A core competency is a deep proficiency that enables a company to deliver unique value to customers. Is it possible to have multiple core competencies? Are business visions about possessing a competency, or many competencies, or is it about envisioning a positive future situation and embarking on a mission to produce it? Competencies usually emerge from a blend of people, processes, and culture which evolves into a mindset - and can you really acquire that simply by adding people with relevant skill sets. Should you stick to your existing competencies for selecting any new venture, or should you actively go out and acquire those, if you like the nature of opportunity and there is an organizational passion for pursuing?
The first thing is to identify what all the core competencies are: A core competency is a harmonization of multiple capabilities such that it permeates the entire organization with a focus, and in alignment with the resource-based view, it is at the same time valuable, rare, and difficult to imitate. And while it is possible, given enough time and print space, to list the weaknesses of the resource-based view, it does hold some merit when discussing capabilities. In this context, marketing, IT, human capital management, or any organizational capability that can be defined in terms of a function is not a core competency because it is not diffused into every aspect of the business. Even the two dynamic capabilities that are at the heart of every core competency, organizational learning and knowledge management, are still capabilities because while they must extend across the firm, without a focus they have little value in the marketplace.
Competency is a combination of capabilities with a focus: Each of these same capabilities may be combined in different fashions to yield multiple competencies. They are right there in front of you and most probably it's what you take most for granted. The goal of all businesses is to generate revenue, increase net-new business and enlarge their footprint, and monetize their core competencies. The real issue regarding the creation and nurture of multiple competencies is not one of structure or human capacity, but of leadership and if the leaders’ thinking is in terms of product market or beyond.
It is definitely possible to have multiple competencies: Certain organizations can have multiple core competencies defined as those that provide a real competitive advantage and are not easy to replicate. Core Competencies are those that are well institutionalized in the organization and have been demonstrated by it in many instances or across multiple businesses. Organizations with multiple and complementary core competencies such as design and brand building, agility or intelligence, can build formidable companies, difficult to dislodge from leadership positions, their multiple core competencies are all working at the same time, as something they can monetize. However, the more core competencies that an organization has, the greater the increase in the probability of failure to meet its primary goals. The old adage "You can't be all things to all people" is applicable here.
To develop core competencies a company must take these actions:1). Identify its key capabilities and hone them into organization-wide competency.
2). Compare itself with competitors to ensure that it is developing unique competency
3). Develop an understanding of what capabilities its customers truly value, and invest accordingly in developing and sustaining valued competency.
4). Create an organizational roadmap that sets goals for competence building
5). Pursue alliances, acquisitions and licensing arrangements that will further build the organization’s strengths in core areas and differentiated competency.
6). Encourage communication and involvement in core capability development across the organization
7). Preserve core competency even as management expands and redefines the business
8). Divest non-core capabilities to free up resources that can be used to deepen core capabilities
Competitive assessment transforms big wish into a viable strategy. It is hardly possible to work out a strategy without utilizing your knowledge and experience in competitive assessment; only through the inter-disciplinary analysis, an idea/intention/wish transforms into a viable strategy. However, core competencies such as customer satisfaction and user interface which consist of multiple capabilities and are infused into the being of the firm, are still limited because of their level of analysis and that is the central issue of this discussion. If capabilities define how you do something (marketing, logistics, production, etc.) and competencies describe just the result of those capability combinations in terms of what you deliver to the product market, then the firm can exist, thrive, and generate a suitable return as an outcome of being competitively advantageous. But thinking at this level of analysis will not deliver economic rent, as the treasure by which greatness is measured in economic value only in the current system.
Nurture or acquire competency is situation driven: One school of thought within the organization says you should have at least a 60% competency fit for the critical success factors. Another school of thought argues that if the opportunity is large enough then you should not get hung up about these as long as you can acquire those competencies through appropriate talent. The global marketplace and the digital age is allowing companies to rely increasingly on external competencies and invest less on their own to fulfill their mission. Still, a forward-looking organization has to continually cultivate its differentiated capabilities and unique competency.
In today’s hyper-competitive environment, either business or professional, more often than not, have to build multiple core competencies, in order to be unique, not easy to replicate; to be adaptive to rapid changes; to be resilient when getting a setback, and to be focused on the long-term vision and strategy execution.
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