Compete on Know-Why, Not Know-How

Do you know why you make the products or offer the services you do? Too often I find that companies don’t have a clear enough sense of why they do what they do. They get stuck making incremental improvements that are rooted in existing competencies, markets, and business models.

This is especially problematic when companies decide to innovate. If you don’t have a clear understanding of why you are pursuing an innovation, you risk being wasteful and ineffective, and could lack strong differentiators from incumbents. On the other hand, clear, deep, relevant insights help you stay one step ahead of competitors who may try to imitate your creations. If they can’t replicate the thinking driving your innovations, they’ll be doomed to “me too” status.

I call these types of insights core insights, a concept which I first introduced in my book, Innovation X. Core insights are a complement to the familiar notion of core competencies, which were first advocated by Gary Hamel and the late C.K. Prahalad. But whereas core competencies are about know-how, core insights are about know-why.

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