Companies strive for competitive advantage through many avenues. Some firms focus on access to natural resources to gain cost advantage. Others develop distinctive and rigorous processes to gain operational efficiencies that their competitors cannot match. Still other organizations advance by unique business models that capitalize on their culture, people, and special competencies.
One view* of organizational competencies pinpoints three interdependent perspectives that lead to competitive advantage. As project, product, and engineering managers, we can examine these three aspects of organizational competency to build and strengthen our teams to gain competitive advantage. Organizational competency derives from inputs, management processes, and transformational capabilities.
Input Competencies
Vertically integrated multinational corporations often have a competitive advantage by virtue of access to special resources. Shell, ExxonMobil, and BP are vertically integrated because of access to oil and gas. Brining this valuable natural resource to a refinery is a special competency based on the inputs to the process.
These firms also expect to demonstrate operational competencies as they transform oil and gas into high demand products like gasoline, diesel, and jet fuel. Competencies are further magnified as by-products from the refineries are converted in downstream chemical plants to make plastic, agricultural fertilizers, and food packaging. Vertical integration and access to special resources leads to input advantages vs. competitors.
Management Competencies
Management of a firm directs its short-term and long-range survival. Management decisions, policies, and procedures are how a company’s strategy and vision are implemented. When these actions are taken with foresight and acknowledgement of appropriate risk, a firm can gain competitive advantages.
Project, product, and engineering managers often have special domain knowledge that allows a firm to gain competitive advantage through its decision-making processes. Managers must be diligent to monitor political, economic, and marketing trends. Customer insights provide valuable information leading to next generation features for product development, for example. Management competencies must include data gathering, information analysis, and knowledge transfer. Of course, such end-user insights are based on cultural competencies of the organization and how it transforms information into actionable learning.
Transformational Capabilities
Data is simply a set of words or numbers. It is useless without interpretation. When the data is analyzed, segmented,
and categorized, it becomes information. When project, product, and engineering managers apply that information to make decisions that guide product development and innovation for competitive advantage, that information becomes knowledge. The transformation of data to information to knowledge is based upon an organization’s cultural capability to learn.
As indicated, the three competencies for competitive advantage are intertwined and interdependent. Yet, the tie among them is learning. A learning organization can adapt and grow. Firms committed to institutional learning will find new ways to access resources, build unique business models, and transform those resources into valuable outputs that meet customer needs. Learning and transformational capabilities are founded on the team processes and culture of an organization.
Today teams are frequently global in nature and operate virtually, using electronic means of communication as a primary tool to exchange ideas. Learning organizations need effective teamwork to join the three organizational competencies together in an effective way to generate profit and cost-savings. Project, product, and engineering managers can encourage team learning as an organizational competency by building open cultures reflecting the diversity of their global teams.
One way to encourage learning capabilities in global teams is through professional development. Teams charged with innovation must be familiar with the concepts presented for New Product Development Professionals (NPDP). Project teams led by certified Project Management Professionals (PMP®) are more successful because of the special management competencies demonstrated in planning and executing a project. Engineering and R&D teams can take advantage of management principles to improve learning competencies through Professional Engineering Management (CPEM) training. Starting with basic principles and sharing among team members and leaders will begin to build organizational competencies and transformational capabilities for distinct completive advantage.
Applying Organizational Competencies
Organizations that recognize their competencies, or lack thereof, in inputs, management, and learning transformation can gain an advantage over their competitors. All firms have different inputs and resources that offer a unique perspective to their business. Whether the company is vertically integrated or has a unique approach to resource development, these input competencies can lead to gains in cost advantage over other competitors in the same industry and market space.
A firm’s vision, strategy, and business model are reflected in its policies and procedures. These operational tools can bring further cost-savings as well as economy of scale advantages. Coupled with how the firm converts data to information and knowledge, its management and learning competencies can bring profitable differentiation to any competitive industry.
If you’d like to learn more about building organizational competencies and team processes to accomplish great things, please contact us at [email protected] or 281-280-8717. We know that time is really the fourth critical element in managing projects, products, and engineering teams so we want to make it simple for you to study, learn, and earn your professional certifications.
*Lado & Wilson, Academy of Management Review, 1994.
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