KFA Writes

Focus on your Core Competencies


The word ‘focus’ refers to selectively concentrating on one aspect of the environment while ignoring other things. While we focus with our Camera to take photographs, we concentrate on a particular object and we ignore the other things. We focus on the object, which we like, which interests us, which we want to capture and share. It’s the same while doing business.

Entrepreneurs have liberty to paint in a plain canvass. Unlike job-holders, who generally need to follow a set format, business leaders can paint whatever they wish to, whatever excites and interests them. However, this needs to be done carefully. Many times, entrepreneurs get over-excited by the prospects of value creation or wealth maximization in the areas in which they are not good at. As entrepreneurs they are mostly optimistic and creative. They see good business prospects in certain ventures; they also analyze the existence of market for a given Business/Product. However, they make a blunder of not analyzing their own ‘Core Competencies’ to get involved in that particular Business/Product.

One prominent example comes to my mind when I analyze a situation of a gold-medalist MBA, having relevant experience in banking & finance, jumping into a Hospital Venture. The person in this example was highly entrepreneurial, had very good analytical skills of not only the market conditions but also the internal factors like finance, systems, legal factors, operation process etc. Despite possessing these qualities and persevering with his hospital venture for more than five years, he failed miserably. Reason – Running a medical business was not his ‘Core Competency’. In this business, he had to rely heavily on medical resources like Doctors, Nurses, Lab Technicians and others for delivery of efficient medical services. By and large, his more than 15 years banking and finance experience did not become relevant in the hospital business, which meant that he had to start from the scratch.  Since he did not have relevant experience, with passing time, he started loosing interest in this business and since he had already invested substantial capital, time and energy, after certain point, he had to keep pushing for this business, which eventually did not do well. A classic example of focusing in the areas, where he did not have relevant Core Competency.

There could be some exceptional examples, in which we could find success stories in similar situations as mentioned above. But I strongly feel that probability of failures are much higher compared to successes in situations where one enters into a business other than his or her own Core Competency areas.


Success Stories

Adidas and Nike are Sports Wear Brands and they are highly successful. They have focused in the area of Sports Wear for many years now. We are not sure whether they would have been successful if they would have diversified into ‘airline business’.

Similarly Boeing and Airbus will and should not start the agriculture business because their Core Competency Profile matches with the aircraft manufacturing business for many years and they should expand and keep on focusing in their relevant areas.

KFA, for last 18 Years, has focused in Banking, Finance, Insurance and Business Education/Training and related Consulting Assignments. I think we have been relatively successful because we have focused in our core competency. Our customers come to us to avail the above services from us. They think that KFA has been able to build the expertise and core competency in the above areas and hence they feel that we can add value to their needs/requirements.

I remember reading in one of the IIM literature, which said, ‘Diversification can become Diworsification’ if not taken forward carefully. In Nepal, we see many examples; most prominent ones are Highly Successful Educational Institutes locking their substantial funds in Real Estates. This is called absolutely ‘un-related diversification’. While investing in Real Estates, these educational institutes were primarily guided by the capital appreciation or arbitrage opportunity, which do not fall into their Core Competency and when the market moved down, they lost a lot of money. What is even worse is that because they loose a lot of money because of this unrelated diversification, their overall financial management gets distorted, which has directly impacted their core business and we have seen downfall of their otherwise very successful educational business.

I hope the existing and future entrepreneurs will continue to focus in their Core Competencies and create a sustainable business model. Understanding what you are good at and focusing in the same is absolutely critical. 

-Resta Jha

The Author is Executive Chairman of KFA, leading Institute providing Training, Education and Consulting Services to various sectors in Nepal.

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