You may recall the following definitions from an earlier Module: •Core Competency – An internal, value-creating activity that is central to the company’s ability to achieve a competitive advantage. •Distinctive Competency – An internal, value-creating activity that is unique and allows a company to achieve a competitive advantage. •Capability – A company’s ability to put its resources and competencies to productive use. Core competencies are rarely reliant on a single department – they are more likely to owe their existence to a strong collaboration between two or more departments.
Strategically relevant competencies might include: •Greater proficiency in product development •Better manufacturing know-how •Better after-sales service •Faster response to changing customer needs •Capacity to speed new products to market •Superior inventory management systems •Better marketing and merchandising skills •Greater effectiveness in promoting staff-management co-operation Greater proficiency in product development and/or capacity to speed products to market may be the foundation for strategy based on superior innovation.
Better after-sales service and/or faster response to customer needs may give rise to a strategy based on superior customer responsiveness. Better manufacturing know-how may yield superior efficiency or superior quality. The key to building a competency into a competitive advantage is to concentrate more effort and talent on it than your competitors. Sustaining that advantage means adapting competencies to new conditions. In considering the building of competencies the following questions could be asked: •What new core competencies do we need to compete now? What new core competencies do we need to compete in the future? •Can we improve our use of existing core competencies? •What new products or services can we develop by using existing core competencies? Capabilities that are drawn from internal collaboration and are well-managed and well-led can become distinctive competencies. The process of building organisational capabilities involves the development of an ability to do something. This will inevitably require a concentration of resources.
The most valuable capabilities are those than provide clear differentiation between your organisation and your competitors and which it is difficult for them to match. Resource strengths can be built by aligning resources with strategic direction and, if done well, can develop into a distinctive competency. The channelling of human, financial and physical resources of an organisation will be done through budget and broader planning processes.
Building human resource strengths will generally require co-ordinated staff recruitment & selection, training, and the creation of new positions and the deletion of others. Building physical resources (such as plant & equipment and physical infrastructure) will require am understanding of new processes and new technologies. In both cases relevant financial resources need to be allocated through an appropriate budget process. The key here is to increase resources to high priority areas and reduce them to low priority areas.