Reinforcing strengths will provide greater rewards than mending weaknesses
Sustainable growth requires a corporate skill set that is differentiated and relevant to the markets you serve. Your current portfolio of corporate skills includes both strong and lagging capabilities. Some of these skills are must-haves for long-term viability. Some can help you excel in a narrow aspect of your business. A few can create an uncontestable market lead. Manage this portfolio proactively to strengthen core competencies, set consistent objectives, and create guidelines for decision making and resource allocation. Evaluating the corporate skills portfolio regularly uncovers capabilities that truly matter in your markets and initiatives with the greatest potential impact on revenue growth.
Corporate skill portfolio management has four stages: identification, assessment, prioritization, and execution.
Identification: Create a list of about ten business attributes that are key to revenue growth. These might include customer loyalty, feature richness or product quality, supply chain efficiency, or the strength of your partnerships. Ask your management team to make lists independently, and then compare. The resulting discussion to narrow the list will undoubtedly be illuminating in itself. This is an opportunity to clarify what is critical to your business and to your customers, and to align the company around the competencies that are most likely to drive growth and profitability.
Assessment: Gauge your company’s level of competence in each area. Rate each skill area as lagging, on par with customer expectations, differentiating, or vanguard. The last is on the level of Apple’s virtuosity in product design or eBay’s market share dominance. Be sure to evaluate your capabilities relative to the broad marketplace, including major competitors, substitutes, new entrants, and leaders in other markets. A wide comparison base normalizes your assessment of strengths: If your highly streamlined supply chain is standard for the industry, for example, you are simply on par.
Prioritization: Consider how improving your capabilities in each area will accelerate growth. Will raising service quality increase repeat business? Will adding more features to an already competitive product alter customers’ choices? Will adding efficiency to your sourcing process spur growth or distract from it? Define the initiatives required to improve your top-priority corporate skills and quantify investment and revenue impact for each initiative.
Execution: Incorporate the initiatives you define into your annual business plan. The owner of each initiative will require resources and commitments from multiple organizations. Identify those cross-functional dependencies in the planning phase, so that there are no surprises or finger-pointing later.
This process will identify areas of strength where investment can create a long-term competitive advantage. It will also find weaknesses for which you must compensate to protect current market position. Reinforcing strengths will provide greater rewards than mending weaknesses. A University of Wisconsin study found that focusing on errors generates feelings of fatigue, blame, and resistance. Emphasizing what works well and discussing how to get more from strengths taps into creativity, passion, and the desire to succeed.4 Teams that examined successes improved twice as much as those that studied mistakes. In their analysis of a massive Gallup Organization study, the authors of Now, Discover Your Strengths also found that the most successful people and organizations play to their strengths, and only just compensate for their weaknesses.5
Management of the corporate skill portfolio is an ongoing cycle, not a one-time exercise. Both the level of capabilities in the portfolio and your choices of which to develop will shift year to year. You can’t be the vanguard in every aspect of business, and you don’t need to be. Understanding and developing key strengths can turn them into insurmountable competitive advantages.
A Corporate Skills Development Guide and Workbook is available at http://www.shirmangroup.com.