What Is a Core Competency?

Definition & Examples of a Core Competency

Cropped shot of two businesswomen working together on a digital tablet in an office

Tassii / Getty Images

Core competencies are the defining capabilities or advantages that a business may have that distinguish it from the competition. Core competence is the foundation for sharpening a company's competitive edge, and it guides brand reputation, business growth, and marketing strategy.

Learn more about core competencies and their role and benefit in business and your personal life.

What Are Core Competencies?

Core competencies are distinct, hard-to-replicate competitive advantages. In business, the concept of core competence originated as a resource-based approach to corporate strategy, introduced by C.K. Prahalad and Gary Hamel. In their 1990 book "The Core Competence of the Corporation," they describe various core competencies as meeting three universal conditions:  

  • They provide consumer benefits.
  • They're not easy for competitors to imitate.
  • They can be leveraged widely to many products and markets.

Such a strict definition of core competence excludes the strengths of small businesses, however, as most would not be able to meet the third condition. The concept of core competencies can also be applied to someone's personal skills and working advantages. Personal core competencies can include:

  • Problem-solving skills
  • Analytical thinking
  • Technical competency
  • Conflict resolution
  • Adaptability

How Core Competencies Work

Core competence has evolved over the past 30 years, but it remains based on exploiting several competitive advantages. Core competencies are what make it difficult for other businesses to duplicate a product or service, and then outperform the competition. Successful businesses tend to have more than one of the following core competencies:

  • Quality
  • Customer service
  • Value
  • Innovation
  • Marketing
  • Size and buying power

Walmart and Apple are two companies that have continuously showcased the power of core competencies. Walmart's primary core competencies are its buying power and supply chain management. The size of Walmart's operations allows them to buy products in massive bulks at prices lower than their competitors can receive. Because of these low purchase prices, they can undercut their competitors on price and attract more consumers.

Apple's main core competency is innovation. They have a long history of developing unique and innovative technology products, including the Mac computer, iPod, iPhone, iPad, Apple TV, and Apple Watch. Even when it's not the first company to develop a new product, Apple is often the one that's able to take a new product, engineer it in a unique fashion, and make it an enormous commercial success.

The release of the iPhone has often been credited as what killed the sales of Blackberry devices.

Advantages and Disadvantages of Core Competencies

One of the most important benefits of possessing core competencies is that it gives businesses a better shot at being competitive long-term. It's one thing to have a product or service that's initially successful, but if competitors can easily duplicate it, you will eventually be fighting for market share and searching for other ways to differentiate yourself.

Take Snapshot Stories, for example. Snapchat was the original social media platform to introduce 24-hour disappearing stories, but Instagram easily duplicated the concept, and it caused Snapchat to lose 3 million daily users within two years of its release.

As job markets become increasingly competitive, it's more important than ever to set yourself apart from the competition. While creating your resume, including a core competencies section can allow you to use the limited space to highlight characteristics that make you unique.

Employers are also increasingly using Applicant Tracking Systems (ATS)—which scan resumes for keywords—to prescreen candidates. Including core competencies on your resume can help the ATS software identify keywords provided by the employer and further you in the hiring process.

Issues may arise when a company incorrectly assigns a core competency to itself, leading to overemphasizing weaknesses or ignoring potential strengths. For example, suppose a company believes marketing is its core competency when, in reality, it's innovation. In that case, it may use too many resources producing marketing campaigns and not enough innovating its products and services—which will allow it to remain competitive in the long-term.

Key Takeaways

  • Core competencies are a company's competitive advantages.
  • People can possess personal core competencies that give them an edge in competitive job markets.
  • Core competencies can be learned with time.
  • Incorrectly assigning core competencies to itself can cause companies to misallocate their resources.