800-CEO-READ Blog writes about a new book “Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth” by Chris Zook:
Zook has always stressed looking at the industry profit pool rather than the market size. He suggests it is changes in the profit pool that signal the need for redefining a company’s core. Your company could be losing your share of the pool (U.S. vs. Japanese automakers) but the market has not changed; the profit pool could have shifted to a different point in the value chain (Intel and Microsoft in PCs); new technology could completely change the economics of an industry (Amazon in books).
The core is where companies must find strength to withstand industry turbulence, Zook argues. But he also suggests that all companies have hidden assets that can be utilized when a company must redefine its core. Like any good consultant, Zook has classified them into three broad categories. The first is undervalued business platforms ranging from adjacencies into new geographies to support services to non-core businesses. The second is untapped customer insights, a familiar idea often hard to act on. Finally, underutilized capabilities are the most abstract of the three and were the least often used in the companies Zook examined.