How can you determine your company's core competencies that make it stand out from competitors?

A few years ago, there was a time when the term “core competencies” was used a lot in the news and business books.

In a highly competitive business environment, you are always required to have strategies and strengths that outperform your competitors.

Just like our company, other companies are constantly growing, and yesterday’s “strengths” will never be tomorrow’s “strengths.”

A company’s core competencies, which are its strengths, need to be periodically reviewed in line with changes in the environment surrounding the company.

In this article, we will introduce how to identify core competencies and reflect them in your business.

Overview of core competencies

Before introducing how to identify and review core competencies, let’s review the overview of core competencies once again.

Core competency refers to the ability (management methods and management resources) that allows a company to demonstrate its strengths in business compared to its competitors, or the products, technologies, and skills that are more attractive to customers than other companies.

The term core competencies was first coined in 1990 by management scholar Gary Hamel and former University of Michigan professor C.K. Prahalad in a paper published in the Harvard Business Review.

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   Examples of core competencies
   

Harvard Business Review cited Honda’s “engine technology” and Volvo’s “safety technology” as examples in the automobile industry, but there are also other examples such as Ajinomoto’s “technological capabilities related to amino acids” and Fuji’s This includes “precision processing technology” based on film manufacturing technology.

Why identify core competencies?

We have cited the manufacturing technology of large companies as an example of core competency, but manufacturing technology is not the only strength of our company.

In simple terms, core competency can be said to be “differentiation from other companies.”

For example, compared to other companies, the quality of service is overwhelmingly better, the price is competitive, and the product lineup is competitive.

In a constantly changing and highly competitive market, your company’s position is constantly changing. No matter when customers compare your company with other companies, you must take measures to ensure that they always choose your company.

That is the reason to identify core competencies.

How to determine core competencies?

Even if you try to easily determine your company’s strengths or look for points that differentiate you from other companies, you won’t be able to find it right away.

The quickest way to consider various possibilities is to form a project team, listen to the opinions of many people, and once a consensus has been reached, ask for their cooperation in promoting differentiation.

However, when forming a project team within your company, you need to be a little creative with the members.

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   Members should not consist only of people with high positions or long experience with the company.
   

I believe that project teams like this are often under the control of the company president, but if possible, it would be better to have someone with a higher position or with a longer company history participate as an observer. People with long experience in the company often say things like, “We’ve always done things this way,” “This technology we have is what the market needs,” “If it’s not selling well, it’s because we’re selling it poorly.” Because they have strong beliefs about themselves and have a lot of influence, the direction of the project is limited. The business environment is constantly changing. The key to success is to have as many project members as people who are sensitive to the current business environment.

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   Add people who interact with customers to the membership
   

Some companies have a business planning department, and general staff may play a central role in promoting projects. Even in such cases, it is important to include members from the field sales department, etc. The Harvard Business Review, in which Gary Hamel and others contributed, defined a company’s ability to provide high added value to its customers. What is the added value for customers? This is something that only those who directly interact with customers understand.

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   Seek outside cooperation if possible
   

It will be expensive, so you will need to budget for it, but it is also effective to include a company that provides outside consulting as a member. There are two reasons for that. First, they will be able to provide a more comprehensive view of the company’s environment than internal staff. In order to make accurate decisions, it is necessary to calmly observe and analyze the business environment. Second, it is useful after analysis.

As a result of discussions among project members, the conclusion may be that there are no strengths, or even if there are, they are weak.

In such cases, it is possible to utilize a consulting company.

The first thing to discuss in a project is: What does the customer want? Looking at the bigger picture, what creates added value in the market? is.

As a result, if your company does not have something that meets the requirements, the only solution is to create it from scratch or procure it from elsewhere.

Creating a point of differentiation from scratch is not inconceivable, but it is likely to take time and may not always be successful.

In such cases, you may consider contacting a company with which you can collaborate through a consulting company.

In order to complement your company’s weaknesses and strengthen your company’s strengths, you should actively consider collaborating with other companies.

Asking for outside cooperation also means gaining knowledge that your company doesn’t have.

We take time to gather and analyze information, and when we get the results, we move quickly. This can be said to be the secret to making the project a success.

summary

◆You need the courage to reject the way things have been done up until now.

◆Think about core competencies from the customer’s perspective

◆ Actively incorporate outside opinions

◆Carefully investigate and consider. Once a conclusion is reached, move quickly