While the COVID-19 pandemic has sent the global economy reeling, it also forced many manufacturers to reexamine the foundations and principles their businesses were founded upon.
Though they are often referred to in dry and academic terms, core competencies form the bedrock of an organization. Inline with the Japanese model of doing business, core competencies are like the root system of a tree. In more Americanized terms, they are an organization’s “special sauce.” Many small- and medium-size manufacturers focus on aspects of their business outside what they produce, such as customer service, quality, and reputation, but do not take time to drill down into these attributes to figure out how or why they work.
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Likewise, many times those core competencies are embedded so deeply within the culture that they can be overlooked when it comes to seizing new opportunities or planning for future growth. Likewise, in times of economic turmoil -- such as during the current COVID-19 pandemic -- leveraging your businesses core competencies allows an organization to pivot rapidly into new areas, said Terry Hossink, a business development manager at the Michigan Manufacturing Technology Center West (MMTC-West).
“The key here is to truly understand what your company, your talents and your abilities are, and how to use these assets moving forward so you don’t fall behind the curve.” Hossink said of core competencies.
Hossink along with other business executives spoke about the importance of core competencies during the second webinar in the 2020 Back to Basics series hosted by The Right Place, MMTC-West and MiBiz. The webinar also included executives from Grand Rapids-based Profile Films, Inc., who shared how they used core competencies to navigate their business through the current pandemic.
A CASE STUDY IN COMPETENCE
Like many small- and medium-sized manufacturers in West Michigan, Profile Films maintained the majority of its executive leadership team and many employees since its founding in 1994. Because of that, the manufacturer of polyethylene bags and sheeting maintains a trove of inherent institutional knowledge. So much so that Profile Films’ core competencies are embedded into everyday processes and rarely discussed outloud among the executives or employees. That was until the COVID-19 pandemic struck in March 2020 and forced the manufacturer to fall back on its core competencies to find a path ahead in the economic environment caused by COVID-19.
“COVID really accentuated that character [of Profile Films],” said Todd Tjoelker, Profile Film’s new CEO, who joined the firm in February 2020. “It gave me a chance as a newcomer to see the team in action. You never want a crisis to occur but when they do, it really is an opportunity to see how the team interacts and works and solves problems and creates a new normal. That came out in spades over the last month and a half.”
As the full force of the pandemic took hold over the global economy, Tjoelker found himself positioned to observe and assist the rest of the executive team in leveraging Profile Films’ core competencies to navigate the crisis.
The company “turned the place upside down,” cordoning off separate entrances, closing lunch and locker rooms, and implementing other procedures to ensure its employees’ safety, said Steven Ehmann, founder and owner of Profile Films. Then, the manufacturer turned its attention to serving its customers in the food processing sector and continued to run three shifts, seven days a week. Aided by Tjoelker’s experience with large organizations in the automotive and aerospace sectors, Profile Film’s executive team formed continuity and contingency plans, conducted risk assessments and continued to revamp its facility to both meet customer demand.
“We often say we don’t really sell bags, we sell trust and dependability,” Ehmann said. “We’ve taken what is normally a commodity industry… and have created quite a nice niche where we service companies that are dependent on us and we become dependent on them.”
While core competencies are often equated to outsourcing all processes not unique to the organization, that is not necessarily the case, Tjoelker said.
“When you really have to flip the place upside down, you find yourself taking on those competencies of nimbleness and creatively to allow you to re-layout your floor plan [and] understand how you’re going to clean the place and serve food to your teammates,” Tjoelker said. “All of these things aren’t necessarily a normal part of your business. The core competencies of being nimble and trusting, being an open forum where no one has a bad idea and breaking down hierarchies -- boy did that really come to play when we had to respond quickly to this situation.”
A PATH AHEAD
Going forward, Profile Films plans to keep its core competencies front-of-mind as West Michigan, and global economy, reposition after the COVID-19 Pandemic. Company executives and employees alike will continue to openly discuss Profile Film’s core competencies and how to leverage those in the future, Tjoelker said. Executives are hosting more meetings discussing competencies, as well as one-on-one conversation, and frequent team huddles to insure cross-talk regarding core competencies between departments.
Tjoelker also plans to incorporate Profile Film’s core competencies as he continues to integrate new metrics, transparency, and other procedures. However, he is quick to note that integrating these new processes cannot be done at the expense of the original foundation that built Profile Films into the business it is today. Similarly, letting core competencies drive business decisions too rigidly can also be risky, according to Hossink of the MMTC-West.
“If you follow the path too closely you can actually stifle innovation and that will reduce your ability to react to rapid changes,” Hossink said. “If you ignore the human element of your culture, that can suffer as well. People could feel less a part of the organization and their output could suffer.”
Outside of looking to improve its future operations through its core competencies, Profile Films also plans to leverage its core competencies when it comes to future acquisitions. Traditionally, the firm has concentrated on organic growth, however, as the economy emerges from COVID-19, Ehmann and Tjoelker noted they are keeping their options open for opportunities. For them, having a firm grasp of their company’s core competencies will aid in choosing the correct fit for their organization.
“Knowing who you are is the starting point of being able to perpetuate the culture somewhere else,” Tjoelker said.
Despite the economic situation caused by the COVID-19 pandemic, small- and medium-size manufacturers have the ability to refocus their businesses and find new opportunities for growth. Office furniture makers saw an opportunity to leverage their design and manufacturing skills to produce masks, Hossink said. Likewise, another organization did not see itself as only a maker of eco-friendly glove drying machines, but as an importer, and are now providing much needed PPE to West Michigan.
“In the COVID-19 world we’ve seen a number of manufacturers pivot to supply PPE,” Hossink said. “For the most part, it was because they understood what they were good at and could translate that into action...Keep your minds open. There are pivots that some made to meet today’s market... If you begin your journey don’t lose your heart for adventure. It can be hard work but it can also be fun.”