The Core-Competency Focus Filter
Serve a narrow customer deeply before adding adjacent business lines.
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 5
- Confidence
- 98%
Ivo Tjan's filter starts by rejecting the supermarket model for a smaller company. A founder defines the customer, identifies the narrow capability the company can perform unusually well, and tests every proposed product against that core. Offers that serve a different audience or require unrelated expertise are declined, even when they appear to add revenue, because they divide attention and prevent mastery. Resources then concentrate on becoming indispensable to the selected customers. Commerce West Bank applies the mechanism by serving privately owned small and middle-market businesses through commercial lending and real estate rather than trying to match national banks across retail, mortgages, insurance, and every other category. Breadth becomes an option only after the focused model is established, not a shortcut to growth.
Origin
Tjan developed the approach while positioning Commerce West Bank against national banks that could afford to operate across many lines. The bank remained focused on business owners, key executives, commercial loans, and commercial real estate for 24 years.
Core principles
- 01Smaller companies cannot copy a market leader's breadth without diluting their advantage.
- 02Being all things to some people creates more value than being a little useful to everyone.
- 03A clear core competency tells a company which revenue opportunities to decline.
- 04Expansion should follow mastery rather than substitute for it.
How to run it
- 1
Define the chosen customer
Specify the people or companies the business will serve and the economic range or use cases that make them a fit.
Pro tip Use observable boundaries such as company type, revenue, transaction style, or problem class.
- 2
Name the real competency
Identify the small set of capabilities the business performs better than broad competitors. Describe them in terms of customer outcomes rather than product labels.
Watch out Calling every current activity a core competency makes the filter meaningless.
- 3
Audit the catalogue
Test each existing or proposed line against the chosen customer and competency. Separate reinforcing offers from distracting adjacencies.
Pro tip Ask whether the offer deepens mastery or merely appears to add revenue.
- 4
Cut the scatter
Decline or remove lines that require a different customer, operating model, or expertise, then redirect those resources to the core.
Watch out Copying a large competitor's range ignores the scale that makes its breadth possible.
- 5
Dominate before expanding
Build depth, reputation, and customer value in the selected field before considering adjacent categories.
Pro tip Treat expansion as a later choice, not an automatic reward for finding another sellable item.
In the wild
Commerce West focuses on privately owned companies, usually with $1 million to $100 million in revenue. It concentrates on commercial and industrial loans, working capital, acquisitions, SBA lending, and commercial real estate while avoiding broad retail, consumer, restaurant, and speculative venture banking.
→ The bank built a distinct position around underserved business owners and retained the same core competency through 24 years of market changes.
Common mistakes
Copying the largest competitor
National banks can support many lines because of their scale; a smaller bank dilutes itself by copying that catalogue.
Mistaking more products for more revenue
Adding unrelated products can consume attention without creating category leadership or durable customer value.
Expanding before mastering the core
Premature breadth leaves a company as a generalist before it has become exceptional at anything.
Is it for you?
Best for
Focused companies competing against much larger firms with broader product portfolios.
Not ideal for
Large platforms whose scale, systems, and customer demand genuinely support multiple mature business lines.
From the transcript
“we try to be all things to all people versus being all things to some people”
“the focus has to be more narrow today for a bank and a company”
“narrowing in your your expertise and your core competency just what you're what you're good at get in that business line and don't worry about…”
From the episode
Banking on Innovation ft. Ivo A. Tjan
Ivo A. Tjan