Saturday, August 7, 2010

The Importance of knowing your REAL core competency...

There seems to be a revival brewing related to the importance of an organization's understanding of its core competency or competencies.  I remember when this was an important step in process improvement (nearly 10 years ago) then it fell by the wayside...I have always used this subtly in my work...from that time to today!

I laud the person or person's who re-sparked this...KUDOS!

True innovation within organizational constraints can not happen without that understanding.  The problem is that (at the risk of sounding philosophical) most organizations stop short of finding the soul...and stop at some physical manifestation.

The core competency of an organization is its is what it is really good at...on the most basic and nearly quantum level.

Let me use an example to further clarify my position...

Let's consider an Armored Car Company...we'll call it "ACC, Incorporated."

It is a booming company.  Their clients all desire that their money is moved from their places of business to the banks without any risk.  ACC had been doing this for years without any loss.  They have impenetrable equipment, people of the highest integrity, and technology second to none!  From their perspective they are in the Armored car business and to be at the top of the business, they have to be this way.

ACC leaders decide that they need to define their core competency and quickly identify "safely moving money" as what they do.

Let's take a break for a moment and look at some examples of mistakes that other companies have made in ill-defining core competencies.

A diet food manufacturer defined its competency as making flavorful diet foods.  Their true competency was portion control.  They met dietary requirements not through low calorie ingredients, but through weight control.  As a result they completely missed another potential market related to portion control for diabetics.

A company who made metro buses defined its core competency as making mass transit vehicles, rather than large framed energy efficient vehicles and missed the recreational vehicle market.

Not clearly defining the core competency closes doors to many creative opportunities and often ones that are more viable and less competitive than the market that the company is currently in.

ACC has "missed the boat" in their narrow definition of their core competency.  It would be more accurate to describe their core competency are moving materials without the risk of loss.  They do not have to move only money...although that is all they do.  They could move priceless pieces of art, jewelry, important documents, equipment...anything that their customer does not want to risk losing.  Their market is significantly larger than their prior definition has limited them to...

I could go on for a long time on this issue...but I believe that we can see the importance of this exercise in 21st Century Process Improvement.  "The New Brass Ring" touches briefly on this subject during the define stage.  My next book "The Perfect Machine" is all about capturing the essence of a company and leveraging it into the new market is one of the Secrets to going from Surviving to Thriving in this century!