3.7.3 - Overall performance and core competences

Operational, HR and marketing evidence

Non-financial measures show outcomes and capabilities that may explain current financial results or signal future problems.

Operations data include productivity, utilisation, defects, waste and delivery times. HR evidence includes labour turnover, absence, skills and engagement. Marketing measures include sales volume, market share, customer satisfaction and repeat purchases. Choose measures relevant to the business's objectives: long waiting times matter greatly to an urgent repair service, while product durability matters to a manufacturer promising reliability.

Illustrative case: the following data track a service business across comparable years:

Productivity and market share improved, but satisfaction fell by four percentage points and labour turnover doubled. A strategy of faster processing may be putting pressure on staff and service quality; alternatively, growth may have changed the customer or workforce mix. The data suggest questions rather than prove one cause. Examine how each measure was collected and look for supporting evidence.

Compare with relevant competitors or sector benchmarks as well as the past. Improvement from a poor baseline may still leave the business behind rivals. Comparisons need similar products, quality, periods and definitions. A high average can also hide weak sites or an important dissatisfied segment. Use a range of measures to identify strengths and weaknesses without treating every statistic as equally important.

Core competences and strategic capability

A core competence is a distinctive capability that helps a business create customer value and compete effectively.

It often combines skills, knowledge, systems and cooperation rather than consist of one machine or individual. A repair company's ability to complete complex work quickly and reliably may depend on combining diagnosis, parts sourcing and skilled customer communication. Competitors might buy similar tools yet struggle to reproduce the coordinated capability and experience.

Core competences matter because they can support differentiation, efficiency or entry into related markets. A capability in dependable delivery might serve several product ranges. Strategy should consider how the competence can be developed and used where customers value it, rather than expand into an activity merely because it appears profitable. A technically impressive skill is less strategically valuable if customers no longer need its result.

Not every strength is a core competence. Having spare cash helps, but by itself may not explain a distinctive customer benefit or a hard-to-copy way of working. A competence can also depend on people leaving, suppliers cooperating or systems remaining current. Protecting and renewing it may require training, knowledge sharing, innovation and investment.

External change can reduce its relevance. A business highly skilled in servicing an old technology may need to adapt as customers switch products. Overconfidence in a previously successful capability can encourage strategic drift. Assess what the business does particularly well, why customers value it, how competitors could respond and whether the capability will remain useful under future conditions.

Short-term and long-term performance

A decision can improve current performance while weakening future outcomes, or reduce present profit while building a stronger business.