Most of the organizations I’ve worked with have given little thought to their core competencies. They have a general idea of what they are or might be but there’s never been a formal discussion of the topic nor has a list of core competencies been developed or communicated.
That’s a major gap in a Baldrige evaluation and an obstacle to achieving performance excellence.
The Baldrige Criteria define core competencies as “your organization’s areas of greatest expertise…those strategically important capabilities that are central to fulfilling your mission or provide an advantage in your marketplace or service environment. Core competencies are frequently challenging for competitors or suppliers and partners to imitate, and they may provide a sustainable competitive advantage.”
The Criteria ask what your core competencies are (P.1a2), how you determine them (2.1a1), how your strategic objectives address them (2.1b2), how your learning and development system addresses them (5.1b1), and how your work systems and processes relate to and capitalize on them (6.1a2).
Baldrige Award recipients answered these questions in different ways, as you can see when you read through their application summaries. It is difficult to actually find their core competencies, however, either because they skirt that question or chose to remove their responses from the online summaries. Here are two examples:
- Cargill Corn Milling North America listed its core competencies as risk management and origination, technical support, supply chain management, and corporate social responsibility.
- Sharp HealthCare listed its core competency as “transforming the health care experience through the Sharp Experience” (a performance improvement initiative)
Core competencies are a keystone for high-performing organizations because they differentiate those organizations from their competitors. C.K. Prahalad and Gary Hamel first made this case in a 1990 article entitled, The Core Competence of the Corporation. According to Prahalad and Hamel, there are three tests for identifying a core competence. It should: (1) provide access to a wide variety of markets; (2) contribute significantly to end-product benefits; and, (3) be difficult for competitors to imitate. A core competence is not a product or service; it is the culture, technologies, processes, and/or expertise that enable an organization to design, produce, and deliver products/services that meet or exceed customer requirements better than your competitors.
The Baldrige Criteria ask what your core competencies are and how you determine and act on them because such knowledge is necessary for an organization to achieve performance excellence.