Center for Simplified Strategic Planning

Questions and Answers

Strategic Planning Questions and Answers

What's the difference between strategic competencies and the strengths of a company?

To see the distinction between a strength and a competency, let's first look at the definition of a competency. We define competencies as a combination of skills, processes and knowledge. This definition is important for strategy, because competencies are generally more difficult to create (because they are a combination rather than just one of the elements) and they improve with use (because our skills improve with practice). Strengths, on the other hand, can be any characteristic of your company which creates advantage for you in the marketplace. For example, the location of your plant might create a competitive advantage, but it is an asset - not know-how. The skills you use to exploit such strategic assets may well be competencies, but it is important to recognize that assets require investment and tend to depreciate, while competencies are acquired through learning and tend to appreciate.

To be strategic, a competency must also fulfill three additional pre-requisites:

  1. It must create significant value for customers.
  2. It must differentiate you from the competition.
  3. It must be difficult to copy.

A competency that does not fulfill all three pre-requisites may still be a strength (something of advantage to you), and it may be an important strength, but it is not a Strategic Competency.

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Center for Simplified Strategic Planning, Inc.
PO Box 8272
Ann Arbor, MI 48108

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