Competencies and Value Propositions

There is an accepted wisdom that we — as individuals and as organizations — should focus on our 'core competencies' and avoid (or outsource) those things that are not a core competency.

Core competency is usually thought to mean 'what you’re already good at’. That sounds reasonable at a certain level. But it misses the fact that your core competency might not be your core value proposition at a given point in time. It misses that sometimes you need to become good at something you’re not right now, or stop doing something you are good at, in order to provide greater value (to whatever your constituency is) at this point in time. And it forgets that our competencies of today were not our competencies of yesterday — we learned those competencies, we became good at them, probably by conscious effort. With further conscious effort and persistence, we can have new competencies tomorrow that we don’t have today.

To use an example from personal experience, if I may be a bit immodest for a second, (I think) I was a good programmer through the early part of my career. I came up with creative solutions and I was incredibly productive, developing working code faster than any of my colleagues, sometimes astounding them with how quickly I worked. I am admittedly extremely rusty now, but I believe that if I sat and coded every day for a while, I would get back in practice and once again be a valuable programmer. That is a core competency. But it’s not my core value proposition today. It doesn’t really make sense for me to spend time coding vs creating more leveraged value by being a competent leader and manager. But I was a good coder before I was a good manager. I consciously developed my programming skills when I was young, and then I had to consciously develop my leadership and management skills, which is something I continue to focus on consciously developing. I had to leave coding behind, even though I love it and I’m good at it. Early in my career my core value proposition was coding, now it’s leading. And I developed skills to allow me to make that transition. I invested in that.

The same is true of institutions. As a team or a company, we may be good at certain things and bad at certain things. While it’s tempting to simply focus on the things we are good at and ignore the things we are bad at, that might not maximize our value as a firm. We need to be acutely aware of what our core value proposition is — as a company — and make sure we are good at all the things that contribute to that value proposition. We shouldn’t be afraid to outsource things that don’t contribute to that value proposition, even if we are good at them today, if outsourcing is more efficient or helps us stay more focused on what matters. But if we are not good at something that is part of our core value proposition, as defined by our mission, then we should not outsource it. Instead we need to become good at it. We need to invest in hiring people who can help us become good at that, invest in training, and invest in thinking through creative ways to become good at whatever we need to do to deliver our maximum value.