Organizations have enormous potential and ability to create value. The art of business is to combine and harmonize skills and resources to uniquely provide what customers want and subsequently distinguish themselves in the marketplace. To do this, they use their core competencies, or signature strengths.
Core competencies include specialized knowledge, techniques, or skills – even beautifully called a “distinctive collective learning” – that the company uses to develop core products and new business. While core competencies are difficult and challenging to achieve, and are of great import in keeping a business competitive, these same competencies are what the virtuous organization sees as key to making a truly impactful contribution to all stakeholders and generating both financial and social value. Core competencies (and resultant core products) are used for profit, product, and differentiation, but these treasures easily become traps if not extended to fulfill the organization’s mission and elevate society.
Business leaders are valued for being future-facing and highly skilled at developing industry foresight that is necessary to adapt to changes. They must also be wise in controlling and managing resources that will enable the company to attain goals despite any constraints. To avoid falling into the profit, product, and differentiation traps, virtuous organizations build with a long-term view, thinking about all stakeholders and focusing on new value creation.
Virtuous organizations realize that it is their core competencies – their “engine of development” – that allows a prescient point of view where they see their position to provide value and leadership in contributing to broader social good.
Research warns against the common tendency for a corporate responsibility initiative to reflect a pet interest of the founder, an executive, or employees, rather than drawing on the use of a company’s signature strengths. The organization might also follow the trends of current prevailing political or social issues, thus having limited (and sometimes even negative) social impact. Instead, virtuous organizations zealously consider the value they can create when they combine their signature strengths with a currently unmet need in their community or society. By aligning signature strengths with a strategic social need, there is ample evidence that demonstrates a business can create both social and financial value.
In order for a virtuous organization to mobilize their signature strengths for full value creation (social and financial), it must first identify its competencies. In order to deliver unique value, companies identify, hone, and even perfect core competencies. Then they integrate these competencies into their core activities to generate that unique value. A framework for a rigorous review of company core competencies may start by looking at company purpose, principles, process, and people. Companies may also consider their resources, products, priorities, and partnerships among their signature strengths.
Purpose. An organization’s statement of purpose, or mission statement, may be its signature strength to the extent they align all activities to that purpose. The opportunity of a virtuous organization is to connect any statement of strategic intent that defines a company and its markets to its clear deep purpose (why the company does what it does) and core competencies (how an organization does what it does) for significant and sustainable impact.
Principles. Whether a business provides a product or a service, there are values and principles that, when applied, bring an organization closer to the process and product desired. An organization whose principles are clearly communicated and implemented may consider those principles to be its signature strength, or its way of adding unique value. For example, a company deeply committed to the principle of preserving the environment may give employees certain days off to engage in organized environmental conservation or regeneration activities.
Process. Another organizational signature strength may be a company’s processes, including processes like governing by council or a unique assembly or distribution line. In a unique combination of culture, core competencies, and end product or services, organizations tend to develop formal rules and processes that are most likely to yield the most value creation. Once refined, these unique processes can be used in a variety of situations and contexts.
People. Organizational core competencies and employee competencies are different. But one of the most unique assets of a firm is its workforce. A company’s work-force develops a knowledge set and culture that is incredibly difficult to replicate. The signature strength of an organization may be how it invests in the development of its employees, knowing this is part of what will make them more valuable in the long term.
As virtuous organizations identify and utilize core competencies to create more value for all, there is a deeper understanding among stakeholders of the potency of organizational alignment, including among those overseeing resource allocation. When a company communicates its core competencies well, it feeds a culture of innovation, particularly when met with resources. New markets can be invented, emerging opportunities are quickly met, and stakeholders will be delighted by needs being met that they didn’t even know existed. When prioritized, these company initiatives are folded into the core business as sustainable, and they widen the ways in which the company uses its signature strength.
There is an open flow culture among organizations who view themselves as a “portfolio” of core competencies that can and will be shared to increase value. It encourages effective work across organizational boundaries, sharing of resources, and long-term thinking. Virtuous organizations actively identify and invest in next-generation core competencies that are strategically aligned with the value they can bring to all stakeholders and the broader community.