All successful companies are known for something: Airbnb for rental homes, Apple for electronics and Honda for cars. A company’s end product is what consumers and stakeholders focus on but it is not usually a core competency.
Let’s start off with what a core competency is: “A defining capability or advantage that distinguishes an enterprise from its competitors”. Discovering your core competency is more difficult than it seems. Core competence does not diminish with use, if anything it develops and becomes better with time.
Take Honda for example.
Honda’s core competence is not in the cars or motorcycles they build, its their motors. The difference between the complete vehicle and the motor is that Honda can build for anything that needs a motor. This gives a competitive advantage and accounts for 84% of the market share for the motor industry. This skill reaches beyond cars and into lawn mowers and chainsaws, it’s endless!
The secret is looking into the foundation of your company. Some are so focused on what the end product should be that they overlook the many smaller pieces that play into a successful business. Taking a closer look can help you gain more of a market share and even in markets you didn’t know you fit into. Find a niche or product that you can do better than others.
Let’s look at Honda again. Honda was making motors for their cars and was competing with Nissan for market share. Nissan was in need of better motors and no one did them better than Honda. Nissan then decided to collaborate with Honda and began using Honda motors in their Nissan engines.
You may wonder why Honda would agree to sell their competitors their golden ticket. For one, Honda would make an enormous amount of profit from selling their motors. Second, while Nissan stops all R&D for their motors and putting themselves at a long-term disadvantage, Honda can continue to evolve their machine to make it better and take over more industries.
Honda is aware that their core competency is in their motors and not their cars that they are willing to sell to competitors and manufacture other products. Core competencies are more than just physical products. They may lie in your a certain program or company culture. It’s your job to find what out what that is to truly be able to excel.