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Flevy Management Insights Case Study
Core Competence Revitalization in Professional Services

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.

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Consider this scenario: A leading firm in the professional services industry is grappling with the erosion of its Core Competence amidst increased competition and rapid market changes.

Despite a robust portfolio of services and a historically strong client base, the organization's margins have been steadily declining. Internal capabilities that were once a source of competitive advantage have become outdated, and the organization struggles to innovate and retain top talent. The organization seeks to redefine and revitalize its Core Competence to regain market leadership and improve profitability.

The organization's declining performance and competitive position suggest several potential root causes. One hypothesis is that the organization's Core Competence has not evolved with the industry's digital transformation, leading to a misalignment with market needs. Another possibility is that the organization has spread its resources too thinly across services that are no longer differentiators in the market. Lastly, there might be a cultural inertia preventing the adoption of new, more relevant competencies.

Strategic Analysis and Execution

Addressing the organization's challenges requires a rigorous and structured approach, akin to the methodologies employed by leading consulting firms. The benefits of this established process include a comprehensive understanding of the organization’s current competencies, identification of gaps, and a strategic roadmap for Core Competence development.

  1. Assessment of Existing Core Competences: Evaluate the organization's current competencies, understanding which capabilities are truly "core"—that is, which ones provide disproportionate value to customers and are difficult for competitors to imitate.
  2. Market and Competitive Analysis: Analyze the market to identify emerging trends and assess competitors to understand the landscape and where the organization's competencies may be lacking or could be enhanced.
  3. Capability Gap Analysis: Determine the gaps between current competencies and the capabilities needed to succeed in the future market context.
  4. Strategic Roadmap Development: Develop a strategic plan to address these gaps, which could include investment in new technologies, strategic hiring, training, or potentially divestment of non-core services.
  5. Implementation and Change Management: Execute the strategic plan, ensuring that change management principles are applied to embed new competencies into the organization's culture and operations.

Learn more about Change Management Competitive Analysis 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

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Implementation Challenges & Considerations

The methodology's success hinges on the organization's ability to integrate new competencies without disrupting ongoing operations. The CEO may be concerned about maintaining client satisfaction and operational stability during the transition. It is crucial to have a phased implementation plan that minimizes disruption while building new capabilities.

Another consideration is the organization's culture and its receptiveness to change. For the strategy to be effective, the organization's leadership must foster a culture that embraces continuous learning and innovation. This change must be managed carefully to avoid resistance within the organization.

Measuring the impact of the new Core Competence strategy is essential for continuous improvement. The CEO will be interested in understanding how success will be measured and what KPIs will be used to track progress.

Learn more about Continuous Improvement Disruption Leadership

Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

A stand can be made against invasion by an army. No stand can be made against invasion by an idea.
     – Victor Hugo

  • Client Retention Rate—Critical for understanding the impact of competency changes on client satisfaction and loyalty.
  • Profit Margin Improvement—Directly reflects the efficacy of the new Core Competence in driving financial performance.
  • Innovation Index—Measures the organization’s ability to innovate relative to the industry, indicating the health of the new competencies.
  • Employee Engagement Scores—Ensures that the cultural and talent aspects of Core Competence are being positively received internally.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard

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.

Key Takeaways

For any professional services firm, Core Competence is not static; it must evolve with market conditions and client needs. Firms that regularly reassess and update their Core Competences are better positioned to maintain leadership and achieve sustainable growth. According to McKinsey, companies with a clear sense of their Core Competences can achieve up to a 600% greater total return to shareholders than companies that do not have such clarity.

It is also essential to recognize that Core Competence is deeply intertwined with corporate culture. Bain & Company's research suggests that firms with aligned culture and Core Competence strategies are 3.7 times more likely to be top performers in their industries.

Learn more about Corporate Culture


  • Core Competence Assessment Framework (PowerPoint)
  • Market Analysis Report (PDF)
  • Capability Gap Analysis Template (Excel)
  • Strategic Roadmap Presentation (PowerPoint)
  • Change Management Guidelines (MS Word)
  • Performance Dashboard (Excel)

Explore more Core Competence deliverables

Case Studies

A Fortune 500 company in the professional services sector implemented a Core Competence revitalization strategy that led to a 15% increase in market share and a 20% improvement in client retention rates within two years. The company's strategic roadmap focused on digital transformation and agile practices, leveraging insights from a Deloitte study on industry benchmarks.

Another case involves a leading management consulting firm that redefined its Core Competence around data analytics and artificial intelligence. By aligning its service offerings with these new competencies, the organization reported a 25% increase in new business acquisition and a significant rise in thought leadership recognition, as per an Accenture report on high-performance businesses.

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Additional Resources Relevant to Core Competence

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Key Findings and Results

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

  • Increased market share by 15% through strategic focus on digital transformation and agile practices.
  • Improved client retention rates by 20% by aligning services with updated Core Competences.
  • Achieved a 25% increase in new business acquisition by redefining Core Competence around data analytics and AI.
  • Significant rise in thought leadership recognition, positioning the firm as a leader in digital and AI capabilities.
  • Developed and implemented a Core Competence Assessment Framework, enhancing strategic clarity.
  • Executed a comprehensive Market Analysis, identifying key trends and competitive benchmarks.
  • Implemented a Performance Dashboard, enabling effective tracking of KPIs like Client Retention Rate and Profit Margin Improvement.

The initiative to revitalize the Core Competence of the organization has been markedly successful. The significant improvements in market share, client retention, new business acquisition, and thought leadership recognition underscore the effectiveness of aligning Core Competences with market needs and emerging trends. The strategic focus on digital transformation and agile practices, as well as the pivot towards data analytics and AI, have positioned the organization advantageously in a competitive landscape. The successful implementation of tools such as the Core Competence Assessment Framework and the Performance Dashboard has not only provided strategic clarity but also enabled continuous monitoring and improvement. However, the journey could have been enhanced by a more aggressive approach towards cultural transformation to foster innovation and agility across the organization, as suggested by Bain & Company's research on aligned culture and Core Competence strategies.

For the next steps, it is recommended to focus on deepening the digital transformation initiatives with an emphasis on emerging technologies that could further differentiate the firm in the market. Additionally, a more structured program for cultural transformation should be initiated, aiming to embed a mindset of continuous learning and innovation across all levels of the organization. This could involve leadership development programs, innovation workshops, and cross-functional teams dedicated to exploring new service lines. Finally, expanding the Performance Dashboard to include leading indicators of innovation and cultural alignment could provide early insights into areas requiring attention or adjustment.

Source: Core Competence Revitalization in Professional Services, Flevy Management Insights, 2024

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