Test Your Core Competencies

June 9, 2014

core competencies

“A strategy is a plan that creates sustainable competitive advantage and allows an organization to perform over time, even in the face of a changing environment.”  — Jimmy Brown

Your strategic plan should do all three things Brown suggests:

1. Create a sustainable competitive advantage;

2. Allow you to perform over time with confidence; and

3. Take into account environmental changes.

If your strategic plan doesn’t do these three things, and doesn’t provide a clear destination, you need a better plan. You need a plan that tells you what to do and, as importantly, what not to do.

Many businesses do too much. Rather than focus on what they do well, they do all that they can–either because that’s the industry norm, “that’s the way we’ve always done it,” or because they don’t see the harm. The harm comes from taking resources away from what their customers consider to be core offerings.

CO2 Partners uses the Business Model Generator for strategic planning; it identifies the critical elements of your business so you can focus on what is most important. I also like Hamel and Prahalad three-question test for helping clients determine if one of their capabilities is actually a core competency:

  • Does the capability make a disproportionate contribution to the ultimate customer value, and/or does it allow the company to deliver value to customers in an appreciably more efficient way?
  • Does the particular capability provide a potential basis for entry into some new market?
  • Is this capability difficult for competitors to imitate?

Put your capabilities and core competencies to the test. Do they do all three of these things? If not, you should allocate your resources elsewhere.

Your strategic plan should be unique–playing off your unique strengths, culture, mission, and vision. If it feels like your plan was designed for some other company or doesn’t provide concrete directions about how best to utilize your resources, you need a new and better plan.

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