Building a strong foundation
Along with external capabilities, an organization or individual must possesses expertise in certain key areas. Simply following market trends can sometimes lead to failure due to lack of resources or skill set. If we continue to pursue new business areas, a lot of times, we waste a lot of resources, which could be used to grow strategically in existing areas. Establishing a significant presence in three to six areas of interest could end up being more profitable for organizations. So, how do you identify what your organization does well?
Peer feedback or internal studies can help identify current capabilities and create room for improvement. A periodic internal state analysis could uncover areas to grow. Using scientific methods to build a hypothesis and subjecting it to continuous improvement increases performance levels. Once a company has a strong skill set or things that they do best, customer will flock their brand resulting in high revenues. A core competency for a company can be anything ranging from its people, processes, technology, etc. For example, the Toyota Production System is an excellent example of process improvement. Due to the level of delivery excellence in this system, organizations and experts across the world study and try to replicate this system.
Building and establishing core competencies are the secret for success for organizations. Companies must strategically focus on figuring out what matters the most – people, processes or profit. This will enable them to gain perspective on how to approach the market, what resources they need to succeed, identifying a target audience, and most importantly what are legacy are they leaving behind.
Another example could be luxury car companies. They know that they can build great cars that are highly desirable. They choose not to diversify their models but instead build best in class models. A logistics company penetrating a new market may seek to first establish a strong foot hold in that region. Only once it gains this can it explore more areas to improve and grow. This however doesn’t imply that a company ignores market trends. How does a company tie existing marketing trends to exploit its internal growth potential?
Companies must identify how market dynamics can affect them to do better. For example, a finance company may have only a web portal. It could enhance its customer experience by introducing a mobile application, which provides basic functionalities like transferring money. In this example, the company is trying to grow in its core competency.
Separating strategy from resources must be avoided. Resources are a must for a sustainable strategy. To become a true market leader, companies must identify what they do best. A strong core foundation is the key to success. With this, companies can look for opportunities to reach new benchmarks. Understanding current trends and how they can be applied will enable organizations to build a coherent model. Both internal and external factors must affect the future strategy of an organization. A clear vision helps everyone associated to the organization align themselves to a common goal and thus increases the probability of success.