How to Build Differentiating Business Capabilities

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Business capabilities form the foundation to create, deliver, and support the products and services a business offers. These capabilities include core competencies that enable the business to differentiate itself from competition.

To build true differentiating capabilities, businesses need to keep these four areas in mind.

  1. Reimagine the future with no constraints

Enhancing current capabilities potentially increases the benefits to be delivered. To build new differentiating capabilities, it is helpful to start with a clean slate.

Reimagine how the problem on hand could be tackled in a fun, effortless, or memorable manner.

Would a new way to facilitate decision-making for the customer make it effortless? Would incorporating an unconventional feature elevate the level of enjoyment? How about broadening the product appeal to suit family application?

Look beyond the product or service itself. Create unique capabilities that are difficult for others to imitate.

  1. Anchor capabilities with customer value

Business capabilities encompass expertise, talent, patents, operating systems, management discipline, technology, and infrastructure. These capabilities, when packaged in a coherent manner, deliver value to the customers.

Customers are willing to pay for products and services that help to tackle their problems they need assistance with.

Hence, new differentiating capabilities ought to be oriented toward value creation. The value could be speed, enjoyment, connection with people, something that is compelling to the target market.

  1. Introduce technology with clear end goals

Adoption of business applications such as customer relationship management or enterprise resource planning aims to improve efficiency. These tools serve to streamline operations.

Technology investments tend to be siloed to address functional needs. To use technology for building differentiating capabilities, it requires more deliberate thinking of what the end goals are for its deployment.

Technologies such as artificial intelligence, virtual reality, blockchain, and augmented reality have been widely used to create innovative products and services. They are enablers with unlimited potential.

Businesses need to articulate clearly the value of the differentiating capability first before diving into technology selection. This would facilitate better assessment of options and avoid wasting capital on technology fads.

  1. Explore partnerships with objectivity

The new capability could require know-how that is not available internally. As it takes time to hire, train, and build the expertise, it might make sense to explore partnership opportunities.

Reach out and seek input from domain experts. They could provide intelligence to clarify the value and verify the approach to building that differentiating capability.

Customers are also partners. Take the time to talk to them. Observe how they tackle the problem today. Attentiveness to details could uncover overlooked values. The engagement also leads to a more trusting and loyal relationships.

Building differentiating capabilities is more than enhancing what is in place today. It requires fresh perspectives and rethinking to develop them. It demands committed leadership to champion it.

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