Competency or competence is defined as “the ability to do something successfully or efficiently” by the Oxford dictionary. Vocabulary.com defines competency as “the quality of being adequately or well qualified physically and intellectually.” We can think of competency either on the personal level, the skills that a person brings to the tasks they face, or on an organizational level. On the organizational level, competencies are the skills, processes, or knowledge that the organization possesses. In other words, competencies are the things that the organization does exceptionally well. Some organizations are able to describe a long list of competencies or things that they do exceptionally well.

From a strategic perspective, only a very select group of competencies are relevant. These are variously referred to as core competencies, distinctive competencies, or strategic competencies. Some people split hairs in differentiating between what would be termed core, distinctive, or strategic competencies but any difference in the definition of these three terms is inconsequential. Therefore, we can use these three terms interchangeably.

A strategic competency is what sets an organization apart from competitors in their ability to meet customer needs. To qualify as a strategic competency, it must 1) be a skill, process or knowledge that the company possesses, 2) have value to the customer, and 3) be difficult for competitors to duplicate.

A strategic competency must be a skill, process, or knowledge that the organization possesses. It drives the way the organization produces its product or service offering. It is not a piece of equipment, but it could be the knowledge to develop specialized equipment or to use equipment in a specific way.

A strategic competency must develop value for the customer. As stated above, there could be many competencies in an organization but only the ones that develop value for the customer have the potential to be strategic competencies. A manufacturing facility that is skilled in its ability to be clean and organized has a competency, but it is unlikely to be strategic. A culture that values teamwork and collaboration in and of itself is not a strategic competency but could support a competency such as speed of development. A strategic competency enables the organization to better meet particular needs of customers.

A strategic competency must be difficult for competitors to duplicate. If an organization is just one of many companies that possesses a particular skill, it is not a strategic competency. If the skill or knowledge can be quickly reproduced by others, it is not a strategic competency. It must be unique or fairly unique to be a strategic competency.

Strategic competencies are the skills or knowledge that underlie or produce a competitive advantage. Competitive advantage is the ability of an organization to provide a greater value in meeting the needs of customers. In a way, strategic competencies and competitive advantage can be thought of as opposite sides of the same coin. Strategic competencies are the abilities of the organization to produce higher value for the customer; competitive advantage is the perception on the part of the customer of the higher value provided.

One of the key purposes of strategic planning is to identify the most important strategic competency (or competencies) and then to identify and allocate the resources and actions that will further develop them. By doing so, the organization builds the capability to deliver value to the customer and a competitive advantage over other potential suppliers.

Does your organization understand its strategic competencies? Does your plan focus on further developing these strategic competencies?