If you are serious about increasing your organisation’s competitive advantage you will need to understand if you have clarity around the strength of your distinctive competences. The basics first:
- A competence is something the organisation does. Every organisation has competences, fewer ones have distinctive competences. A distinctive competence is something the organisation does materially better than its competitors.
- It is distinctive competences that deliver competitive advantage.
- Distinctive competences derive from organisational capabilities e.g. to be lowest cost provider you would expect to find deep, applied expertise around: cost and margin management, procurement, supply chain, outsourcing, resource management, MI etc.
- Many organisations have little conscious understanding of their capabilities or how to organise or prioritise their development into distinctive competences.
- It is the lack of distinctive competences that creates a (sometimes fatal) weakness in an organisations’ ability to survive through difficult times. Woolworths is a classic example. It did several things quite well (like pick n mix sweets) but nothing brilliantly well.
- The major benefit from working this out is that it forces any strategy to have focus, to discriminate around what you will and won’t do. BMW’s quite clear in its distinctive competence, sports focused cars and motorbikes. It has deep capability in understanding what makes a car drive really well. Their strapline the ultimate driving machine is no accident.
- The more capabilities you focus on developing, the less likely any will have the depth to become distinctive. You can’t be materially better in many things. A nascent capability you can see Tesco consciously working on, to become world beating in data mining. Using its loyalty card information to create a much more personalised and tailored experience for its customers.
We help organisations to understand capabilities and develop strategies based on building real competitive advantage. We have our own proprietary model covering 11 different dimensions of possible competitive advantage and a process for establishing how an organisation could focus on them most effectively.