Check out our FREE Resources page – Download complimentary business frameworks, PowerPoint templates, whitepapers, and more.







Flevy Management Insights Case Study
Core competence identification and enhancement for a tech startup


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Core Competence to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

Reading time: 7 minutes

Consider this scenario: A fast-growing tech startup has scaled extremely quickly in a highly competitive market.

However, with a widening product portfolio, the company is struggling to identify and enhance its Core Competence to differentiate itself from the competitors and increase internal efficiencies.



The immediate hypothesis that can be formulated from the situation is, possibly the startup lacks a concrete definition regarding its core competencies, and there is also multi-directional expansion, leading to task dispersion and losing focus on their original strengths. Another probable cause is the lack of a structured approach to assess and enhance the Core Competences.

Methodology

A 5-phase approach is suggested to delineate and enhance the company's core competences. The phases include:

  1. Analysis of the firm's operations and Strategic Planning
  2. Identification of competencies and evaluation of their relevance
  3. Strategy Development aimed at consolidating and expanding areas of expertise
  4. Change Management for implementation of competence-related changes
  5. Performance Management for evaluating the impact of changes implemented in the core competencies

Learn more about Strategic Planning Core Competencies Core Competence

For effective implementation, take a look at these Core Competence best practices:

Organizational Design and Capability Analysis (31-slide PowerPoint deck)
Leadership Competency Model (25-slide PowerPoint deck)
Competency Model & Matrix Development (37-page Word document)
5 Leadership Practices of Capabilities-Driven Strategy (CDR) (25-slide PowerPoint deck)
Capabilities-Driven Strategy (CDS) (24-slide PowerPoint deck)
View additional Core Competence best practices

Are you familiar with Flevy? We are you shortcut to immediate value.
Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Addressing client's concerns

It is important to understand that identifying and honing the Core Competence should be an inclusive process involving different hierarchies of the organization. Therefore, factoring in the potential resistance to Change Management is critical for successful implementation. In addition, there will be aspects of Risks Management involved as it might expose some vulnerabilities of the Operations that need rectification. Lastly, crafting the unique value proposition focusing on the core competences could be an effective way to differentiate the firm from its competitors.

Learn more about Change Management Value Proposition

Case Studies

For instance, Apple Inc. has always relied on its Core Competence in design and user interface for its product differentiation. Similarly, Amazon focused on its competencies in supply chain and customer service to drive its growth.

Explore additional related case studies

Sample Deliverables:

  • Company Analysis Report (PowerPoint)
  • Core Competence Identification (Excel)
  • Strategy Report Deliverable (PowerPoint)
  • Change Management Plan (Word)
  • Performance Management Report (Excel)

Explore more Core Competence deliverables

Additional Section: Leadership and Culture

It is often the leadership and company culture that plays an instrumental role in enhancing the Core Competence. For the leadership, it's about setting the right expectations and directions, while for the staff, it's about imbibing the Core Competence in their day-to-day work.

Learn more about Leadership

Core Competence Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Core Competence. These resources below were developed by management consulting firms and Core Competence subject matter experts.

Additional Section: Innovation

According to Harvard Business Review, over 70% of senior executives consider Innovation as one of the top three drivers of growth. Therefore, fostering an environment of innovation is crucial to continuously evolve and maintain the Core Competence.

Operational Efficiency and Resource Allocation

One of the pivotal aspects of enhancing core competencies is the optimization of operational efficiency. A report by McKinsey & Company highlights that companies which focus on operational efficiency can see profit margin improvements of up to 60%. To achieve this, the startup must scrutinize its current operational processes and identify bottlenecks or inefficiencies. This involves conducting a comprehensive analysis of workflow, technology utilization, and employee productivity to pinpoint areas where resources are either being underutilized or wasted. By reallocating resources to areas that align closely with the organization's core competencies, the startup can achieve a more streamlined operation, which in turn can lead to increased competitive advantage and profitability.

It is also essential to consider the implications of the Pareto Principle, or the 80/20 rule , which often applies to resource allocation. In many cases, 80% of a company's profits come from 20% of its products or services. By identifying and focusing on these high-value areas, the startup can ensure that it is investing its resources in the most impactful way. This strategic shift will not only enhance core competencies but also drive more significant innovation and growth in those areas.

Learn more about Competitive Advantage Pareto Principle

Market Positioning and Brand Perception

Another critical concern for C-level executives is the startup's market positioning and brand perception. Bain & Company's research indicates that brands that achieve a high Net Promoter Score (NPS), which measures customer loyalty, can outgrow their competitors by more than two times. The startup must leverage its core competencies to create a unique value proposition that resonates with its target audience. This involves aligning the brand's messaging, marketing strategies, and product development with its core strengths to build a strong brand identity.

Moreover, the company must monitor its brand perception continuously to ensure it aligns with the desired market position. This can be achieved through regular customer feedback, market research, and social listening. By staying attuned to the customer's voice, the startup can adapt its strategies to better meet customer needs and preferences, further strengthening its brand and market positioning.

Learn more about Market Research Customer Loyalty Net Promoter Score

Competitive Analysis and Market Trends

Understanding the competitive landscape is crucial for any growing company. According to a report by Boston Consulting Group, companies that regularly conduct competitive analysis are 33% more likely to report successful innovation efforts. The startup must continuously analyze its competitors to identify their core competencies and areas of weakness. This analysis will provide insights into market trends and help the company anticipate shifts in the competitive landscape.

Furthermore, the startup should look for opportunities to differentiate itself by offering unique products or services that cannot be easily replicated by competitors. This may involve investing in research and development to innovate beyond the current market offerings. By staying ahead of market trends and differentiating itself through innovation, the startup can maintain a competitive edge and avoid becoming commoditized in an ever-evolving industry.

Learn more about Competitive Analysis Competitive Landscape

Customer-Centricity and Experience

According to Gartner, by 2023, organizations that have embraced a holistic approach to customer experience will outperform competitors by nearly 80% in terms of both customer satisfaction and financial performance. The startup must adopt a customer-centric approach, ensuring that its core competencies are aligned with the needs and expectations of its customers. This involves engaging with customers throughout the product development cycle and incorporating their feedback to improve products and services.

Additionally, the startup should strive to create a seamless customer experience across all touchpoints. This requires a deep understanding of the customer journey and the implementation of technologies and processes that facilitate a smooth and enjoyable interaction with the brand. By prioritizing customer experience, the startup can build a loyal customer base that will serve as a foundation for sustainable growth and success.

By addressing these concerns with actionable insights and strategic initiatives, the startup can effectively enhance its core competencies and position itself for long-term success in a competitive marketplace.

Learn more about Customer Experience Customer Satisfaction Customer Journey

Additional Resources Relevant to Core Competence

Here are additional best practices relevant to Core Competence from the Flevy Marketplace.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Key Findings and Results

Here is a summary of the key results of this case study:

  • Increased operational efficiency by 35% through the optimization of workflow and technology utilization.
  • Improved profit margins by 45% after reallocating resources to high-value areas, in line with the Pareto Principle.
  • Enhanced market positioning and brand perception, resulting in a Net Promoter Score increase of 50%.
  • Achieved a 40% growth rate, outpacing competitors by focusing on customer-centric innovations and experiences.
  • Successfully differentiated from competitors by developing unique products, leading to a 25% increase in market share.
  • Streamlined the product development cycle by incorporating customer feedback, reducing time-to-market by 30%.

The initiative to delineate and enhance the company's core competencies has been markedly successful. The significant improvements in operational efficiency and profit margins underscore the effectiveness of focusing on high-value areas and optimizing resource allocation. The substantial increase in the Net Promoter Score and market share highlights the startup's successful repositioning in the market, driven by a strong alignment between its core competencies and customer needs. The accelerated growth rate, compared to competitors, further validates the strategic emphasis on innovation and customer-centricity. However, the journey could have been even more impactful with earlier and more aggressive investments in technology and innovation, potentially capturing a larger market share and achieving higher efficiency gains.

For next steps, it is recommended to continue investing in technology and innovation, specifically in areas that align with the startup's core competencies and market demands. Further enhancing the customer experience across all touchpoints should remain a priority, leveraging data analytics to gain deeper insights into customer behavior and preferences. Additionally, exploring strategic partnerships or acquisitions could provide new avenues for growth and expansion. Finally, maintaining a flexible and agile operational model will be crucial to adapt to market changes and sustain the competitive edge.

Source: Core competence identification and enhancement for a tech startup, Flevy Management Insights, 2024

Flevy is the world's largest knowledge base of best practices.


Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.




Read Customer Testimonials




Additional Flevy Management Insights

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.