Knowing and understanding your company’s core competencies plays a significant role in determining how you do business. They are essential for a better understanding of the ways and the directions in which the company can grow.
Without knowing what your company's core competencies are, you can never fully exploit your strengths, identify weaknesses to be improved and capitalize on the needs of your target audience.
This is why every company's self-evaluation must also cover this vital aspect of business growth.
But what are core competencies in business? Let’s identify and understand them in detail in order to help your organization stand out among competitors.
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What Are Core Competencies in Business?
The core competencies in business are the products, services, capabilities, and skills that give an organization or company a competitive advantage over others. Core competencies are unique values that no other business can offer or replicate.
Identifying the core competencies of business solutions companies is an essential business strategy for existing and prospective customers.
When you know the core competencies of your business, it becomes easy for you to forge a more substantial reputation for your business and market it in the right direction.
Core Capabilities Definition: Personal vs. Business
Whether you are an individual or an organization, recognizing your core capabilities is the only way of standing apart. When it comes to core competencies or core capabilities, it is necessary to differentiate between personal ones and the ones strictly from the business perspective.
Personal Core Competencies
Personal competencies are the qualities you want to be highlighted and known for. Irrespective of whether you are a hiring manager or a candidate, some of the distinct competencies would be:
- Problem-solving skills
- Attention to detail
- Good interpersonal skills, teamwork and leadership
- Strong oral and written communication skills
Business Core Competencies
If you run a business, you are already familiar with your competitors and you have some opinions about their offerings.
While identifying the core capabilities, you should point out areas where you hope to stand out from others. These are:
- Adaptability, creative thinking, and innovation
- Customer experience
- Consistency and reliability
- Unique and empowering company culture
- Partnership with industry leaders
Examples of Core Competencies in Business
By reading the definition of core competencies, it is evident for you to wonder as to which products and services you can include in your core competencies.
If you cannot immediately identify a product/service, remember that core competencies are unique skills and abilities, and that is why we are here to discuss examples of core competencies in business.
So, here are some real-life industry examples of business core competencies, which should be known for a better understanding, and identification of the core competencies.
- QuickBooks' Continuous Innovation
- Dropbox's Incomparable Value
- Amazon's Excellent Customer Service
- Target's Strategic & Successful Marketing
- McDonald's Formidable Buying Power & Size
1. Google's Consistent High Quality
Speaking of quality, Google, the world's leading search engine, undoubtedly tops the list of organizations that have maintained a consistently high quality of its software. Google has indeed driven the so-called fourth industrial revolution or the digital revolution that rules the web world today.
Google has ease-of-use, a modern look and feel, and excellent organization options, irrespective of whether you are using Google Photos, Maps, or simply Docs to create and edit texts. The unmatched quality, therefore, continues to be one of the core competencies of Google.
2. QuickBooks' Continuous Innovation
Ceaseless innovation or updating software can also be a core competency in business. A leading example of this is QuickBooks, in the accounting software industry. For decades, the organization has been adding new features and tools that other platforms hardly could.
Continuous innovation, therefore, is the crux of the competency model of this company. This competency has also enabled the business to be the first choice of accounting software for businesses of all sizes.
3. Dropbox's Incomparable Value
The unmatched value turns out to be a core competency for a business when it can offer products and services at a much lower price than its competitors. A leading example of an organization having this as a core competency is Dropbox.
Not only does Dropbox enable fast and simple file sharing, but it also makes these possible at an incredibly reasonable price, which leads to a lot of value addition for the customers. Business owners must pay less than $20 per month for a wide range of solutions that include watermarking features, cloud storage, offline file access, and e-sign tools.
4. Amazon's Excellent Customer Service
No matter how robust and powerful an organization’s business intelligence system is, unparalleled customer service can always stand out as a core competency in business.
In this regard, Amazon is supposed to be the most omnipresent brand in the world. Amazon’s massive success comes from its excellent customer service.
Since there is no one product that Amazon offers and, instead, a sea of options, it has been strategic planning on the part of the organization to create an unwavering focus on customer experience and satisfaction.
5. Target's Strategic & Successful Marketing
If a company can create a distinctive brand image and market it well, this can turn out to be a core competency in itself. An interesting example of strategic and successful marketing being used as a core competency in business is Target.
There are numerous department stores where you can find any type of items you need, almost anywhere in the world. Yet, Target stands out by utilizing its excellent effort at brand marketing.
Their brand is undeniable, whether looking at the employees in red shirts or the branded white bull terrier mascot. The familiar fonts, along with the consistent red and white motif, have always grabbed the attention of sellers and customers alike for decades.
6. McDonald's Formidable Buying Power & Size
Though this is a core competency that only leading organizations can have, it is a huge one. An example of a company having a formidable size and buying power is McDonald’s.
This core competency has allowed the business to expand its dominance in the US market and globally. McDonald’s is enormous, and its massive buying power enables it to open new franchises in any location it pleases.
Alongside buying power, its supply chain is also large enough to enable it to purchase food at low prices and sell processed meals at highly competitive prices.
While these examples are of some world-leading companies, even small businesses can identify their core competencies and create unique ones to stand out.
How To Identify the Core Competencies in Your Business
Even with a thorough understanding of what core competencies in business mean, identifying the specific ones for your company might seem challenging. You can follow the steps below or turn to a business consulting firm to help you identify your unique capabilities and how to leverage them.
- Go Through Your Company’s Mission Statement
- Rethink the Unique Selling Proposition of Your Company
- Consider Your Existing Competencies
- Determine the Criteria for Your Core Competencies
- Identify the Areas of Work You Can Outsource
1. Go Through Your Company’s Mission Statement
Revisiting the business's mission and vision statement is a good way to start identifying the core competencies. You will get an idea of what is important and where you need to take your business. Use these statements to focus on the right set of core competencies of your business.
2. Rethink the Unique Selling Proposition of Your Company
Take some time and ponder why your customers choose your company. Consider whether the quality of the product stands out or the fantastic customer service that makes you gain a competitive edge in the market. These reasons will shed enough light on what the core competencies are in your business.
3. Consider Your Existing Competencies
Alongside surveying the customers, make sure you monitor your employees, too, to find out if there is a common theme in the core competencies they identify. Throwing light on what your company does well or what keeps you apart from the competition will help you identify the core competencies.
4. Determine the Criteria for Your Core Competencies
There are three criteria that each of your competencies must meet. Accordingly, the core competency should be a rare one, it should be hard to imitate, and it should offer superior value. You can compare each of the competencies against these criteria to establish the list of core competencies in your business.
5. Identify the Areas of Work You Can Outsource
Once you have identified the core competencies, it is time to focus on the areas that can be outsourced to allow you to better focus on strengthening these competencies. Outsourcing also frees up the employees' time, enabling them to work on developing the core competencies.
What Are Core Competencies in Business: Takeaways
Core competencies are the unique abilities and resources that a business possesses that enable it to create and deliver value to its customers. It is important to understand and utilize core competencies in order to inform strategic decision-making and gain a competitive advantage in the market.
If you're a small enterprise or startup that needs help defining your core competencies, small business consulting firms can help you understand and even develop competencies that will help you gain an edge in the competition.