1. Critical to Quality (CTQ) TreesTranslating Broad Needs to Requirements

Identify how your customers evaluate quality in your products.

When you're developing new products and services, quality is important – not only to satisfy your clients, but also to help you stand out from your competitors.However, defining quality can be a challenge, and it's easy to overlook factors that customers care about.This is when Critical to Quality (CTQ) Trees are useful. They help you understand what drives quality in the eyes of your customers, so that you can deliver a product or service that they are genuinely pleased with.

About CTQ TreesCritical to Quality (CTQ) Trees, as shown in figure 1, below, are diagram-based tools that help you develop and deliver high quality products and services. You use them to translate broad customer needs into specific, actionable, measurable performance requirements. For example, an instruction such as "improve customer service" is too broad to do much with. However, by using a CTQ Tree, you can drill-down from this broad goal to identify specific, measurable requirements that you can use to improve performance. CTQ Trees were originally developed as part of Six Sigma.

Six SigmaImproving quality systematically

What IS Six Sigma?

Why do organizations adopt it?And how does it help impove quality?

To answer these questions – and more – we're bringing you this guest article from Six Sigma expert, Thomas Pyzdek.

What is Six Sigma?Six Sigma is a rigorous, focused and highly effective implementation of proven quality principles and techniques. Incorporating elements from the work of many quality pioneers, Six Sigma aims for virtually error free business performance. Sigma is a letter in the Greek alphabet used by statisticians to measure the variability in any process, and if you can keep the output of that process within a six sigma-wide band (in effect, no more than 3.4 defects per million outputs), you can be confident that your process is operating as it should. Six Sigma focuses on improving quality (and therefore reducing waste) by helping organizations produce products and services better, faster and cheaper. In more traditional terms, Six Sigma focuses on defect prevention, cycle time reduction, and cost savings. Unlike mindless cost-cutting programs which reduce value as well as quality, Six Sigma identifies and eliminates costs which provide no value to customers.

Understanding the ToolSix Sigma has two main strands. First, it involves using a handful of tried and true performance improvement methods and, second it involves training a small cadre of in-house technical leaders, known as Six Sigma Black Belts, to a high level of proficiency in the application of these techniques.

The DMAIC FrameworkThe tools are applied within a simple framework known as DMAIC, or Define-Measure-Analyze-Improve-Control. DMAIC can be described as follows:

You can use them in a variety of situations, including when you're developing products and services for your "internal customers."

Figure 1 – A CTQ Tree

You use CTQ Trees by first identifying the critical needs of your customers. This is what your product or service must deliver for customers to be happy. For example, if you're launching a new website, a need might be: "Must be accessible on a smart phone." Then, for each need, you identify its quality drivers. These are the factors that customers will use to evaluate the quality of your product. For example, for the need "Must be accessible on a smart phone," a quality driver might be "Must display properly on smart phone web browsers." Finally, you identify measurable performance requirements that each driver must satisfy if you're to actually provide a high quality product to your customers. Without these requirements, you have no way to actually measure the performance and quality of your product. For example, the measurable requirement for the driver, "Must display properly on smart phone web browsers," might be for the website to "display as required on the five most popular smart phone web browsers." It is best to do a CTQ Tree for each individual critical need that you identify. You'll then have a comprehensive list of requirements that you can use to deliver a product that delights your customers.

How to Use the ToolWe'll now look at a step-by-step process for developing a CTQ Tree.

Step 1: Identify Critical Needs You first need to identify the critical needs that your product has to meet. Do a CTQ Tree

for every need that you identify. During this first step, you're essentially asking, "What is critical for this product or service?" It's best to define these needs in broad terms; this will help ensure that you don't miss anything important in the next steps. If you can't ask customers directly about their needs, brainstorm their needs with people who deal with customers directly – Sales people and customer service representatives – as well as with your team. (Perceptual Positions is a useful technique here – for example, if people are struggling to move from an engineering mindset into a customer mindset.)

Brainstorming

Generating Many Radical, Creative Ideas

Brainstorming is a popular tool that helps you generate creative solutions to a problem. It is particularly useful when you want to break out of stale, established patterns of thinking, so that you can develop new ways of looking at things. It also helps you overcome many of the issues that can make group problem-solving a sterile and unsatisfactory process. Used with your team, it helps you bring the diverse experience of all team members into play during problem solving. This increases the richness of ideas explored, meaning that you can find better solutions to the problems you face. It can also help you get buy in from team members for the solution chosen – after all, they were involved in developing it. What’s more, because brainstorming is fun, it helps team members bond with one-another as they solve problems in a positive, rewarding environment.

Why Use Brainstorming?Conventional group problem-solving can be fraught with problems. Confident, "big-ego" participants can drown out and intimidate quieter group members. Less confident participants can be too scared of ridicule to share their ideas freely. Others may feel pressurized to conform

with the group view, or are held back by an excessive respect for authority. As such, group problem-solving is often ineffective and sterile.By contrast, brainstorming provides a freewheeling environment in which everyone is encouraged to participate. Quirky ideas are welcomed, and many of the issues of group problem-solving are overcome. All participants are asked to contribute fully and fairly, liberating people to develop a rich array of creative solutions to the problems they're facing.

“Brainstorming 2.0”The original approach to brainstorming was developed by Madison Avenue advertising executive, Alex Osborn, in the 1950s. Since then, many researchers have explored the technique, and have identified issues with it. The steps described here seek to take account of this research, meaning that the approach described below differs subtly from Osborn's original one.

What is Brainstorming?Brainstorming combines a relaxed, informal approach to problem-solving with lateral thinking. It asks that people come up with ideas and thoughts that can at first seem to be a bit crazy. The idea here is that some of these ideas can be crafted into original, creative solutions to the problem you're trying to solve, while others can spark still more ideas. This approach aims to get people unstuck, by "jolting" them out of their normal ways of thinking.During brainstorming sessions there should therefore be no criticism of ideas: You are trying to open up possibilities and break down wrong assumptions about the limits of the problem. Judgments and analysis at this stage stunt idea generation.Ideas should only be evaluated at the end of the brainstorming session – this is the time to explore solutions further using conventional approaches.

Individual BrainstormingWhile group brainstorming is often more effective at generating ideas than normal group problem-solving, study after study has shown that when individuals brainstorm on their own, they come up with more ideas (and often better quality ideas) than groups of people who brainstorm together. Partly this occurs because, in groups, people aren’t always strict in following the rules of brainstorming, and bad group behaviors creep in. Mostly, though, this occurs because people are paying so much attention to other people’s ideas that they're not generating ideas of their own – or they're forgetting these ideas while they wait for their turn to speak. This is called "blocking". When you brainstorm on your own, you'll tend to produce a wider range of ideas than with group brainstorming - you do not have to worry about other people's egos or opinions, and can therefore be more freely creative. For example, you might find that an idea you’d be hesitant to bring up in a group session develops into something quite special when you explore it with individual brainstorming. Nor do you have to wait for others to stop speaking before you contribute your own ideas. You may not, however, develop ideas as fully when you brainstorm on your own, as you do not have the wider experience of other members of a group to help you.

Tip: When Brainstorming on your own, consider using Mind Maps to arrange and develop ideas.

Group BrainstormingWhen it works, group brainstorming can be very effective for bringing the full experience and creativity of all members of the group to bear on an issue. When individual group members get stuck with an idea, another member's creativity and experience can take the idea to the next stage. Group brainstorming can therefore develop ideas in more depth than individual

brainstorming. Another advantage of group brainstorming is that it helps everyone involved to feel that they’ve contributed to the end solution, and it reminds people that other people have creative ideas to offer. What’s more, brainstorming is fun, and it can be great for team-building!Brainstorming in a group can be risky for individuals. Valuable but strange suggestions may appear stupid at first sight. Because of this, you need to chair sessions tightly so that ideas are not crushed, and so that the usual issues with group problem-solving don’t stifle creativity.

How to Use the ToolYou can often get the best results by combining individual and group brainstorming, and by managing the process carefully and according to the "rules" below. That way, you get people to focus on the issue without interruption (this comes from having everyone in a dedicated group meeting), you maximize the number of ideas you can generate, and you get that great feeling of team bonding that comes with a well-run brainstorming session!

To run a group brainstorming session effectively, do the following:

Find a comfortable meeting environment, and set it up ready for the session.

Appoint one person to record the ideas that come from the session. These should be noted in a format than everyone can see and refer to. Depending on the approach you want to use, you may want to record ideas on flip charts, whiteboards, or computers with data projectors.

If people aren’t already used to working together, consider using an appropriate warm-up exercise or ice-breaker.

Ice BreakersEasing group contribution

Ice Breakers can be an effective way of starting a training session or team-building event. As interactive and often fun sessions run before the main proceedings, they help people get to know each other and buy into the purpose of the event.

If an ice breaker session is well-designed and well-facilitated, it can really help get things off to a great start. By getting to know each other, getting to know the facilitators and learning about the objectives of the event, people can become more engaged in the proceedings and so contribute more effectively towards a successful outcome.

But have you ever been to an event when the ice breaker session went badly? Just as a great ice breaker session can smooth the way for a great event, so a bad ice breaker session can be a recipe for disaster. A bad ice breaker session is at best simply a waste of time, or worse an embarrassment for everyone involved.

As a facilitator, the secret of a successful icebreaking session is to keep it simple: Design the session with specific objectives in mind and make sure the session is appropriate and comfortable for everyone involved.

This article helps you think through the objectives of your ice breaker session, and then suggests various types of ice breaker you might use. As a facilitator, make sure your ice breakers are remembered for the right reasons – as a great start to a great event!

When to Use IcebreakersAs the name suggests, an ice breaker session is designed to "break the ice" at an event or meeting. The technique is often used when people who do not usually work together, or may not know each other at all, meet for a specific, common purpose.Consider using an ice breaker when:

Participants come from different backgrounds.

People need to bond quickly so as to work towards a common goal.

Your team is newly formed.

The topics you are discussing are new or unfamiliar to many people involved.

As facilitator you need to get to know participants and have them know you better.

So What's the "Ice"?

When designing your ice breaker, think about the "ice" that needs to be broken.

If you are bringing together like-minded people, the "ice" may simply reflect the fact that people have not yet met.

If you are bringing together people of different grades and levels in your organization for an open discussion, the "ice" may come from the difference in status between participants.

If you are bringing together people of different backgrounds, cultures and outlooks for work within your community, then the "ice" may come from people's perceptions of each other.

You'll need to handle these differences sensitively. Only focus on what's important to your event. (Remember, you want to break some ice for your event, not uncover the whole iceberg, or bring about world peace!)

And as you move on to design and facilitate the event, it's always best to focus on similarities (rather than differences), such as a shared interest in the event's outcome.

Designing Your Icebreaker

The key to a successful ice breaker is to make sure the ice breaker is specifically focused on meeting your objectives and appropriate to the group of people involved.

Once you have established what the "ice" is, the next step is to clarify the specific objectives for your ice breaker session.

For example, when meeting to solve problems at work, the ice breaker objectives may be:"To establish a productive working environment for today's event with good participation from everyone involved, irrespective of their level or job role in the organization."

With clear objectives, you can start to design the session. Ask yourself questions about how you will meet your objectives. For example:

"How will people become comfortable with contributing?

"How will you establish a level playing field for people with different levels and jobs?

"How will you create a common sense of purpose?"

These questions can be used as a check list once you have designed the ice breaker session:

"Will this ice breaker session help people feel comfortable, establish a level playing field, etc"As a further check, you should also ask yourself how each person is likely to react to the session. Will participants feel comfortable? Will they feel the session is appropriate and worthwhile?

Example Ice BreakersThere are many types of ice breakers, each suited to different types of objectives. Here we look at a few of the more popular types of ice breakers and how they can be used.

Introductory Ice BreakersIntroductory ice breakers are used to introduce participants to each other and to facilitate conversation amongst the participants.

The Little Known Fact: Ask participants to share their name, department or role in the organization, length of service, and one little known fact about themselves.This "little known fact" becomes a humanizing element that can help break down differences such as grade / status in future interaction.

True or False: Ask your participants to introduce themselves and make three or four statements about themselves, one of which is false. Now get the rest of the group to vote on which fact is false.As well as getting to know each other as individuals, this ice breaker helps to start interaction within the group.

Interviews: Ask participants to get into twos. Each person then interviews his or her partner for a set time while paired up. When the group reconvenes, each person introduces their interviewee to the rest of the group.

Problem Solvers: Ask participants to work in small groups. Create a simple problem scenario for them to work on in a short time. Once the group have analyzed the problem and prepared their feedback, ask each group in turn to present their analysis and solutions to the wider group.

Tip:Choose a fairly simple scenario that everyone can contribute to. The idea is not to solve a real problem but to "warm up" the group for further interaction or problem solving later in the event. The group will also learn each other's styles of problem-solving and interaction.

Team-Building Ice BreakersTeam-building ice breakers are used to bring together individuals who are in the early stages of team building. This can help the people start working together more cohesively towards shared goals or plans.

The Human Web: This ice breaker focuses on how people in the group inter-relate and depend on each other.The facilitator begins with a ball of yarn. Keeping one end, pass the ball to one of the participants, and the person to introduce him- or her-self and their role in the organization. Once this person has made their introduction, ask him or her to pass the ball of yarn on to another person in the group. The person handing over the ball must describe how he/she relates (or expects to relate) to the other person. The process continues until everyone is introduced.To emphasis the interdependencies amongst the team, the facilitator then pulls on the starting thread and everyone's hand should move.

Ball Challenge: This exercise creates a simple, timed challenge for the team to help focus on shared goals, and also encourages people to include other people.The facilitator arranges the group in a circle and asks each person to throw the ball across the circle, first announcing his or her own name, and then announcing the name of the person to whom they are throwing the ball (the first few times, each person throws the ball to someone whose name they already know.) When every person in the group has thrown the ball at least once, it's time to set the challenge – to pass the ball around all group members as quickly as possible. Time the process, then ask the group to beat that timing. As the challenge progresses, the team will improve their process, for example by standing closer together. And so the group will learn to work as a team.

Hope, Fears and Expectations: Best done when participants already have a good understanding of their challenge as a team. Group people into 2s or 3s, and ask people to discuss their expectations for the event or work ahead, then what they fears and their hopes. Gather the group's response by collating 3-4 hopes, fears and expectation from pairing or threesome.

Topic exploration ice breakersTopic exploration ice breakers can be used to explore the topic at the outset, or perhaps to change pace and re-energize people during the even.

Word association: This ice breaker helps people explore the breadth of the area under discussion. Generate a list of words related to the topic of your event or training. For example, in a health and safety workshop, ask participants what words or phrases come to mind relating to "hazardous materials". Participants may suggest: 'danger,' 'corrosive,' 'flammable,' 'warning,' 'skull and crossbones,' etc. Write all suggestions on the board, perhaps clustering by theme. You can use this opportunity to introduce essential terms and discuss the scope (what's in and what's out) of your training or event.

Burning questions: This ice breaker gives each person the opportunity to ask key questions they hope to cover in the event or training. Again you can use this opportunity to discuss key terminology and scope. Be sure to keep the questions and refer back to them as the event progresses and concludes.

Brainstorm: Brainstorming can be used as an ice breaker or re-energizer during an event. If people are getting bogged down in the detail during problem solving, for example, you can change pace easily by running a quick-fire brainstorming session. If you are looking for answers to customer service problems, try brainstorming how to create problems rather than solve them. This can help people think creatively again and gives the group a boost when energy levels are flagging.

Define the problem you want solved clearly, and lay out any criteria to be met. Make it clear that that the objective of the meeting is to generate as many ideas as possible.

Give people plenty of time on their own at the start of the session to generate as many ideas as possible.

Ask people to give their ideas, making sure that you give everyone a fair opportunity to contribute.

Encourage people to develop other people's ideas, or to use other ideas to create new ones.

Encourage an enthusiastic, uncritical attitude among members of the group. Try to get everyone to contribute and develop ideas, including the quietest members of the group.

Ensure that no one criticizes or evaluates ideas during the session. Criticism introduces an element of risk for group members when putting forward an idea. This stifles creativity and cripples the free running nature of a good brainstorming session.

Let people have fun brainstorming. Encourage them to come up with as many ideas as possible, from solidly practical ones to wildly impractical ones. Welcome creativity!

Ensure that no train of thought is followed for too long. Make sure that you generate a sufficient number of different ideas, as well as exploring individual ideas in detail.

In a long session, take plenty of breaks so that people can continue to concentrate.

Taking Your Brainstorming Further...If you're still not getting the ideas you want, try using these approaches to increase the number of ideas that you generate:

The Stepladder Technique - This improves the contribution of quieter members of the group, by introducing ideas one person at a time.

Brainwriting - Brainwriting uses a written approach to brainstorming to generate and develop ideas. This helps you get ideas from all individuals, and develop these ideas in depth.

Brain-netting - This is similar to Brainwriting, but uses an electronic document stored on a central server.

The Crawford's Slip Approach – The Crawford's Slip Approach helps you get plenty of ideas from all participants in your session, and gives you a view of the popularity of each idea. The techniques below help you in specific brainstorming situations:

Reverse Brainstorming – This is useful for improving a product or service. Starbursting – Star bursting helps you brainstorm the questions you need to ask to

evaluate a proposal. Charette Procedure – This procedure helps you brainstorm effectively with large groups of

people. (Conventional brainstorming is cumbersome and increasingly ineffective when more than 10 to 12 people are involved.)

Round-Robin Brainstorming – This technique helps you ensure that people will contribute great ideas without being influenced by others in the group.

Role storming – This method encourages group members to take on other people's identities while brainstorming. This reduces the inhibitions that many people feel when sharing their ideas with a group.

Where possible, participants in the brainstorming process should come from as wide a range of disciplines as possible. This brings a broad range of experience to the session and helps to

make it more creative. However, don’t make the group too big – as with other types of teamwork, groups of between 5 and 7 people are often most effective.

Key PointsBrainstorming is a useful way of generating radical solutions to problems, just as long as it's managed well. During the brainstorming process there is no criticism of ideas, and free rein is given to people's creativity (criticism and judgment cramp creativity).

This tends to make group brainstorming sessions enjoyable experiences, which are great for bringing team members together. Using brainstorming also helps people commit to solutions, because they have participated in the development of these solutions.The best approach to brainstorming combines individual and group brainstorming. Group brainstorming needs formal rules for it to work smoothly.

Step 2: Identify Quality DriversNext, you need to identify the specific quality drivers that have to be in place to meet the needs that you identified in the previous step. Remember, these are the factors that must be present for customers to think that you are delivering a high quality product. Don't rush this – it's important that you identify all of the drivers that are important to your customers. Again, speak to people with customer contact, and ask your customers what factors are important to them. Tools such as Kano Analysis and the Five Product Levels will also be useful here, as they can help you identify product features that will delight your customers.

Step 3: Identify Performance RequirementsFinally, you need to identify the minimum performance requirements that you must satisfy for each quality driver, in order to actually provide a quality product. Here it's important to remember that there are many things that will affect your ability to deliver these. For example, do you have enough resources or the right technology in place? And, what will you need to do in other parts of your organization to meet these requirements? Once you've completed a CTQ Tree for each critical need, you'll have a list of measurable requirements that you must meet to deliver a high quality product.

Tip:We've already mentioned Kano Analysis and the Five Product Levels. These tools, along with others tools such as USP Analysis and Core Competence Analysis, will help you differentiate your products from those of your competitors. Use them alongside CTQ Trees if you're developing products for customers outside of your organization.

Kano Analysis

Kano Model Analysis (Delivering Products That Delight)

Kano Model Analysis is a useful technique for deciding which features you want to include in a product or service. It helps you break away from a profit-minimizing mindset that says you've got to have as many features as possible in a product, and helps you think more subtly about the features you include. This can be the difference between a product or service being profitable or unprofitable. More than this, it helps you develop a product that will truly delight your customers.

Explaining the Kano Model

According to the Kano Model (developed by Dr Noriaki Kano in the 1980s), a product or service can have three types of attribute (or property):

Threshold Attributes: Which customers expect to be present in a product. Performance Attributes: Which are not absolutely necessary, but which are known

about and increase the customer's enjoyment of the product. Excitement Attributes: Which customers don't even know they want, but are delighted

when they find them.

Threshold Attributes affect customers' satisfaction with the product or service by their absence: If they're not present, customers are dissatisfied. And even if they're present, if no other attributes are present, customers aren't particularly happy (you can see this as the bottom curve on the graph below).

Figure 1 - The Kano Model

Using the example of a cell phone, the ability to store people's names and telephone numbers is a Threshold Attribute. While a cell phone without this function would work, it would be grossly inconvenient. It's on Performance Attributes that most products compete. When we weigh up one product against another, and decide what price we're prepared to pay, we're comparing Performance Attributes. These are shown as the middle line on the graph. On a cell phone, Performance Attributes might be polyphonic ringtones or cameras (although to a teenager, polyphonic ringtones may be Threshold Attributes!)Excitement Attributes are things that people don't really expect, but which delight them. These are shown as the top curve on the graph above. Even if only a few Performance Attributes are present, the presence of an excitement attribute will lead to high customer satisfaction.For the right person (and at the time of writing!), a free Bluetooth headset might be an Excitement Attribute on a cell phone.(There's also a fourth type of attribute: Things customers don't care about at all.)

Using the ToolTo use Kano Model Analysis, follow these steps:1. Brainstorm all of the possible features and attributes of your product or service, and

everything you can do to please your customers.

2. Classify these as "Threshold", "Performance", "Excitement" and "Not Relevant".

3. Make sure your product or service has all appropriate Threshold Attributes. If necessary, cut out Performance Attributes so that you can get these – you're going nowhere fast if these aren't present.

4. Where possible, cut out attributes that are "Not Relevant".

5. Look at the Excitement Attributes, and think how you can build some of these into your product or service. Again if necessary, cut some Performance Attributes, so that you can "afford" your Excitement Attribute.

6. Select appropriate Performance Attributes so that you can deliver a product or service at a price the customer is prepared to pay, while still maintaining a good profit margin.

Tip:Where possible, get your customers to do the classification for you. Partly this will keep you close to your market, but partly it will keep you and even the most out-of-touch people in your company up-to-date with people's changing expectations.Using the example above, only a few years ago, polyphonic ring tones (and even phone number lists!) were Excitement Attributes on cell phones.Also, make sure when you choose customers, that you choose customers who are typical of the market you want to sell to.

Kotler and Keller's Five Product Levels

Exceeding Customer Expectations(Also known as the Customer-Perceived Value Hierarchy and the Extended Products Model.)

When you're developing a new product or service, it's clearly important that you meet your customers' wants and needs. But it's also vital that you significantly exceed your customers' expectations, so that you can stand out from the competition.

However, this can be difficult. For instance, how can you actually define customer expectations? How can you keep ahead of your competitors? And which features should you highlight as part of your marketing strategy?

One tool that can help with this is Kotler and Keller's Five Product Levels model. In this article, we'll look at this model, and we'll discuss how you can use it to develop new products that exceed your customers' expectations.

About the Five LevelsMarketing experts Philip Kotler and Kevin Lane Keller published the Five Product Levels model in their 2003 textbook, "Marketing Management." The model is based on Kotler's earlier research and on a 1980 Harvard Business Review article by Theodore Levitt.

USP Analysis

The Unique Selling Proposition: Finding Your "Competitive Edge"

For years, business trainers have stressed the importance of "USPs" (Unique Selling Propositions). Your USP is the unique thing that you can offer that your competitors can't. It's your "Competitive Edge". It's the reason that customers buy from you and you alone.

USPs have helped many companies succeed. And they can help you too when you're marketing yourself (when seeking a promotion, finding a new job or just making sure you get the recognition you deserve.) If you don't have a USP, you're condemned to a struggle for survival – that way lies hard work and little reward.

However, USPs are often extremely difficult to find. And as soon as one company establishes a successful USP in a market, competitors rush to copy it.

This tool helps you find your USP. And it then helps you think how you'll defend it.

Core Competence AnalysisGet Ahead. Stay Ahead.

The idea of "core competences" is one of the most important business ideas currently shaping our world. This is one of the key ideas that lies behind the current wave of outsourcing, as businesses concentrate their efforts on things they do well and outsource as much as they can of everything else.

In this article we explain the idea and help you use it, on both corporate andpersonal levels. And by doing so, we show you how you can get ahead of your competition – and stay ahead.

By using the idea, you'll make the very most of the opportunities open to you:

You'll focus your efforts so that you develop a unique level of expertise in areas that really matter to your customers. Because of this, you'll command the rewards that come with this expertise.

You'll learn to develop your own skills in a way that complements your company's core competences. By building the skills and abilities that your company most values, you'll win respect and get the career advancement that you want.

Explaining Core Competences: The Value of UniquenessThe starting point for understanding core competences is understanding that businesses need to have something that customers uniquely value if they're to make good profits. "Me too" businesses (with nothing unique to distinguish them from their competition) are doomed to compete on price: The only thing they can do to make themselves the customer's top choice is drop price. And as other "me too" businesses do the same, profit margins become thinner and thinner.

This is why there's such an emphasis on building and selling USPs (Unique Selling Points) in business.

If you're able to offer something uniquely good, customers will want to choose your products and will be willing to pay more for them.

The question, though, is where this uniqueness comes from, and how it can be sustained.In their key 1990 paper "The Core Competence of the Corporation", C.K.Prahalad and Gary Hamel argue that "Core Competences" are some of the most important sources of uniqueness:

These are the things that a company can do uniquely well, and that no-one else can copy quickly enough to affect competition.Prahalad and Hamel used examples of slow-growing and now-forgotten mega corporations that failed to recognize and capitalize on their strengths. They compared them with star performers of the 1980s (such as NEC, Canon and Honda), which had a very clear idea of what they were good at, and which grew very fast.

Because these companies were focused on their core competences, and continually worked to build and reinforce them, their products were more advanced than those of their competitors, and customers were prepared to pay more for them. And as they switched effort away from areas where they were weak, and further focused on areas of strength, their products built up more and more of a market lead.

Now you'll probably find this an attractive idea, and it's often easy to think about a whole range of things that a company does that it can do well. However, Hamel and Prahalad give three tests to see whether they are true core competences:

1. Relevance: Firstly, the competence must give your customer something that strongly influences him or her to choose your product or service. If it does not, then it has no effect on your competitive position and is not a core competence.

2. Difficulty of Imitation: Secondly, the core competence should be difficult to imitate. This allows you to provide products that are better than those of your competition. And because you're continually working to improve these skills, means that you can sustain its competitive position.

3. Breadth of Application: Thirdly, it should be something that opens up a good number of potential markets. If it only opens up a few small, niche markets, then success in these markets will not be enough to sustain significant growth.

An example: You might consider strong industry knowledge and expertise to be a core competence in serving your industry. However, if your competitors have equivalent expertise, then this is not a core competence. All it does is make it more difficult for new competitors to enter the market. More than this, it's unlikely to help you much in moving into new markets, which will have established experts already. (Test 1: Yes. Test 2: No. Test 3: Probably not.)

Using This In Your Business and Career:Mind Tools on Strategy:

SWOT Analysis

SWOT AnalysisDiscover New Opportunities. Manage and Eliminate Threats.

SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Used in a business context, a SWOT Analysis helps you carve a sustainable niche in your market. Used in a personal context, it helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities. (Click here for Business SWOT Analysis, and here for Personal SWOT Analysis.)

Business SWOT AnalysisWhat makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares.More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market.

How to Use SWOT AnalysisOriginated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful now as it was then. You can use it in two ways - as a simple icebreaker helping people get together to "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool.

Tip:Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to external factors. For this reason the SWOT Analysis is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix.

To help you to carry out a SWOT Analysis, download and print off our free worksheet, and write down answers to the following questions.

Strengths: What advantages does your organization have?

What do you do better than anyone else?

What unique or lowest-cost resources can you draw upon that others can't?

What do people in your market see as your strengths?

What factors mean that you "get the sale"?

What is your organization's Unique Selling Proposition (USP)?

Consider your strengths from both an internal perspective, and from the point of view of your customers and people in your market. You should also be realistic - it's far too easy to fall prey to "not invented here syndrome." Also, if you're having any difficulty with this, try writing down a list of your organization's characteristics. Some of these will hopefully be strengths! When looking at your strengths, think about them in relation to your competitors. For example, if all of your competitors provide high quality products, then a high quality production process is not a strength in your organization's market, it's a necessity.

Weaknesses:

What could you improve?

What should you avoid?

What are people in your market likely to see as weaknesses?

What factors lose you sales?

Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you don't see? Are your competitors doing any better than you?It's best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities: What good opportunities can you spot?

What interesting trends are you aware of?

Useful opportunities can come from such things as: Changes in technology and markets on both a broad and narrow scale.

Changes in government policy related to your field.

Changes in social patterns, population profiles, lifestyle changes, and so on.

Local events.

Tip:A useful approach when looking at opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, look at your weaknesses and ask yourself whether you could open up opportunities by eliminating them.

Threats What obstacles do you face?

What are your competitors doing?

Are quality standards or specifications for your job, products or services changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

Tip:When looking at opportunities and threats, PEST Analysis can help to ensure that you don't overlook external factors, such as new government regulations, or technological changes in your industry.

Further SWOT Tips

Mind Tools on Strategy: SWOT Analysis TOWS Analysis PEST Analysis Core Competence Analysis Value Chain Analysis Porter's Five Forces Porter's Generic Strategies Bowman's Strategy Clock

Scenario Analysis

If you're using SWOT Analysis as a serious tool (rather than as a casual "warm up" for strategy formulation), make sure you're rigorous in the way you apply it:

Only accept precise, verifiable statements ("Cost advantage of US$10/ton in sourcing raw material x", rather than "Good value for money").

Ruthlessly prune long lists of factors, and prioritize them, so that you spend your time thinking about the most significant factors.

Make sure that options generated are carried through to later stages in the strategy formation process.

Apply it at the right level - for example, you might need to apply SWOT Analysis at product or product-line level, rather than at the much vaguer whole company level.

Use it in conjunction with other strategy tools (for example, USP Analysis andCore Competence Analysis) so that you get a comprehensive picture of the situation you're dealing with.

Note:You could also consider using the TOWS Matrix. This is quite similar to SWOT in that it also focuses on the same four elements of Strengths, Weaknesses, Opportunities and Threats. But TOWS can be a helpful alternative because it emphasizes the external environment, while SWOT focuses on the internal environment.

Example SWOT Analysis

A start-up small consultancy business might draw up the following SWOT Analysis:

Strengths: We are able to respond very quickly as we have no red tape, and no need for higher

management approval.

We are able to give really good customer care, as the current small amount of work means we have plenty of time to devote to customers.

Our lead consultant has strong reputation in the market.

We can change direction quickly if we find that our marketing is not working.

We have low overheads, so we can offer good value to customers.

Weaknesses: Our company has little market presence or reputation.

We have a small staff, with a shallow skills base in many areas.

We are vulnerable to vital staff being sick, and leaving.

Our cash flow will be unreliable in the early stages.

Opportunities: Our business sector is expanding, with many future opportunities for success.

Local government wants to encourage local businesses.

Our competitors may be slow to adopt new technologies.

Threats: Developments in technology may change this market beyond our ability to adapt.

A small change in the focus of a large competitor might wipe out any market position we achieve.

As a result of their SWOT Analysis, the consultancy may decide to specialize in rapid response, good value services to local businesses and local government.Marketing would be in selected local publications to get the greatest possible market presence for a set advertising budget, and the consultancy should keep up-to-date with changes in technology where possible.

Key PointsSWOT Analysis is a simple but useful framework for analyzing your organization's strengths and weaknesses, and the opportunities and threats that you face. It helps you focus on your strengths, minimize threats, and take the greatest possible advantage of opportunities available to you.

SWOT Analysis can be used to "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool. You can also use it to get an understanding of your competitors, which can give you the insights you need to craft a coherent and successful competitive position.When carrying out your SWOT Analysis, be realistic and rigorous. Apply it at the right level, and supplement it with other option-generation tools where appropriate.

TOWS Analysis

Using the TOWS MatrixDeveloping strategic options from an external-internal analysisTOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS and SWOT are acronyms for different arrangements of the words Strengths, Weaknesses, Opportunities and Threats.

By analyzing the external environment(threats and opportunities), and yourinternal environment (weaknesses and strengths), you can use these techniques to think about the strategy of your whole organization, a department or a team. You can also use them to think about a process, a marketing campaign, or even your own skills and experience.

Our article on SWOT Analysis helps you perform a thorough SWOT/TOWS Analysis. At a practical level, the only difference between TOWS and SWOT is that TOWS emphasizes the external environment whilst SWOT emphasizes the internal environment. In both cases, this analysis results in a SWOT (or TOWS) Matrix like the one shown below:

Strengths Weaknesses

Opportunities Threats

In this article, we look at how you can extend your use of SWOT and TOWS to think in detail about the strategic options open to you. While this approach can be used just as well with SWOT as TOWS, it's most often associated with TOWS.

Identifying Strategic Options

Mind Tools on Strategy:

Swot Analysis Tows Analysis Pest Analysis Core Competence Analysis Value Chain Analysis Porter's Five Forces Porter's Generic Strategies Bowman's Strategy Clock Scenario Analysis

SWOT or TOWS analysis helps you get a better understanding of the strategic choices that you face. (Remember that "strategy" is the art of determining how you'll "win" in business and life.) It helps you ask, and answer, the following questions: How do you:

Make the most of your strengths?

Circumvent your weaknesses?

Capitalize on your opportunities?

Manage your threats?

A next step of analysis, usually associated with the externally-focused TOWS Matrix, helps you think about the options that you could pursue. To do this you match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:

TOWS Strategic Alternatives Matrix

  External Opportunities (O)1.2.3.4.

External Threats (T)1.2.3.4.

Internal Strengths(S)1.2.3.4.

SO"Maxi-Maxi" StrategyStrategies that use strengths to maximize opportunities.

ST"Maxi-Mini" StrategyStrategies that use strengths to minimize threats.

Internal Weaknesses (W)1.

WO"Mini-Maxi" StrategyStrategies that minimize

WT"Mini-Mini" StrategyStrategies that minimize

2.3.4.

weaknesses by taking advantage of opportunities.

weaknesses and avoid threats.

This helps you identify strategic alternatives that address the following additional questions: Strengths and Opportunities (SO) – How can you use your strengths to take

advantage of the opportunities?

Strengths and Threats (ST) – How can you take advantage of your strengths to avoid real and potential threats?

Weaknesses and Opportunities (WO) – How can you use your opportunities to overcome the weaknesses you are experiencing?

Weaknesses and Threats (WT) – How can you minimize your weaknesses and avoid threats?

Using the Tool

Step 1: Print off our free SWOT Worksheet and perform a TOWS/SWOT analysis, recording your findings in the space provided. This helps you understand what your strengths and weaknesses are, as well as identifying the opportunities and threats that you should be looking at.

Step 2: Print off our free TOWS Strategic Options Worksheet, and copy the key conclusions from the SWOT Worksheet into the area provided (shaded in blue).

Step 3: For each combination of internal and external environmental factors, consider how you can use them to create good strategic options: Strengths and Opportunities (SO) – How can you use your strengths to take advantage

of these opportunities?

Strengths and Threats (ST) – How can you take advantage of your strengths to avoid real and potential threats?

Weaknesses and Opportunities (WO) – How can you use your opportunities to overcome the weaknesses you are experiencing?

Weaknesses and Threats (WT) – How can you minimize your weaknesses and avoid threats?

Note:The WT quadrant – weaknesses and threats – is concerned with defensive strategies. Put these into place to protect yourself from loss, however don't rely on them to create success.

The options you identify are your strategic alternatives, and these can be listed in the appropriate quadrant of the TOWS worksheet.

Tip:When you have many factors to consider, it may be helpful to construct a matrix to match individual strengths and weaknesses to the individual opportunities and threats you've identified. To do this, you can construct a matrix such as the one below for each quadrant (SO, ST, WO, and WT).

SO Matri

xS1 S2 S3 S4

O1        

O2        

O3        

O4        

This helps you analyze in more depth options that hold the greatest promise. Note any new alternatives you identify on the TOWS Strategic Alternatives worksheet.

Step 4: Evaluate the options you've generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you're considering.

Tip:See the Mind Tools Strategy and Creativity Sections for other useful techniques for understanding your environment, and analyzing your strategic options. And see our Problem Solving and Decision Making Sections for techniques for understanding these options in more detail, and deciding between them.

Key Points:The TOWS Matrix is a relatively simple tool for generating strategic options. By using it, you can look intelligently at how you can best take advantage of the opportunities open to you, at the same time that you minimize the impact of weaknesses and protect yourself against threats.Used after detailed analysis of your threats, opportunities, strength and weaknesses, it helps you consider how to use the external environment to your strategic advantage, and so identify some of the strategic options available to you.

PEST Analysis

PEST AnalysisUnderstanding "Big Picture" Forces of ChangeAlso PESTLE, PESTEL, PESTLIED, STEEPLE & SLEPT.

PEST Analysis is a simple but important and widely-used tool that helps you understand the big picture of the Political,Economic, Socio-Cultural andTechnological environment you are operating in. PEST is used by business leaders worldwide to build their vision of the future.It is important for these reasons:

By making effective use of PEST Analysis, you ensure that what you are doing is aligned positively with the forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it.

Good use of PEST Analysis helps you avoid taking action that is condemned to failure for reasons beyond your control.

PEST is useful when you start operating in a new country or region. Use of PEST Analysis helps you break free of unconscious assumptions, and helps you quickly adapt to the realities of the new environment.

How to Use the Tool:

PEST is a simple mnemonic standing for Political, Economic, Socio-Cultural and Technological. Download our free worksheet to record your analysis.Using the tool is a three stage process: Firstly, you brainstorm the relevant factors that apply to you, using the prompts below.

Secondly, you identify the information that applies to these factors.

Thirdly, you draw conclusions from this information.

Tip:The important point is to move from the second step to the third step: it is sterile just to describe factors without thinking through what they mean. However, be careful not to assume that your analysis is perfect: use it as a starting point, and test your conclusions against the reality you experience.

The following prompts may help as a starting point for brainstorming (but make sure you include others that may be appropriate to your situation):

Political: Government type and stability.

Freedom of press, rule of law and levels of bureaucracy and corruption.

Regulation and de-regulation trends.

Social and employment legislation.

Tax policy, and trade and tariff controls.

Environmental and consumer-protection legislation.

Likely changes in the political environment .

Economic:

Stage of business cycle.

Current and projected economic growth, inflation and interest rates.

Unemployment and labor supply.

Labor costs.

Levels of disposable income and income distribution.

Impact of globalization.

Likely impact of technological or other change on the economy.

Likely changes in the economic environment.

Socio-Cultural:

Population growth rate and age profile.

Population health, education and social mobility, and attitudes to these.

Population employment patterns, job market freedom and attitudes to work.

Press attitudes, public opinion, social attitudes and social taboos.

Lifestyle choices and attitudes to these.

Socio-cultural changes.

Technological Environment: Impact of emerging technologies.

Impact of Internet, reduction in communications costs and increased remote working.

Research & Development activity.

Impact of technology transfer.

Other forms of PEST – PESTLE, PESTLIED, STEEPLE and SLEPT:Some people prefer to use different flavors of PEST Analysis. These are:-

PESTLE/PESTEL: Political, Economic, Sociological, Technological, Legal, Environmental.

PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental, Demographic.

STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical.

SLEPT: Social, Legal, Economic, Political, Technological.

Choose the flavor that most suits you!

Example:

We're going to avoid giving an example here, because of the huge potential for causing offense: few societies seem perfect to outsiders, and there are few things as irritating as having an outsider criticize one's own country.

However, a broad principle is that things that make economic activity more difficult for people or organizations raise the cost of doing business: activity is either blocked altogether, or it costs more as people spend time and money circumventing difficulties. The higher the cost of doing business in a region, the more project profitability is squeezed, meaning that businesses and projects that could otherwise operate are never launched. In turn, this means that less economic activity takes place, and people are poorer.

Another broad principle is wherever there is rapid or major change in an area, there are likely to be new opportunities and threats that arise. Smart people and companies will take advantage of the opportunities and make money helping others manage the threats.And do remember that few situations are perfect: it is up to us to make the most of the situation in which we find ourselves.

Key Points:

PEST Analysis is a useful tool for understanding the ‘big picture’ of the environment in which you are operating, and for thinking about the opportunities and threats that lie within it. By understanding your environment, you can take advantage of the opportunities and minimize the threats.

PEST is a mnemonic standing for Political, Economic, Social and Technological. These headings are used firstly to brainstorm the characteristics of a country or region and, from this, draw conclusions as to the significant forces of change operating within it. This provides the context within which more detailed planning can take place, so that you can take full advantage of the opportunities that present themselves.

Core Competence AnalysisGet Ahead. Stay Ahead.

The idea of "core competences" is one of the most important business ideas currently shaping our world. This is one of the key ideas that lies behind the current wave of outsourcing, as businesses concentrate their efforts on things they do well and outsource as much as they can of everything else.In this article we explain the idea and help you use it, on both corporate and personal levels. And by doing so, we show you how you can get ahead of your competition – and stay ahead.

By using the idea, you'll make the very most of the opportunities open to you:

You'll focus your efforts so that you develop a unique level of expertise in areas that really matter to your customers. Because of this, you'll command the rewards that come with this expertise.

You'll learn to develop your own skills in a way that complements your company's core competences. By building the skills and abilities that your company most values, you'll win respect and get the career advancement that you want.

Explaining Core Competences: The Value of Uniqueness

The starting point for understanding core competences is understanding that businesses need to have something that customers uniquely value if they're to make good profits.

"Me too" businesses (with nothing unique to distinguish them from their competition) are doomed to compete on price: The only thing they can do to make themselves the customer's top choice is drop price. And as other "me too" businesses do the same, profit margins become thinner and thinner.

This is why there's such an emphasis on building and selling USPs (Unique Selling Points) in business.

If you're able to offer something uniquely good, customers will want to choose your products and will be willing to pay more for them.

The question, though, is where this uniqueness comes from, and how it can be sustained.In their key 1990 paper "The Core Competence of the Corporation", C.K.Prahalad and Gary Hamel argue that "Core Competences" are some of the most important sources of uniqueness: These are the things that a company can do uniquely well, and that no-one else can copy quickly enough to affect competition.

Prahalad and Hamel used examples of slow-growing and now-forgotten mega corporations that failed to recognize and capitalize on their strengths. They compared them with star performers of the 1980s (such as NEC, Canon and Honda), which had a very clear idea of what they were good at, and which grew very fast.

Because these companies were focused on their core competences, and continually worked to build and reinforce them, their products were more advanced than those of their competitors, and customers were prepared to pay more for them. And as they switched effort away from areas where they were weak, and further focused on areas of strength, their products built up more and more of a market lead.

Now you'll probably find this an attractive idea, and it's often easy to think about a whole range of things that a company does that it can do well. However, Hamel and Prahalad give three tests to see whether they are true core competences:

1. Relevance: Firstly, the competence must give your customer something that strongly influences him or her to choose your product or service. If it does not, then it has no effect on your competitive position and is not a core competence.

2. Difficulty of Imitation: Secondly, the core competence should be difficult to imitate. This allows you to provide products that are better than those of your competition. And because you're continually working to improve these skills, means that you can sustain its competitive position.

3. Breadth of Application: Thirdly, it should be something that opens up a good number of potential markets. If it only opens up a few small, niche markets, then success in these markets will not be enough to sustain significant growth.An example: You might consider strong industry knowledge and expertise to be a core competence in serving your industry. However, if your competitors have equivalent expertise, then this is not a core competence. All it does is make it more difficult for new competitors to enter the market. More than this, it's unlikely to help you much in moving into new markets, which will have established experts already. (Test 1: Yes. Test 2: No. Test 3: Probably not.)

Using This In Your Business and Career:

To identify your core competences, use the following steps:1. Brainstorm the factors that are important to your clients.

2. If you're doing this on behalf of your company, identify the factors that influence people's purchase decisions when they're buying products or services like yours (make sure that you move beyond just product or service features and include all decision-making points.)

3. If you're doing this for yourself, brainstorm the factors (for example) that people use in assessing you for annual performance reviews or promotion, or for new roles you want.

4. Then dig into these factors, and identify the competences that lie behind them. As a corporate example, if customers value small products (e.g. cell phones), then the competence they value may be "component integration and miniaturization".

2. Brainstorm your existing competences and the things you do well.

3. For the list of your own competences, screen them against the tests of Relevance, Difficulty of Imitation and Breadth of Application, and see if any of the competences you've listed are core competences.

4. For the list of factors that are important to clients, screen them using these tests to see if you could develop these as core competences.

5. Review the two screened lists, and think about them:

If you've identified core competences that you already have, then great! Work on them and make sure that you build them as far as sensibly possible.

If you have no core competences, then look at ones that you could develop, and work to build them.

If you have no core competences and it doesn't look as if you can build any that customers would value, then either there's something else that you can use to create uniqueness in the market (see our USP Analysis article), or think about finding a new environment that suits your competences.

6. Think of the most time-consuming and costly things that you do either as an individual or a company.

7. If any of these things do not contribute to a core competence, ask yourself if you can outsource them effectively, clearing down time so that you can focus on core competences.

8. For example, as an individual, are you still doing your own cleaning, ironing and decorating? As a small business, are you doing you own accounts, HR and payroll? As a bigger business, are you manufacturing non-core product components, or performing non-core activities?

Tip 1:As with all brainstorming, you'll get better results if you involve other (carefully-chosen) people.Tip 2:On a personal basis and in the short term, it might be difficult to come up with truly unique core competences. However, keep this idea in mind and work to develop unique core competences.Tip 3:You may find it quite difficult to find any true core competences in your business. If you've got a successful business that's sustainably outperforming rivals, then maybe something else is fuelling your success (our article on USP Analysis may help you spot this).However, if you're working very hard, and you're still finding it difficult to make a profit, then you need to think carefully about crafting a unique competitive position.This may involve developing core competences that are relevant, real and sustainable.Tip 4:As ever, if your going to put more effort into some areas, you're going to have to put less effort into others. You only have a finite amount of time, and if you try to do too much, you'll do little really well.

Value Chain Analysis Porter's Five Forces Porter's Generic Strategies Bowman's Strategy Clock Scenario Analysis

To identify your core competences, use the following steps:

1. Brainstorm the factors that are important to your clients. If you're doing this on behalf of your company, identify the factors that influence people's purchase decisions when they're buying products or services like yours (make sure that you move beyond just product or service features and include all decision-making points.) If you're doing this for yourself, brainstorm the factors (for example) that people use in assessing you for annual performance reviews or promotion, or for new roles you want. Then dig into these factors, and identify the competences that lie behind them. As a corporate example, if customers value small products (e.g. cell phones), then the competence they value may be "component integration and miniaturization".

2. Brainstorm your existing competences and the things you do well.

3. For the list of your own competences, screen them against the tests of Relevance, Difficulty of Imitation and Breadth of Application, and see if any of the competences you've listed are core competences.

4. For the list of factors that are important to clients, screen them using these tests to see if you could develop these as core competences.

5. Review the two screened lists, and think about them:

If you've identified core competences that you already have, then great! Work on them and make sure that you build them as far as sensibly possible.

If you have no core competences, then look at ones that you could develop, and work to build them.

If you have no core competences and it doesn't look as if you can build any that customers would value, then either there's something else that you can use to create uniqueness in the market (see our USP Analysis article), or think about finding a new environment that suits your competences.

6. Think of the most time-consuming and costly things that you do either as an individual or a company. If any of these things do not contribute to a core competence, ask yourself if you can outsource them effectively, clearing down time so that you can focus on core competences. For example, as an individual, are you still doing your own cleaning, ironing and decorating? As a small business, are you doing you own accounts, HR and payroll? As a bigger business, are you manufacturing non-core product components, or performing non-core activities?

Tip 1:As with all brainstorming, you'll get better results if you involve other (carefully-chosen) people.

Tip 2:On a personal basis and in the short term, it might be difficult to come up with truly unique core competences. However, keep this idea in mind and work to develop unique core competences.

Tip 3:You may find it quite difficult to find any true core competences in your business. If you've got a successful business that's sustainably outperforming rivals, then maybe something else is fuelling your success (our article on USP Analysis may help you spot this).

However, if you're working very hard, and you're still finding it difficult to make a profit, then you need to think carefully about crafting a unique competitive position.

This may involve developing core competences that are relevant, real and sustainable.

Tip 4:As ever, if your going to put more effort into some areas, you're going to have to put less effort into others. You only have a finite amount of time, and if you try to do too much, you'll do little really well.

CTQ Tree ExampleJesse is launching a store that sells baby clothing. After speaking with potential customers, one of the critical needs she identifies is "Good Customer Service." So she uses a CTQ Tree to create a list of measurable performance requirements that will help her achieve this.Jesse's CTQ Tree is shown below, in figure 2.

Figure 2 – Jesse's Example CTQ Tree(Click image to view full size.)

Key PointsCritical to Quality (CTQ) Trees help you translate broad customer needs into specific, actionable, measurable performance requirements. You can then use these requirements to deliver high quality products and services. CTQ Trees were originally developed as part of the Six Sigma methodology. You use the tool by first identifying the critical needs of your customers. Then, for each need, you identify the quality drivers that have to be in place to meet those needs. Finally, you identify measurable performance requirements that each driver must satisfy, if you're going to provide a quality product to your customers. Do a CTQ Tree for every need that you identify. You'll then have a comprehensive list of performance requirements that will help you deliver a high quality product.