Break the Rules!

2When You're Tempted to Say No, Instead Say “Yes, We Can!”: Then Figure Out How

 

For more than four decades, the widely accepted wisdom in the world of business has been that the most successful companies are those that pursue opportunities for which the necessary competencies are already in hand. Tom Peters and Bob Waterman, in their classic 1982 book In Search of Excellence, argued that businesses should “stick to their knitting,” staying true to the business they know, rather than diversifying beyond what they're good at.¹

Similarly, strategy gurus C. K. Prahalad and Gary Hamel built their academic careers on the back of their classic 1990 article that argued that what good companies should do is clarify their core competencies and then build upon and enhance them.² Honda's core competencies in engines and power trains, for example, have provided the underlying basis for business units that manufacture products as diverse as motorcycles, automobiles, lawn mowers, and more. 3M's core competencies in coatings, substrates, and adhesives have enabled it to develop an ever‐expanding product line that combines these competencies in various ways.

Makes good sense, right? Further support for this view comes from the waves of spin‐offs and divestments that inevitably follow periods during which some businesses have strayed from their knitting and built highly diverse conglomerates, ...