J Contact Us

Corporate Office
888-733-1238
612-338-4722
email
 
Our Perspective
Print this page
What's Your Core Competency?
By Mark W. Sheffert
November 2001

Two weeks ago, I was sitting at home waiting for the phone company to show up to install a new line for my computer. Of course, they had given me a four-hour window during which I had to sit around and wait. Then, they called to say they were running behind schedule and that it would be another hour before they even got to my door.

That caused me to wonder why it is that you can send a package via FedEx and know it is positively guaranteed be delivered to its destination across the country by 10:00 am the next morning, yet I was sitting there like an idiot from 8:00 am to noon waiting for the phone guy, and then he still didn’t show up until 1:30 pm? Don’t phone
companies think your time is valuable?

Why is it that Hertz #1 Club Gold members can rent a Jaguar XJ8 or Lincoln LS in a few minutes simply by showing their driver’s license, yet to rent a movie at Blockbuster you need to wait in line, show your membership card and an I.D. card (or two), sign their paperwork, pay, and then walk through a security gate? Don’t they
realize how untrustworthy and inconvenient that is?

Why is it that Lands End can remember your address, credit card number, last order, and the sizes of all your family members, but after ten years of going to the same doctor, the receptionist greets you with "Next!", then demands your name, asks you why you are seeing the doctor (in a loud voice in front of all the other people sitting in the waiting room), and then drills you with questions about your home address and insurance information? Don’t doctors recognize you as a valued customer?

Why is it that you can get informed and patient help from your neighborhood hardware store employee when you’re buying a socket set, but if you have a question about your new software program, you get lost in the voice mail / hold never-never land of most software companies? Don’t they know that being big and having superior software capabilities don’t mean beans if they don’t provide customer service too?

Why is it that some companies are a delight to do business with, while others just don’t seem to care about what’s important to you? Don’t the latter know what they are --- or aren’t --- doing? Don’t they know competition is tough today and the changing world will only make it tougher tomorrow?

Consumers are continuously pushing the things they value to further extremes. If they value low prices, they expect prices to be lower today than they were yesterday. If they value convenience and fast service today, they expect even less hassle and faster service tomorrow. If they want the latest technology, their growing expectations make what’s state-of -the-art today obsolete tomorrow. If they value knowledgeable and patient service today, they expect more expert advice tomorrow. The very reasons why customers do business with you are also the same reasons they will leave you. For instance, if they come to you for lower prices, they will leave for someone else with a price lower than yours. Or if they come to you because of your superior service, they will leave when someone else can offer them even better service.

Today’s market leaders are successful because their competitive advantages are focused on one component of what consumers value. FedEx has made sending packages overnight so reliable that flawless on-time service is the norm, not the exception; Hertz has made renting a car as convenient as taking a taxi. But, they don’t try to be
everything to all people. They have narrowed their focus on a few certain competitive advantages and brought them to such a level of excellence that their competitors are left in the dust.

Why is it that more companies don’t realize that competition is getting tougher every day? Why don’t more companies focused on the one thing that customers value? Why is it that few executives can articulate their company’s core competencies? Why is it that competitive positioning is left to once-a-year planning sessions and then forgotten? The following represent some lessons that we’ve learned in our firm in working with hundreds of companies that may help you focus on your core competencies and competitive position.

Get Closer to the Enemy

I once heard an old Jewish saying that went something like this: "Keep your friends close and your enemies even closer". They may not have had business competitors in mind, but the shoe sure fits in this case. To narrow your focus and improve your competitive position, understanding the competition is essential.

Attending trade shows, religiously reading trade journals, and belonging to industry associations are common ways to learn about the competition. Two uncommon ways, however, are to glean information from customers and vendors. Ask your customers if they use more than one vendor for your type of product or service, and if
so, who it is and why. What do they offer that you don’t? And vice versa? How do you stack up against them? And, ask your vendors if they have other customers in your industry. If so, find out who they are, what they are buying, how much they are buying, and if they know anything else about your competitors that they can share.
It’s surprising how much information you can get from asking these types of questions.

Another uncommon way is to "secret shop". At least once a year, hire a marketing consultant independent from your company to go shopping for competitive products, and then learn from their experiences. Or, hire a marketing firm specializing in "competitive espionage" to study the way your competitors have responded to market situations in the past to predict how they will respond in the future.

Get to know your competition so well you can forecast how they will respond to your next move. Understand their strengths, weaknesses, and market niche. Read their marketing materials, visit their web site often, and network within your industry’s association. Get to know their products or services as well as your own.

I’ve read that Xerox began benchmarking in 1979 as a way to analyze competing products. They brought competing products in-house and compared their operating capability and features, and then took them apart and scrutinized their mechanical components. They used this information to compete better against the Japanese
competitors making inroads into the U.S. copier market.

Next, remember that competition comes in direct and indirect forms. When my firm is hired to turn around a troubled company, one of the first questions we ask the CEO is to tell us about the competition. It’s surprising how often we hear, "Oh, we don’t have any." Then we know the company is out of touch with its market, because even if a company can have 100% of its market (a pipe dream), there’s always someone who competes indirectly for the customer’s dollar.

For example, Southwest Airlines, whose strategy is to provide short point-to-point low-fare service, doesn’t stop at the big airlines when it sizes up its competition. Chairman Herb Kelleher has said that their competition is the automobile; they want to take people from Toyota, Ford, and General Motors. Their no-frills service with
frequent, conveniently timed flights and low fares to and from centrally located downtown airports reflect that competitive position.

Also look forward to see what could make your product or service obsolete. There are many historical examples, like the best and cheapest black and white television being made obsolete when the color television was introduced. Everyone’s always trying to make the better, cheaper, faster mousetrap, so it had better be you to do it first.

Look in the Mirror
Now that you know the competition, look in the mirror. Whether or not you think you know your company well, be sure to get feedback from customers. It’s their perception of your company that matters most. Do it informally by visiting with customers and taking key customers out for dinner, or formally with customer surveys and / or
questionnaires.

Ask questions to find out how satisfied they were with your products or services. Were our promises kept and deadlines adhered to? Were our salespeople informed and easy to deal with? Is our marketing material understandable and free of technical jargon? Did we listen to you? Are our facilities inviting and friendly?

Ask specific questions about their perceptions of the features and benefits of your products and services. Find out where you stack up against the competition in their eyes. What you think is important and what is important to them may be two different things.

Armed with the information you now have about your competition and your own company, you should be able to plot your competitive advantages in every category of the marketing "P"s. Is your product the best or the cheapest? Is your pricing in the middle of the pack, lowest or highest? Are your promotion efforts ahead of or behind the competition’s? Is your placement or distribution method more efficient than the others? With this knowledge, you’ll have a solid grasp on your strengths, weaknesses, and niche in the market.

Dominate Your Market

If you know your competition well and understand your own place in the marketplace, you can narrow your focus on certain competitive advantages that appeal to what consumer value, like low prices, fast service, premium service, or flawless quality. What is it that no one else in your industry is doing? What is it that you can do better than anyone else?

Today’s new world of tougher competition and rising consumer expectations means that what you did good yesterday isn’t good enough today. You can’t raise prices when your costs increase, you have to lower prices and still find ways to accommodate rising expectations. You can’t just give good service, you must provide fast, flawless, and convenient service that gets better every day. You can’t simply have good quality and state-of-the art capabilities, you have to offer superior quality and knock-your-socks-off innovative features and benefits.

A note of caution, however: It’s impossible to do all of these things for every one. Pick one and then do it so well it becomes your core competency. And I don’t mean just a general sense of "what we do well around here"; I mean you need to arrive at an insightful, creative and shared definition of the few things your company does well in the eyes of your customers. Don’t define your technical capabilities --- link your competencies to the benefits you provide to your customers.

Consumers are pushing their demands to the extremes, and the only way to meet those rising expectations is to narrow your focus on certain competitive advantages. Whatever it is that consumers value today, they expect more of it in the future. The companies that don’t try to do everything for everyone, but which choose their
customers and narrow their focus on certain competitive advantages will be the ones to succeed. Companies that can’t keep up with rising consumer expectations will fail, and the ones that do will dominate their market. The buyer-seller relationship tables have turned --- caveat vendor … today the buyer is king.


Back to Top
   
Manchester® is a registered trademark of Manchester Companies, Inc.