Unstoppable

Successful strategic renewals using hidden assets satisfied four criteria: (1) clear and measurable competitive differentiation, (2) tangible value added for the customer, (3) a robust (and often new) profit pool, and (4) the ability to obtain the needed capabilities for implementation

FIGURE 5-2
Defining core capabilities: basic approach

is section describes four simple tools that can help you organize your thoughts and assemble data on capabilities as you develop your strategic options. These tools are depicted in figure 5-2.
A good starting point is the value chain (figure 5-2a), which shows each of the major activities (or clusters of activities) that the business employs to deliver value to customers

Support services and activities to the core (e.g., the customer service organization or a unique information system)
Noncore businesses and orphan product groups

We identified three primary types of platforms:
Adjacencies (new geographies, new channels of distribution, and so on) that had been entered to expand the core business

FIGURE 2-4
Leaders capture the profit pool

Each liability was in an area that company systems did not track (but do now): competitive cost position (Avis proved to be high cost even against Hertz

The typical industry has more than six competitors

rs. The top two competitors usually capture more than 75 percent of the profit pool, and the company with the greatest market power usually captures about 70 percent of total profits and 75 percent of profits above the cost of capital (figure

The story of General Dynamics illustrates how dramatic change in the profit pool can trigger the need to redefine a company