Competency Analysis?

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Feedback from stakeholders such as team members, investors, or customers is crucial in validating the competencies identified in a Core Competency Analysis. These stakeholders can provide insights into whether the identified competencies truly distinguish the organization in the marketplace. Team members can validate if the competencies align with their daily operations and capabilities. Investors can provide a perspective on whether the competencies align with market trends and can drive profitability. Customers can validate if the competencies indeed deliver value to them. Thus, their feedback helps ensure that the competencies are not just theoretically sound, but also practically relevant and effective.

Are there any case studies that demonstrate the effectiveness of Core Competency Analysis?

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Yes, there are numerous case studies that demonstrate the effectiveness of Core Competency Analysis. Companies like Apple, Google, and Amazon have used this analysis to identify their unique strengths and leverage them to gain a competitive edge in the market. However, these case studies are not included in this presentation.

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Scenarios

A core competency analysis can be conducted across three different scenarios: either with core competencies already established, potential competencies defined, or no existing or potential competencies.

In scenario one, the action is to identify how to develop and improve each existing core competency to increase market share and strengthen its competitive position in the greater industry landscape.

In scenario two, no existing core competencies were established but potential ones are identified. In this case, identify what makes the most sense to invest in and develop further.

In scenario three, with no existing or potential core competency, more stakeholders need to be involved in the discovery process. The action to take in this scenario could be to survey customers or involve external facilitators like a partner organization or consultant.(Slide 9)

Skill areas

Management, technical, and organizational skills are all areas that can be invested in as a core competency. Risk management, business knowledge, and business attributes are also areas that can be developed.

For example, let's say you are an exec at a cyber-security company that has been assigned the mandate to develop new products and services to meet the current boom in cyber-security services. You decide to conduct a core competency analysis before diving into new product development.

While your company's strategic perspective, relationship development, and decision-making are key strengths and competitive advantages, they aren't unique enough to differentiate yourself from competition. Therefore, they aren't considered as core competencies.

Your technical skills in research and analytics, data interpretation, and information systems are all vital strengths. But once again, you want a core competency to be something that others can't emulate, and your technical skills are on par with the rest of your industry as a minimum barrier to entry.

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That said, your organization's risk management skills may be unique. Particularly, your standards and frameworks, adaptation approaches, and process and solutions put you ahead in terms of on-the-ground execution. Your subspecialty in cloud-security solutions has also become an increasingly important part of the industry. Therefore, these are the core competencies to focus on when you develop the next slate of products. (Slide 11)

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Comparison With Others

In this visualization, competencies can be compared against multiple companies in competition for market share, alongside those companies' core and end products.

In our example, you've determined risk management skills to be a core competency. In particular, the ability to mitigate internal and customer risk across standardized frameworks, adaptable and flexible processes, and a subspeciality in cloud-based security solutions.

Your core product is the cloud-based zero-trust security application infrastructure, which requires customers to switch over to your service from their existing cloud network.

The new end product, based on your core competency analysis, could be a cloud security readiness service that assesses a client's potential risk at a minimal cost. It also creates a custom plan to upgrade servers with identity and access management, plus data protection capabilities to integrate and work within customers' existing cloud server infrastructures.(Slides 12-14)

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Development Progress

Team leaders, project managers and executives will want to track development progress. Editable sliders can be dragged with percentages adjusted to monitor and report how far along the organization is in the core competency analysis process. Each slider can be used to represent progress or compare a competency-relevant strength.(Slide 15)

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Leadership Levels

Core competencies can be defined and analyzed across leadership levels as well. For instance, executives, managers, supervisors, and project leads can conduct a self-or-cross-organizational analysis to determine relevant strengths to build upon. (Slide 16)

Assessment of Competency Areas

Leaders can test potential competencies against one another. To do so, ask whether each competency provides a customer benefit, is difficult to imitate, and can be leveraged widely.

Let's say Competency 1 is your cloud security company's risk management skills, while Competency 2 is your company's technical skills, and Competency 3 is your organization's management style.

While your company's technical skills provide a benefit to customers, it is easy to imitate and can't be leveraged widely as a competitive advantage over your peers. Alternatively, your management skills are hard to imitate, but don't really provide customer benefits and can't be leveraged widely as a core competency. Your risk management skills, on the other hand, are difficult to imitate and can be leveraged widely over your competition — thus, it passes the test to be prioritized over the other two options.[/italic](Slide 18)[/italic]

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For a deeper analysis into each competency, an alternate visualization with an editable questionnaire can be used to rank competencies with a yes or no answer according to the key areas that are important to your business. [/italic](Slide 19)[/italic]

A table analysis visualization is also available to rank each competency by its relative importance, defensibility, and comparative strength against others.[/italic](Slide 20)[/italic]

For similar resources, check out our presentations on Competitive Landscape Analysis (Part 1) and Competitive Landscape Analysis (Part 2). Or learn more about Competitive Strategy: Techniques for Analyzing Industries and Competitors from Michael Porter's book.