Many business consultants will encourage you to keep your focus on the customer, which to a large extent is good advice. After all, you can’t build a business without customers, but is it really as simple as that? What is equally important is to focus on your core competencies: to identify and develop the things your business does particularly well. Your niche, if you will.
Ask yourself what your business does particularly well. Is it the way you manage customer relationships? Is it your ability to innovate in a particular area? Or is it a unique specialization of skills within your industry? Think about the people who work with you. Why are they there? Do they share any unique qualities? If your employees are few, or non-existent, think about yourself, your partners, or the people you would like to hire and consider the same questions.
Your core competencies are not simply your ability to produce a particular product or service, it is the one or two outstanding abilities of your business.
It is better to be outstanding in a few areas than to be average in many. In other words, focus on what you do well.
Building on your strengths can also be an effective way to distinguish and distance yourself from your competition.
For instance when Megan Driscoll founded EvolveMKD, a New York public relations firm, she carved out a niche by specializing in two subjects she knew well: beauty and health care. Driscoll’s decision to specialize led to so much growth in her small company that she had hired 10 employees within its first 6 months to keep up with demand.
Of course, you don’t like to brag, but if you were pushed, you would be able to come up with a few things that your company does very well. You may be masters of marketing, or you may have a secret blend of 11 herbs and spices that really set you apart. When people talk about your company, they talk about these things. These are your core competencies. They are the thing you do that makes you the most money. They make your company special, and your products desirable in the eyes of your customers. You will know you’ve landed on a core competency that can be developed into a competitive advantage if it is:
1. Valuable – it allows your company to exploit opportunities or neutralize threats in the business environment.
2. Rare – it’s a capability that few, if any, competitors possess
3. Costly or difficult to imitate– it’s a capability that competitors can’t easily develop either because they don’t have the ability, depth of understanding, or corporate culture to support.
4. Non-substitutable-Your offering can’t be replaced by another.
According to Leslie Balmorth, COO of Tauber & Balser, “Today, firms need to become famous for the specialized services they provide to remain competitive in the business marketplace.” A core competency especially has the potential to give you a competitive advantage when it is valuable and unique from your customer’s point of view.
Just remember to hold back from developing too many core competencies! You can get stretched thin, and have your focus divided. As Marty Neumeier says, “The three most important words in differentiating your brand: focus, focus and focus.”
Invest your resources into a few areas where you know you can make a good return on them. Identify and develop your company’s niche offerings and watch as you distinguish yourself from your competitors and gain the advantage in your market.