DISCRIMINATING COMPETENCY – The Key to Sustainable Competitive Advantages 

June 30, 2023Strategy


DISCRIMINATING COMPETENCY – The Key to Sustainable Competitive Advantages 

June 30, 2023 Strategy

Organizations are well served when they examine, embrace, and utilize what makes them unique in the perspective of the clients they serve during these most difficult times. A discriminating competence assessment is a common name for this type of study. Such an analysis identifies the collection of knowledge and tools that enables a business (or organization) to offer a certain value to a consumer.

A discriminating competence or core competence is a highly developed skill that enables a business to provide distinctive value to clients. It represents an organization’s collective learning, notably on how to coordinate various production skills and integrate various technology.

Understanding discriminating competencies enable organizations to invest in their competitive advantages and be distinct from the competition.
For government and nonprofit organizations, discriminating competence is essential for determining where programs and services can/should be delivered in an efficient, cost-effective way.

Organizations use Discriminating Competencies to: 
  1. Create positions and plans for competition that take advantage of organizational strengths. 
  2. Create new markets and penetrate developing ones swiftly 
  3. Improve knowledge and skill transfer between business units and functional units within the organization. 
  4. Increase the range of an organization’s innovation capacity to provide new goods and services 
  5. Improve branding and increase consumer loyalty 
  6. Choose where to put resources. 

Amazon is a prime example.  As they put it, Amazon wants to be “earth’s most customer-centric company.” In this case, we can see that Amazon’s main capabilities are focused on: 

  1. offering a first-rate customer experience through quick delivery based on their innovative infrastructure and logistics 
  2. excellent customer support  
  3. and easy access to a broad variety of goods at a cheaper price. 

These capacities open doors to a variety of markets, make it difficult for rivals to copy them, and significantly increase the perceived value for customers.  The fact that Amazon has been able to develop, use, and rearrange its discriminating competencies into long-lasting competitive advantages is a prime example of why the company is so well-positioned to grow its services and thrive in a quickly shifting external environment. 

Maximizing Your Core Competency: 

First, you need to identify where your organization has competence mastery. The following list of typical core competence areas includes: 

  1. Product Quality – superior to industry norms in terms of product or service quality.
  2. Service levels that are far superior than industry norms. 
  3. Strong consumer focus resulting in a high level of customer closeness.
  4. Brand reputation & image – built over several years of exceptional performance.
  5. Special and distinctive technical abilities of one or more team members 

Particular attention should be paid to the internal capabilities of the organization which customers recognize as its competitive advantage. The organization’s core competency becomes the center around which pertinent business prospects are selected and the organization’s strategic direction is established.

Discriminating competences have to be seen as dynamic components that change over time in response to the operational environment of the firm. You can turn a skill into a core skill and become “competitively different” in the process.

For a competency to be considered unique, it must be a quality that the customer appreciates and that competitors would like to have in their own business. A discriminating competency cannot be an essential quality to the organization’s operations (but not exceptional in any way) because it does not distinguish the organization from competitors.

An ability that is essential to an organization’s operations but is not remarkable in some manner should not be regarded as a core competency since it does not set the company apart from its rivals.

Amazon has undoubtedly embraced this justification. Perhaps it’s time to implement this practice if your company doesn’t already.

H. Pierson Strategy Consulting Team.


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