George Stalk, Jr., Philip Evans, Lawrence E. Shulman

Competing on capabilities provides a way for companies to gain the benefits of both focus and diversification. Put another way, a company that focuses on its strategic capabilities can compete in a remarkable diversity of regions, products, and businesses and do it far more coherently than the typical conglomerate can. Such a company is a “capabilities predator”—able to come out of nowhere and move rapidly from nonparticipant to major player and even to industry leader.

Capabilities-based companies grow by transferring their essential business processes—first to new geographic areas and then to new businesses.

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