Core Competency

If the transformation process is the core of the business, it is necessary to protect, control, and improve the process. That may not mean the core competency is the actual production of product. Some companies have superior skills in the area of product design, others in processing documents or sales, and still others in delivering a service. The key is determining what the “transformation” process is that exists as the core competency of the business. Many companies have patents and trade secrets that protect their core competency. So what is your business’s core Competency? The following questions will focus your thinking.




1. What does our customer want? This question is for established businesses and pushes to examine customer desires. With a new product offering or a startup business, it means crystallizing the value proposition that we expect the customer to pay for.

2. Is our business unique in offering this product or service? If no one else can make the same offer in the marketplace the business has a powerful position. However this needs to couple with #1., above, to make sure the offering is not only unique but desirable. A monopoly on something no one wants is worthless.

3. Is it difficult for “would be” competitors to enter the same market? Obstacles to entry can be technology, capital investment, skills, geography, etc. These keep entrants out but if the perceived reward is great enough they may invest for the later pay out. A corollary to this is: Can an unrelated offering fill the customer need as well or better?

4. Can the business continue to evolve the offering to stay ahead of potential competitors? This focuses on the business’s ability to move down the learning curve rapidly and stay ahead of competitors. As competitors try to match the business’s competency the business has moved to a new higher level of competency.

5. If an outsider were allowed to do this task for the business, could they meet the needs of our customer without our business? If a business allows a core competency to be performed by an outsider it exposes itself to creation of a competitor. The computer and electronics industry is filled with examples of this. Overseas suppliers are often the ones who can most easily introduce a competing product to the ones that have been outsourced to them.



If a business wishes to be the master of its own destiny, it must not give its core competency to others to perform.