YourCircleofCompetence 113masses may generate some short-term profit (hula hoops, yo-yos),
but the typical pattern is that those tastes evaporate an dthe profit
in them moves to the collectors and dealers (Pez candy dispensers).
The patterns of endurance give rise to longer-term profit centers, as
with the tren dtowar dlow-salt an dlow-fat foo ds that companies
such as Nabisco took advantage of.
Business organization an d design move aroun da lot with
changes in the context in which companies operate an dcompete:
- Globalization le dmany companies, such as Procter & Gamble an d
Xerox, to reorganize their management structures—from having
heads of different parts of the world to having heads of various
product lines throughout the world. - The rise of the Internet an de-commerce le dmany to create entire
new dimensions of their businesses to market product on-line or
to redirect major chunks of their businesses to take advantage of
the lower costs an dwi der reach of Internet sales—in GE’s case,
the company did both. - The move towar dservice profit centers an dthe ability to unleash
greater profits with fewer har dassets le dmany companies to op-
erate parts of their businesses as managers under contract rather
than through outright ownership, the way Barnes & Noble entered
the college bookstore market.
Companies that adapt organizational structure and business de-
sign to meet changing needs and opportunities are good companies
to keep an eye on. If you notice a company that constantly readapts
itself in this way, try to learn more about it. Even if those companies
don’t make it into your circle of competence, you can enlarge it with
the knowledge you gain from studying them. Coca-Cola and Disney
are goo dexamples.
Coca-Cola’s main business is selling beverages globally, princi-
pally gallons of concentrates an dsyrups that constitute the Coke
bran dbut also Minute Mai dan dnearly two hun dre dothers. Coca-
Cola devotes most of its resources to marketing its brands to pro-
mote consumer awareness an dmaintaining an dexpan ding its bot-
tling operations through a mix of independent bottlers and wholly
or partly owne dbottlers. Coca-Cola reinvente ditself in the 1980s to
see its chief customers not as those who actually drink Coke and
the other brands but the distributors around the world who carry
product to those end consumers (this transformation was led by