To determine your core competencies, take another look at the mirror. Take a step away from the business, and get a new fresh look at it. What things do you do best? Let’s consider a few companies most people know: We might reasonably think a core competency of Apple Computer is design, a core competency of Nordstrom is customer service, and a core competency of Volvo is vehicle safety. The picture here illustrates this idea: you have to recognize what you’re good at. It can’t be everything. You aren’t credible if you try to do everything right.

Core Competency

You do have to understand your core competence as you develop your core strategy. Don’t pretend you can be the best at service and have the lowest prices and the highest quality products; that isn’t credible and it will just get in the way. Be honest with yourself or with your team.

Don’t think that core competency depend on the industry, or that they are the same for all players in any given industry. Look at the difference between economy cars, reliability cars, safety cars, and performance cars, for example. Or consider the different possibilities for a management consultant, whose core competencies might be any of these:

  • Facilitation of discussions and brainstorming for the management team
  • Cost cutting and firing
  • Finding new growth opportunities in contiguous markets
  • Finding people with money who can finance new ventures from the consultant’s clients
  • Developing documents that are easy to read and cover the bases well

And then consider the variations on food services and restaurants. To name just a few:

  • Quick, fast, drive-through
  • Excellent cuisine
  • Ambiance; good place for a date
  • Sports bar
  • Healthy fast foods

So this is not a difficult concept to understand. It usually leads to good discussion and a better sense of core strategy.

Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Follow him on Twitter @Timberry.