It doesn't matter much where your company sits in its industry ecosystem, nor how vertically or horizontally integrated it is - what matters is its relative 'share of customer value' in the final product or solution, and its cost of producing that value.
Interpretation
The location of a company within its industry is less important than how much value it provides to customers and how efficiently it can produce that value.
Gary Hamel emphasizes that a company's position within its industry and its level of integration are secondary to its ability to deliver value to customers and manage production costs effectively. This perspective challenges traditional views of business success, urging companies to focus on the quality and cost-effectiveness of their offerings rather than their relative industry status.
In practice
During a conference on entrepreneurship, this quote can be used to motivate startups to focus on customer satisfaction.
The real damper on employee engagement is the soggy, cold blanket of centralized authority. In most companies, power cascades downwards from the CEO. Not only are employees disenfranchised from most policy decisions, they lack even the power to rebel against egocentric and tyrannical supervisors.
The biggest barriers to strategic renewal are almost always top management's unexamined beliefs.
To create an organization that's adaptable and innovative, people need the freedom to challenge precedent, to 'waste' time, to go outside of channels, to experiment, to take risks and to follow their passions.
If customer ignorance is a profit centre for you, you're in trouble.
The single biggest reason companies fail is they overinvest in what is, as opposed to what might be.
The only thing that can be safely predicted is that sometime soon your organization will be challenged to change in ways for which it has no precedent.
I'm a believer that you accomplish much, much more with direct relationships than by using an intermediary. And that cash you keep in the bank can be the difference between staying alive as a small business, or not.
To make a pleasant and friendly impression is not alone good manners, but equally good business.
I'd rather Apple cannibalize Apple than somebody else cannibalize Apple.
Courteous treatment will make a customer a walking advertisement.
The idea that business is strictly a numbers affair has always struck me as preposterous. For one thing, I've never been particularly good at numbers, but I think I've done a reasonable job with feelings. And I'm convinced that it is feelings - and feelings alone - that account for the success of the Virgin brand in all of its myriad forms.
Businesses are not paid to reform customers. They are paid to satisfy customers.
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