When the notion of ‘core competency’ was developed in the early 1990s, it was not only wrong but also known to be wrong. It should have been ‘core capabilities’ except that few could explain the difference between a ‘competency’ and a ‘capability’.
Really the difference is quite simple.
Competency
A ‘Competency’ is a personal attribute. A person is either competent or not, but an organization cannot be competent.
Competency is a combination of personal skills, knowledge, commitment and experience plus attributes.
A newly trained person is not competent. They may be trained and even knowledgeable, but also need experience to become competent. If you think about it, this is the theory behind apprenticeships — to give training, skills, knowledge and experience to staff so as to make them competent.
But another important factor in true competence is ‘commitment’. People can be skilled, knowledgeable and experienced, but if they’re not interested or not committed, they’ll not be truly competent. Their attitude is important.
In addition, some people have more natural inclination or attributes than others for a skill set. If you’re not a numbers person, your level of financial competency will always be limited, however hard you try. I’ve seen fully qualified and experienced accountants who hate accounting — they’ll never become truly competent accountants.
Capability
Now back to ‘Capability.’ This is a corporate attribute. Only an organization can be ‘capable’.
Corporate capability is comprised of the relevant people competencies PLUS focused operational processes, resources, information flows, systems and management controls PLUS the right beliefs, culture and mindsets.
You cannot have a capability without competent staff. So, competency is a prerequisite to capability. But having competent staff does not give you a capability.
The difference between a ‘capability’ and just a process or operation is the level of focus on and the quality of the process. Hence the notion of ‘core capabilities’ (as it should have been). These are the end-to-end processes/operations that are central and critical to your organization’s success.
So, if you’re a manufacturer, your manufacturing process needs to be a core capability — made up of competent staff, streamlined processes, excellent information flows, effective management controls, etc. Your expenses reimbursement process, for example, does not need to be a core capability.
If you’re a bank, your credit risk management process needs to be a core capability.
In organizations where there are a number of projects, investment project value management as a required core capability. Investment project value management is the capability to define and deliver change, achieve the results you want and the realize the associated business value.
This investment value capability is how you move forward, execute strategy and remain competitive. If investment value management is just an also-ran process in your organization, then your strategy execution is also likely to in the ‘also ran’ category.
In most organizations around the world are still struggling to get to capability maturity level two (of five).
Understanding the difference between the two — competency and capability — is important for project and value delivery. If you rely on competence, this is individual based and you are relying on heroes, key staff, etc. to pull you through.
If you rely on corporate capability you have a repeatable process to deliver value.
What you need is investment value management to be a recognised and managed as a core capability — your capability to deliver projects and their value reliably, consistently and effectively.
To develop capability, you need to build on and move beyond individual expertise and competency and focus on processes, policies, beliefs and culture.
