When the company defines its vision as a guiding element in the course of operations, when it seeks to establish with precision where do you want to go and how, and transmit it to all its members, define its core business (or your main business) becomes a key decision to position yourself in the market.
Today, the decision for companies is no longer “I offer cost or I offer quality”. Consumers become much more demandingmore demanding, and they have much more to choose from.
ask quality and priceThey ask for service and payment terms, they ask for variety and speed. Thus, when most companies are trying to do “everything for everyone”, it is very difficult to find a unique position, that differentiates me, that distinguishes me from the rest.
Companies cannibalize their positions by offering all the same advantages. Telecommunications make it easier and easier to exchange production factors, costs and quality are imitable anywhere in the world, losing its value as a differential advantage. It thus becomes indispensable find a different waya differentiating position that the client does not find repeated ad infinitum.
1. Do I know where I want to go?
Even when the market is unstable, I have to have a horizon, a vision of where I want to go. Today it is impossible to talk about detailed long-term plans that do not change, since reality leads us to adjust at every step. But I do need to have a vision as a guiding element for my decisions, a clear and defined idea of what I want for my company, to help me stay on the helm in the storm of hyper-competitiveness.
2. Am I an easy target to attack?
Traditional competitive advantage factors give way to a much more complex set of factors. To achieve a unique, inimitable position, I need to act as a moving target, permanently generating dynamic competitive advantages that evolve and make my movements more unpredictable, more difficult to follow. This is accomplished by clearly defining my essential skills, or core competence .
3. When do I have a core competence?
A core competence is an essential skill of the company, where we find that:
It is an activity, or the integration of a set of activities (not a product) that allows you to enter different markets. This can be both the mastery of a production process, as well as a very good interaction with my clients that allows me to define the product based on their needs, a single format of distribution channels, etc.
This skill is appreciated, or required by consumers, and consequently they are willing to pay more for it.
It is a difficult skill for competitors to imitate, either because it involves “know how” that is not available, or because of the experience or mastery of that skill achieved over time, or the investment made in research.
4. What business can I generate?
When the core competence is identified, it becomes a key to enter several potential markets, derived from the core activity. In turn, the development of these new interrelated businesses, or core business power to the starters. It implies a diversification focused on my vision, on my central business idea.
5. Can I outsource my core competence to boost my business?
Definitely not. The development of core competence It should be one of the most protected areas in the company, to prevent it from being imitated by competitors. On the other hand, by outsourcing my differentiating activity, I run a strong risk of losing that advantage, if I don’t find the right provider, who understands that core competence as I understand it.
6. Why think about core competence Y core businessinstead of focusing on the product?
It is a change in the way of seeing the company. Instead of thinking of a sum of products or business units, it is to think of a sum of key skills and the resulting synergy. When life cycles are getting shorter, associating the company’s image with a specific product does not seem to be a good option. Nor is it diversifying without a criterion, entering businesses in which I do not have differentiating elements, or knowledge of key technologies, as many market examples demonstrate.
7. What if I couldn’t identify any core competence?
It is time to return to the stage of definitions. The risks are many when the company cannot identify itself based on a core competence If my company does not have anything that generates a unique position in the market, my situation is weak, and easily attacked.
8. How do I select my core business?
It is a difficult decision. If I don’t have anything that differentiates me, I have to think in terms of vision and work on building unique skills in the medium term. If there are several skills, the choice is to analyze the future of the market, the position of competitors, and where the needs of customers are tending, to determine what core competences They must define my position.
9. How do I support myself?
If I concentrate my business around my core competence , instead of being eroded, as an asset, they are strengthened and grow, developing through business. But I need to stay focused, avoiding the temptation to grow out of control, and lose my way.
10. Core competence, core businesscompetitive advantages… is it all the same?
No. A competitive advantage may or may not be a core competence. For example, having low prices, a plant used at its optimal capacity, several customer service mouths, can be competitive advantages. Any of them can be imitated, given enough resources. But if the advantage passes, for example, through personnel specially trained in my product, because they participated in the development, or carried out and carry out intensive training that puts me ahead of the rest, this is it. I am placed in a position that no one can immediately copy, and if I protect it (by continuing to invest in it) I maintain the gap that separates me from the competition.
By Robert Serra