Tuesday, September 6, 2011

Lessons from Procter & Gamble – “Stick to your knitting” – Core Competencies

As you might gather from the title, people at P&G didn’t make this statement in so many words. In fact, these words came from my mother when she wanted me to concentrate on what I was doing and not get distracted. But the meaning was clear from my years at Procter & Gamble, as well.

In Procter and business terms, it means to understand your core competencies and stick to them. Don’t get sidetracked and move away from where your true competitive advantage lies. You can quickly recall many companies that strayed and suffered great losses as a result. Gatorade anyone?

Just so that we have a common understanding of the definition of Core Competency it is: A unique ability that a company acquires from its founders or develops and that cannot be easily imitated. Core competencies are what give a company one or more competitive advantages, in creating and delivering value to its customers in its chosen field.

While P&G is clearly known as a marketing/branding/advertising company, it has other core talents as well. The primary core is the people. Great care and effort is expended in identifying and recruiting top candidates in all functions. Then, strong training and development programs are put in place for all, since the company is a promote from within and the future of the company rests heavily on the new hires. They state that people are their most valuable asset and they mean it.

The second core competency is in research and development. The company has “overspent” in this area for decades. In fact, at one time, there were more PhDs per square foot in the R&D labs than at any other place in the world.

The combination of these three elements results in a core competency of bringing superior products to market. Superior is defined as not only breakthrough, but also better meeting customer needs. Breakthrough products include the first shortening (Crisco), the first detergent (Oxydol/Tide), the first workable disposable diaper (Pampers) and many more. The company has been and remains the premier consumer packaged goods company as a result.

This is not meant to be a self-serving article, since I spent more than two decades at P&G. It is meant to help other companies spend the time to clearly define their core competencies and then build strategies and business plans that capitalize on them.

Having been in business for more than 4 decades and as a consultant for more than 12 years, I have seen many companies that have failed to find their core and their efforts achieve less than optimum results, at best. Some do not change and are no longer in business. Resources both human capital and financial are scarce. The dilution of those resources on key projects as well as the lack of focus often causes major damage to companies.

If you need help in identifying your core competencies or creating the plans that will make you successful, contact us. We have a lot of experience as a business acceleration company.



John Maver
Maver Management Group
(925) 648-7561
Maver Management
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