“What is your core competency?”

🌟 Svend Hollensen writes in his book that all companies need a set of competitive advantages to succeed in the market. However, many senior managers mistakenly believe that factors such as access to cheaper raw materials are the source of competitive advantage.

🌟 But examining major companies like IBM, Apple, Microsoft, and others shows that their competitive advantage comes not from the resources they possess but from their core competencies.

🌟 For example, IBM’s ability to design highly advanced machines, Apple’s ability to create new communication technologies, and Microsoft’s ability to integrate artificial intelligence into office software are all examples of core competencies.

🌟 A core competency has three characteristics:

1️⃣ A core competency aligns with the company’s vision and mission. For example, Apple’s access to low‑cost factories in China is not a core competency because Apple’s vision is not to produce cheap phones. In contrast, Apple’s ability to enhance the security of its devices is a core competency because creating an unhackable phone is part of Apple’s mission.

2️⃣ A core competency is built through years of accumulated experience and cannot be purchased. A key point is that competitors cannot easily imitate it. Therefore, a core competency must grow from within the company, not be bought from outside. This is why Google requires its engineers to spend part of their workday on personal projects—so their learning and experience in software design grow and eventually become a core competency of the company.

3️⃣ A core competency can be transferred across the entire company. A true core competency can be used in all products and services, not just one brand or product line. For example, Amazon’s ability to offer personalized recommendations based on previous purchases is one of its core competencies. Amazon uses this capability both in its online store and in its physical stores.

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