Bad Strategy: When Customer Value and Core Competence Don’t Align


I find myself reading a lot of Peter Drucker these days. My company has undergone a serious strategic shift and I like the perspective of Drucker at times like this. A passage from "The Effective Executive" this morning caught my attention. Drucker pointed out that core competencies have to align with value to the customer.

It is so simple, yet often we ignore that pairing. Companies can't just do things that they are good at, if customers don't value those things. And companies can't last if they do things that customers value but that they don't do very well.

If your core competence in an are involves speed – you do something quicker than rivals – that is irrelevant unless speed is the thing that customers also value. If you are in a market where customers value low cost while your core competence revolves around quality, the mismatch indicates that you won't be very successful.

  • Now if someone could only explain:
    1) How to figure out specifically what a customer (really) values, and
    2) What trade-offs they are willing to accept – That would really help.

    Got any recommendations? I think you have to experiment and use your gut…

  • Rob

    I think you have hit the bullseye for why so many startups end up with a product or service that is quite different from what they set out to do.

  • David G

    1 – build something you would use
    2 – ask for feedback from your customers
    3 – LISTEN to them
    4 – stack rank their ideas
    5 – build whatever’s on top of that list
    6 – repeat

  • J

    The best way to figure out what your customers want is to…observe buying patterns. (start broken record mode) Too many companies lose sight of the fact that to stay alive they have to give the customer what the customer will pay for, not necessarily what the customer claims to want. Listening to customers is always a good idea, but it’s important to keep in mind that customers are prone to telling you (honestly) that they want something without letting you know that they won’t pay for it – extra legroom on air carriers being exhibit A.

  • Great post and discussion … already I’ve added to my own idea of how to bring these two components together more! Thanks! It can feel like riding the bus and pushing the bus at the same time, especially if your business involves cutting edge ideas for renewal. Do you agree?

  • Bill

    Perhaps it depends on where the customer is able to discern value, the core and misalignment occurs.