The difference between Skills, Abilities, Knowledge, and Competencies

The differences between Characteristics, Capabilities, Knowledge, and Motivation

In this blog, we will explain the differences between Skills, Abilities, Knowledge, and Competencies using the competency framework that contains four essential elements: Motivation, Personal Characteristics, Qualities, and Knowledge.

Table of contents

When talking about personality, people use different words and concepts. Not only people in general – and who can blame them – but also professionals hr professionals, and experts use different words for a competency that does not necessarily mean the same thing.

There is a difference between knowledge skills abilities, and competencies. And abilities are not the same thing as characteristics. Although they are all soft skills, they have different explanations. Admittedly, it is quite tricky, and there is an overlap in what these terms mean.

On the one hand, it is a bit like where to put the emphasis: “tomato or tomato,” but on the other hand, there is also a clear difference in meaning, like cherry tomato and beef tomato. 

Why is it important to know the difference? If words mean different things, then they have different effects and impacts on people, primarily if it depicts the personality. In what way and to what extent can you practice and develop these characteristics, knowledge, cognitive skills, and abilities?

This holds for the normal or general personality as it is valid for the entrepreneurial nature. Especially for business owners, it is essential to know what can be developed or needs to be present to set up and run a business successfully. 

The four essential elements of the Entrepreneur Competence Model

For the entrepreneurial personality, a new competency model was created. That is to say, the Entrepreneur Competence Model (ECM). It arose from scientific research into entrepreneurship as professional competence and this competency framework contain four essential elements. So, together they form a competency:

  • Motivation; why do you want to be an entrepreneur?
  • Personal Characteristics; who are you really as an entrepreneur?
  • Qualities or abilities; what can you do well as a business owner?
  • Knowledge & experience; do you know what others know to use in your business?

It is vital to understand the differences in meaning because else you could focus on the wrong aspects, that you can not develop, change, or influence.

Motivation; why do you want to be an entrepreneur?

There are two kinds of motivation. One that comes from within (internal motivation) that pulled someone into becoming an entrepreneur. The opposite, instead, happens from outside the person (external motivation). That pushed someone into becoming self-employed. 

The entrepreneur with a high score on Need for Achievement, Need for Autonomy, and a Need for Control is highly motivated to start his own business. This situation fits him like a glove. These are clearly internal motivations. 

Firstly, he can aim as high as he wants. Secondly, do whatever he feels like doing. And thirdly, tell others what to do rather than being told what to do. 

Please make no mistake; this doesn’t say anything about success: he is more suited to being self-employed because he wouldn’t stand a chance working under a boss. He would simply not be an ideal member of the workforce. 

Besides these internal motivations, people almost always have an external motivation, too; some reason that pushed them towards entrepreneurship.

For example, someone didn’t have a job, started looking for a market opportunity, or was guaranteed to have customers right from the start of his self-employment. These are external motivations.

But when the external motive falls away, the entrepreneur falls back to his internal motivation. If there was little or no internal motivation at the start, the chances are that the business owner will quit very quickly.

Personal Characteristics; who are you really?

Personal characteristics say something about your character. It is so firmly attached to you that it is visible and identifiable for others. Think of someone else whose presence is dominant or prominent. 

Many attributes will characterize them. Often it is referred to as personal traits or characteristics, which include characteristics and thinking styles. Indeed, characteristics are not easy to learn.

You are more or less born with them and have evolved through them into the person you are now.

The characteristics are a large and essential part of the results of the entrepreneurial mindset tool E-Scan. These traits are what make someone entrepreneurial. 

Qualities; what can you do well?

A quality, ability, capability, or skill means the same. Something that you can do well: a high proficiency level. So, these terms are interchangeable. Qualities are easy to learn, at least more comfortable than traits.

So, you could consider them as transferable skills. Moreover, the qualities of an entrepreneur are split into two parts. Firstly, the abilities that fall under the early phase of an enterprise and, secondly, the skills that fall under the mature stage of an enterprise.

In the early phase, you have to look out for the first customers and adapt to the market. You need abilities that match that demand. While you need more management proficiency once the company is maturated. Then the business owner’s focus goes from external more to internal.

The abilities that are important for an entrepreneur are the first four related to the management of a small company:

  • Leadership competencies in jointly achieving organizational goals
  • Motivating, interpersonal skills, and communication skills for employee development
  • Planning and management of employee performance
  • Financial management
  • Market orientation as a specific skill of commercially interpreting client’s observable behavior
  • Creativity and innovation
  • Flexibility

Besides the abilities above, any business owner has some job-related skills too.

Knowledge & experience; do you know what others know?

Of course, knowledge and experience deal with the basic elements of doing business. For instance, the occupational functions you would read in every business plan.

  • Marketing & Sales and strategy
  • Organization, (besides technical skill) technical knowledge
  • People (human resource) and type of job function needed
  • Finance and pricing
  • Market demand and supply

Learning styles of entrepreneurs

It’s the owner-manager’s complex task to make sure all these occupational functions are covered and lead to organizational performance. It is, of course, also crucial for an entrepreneur to know how he learns best.

In other words, what is their entrepreneurial way of gaining knowledge and training? What kind of learner are you? For this, his different learning styles are of particular interest.

  • Accommodator; learns by doing, but analyzing information is a problem.
  • Diverger; learns by observing and generating ideas but finds it difficult to be practical.
  • Converger; learns by putting it into practice and solving specific problems but tend to close their eyes for other ideas and suggestions.
  • Assimilator; learns by carefully analyzing problems and information but fails when immediate action and decisions are needed.

Most entrepreneurs have a particular learning style, and that determines how they process knowledge. As a consequence, that makes them blind to information that doesn’t fit their learning style. 

So to speak, one might argue that the ‘real entrepreneur’ knows nothing but knows exactly how to make it happen.

Does the entrepreneur need to know everything? No, of course not. The business owner needs to know what kind of knowledge and experience is required for his business. However, he must – at the very least – have an idea of how this knowledge can be acquired for his company or learned through training.

So, networking and critical thinking are essential skills that can help in this respect. For aspiring entrepreneurs, it can be a daunting task to figure out where to begin when starting a business of your own. However, the complexity and multiplicity, will almost for sure have a negative impact on your self-confidence.

Jack of all trades

So, without the combination of knowledge skills abilities, and competencies, it’s almost impossible for an owner-manager to pull off a successful performance. Of course, everyone has a certain proficiency level. In other words, everyone has some degree of motivation and traits that form the core competency of an entrepreneur.

Above all, with E-Scan, you can quickly discover these levels. For sure, it will reveal a skill gap. Although anyone would like or aims for a high score on every specific competency, the reality is that no one scores high on all. 

All in all, it places complex demands on the owner-manager of each company. It is, without a doubt, a demanding role to play. A difficult job or task that takes 24 hours 7 days a week, because you are always responsible. Hence, you take your work home.

The beauty of entrepreneurship is that you can organize your work around you in the way you want it. Moreover, you can do it in such a manner that it complements and completes your personal entrepreneurial profile. Certainly, entrepreneur coaching can help match those complex demands. 

If you are interested in how you’d score on the key competencies of an entrepreneur, get your free E-Scan now.