One theme common to all of these failures, however, is that the decisions that led to failure were made when the leaders in question were widely regarded as among the best companies in the world.

a vast, middle-of-the-road array of mid-priced goods and services—is no longer competitive. No question, the constant disappointments, the repeated predictions of a turnaround that never seems to come, have reduced the credibility of Sears’ management in both the financial and merchandising communities.

In retrospect, these were obvious markets for hard drives, but at the time, their ultimate size and significance were highly uncertain.

Whether a firm was a start-up or a diversified firm had little impact on its success rate. What mattered appears not to have been its organizational form, but whether it was a leader in introducing disruptive products and creating the markets in which they were sold.

because it is in its processes and values that the organization’s most fundamental capabilities lie.

Competition and customer demands in the value network in many ways shape the firms’ cost structure, the firm size required to remain competitive, and the necessary rate of growth. Thus, managerial decisions that make sense for companies outside a value network may make no sense at all for those within it, and vice versa.

For these reasons, makers of mainframe computers, and makers of the 14-inch disk drives sold to them, historically needed gross profit margins of between 50 percent and 60 percent to cover the overhead cost structure inherent to the value network in which they competed.

Honda’s executives were eager to exploit the company’s low labor costs to export motorbikes to North America,

organization’s values, which are the criteria that managers and employees in the organization use when making prioritization decisions.