Broadening the Extent of Advantage II

Bemused by the idea that their company's competitive strength lies in vaporous generalities...companies may diversify into products and processes they know nothing about.

The idea that some corporate resources can be put to good use in other products or markets is possibly the most basic in corporate strategy.  Its truth is undeniable yet it is also the source of great mischief.  Bemused by the idea that their company's competitive strength lies in vaporous generalities such as "transportation," "branded consumer products," or "management," companies may diversify into products and processes they know nothing about.

The basis for productive extensions often resides within complex pools of knowledge and know-how.  For example, DuPont started as a specialist in explosives.  After World War I, its skill at chemistry and chemical production led DuPont to manufacture cellulose, synthetic rubber, and paints.  The work in synthetics led to new skills in polymer chemistry, which, in turn, left to Lucite and Teflon in 1935.  Similar patterns of accumulating and extending technological resources can be found in General Electric, IBM, 3M  and many pharmaceutical and electronics companies.

ACTION POINT: Identify any complex pools of knowledge and know-how to extend any competitive advantage you may have.