Workshop 8 - Competency, Part 1

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Competency: n. The ability to do something successfully or efficiently.

Competency is at the core of any business, and because of the importance of competency in sustainable business, it’s important to get a framework around it, form a common language around it. We don’t always know what we mean by competency, or if we do, we aren’t good at communicating it to others.

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3 foundations of competency:

  1. Skill: knowing how to do something
  2. Knowledge: keeping up to date; knowing what’s going on in the field in which you work
  3. Experience: being able to say that you have done work in your skill area.


Competency = Photosynthesis: Competency is to sustainable business what photosynthesis is to a plant’s biology: photosynthesis changes energy from the sun into plant growth. Competency takes in energy in the forms of effort, ideas, money, and love, for example, and creates value in business: profit, nurturing the planet, up-lifting the community. If you don’t have competency in something, you can put time, energy and money into a business without getting anything out. Competency is vital, especially to get to the triple bottom line of a sustainable business.

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Depth of competency:

  1. Understanding: You have a basic understanding of the skill; understand the terminology.
  2. Novice: You are in the process of learning and developing a deeper understanding of the skill.
  3. Proficient: You have enough competency in that skill area to be able to perform the task at a market-based rate.
  4. Expert: You are highly proficient in the skill; expert level might be enough for the majority of the skills you need for your business.
  5. World Class: You don't need to be world class at all that you do, but it's great if you can achieve that level in one or two areas of your business.

Be willing to learn: You don’t have to be an expert or at a world class level to start a business, but you do have to be ready, able and willing to learn. The learning process is what is most important. Almost everyone has been a novice in their career, but you have to have a clear understanding of where you need go and how to get there.

Your organization should have a learning culture - work with people who are in the learning process as well.

Capacity: For a service oriented business, achieving the expert level is a measure of your capacity. Capacity is related to competency and number of people available to do the work.

Standards are always shifting: What once was an expert is now a novice - you have to be continually learning, updating, changing. Rule at Accenture: "Every 7 years, everything you know is wrong."



This chart demonstrates the breadth of competency, or specialization, that someone might need to have in a particular field. If you were looking for an attorney, for example, what areas of specialization might be required for your business? If you, yourself, are not 3 tiers deep in your understanding of this skill, then you aren’t near where you need to be. So you need a navigator, someone to help you navigate this space who can help you find the right person with the correct specialized skills that your business requires.

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Core Competencies and Business Competencies:

Using a bicycle repair business as an example, this chart shows the core competencies and business competencies that might be required to run the business.

Core competencies are the skills you need to have in order to produce the product or service you are selling.

For each of the skills listed you need to have a good understanding of how proficient you are; are you a novice? proficient? an expert? world class? Perhaps there will be some jobs that you will have to outsource to partner. You may be very competent at things like wheel truing or fixing/replacing tires, but will have to outsource jobs like painting and frame straightening.

Business competencies are the skills that will be needed in order to run the business end, such as accounting, marketing, human resources management, taxes and web development. As with core competencies, some of these jobs can be handled inside the business while others might have to be outsourced depending on your areas of knowledge and experience.

Many entrepreneurs are initially unaware of how much time they will need to invest in running their business over and above the time they spend actually doing the work of producing the product or providing the service. So be aware that if, for example, you want to be a professional painter with your own business, you will probably spend more time running your business than you will painting.

Core competencies are necessary but not sufficient to run a business. If all you have are core competencies, then you would do best working for someone else. If you want to run your own business, you will have to have or develop business competencies in areas like accounting, taxes, employee hiring/development, marketing, etc. Some of this work you may retain in-house while other jobs might be outsourced to a partner, but you must still have at least a basic understanding of these areas of business management.

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Evaluating Your Competencies: Where Do You Fall?

As a business owner, there is nothing more important than to identify the various competencies that will be required to run your business, and then evaluate what level of competency you are at for each of them. This chart illustrates how you might map out your competency levels.

The Deep Leg: You must have at least one skill area at which you are very, very good - a world class expert - in order for your business to survive long term. You might not be expert, or even proficient, in everything, but you must have that one "deep leg", that one area at which you are the best.

Continuous Learning: You should foster an environment of continuous learning, allowing you to gain a depth of competency in various skill areas.

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Go back to the Seed of your business. The product/service that you want to sell must be aligned with your area of competency and vice versa.

Group Comments:

  • There has to be the high-level understanding of the market, the need/desire for your product, inside the business. Professional marketing can be outsourced if necessary.
  • It's more important to have deeper core competencies, but you need to have enough understanding of business competencies - lack of these can sink your business.
  • 3 states of knowing:
  1. Things you know
  2. Things you know that you don’t know
  3. Things you don’t know that you don’t know (most dangerous). Having an awareness and basic understanding of the necessary competencies to run your business can help you to avoid this area.
  • Understand why you are getting into a business to begin with. Do you want to run the business end of it and just hire the best people who have the core competencies to produce the product/service you want to sell? Or do you want to work in the core competencies and outsource the business side?
  • Meta-competency - Recognizing competency in others. Some people are good at finding people who are good at something, even if they don’t do it themselves. Being able to hire the right people, knowing who is good at something and who is not, is a type of competency .
  • Continuous Learning: As you business grows, so your depth of competency should grow as well. Perhaps, as you learn and gain new skills, a job you once outsourced might be brought back inside the business. Also, it's important to recognize that business is ever-changing so you, as a business leader, should be continuously learning. Time, effort and experience will broaden and deepen your competencies.

What to do if you want to start your own business:

Let's say you're good at baking but you don't know anything about running a business. The best thing to do is to work for someone else for awhile. Deepen and refine your core (baking) skills and take the time to learn about the business end from the people who own that business. Make connections there. Then eventually you may be able to think about starting your own business. Other resources: Small Business Administration, SCORE (David Broner)

You need to hire an attorney or an accountant for your business but you don't know a thing about attorneys or accounting. Starting reading up - go to a website (U of M Law School or B-School sites, for example) and begin educating yourself. Look at the language they use - do your homework - try to gain a basic understanding of the work and the language around the work, so when you talk to a navigator, you can have a coherent conversation with them.