Core competencies

What Are Core Competencies?

Core competencies are the capabilities and advantages of a business or an individual that sets them apart from the competition. 

Initially introduced in the business world in the 1990s by C.K. Prahalad and Gary Hamel as an approach to corporate strategy, core competencies have developed further to tap into employee competencies. These personal skills help employers proactively identify ways to nurture their team and recruit the right talent. 

What Are the Three Conditions of Core Competencies? 

According to Prahalad and Hamel’s article, “The Core Competence of the Corporation”, core competencies meet three universal conditions: 

1. They provide benefits to consumers. 

2. They are not easy for competitors to replicate. 

3. They can be leveraged to many products and markets. 

Businesses must cultivate these core competencies to succeed against the competition and win lasting results. One key way to do so is by bringing together a strong team of individuals who possess the right personal core competencies. These skills should bolster the organization’s potential to succeed.

Employers may look for job candidates who possess the following abilities (this can vary depending on the role and company culture):   

• Analytical abilities

• Creative thinking

• Problem-solving 

• Communication and people skills

• Emotional intelligence

Types of Core Competencies

There are two types of core competencies: organizational and employee.

Organizational Core Competencies 

The core competencies that distinguish a company from its competitors vary by industry. For example, while a hospital might provide excellent amenities for long-term patients, this wouldn’t be relevant in an industry like media operations, where large digital archives and media coordination would be core competencies. 

Therefore, identifying an organization’s core competencies requires tapping into its strengths and weaknesses. This might require your team to: 

• Look into data to identify the significant wins and losses you’ve experienced over the past year.

• Study customer feedback/reviews to see which products/services bring in the most revenue and what types of marketing messages resonate the most.

• Talk to teams and departments to see where your employees are struggling the most and what areas they thrive in.

• Analyze what your competitors are doing and see if there are bigger and better ways to do those things.

From here, you can put together a game plan on how to win opportunities that bring long-term success and hire people who embody these core competencies. 

Employee Core Competencies

Employee core competencies can be broken down into categories like:

• Management competencies: Leadership is the most influential group of people who play a large role in a business’s success. Organizations may tap into leadership competencies during manager training or the recruitment process. Conflict resolution, interviewing skills, team building, and delegation are all examples of leadership core competencies. These skills can then be passed on to their employees, who can treat them as part of their company culture.

• Human resource competencies: The analysis and execution of your organization's core competencies rest on your HR team. Culture, relationship management, stress management, emotional intelligence, ethical management, and negotiation are examples of HR core competencies. 

What Are Examples of Core Competencies?

Here are three businesses that carry notable core competencies: 

• Apple: Apple has consistently produced user-friendly and innovative tech products (Mac, iPod, iPhone, Apple TV, Apple Watch, etc.) with sleek designs. These characteristics have contributed significantly to Apple’s popularity and growth. 

• Walmart: With a solid supply chain and buying power, Walmart has demonstrated its ability to buy products in massive quantities at a lower price than its competitors. This also allows them to then sell their products to customers at lower prices than other retailers.

• Google: This almighty search engine holds about 88% of the global search market, which is primarily attributed to its proprietary algorithms. In addition, Google employees are offered the opportunity to refine their core competencies, primarily in creative thinking and innovation. Their culture values risk-taking and provides their staff with autonomy.