Foundation First: Building Your Company Upon Its Core

Imagine constructing a building without first pouring a solid foundation. What’s likely to happen? It would not be surprising if it collapsed. Just as a building needs a strong foundation to outlast the elements of time and weather, a company also needs a strong foundation to survive competitive and ever-changing markets.

Core Competencies

In the building construction metaphor, a strong foundation can be likened to the Core Competencies of a company. At this point you may be asking, “What are Core Competencies and how can I find them for my company?”

Core Competencies are key attributes your company exhibits which can be leveraged upon to create products or services. In other words, “What does your company do better than any other company in your industry?” If you are able to answer that question with confidence, you have an advantage over your competitors.

One of the biggest mistakes I see entrepreneurs and companies make is claiming their Core Competency to be the products or services they offer. There are several reasons this is not the case, the main reason being you cannot build a company based upon a single product or service.

Discovering Your Core Competency

Discovering your Core Competency is part art and part science. It can be difficult, especially if you are doing it for the first time. When I strategize with entrepreneurs and companies, one of the first exercises we will do together is identifying their Core Competency.

I like to start by having the team write out what their company does and what their products do on a whiteboard. Most of the time they end up writing four or five paragraphs. I then have them circle what they believe are the key terms in the descriptions then erase everything except the circled items. At this point, I ask how each of those key terms interacted with each other and I have them draw arrows between the terms which interact. Soon the white board will look like a map of the different Core Competencies they possess. If there were particular terms that have many connecting arrows, those became dominant contenders.

We then look at the terms and started to dissect them to determine which terms are dominant and which are dependent. Nine times out of ten that little exercise would lead us to the Core Competency of a company.

Once a company knows what they are truly good at, all of their products, services or offerings can be built upon that foundation.

Company Failures = Deviated Cores

Some of the most notorious product failures of all time have come as result of companies deviating from their Core Competencies. As an example, Colgate ventured into the frozen meal market back in the 1980s. The product line was a complete failure as a result of Colgate attempting to enter an industry in which they had no Core Competency.

Colgate’s Core Competencies revolve around oral care… Tooth brushes, tooth paste, mouth wash, etc. When they attempted to enter into a new market without the required Core Competency, failure ensued.

To sum things up, question your company’s Core Competencies and what you do best. If you are unable answer your own questions, go back to square one and identify your core.