Competence – the basis for a business' results

Competence is one of the most important sources of success. Without the right, adequate expertise it would be impossible to achieve one's strategic targets. Without unique expertise it would be hard to establish a strategy which would provide the basis for profitability over and above normal profitability.


Competence is the basis for a business’ results

It is not unusual to define competence as knowledge, which does not make sense to us.  A more useful definition combines knowledge with capabilities and motivation.

As a rule we find it expedient to go even further and define competence as all the resources that need to be in place for a business to carry out certain tasks and activities.  This means that elements such as organisation structure, IT systems, corporate culture and customer focus also become part of the competence concept when they are relevant to carrying out a task.

It is the coexistence of these resources that is important to the business, because all the resources are needed in order to carry out the task in question.  If one link in this chain is missing, it can result in the task not being carried out and the other resources losing their value.

Competence and strategy

Defining the tasks that will be crucial to the success of a business must form a central part of the business’s strategy

Working on competence is closely linked to a business’s strategy.  Once a company has defined the tasks that are to finance its future existence by satisfying customer needs, the time has come to establish the resource base needed to carry out those tasks.  According to our definition, establishing that resource base is the same as working on the company’s competence.

Taking time

“Things take time”: We believe that establishing new competence takes a long time

Changing behaviour takes time.  It can easily take between one and three years to establish competence that will enable a business to carry out new tasks.  In other words, if a business wants to prepare itself to meet future customer needs not catered for by existing competence, it needs to get started right away.

Strategically crucial competence

It is rational to focus on a special type of competence, the sort that is crucial to implementing the business’s strategy. We call it strategically crucial competence

For a competence to be defined as strategically crucial, it must add substantial value for customers.  It must also make a difference in relation to competitors’ competence, and it must be difficult to copy.  It should also be of use in a variety of future scenarios.

Involvement of senior management

The responsibility for strategically crucial competence must rest with senior management

Because the strategically crucial competence is linked to a future situation, the business’s reward system will not support its development.  Employees have no incentive to concern themselves with the strategically crucial competence, so senior managers have to do it.  If they do not bother, no one will, and the business will be no better prepared for the future than its competitors.