What are core competencies?
Core competencies are special skills and capabilities of the firm that provides some competitive advantage in the marketplace. We are primarily interested in those skills and capabilities that allow the firm/brand to deliver superior customer value.
You should note that core competencies are skill sets that reside in the people and processes within the organization. They are ways that the organization operates, rather than the physical resources that the firm. You should use the words “expertise”, “abilities”, “skills”, “know-how”, “processes” and so on.
Probably the best way to understand a core competency is to consider some examples. Here is a list of some potential core competencies that a firm may have.
List of core competency examples
- Innovation expertise
- Speed and flexibility in the marketplace
- Superior product development skills
- Greater marketplace and customer understanding
- Strong analysis and database skills
- Industry/market knowledge and expertise
- Experts in marketing communications
- Fast or friendly customer service
- Streamlined and efficient processes
- Logistics expertise
- Strategic/entrepreneurial insight
- Skills in the early identification of trends/opportunities
You should note from the above list, that there are no physical resources or assets listed – they are some form of a skill set. So why is that important? It is important because core competencies are more likely to be unique in the marketplace and more likely to deliver ongoing competitive advantage.
Core competencies are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies.