Developing and implementing a successful corporate strategy are no simple tasks. They take time, resources, collaboration, and honesty. You may have a clear vision of where you want to take your organization, but have you considered what it is actually capable of at this moment in time?
One key step every organization should consider at the beginning of their strategic planning is understanding core competencies, or the unique strengths and capabilities that provide a competitive advantage. The most successful corporate strategies leverage these core competencies during the early stages of planning to ensure they are considered during every step of the process.
Below are six ways to identify your organization’s core competencies.
SWOT Analysis
A SWOT analysis is a strategic tool used to assess a business’s strengths, weaknesses, opportunities, and threats. Conducting a SWOT analysis is an easy way to organize initial thoughts and clearly identify the above elements.
While this tool may not give you all the answers you need to create a formal corporate strategy, it’s a great way to get the ball rolling in the right direction.
Assess Internal Capabilities
Knowing what you have and what you are capable of is a crucial step when developing an achievable strategy. Ask yourself questions such as:
- What are we good at?
- What systems and processes do we have in place?
- Do we have proper technology?
- How strong is our leadership team?
Identification of Value Enhancers and Detractors
Value enhancers are the elements of your business that make it successful and attractive. Examples of value enhancers can be strong financial performance, experienced management team, devoted customers, reputation and brand recognition, etc.
On the other hand, value detractors are the elements of your business that may make it unsuccessful or unattractive. Poor financial reporting and systems, significant customer concentrations, poor employee morale or retention, and legal or compliance issues are common value detractors.
Identifying and prioritizing your organization’s key value enhancers and detractors can provide clarity on where you need to go.
Analyze Customer, Client, and Community Needs
Are you listening to your customers or clients? Candid feedback from customers or clients is an extremely valuable tool. Feedback surveys can be a great way to identify various areas for growth and improvement.
Evaluate Competition and External Factors
Are you keeping up with competition in your industry? Are there legal, political, or macro-economic conditions that should impact your decision making? As you begin the planning process, having an understanding of your competition and potential external factors is a key piece to the puzzle that should not be overlooked.
At the end of the day, it doesn’t matter how good your processes, people and technology are, if you don’t consider competition and external factors, you could be sacrificing your company’s success.
“Master” What You’re Good At
While this may be a simple concept, it is not so simple to execute. With our rapidly changing environment, organizations may want to move onto bigger, better things before mastering what they are already working on. However, before you embark on a large strategic plan or shift, you should always make sure that you are an expert on what your core competencies are.
Looking Ahead
As you begin your strategic planning, keep in mind that it will be a process—and one that may not always run smoothly. However, you can avoid many of the common pitfalls by doing the necessary preparation and ensuring your house is in order right from the start. Organizations armed with the knowledge of their core competencies not only survive but thrive in the ever-changing world of modern commerce.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.