Here’s one principle that Capstone lives by in its work with growing clients. Before you go buying someone else’s company, be sure you fully understand your own. This requires asking a few simple but powerful questions, such as: “What is your core competency?”
Companies, like people, often have mistaken ideas about where they truly excel. And like people, they sometimes need an outsider to shake off their illusions and get clear about the reality. So when you go in search of your core competency, follow some simple guidelines:
- Don’t trust your own assumptions
- Look at your company from functional angles
- See where your resources are concentrated
- See where your successes are concentrated
- Ask informed and intelligent outsiders
Here are some specific tactics that can help you focus on your core competencies. Review the key functions of your company – operations, marketing, sales, finance, management – and ask yourself which is the strongest and which the weakest. If you have a superb manufacturing plant staffed by the best in the business, but your sales team is struggling and your marketing strategy gathering dust, it’s pretty obvious where your strength lies.
Another tactic is to view your firm in a competitive context: What do you do differently and better than your nearest competitors? What do clients seek you out for? Why do they stay? Is it something about the product itself, or a quality of your service and how you deliver? Or is it a perceived value in your brand, a matter of historic reputation or newcomer’s cool?
Knowing your strengths is one of the most critical factors in building your growth strategy. For one thing, you will be looking to leverage those strengths as you expand rather than taking them for granted. Then you will seek to balance them by finding external resources that compensate your weaknesses. Finally, your strengths represent a marketing asset when you come to approach a potential acquisition. As all M&A players learn, the strategic buyer actually has to sell himself. Your strengths are part of the story that will make a seller take interest in a potential union.