Core competency analytics

Core competency analytics identifies the combinations of skill, knowledge, technology and process that create distinctive customer value. It then shows where those capabilities reside, how robust they are and where they could be deployed more effectively.

When to use it

Review core competences at least annually and whenever strategy, technology or key personnel change. Without a capability map, an organisation may discover only after someone leaves that critical knowledge was concentrated in that person.

The analysis should answer:

• Which activities do we perform materially better than relevant competitors?
• Which competences have accumulated through experience?
• Which competences will the strategy require?
• Where are valuable capabilities underused?
• Could they support different products or markets?
• How mature, transferable and resilient is each competence?
• Where do important capability gaps remain?

Origins

The method applies C.K. Prahalad and Gary Hamel’s core-competence concept to systematic organisational analysis. Their influential work described the corporation as a portfolio of collective learning as well as a portfolio of businesses. Later capability mapping, knowledge management and people analytics made it easier to locate enabling skills, assess concentration risk and connect competences with products and markets.

What it is

A core competence is not a single task or employee. It is a coordinated combination of resources and skills that distinguishes the firm. A candidate should satisfy three tests:

1. It can open access to several markets.
2. It contributes substantially to the benefit customers perceive in the end product.
3. Competitors find it difficult to imitate.

Why it matters

Competitive advantage is difficult to protect when management is not 100 per cent clear about the capabilities beneath it. The finished product may be visible, but the transferable source of advantage often lies in how the organisation designs, produces or delivers it.

Analytics decomposes the value-creation process so those underlying strengths can be evidenced, protected, improved and recombined elsewhere.