What are you good at? Or more precisely what is your company good at? I have worked with several companies that assume they understand their core competency but then miss the mark. This could be because of a historical bias, sunk cost or something else.

Investopedia defines core competency as:

The main strengths or strategic advantages of a business. Core competencies are the combination of pooled knowledge and technical capacities that allow a business to be competitive in the marketplace. Theoretically, a core competency should allow a company to expand into new end markets as well as provide a significant benefit to customers. It should also be hard for competitors to replicate.

I worked with a circuit board manufacturer that believed their future was secured by innovation. The company was surprised when their technology was surpassed and within several months they had lost 60% of their business. What was really their core competency? Quick turn proto-types. They could turn low volume boards on third shift. This was shipping product within 48 hours of the artwork / order. Why was this not exploited? The belief in long term relationships based on their technology. By the time we started working on a quick turn shop, the cash ran out and closed.

I did some continuous improvement work with a coatings company. They built “new” plants. I used quotes around new because it was new equipment but not much innovation. The leadership stated that they were the only company building plants at the time in North America. I agreed but I also let them know that I had been with other coatings companies whose plants were decades older with the same philosophy.  Big tanks, slow turns, little or no customization.  Because of the CapEx spend, the belief was that they were good at manufacturing when, after analysis, what the company was really good at was hazardous chemical logistics. They had lanes, DC’s and an integrated WMS that could move materials almost anywhere in North America within 48 hours.

I have also worked with a food and beverage company that worked hard on developing their manufacturing capability and threw plenty of resources at improvement. As hard as they tried to create a sustainable operational advantage, there were no metrics or programs that would compel the site leadership to change what they were doing. Also, after working with various sites as well as with some of the supply chain leaders, the focus was really on marketing. Which, I found out, is the key driver in this type of product / business.

While performing supply chain analysis and forecasting for an industrial manufacturer that stated that they were a manufacturer with a great brand but what set them apart was their innovation. Their products went beyond the competition. Two issues were created by this belief. One was that the go to market strategy was to show that they were better than the other guys instead of developing a new market where the competitors weren’t. Secondly, when free cash flow was required due to financial leverage, the company brought many of the R&D projects into the headquarters where bureaucracy started to choke out the quick turn and pet projects. Also, the ownership over the ideas turned from the guys in the field who created them to the corporate lap dogs since they were right down the hall from the CEO.

One can’t be fooled but what they think they are good at. One needs to look at the mirror, be the customer and the employee / team member to understand what they are good at.

In the end, there are processes that can help a company better understand what they are truly good at but it takes several steps. I will discuss in future posts.

Advertisements