Entrepreneurs determine the core competency of their business by identifying the unique set of skills, resources, and capabilities that provide their company with a competitive advantage and deliver superior value to customers. The process typically involves several key steps:
How Entrepreneurs Determine Core Competencies
- Review the company’s mission and values: Entrepreneurs start by examining the company’s mission statement, value statement, or slogan to understand what the business aims to be known for and what value it seeks to provide customers
- Analyze what makes the business unique: They compare their business to competitors to identify what the company does better or differently. This could be unique products, processes, market focus, pricing strategies, or customer service
- Gather insights from stakeholders: Entrepreneurs often interview internal staff and key customers to gain perspectives on the company’s strengths and what benefits customers derive from their products or services
- Evaluate the benefits provided to customers: They brainstorm and assess which benefits the company offers that are rare, valuable, and difficult for competitors to imitate—such as lowest cost, highest quality, fastest delivery, or innovative technology
- Understand internal processes and capabilities: Entrepreneurs review the processes, expertise, technology, and resources that enable the company to deliver its products or services effectively and efficiently
- Identify what is difficult to replicate: Core competencies are characterized by being challenging for competitors to copy because they result from extensive learning, unique knowledge, or specialized skills
- Consider the applicability across products and markets: A true core competency can be leveraged across multiple products and markets, providing broad strategic advantages
- Optionally, seek external evaluation: Some businesses hire consultants to objectively assess and identify core competencies based on the company’s framework and market position
Characteristics of Core Competencies
- Provide superior value or benefits to customers
- Are rare and unique within the industry
- Are difficult for competitors to imitate
- Can be applied broadly across products and markets
Examples of Core Competencies
- Exceptional product quality
- Innovative technology and R&D
- Outstanding customer service
- Strong company culture
- Operational efficiency and low cost
- Fast production or delivery
By systematically evaluating these factors, entrepreneurs can pinpoint the core competencies that define their business’s strategic strengths and use them to guide growth, competitive positioning, and resource allocation
