This DATIS blog article, “4 Ways Your Competencies Drive Your Strategy“, was originally written by Mike Figliuolo, thoughtLEADERS, LLC, on June 3rd, 2015 and was reposted with permission.
Core competencies can help you decide which initiatives to pursue and which ones to avoid. By appreciating what you’re great at and applying it to your initiative portfolio, you can achieve a much higher level of success.
One critical aspect of strategic planning is deciding where you will or will not compete. A way I encourage organizations to think about that is to look at their core competencies. A core competency is something your organization is great at.I know your organization is probably good at a lot of things. But what are the two things you would hold up and say “we’re better than anyone else at these two competencies”?
Core competencies could be things like the quality of your product, your ability to innovate, the efficiency of your supply chain, the strength of your brands, or your technology infrastructure. There are a lot of things that you could be good at, so take a step back and ask “how do we compete in the marketplace?” Your organization likely has a primary and secondary core competency. The primary competency is the one you’re going to play to first. The secondary competency is often a “platform” for making your primary competency strong.
Allow me to offer a couple of examples.
Starbucks. I would argue that their two core competencies are the quality of their product (primary) and their service (secondary).
Procter & Gamble. Their core competencies would be product development (primary) and marketing (secondary).
Once you’ve identified your two primary core competencies, it’s helpful to evaluate your initiative portfolio using those competencies as a lens. Look at Competency One and Competency Two relative to one another. Get an understanding of whether the market, the product, or the initiative you’re pursuing relies upon that core competency. Analyze the relative importance of those competencies as they relate to your ability to successfully complete that initiative, launch that product, or enter that market.
Prioritizing Your Efforts Based on Competencies
Your competencies can help you prioritize your work. Depending upon how relevant (or irrelevant) your competencies are for a particular project, you’ll find yourself taking one of four approaches to that initiative: Own, Pursue, Consider, or Avoid.
Own: In some situations, an initiative, a market you’re looking to enter, or a product you’re looking to launch plays very well to both of your core competencies. Those are the types of opportunities you should “own.” You should own that market. You should try to own that product category. Prioritize these opportunities at the top of your list. These are situations where you’re most likely to succeed given the overlap between your skills and the skills the market requires for you to be successful.
Pursue: There will be opportunities where mainly your primary core competency comes into play but your secondary core competency is less relevant. You should pursue those opportunities and they should be reasonably high-priority. Why? You’re known for that primary core competency. You’re great at it. Applying it to these opportunities should result in positive economic outcomes and operational results that are consistent with your long-term strategy.