Do You Have a Competency Based Approach to Strategy Development?

One of the key ingredients to strategy development is assessing a firm’s competencies and capabilities. Competency is assessing the capabilities of your employees, the leaders, service and product offerings of the business, as a means of understanding where the strengths and weaknesses reside in the organization and assessing where the company is going in the future.

A successful strategic plan is essential to increase or maintain the competitiveness of a firm. Beyond that, competencies provide a means to generate innovative ideas for the future. When firms recognize a gap in competencies a firm can choose to fill this gap with the required resources or divest itself from that particular industry that it currently participates. Organizational competencies validate a firm’s ability to perform within its industry. Careful analysis of organizational competencies should propel and leverage a company to align, the sometimes unique capabilities, that can lead to a sustainable competitive advantage.

There are a few ways companies can increase its competencies. First, where competencies are lacking, firms should determine what skill sets are required to increase the effectiveness of its corporate strategy. Here is where specificity is needed. For example, competencies should be aligned using a top to bottom approach and vertically aligned across business units. This is to say each business unit should focus on its core competencies and while there may be some overlap, business units should have a unique set of core competencies that align to the overall corporate strategy. If not then there is a need to reinvent the business model for those business units. Identification of firm competencies increases competitiveness and effectiveness when they are tightly aligned to corporate strategy.

Likewise, examining the strengths and weaknesses of leadership is important as well. Today’s strategy is much different from strategy concepts and beliefs from times gone by. Evidence of this is the rapidly changing landscape and approach to conducting business with a heavy emphasis on technology. The selection of leaders is important to guide the direction of the firm for the future. Most industries require a good dose of technology to enable a firm to compete effectively and innovatively. Today’s leaders must understand how technology will impact the future and identify ways to increase the competency of the firm.

Lastly, collaboration is another strategic approach that can lead to increased competencies. For example, among defense companies, there is great strength in developing the needed competencies by leveraging the strengths of other firms that provide the needed skills necessary to support the customer. Consider this approach as a process step to growing within an area where the firm does not have the needed skill set to conduct the work. This collaborative process extends corporate capabilities and competencies.

While there are many other ways a firm can increase core competencies, a true survey of existing competencies should be examined to better focus the direction of the firm. Whether acquiring, investing in internal resources, or developing new skill sets, competencies are important towards developing a sound competency-based strategic plan.




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Renee Sanders is a PhD candidate in business at Capella University, where her specialization is strategy and innovation. Renee holds an BBA and MBA from the University of Maryland University College. Renee currently works in for a defense contractor as the Director of Strategic Pricing and Price to Win.

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