Corporate Advantage

H ow can you tell

if your company is really

more than the sum of its parts~

CREATING

CORPORATE

ADVANTAGE

BY DAVID J. COLLIS AND CYNTHIA A. MONTGOMERY

M

ST MULTIBUSINESS COMPANIES ARE

the sum of their parts and nothing more.

Although executives have become more

sophisticated in their understanding of what it

takes to achieve competitive advantage at the level

of individual businesses, when it comes to creating

corporate advantage across multiple businesses,

the news is far less encouraging.

True, corporate executives face mounting pressure from their boards and from capital markets to

add value. To date, however, that pressure has had

the greatest impact on corporate strategy in pathological companies such as ITT, where the destruction of value was so great that it had to be stopped.

ARTWORK BY JEFFREY FISHER

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71

C REATING CORPORATE ADVANTAGE

What has slipped under the radar are those companies - the majority, we would argue - that don't

destroy value at the corporate level, but neither do

they create it.

That failure is not for lack of trying. Indeed, in

many of the 50 companies we studied during a sixyear research project/ corporate executives were

struggling to create viable corporate strategies.

Some were working on their core competencies, .

others were restructuring their corporate portfolios, and still others were building learning organizations. In each case, executives were focusing

on individual elements of corporate strategy: resources/ businesses, or organization. What was

missing was the insight that turns those elements

into an integrated whole. That insight is the

essence of corporate advantage - the way a company creates value through the configuration and

coordination of its multibusiness activities. Ultimately, it is what differentiates truly great corporate strategies from the merely adequate.

THE TRIANGLE OF

CORPORATE STRATEGY

Competitive

Advantage·

t

~.

':)~

Control

~...