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Summary
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The winner-takes-all economy
Investors had a great run in the stock market in the late 1990s, but the thanks go to a small stable of companies. An analysis of the performance of 1,000 global companies from 1995 to 2000 shows that just 13 percent of them—creating $4.7 trillion in shareholder value and helping to lift the overall market to a rate of return nearly double that of the median company—were big winners. Operating results supported this market performance; annual earnings growth for top performers was double that of the underperformers. What accounts for the large and growing gap between winners and also-rans? Most winners were "atomizers." Rather than expanding the scale and scope of their activities, they chose a profitable sliver of the value chain and cherry-picked the most attractive products, channels, and customers.

The take-away: Large industry incumbents are especially vulnerable to atomized attackers. To compete against the upstarts, incumbents must not only pick the right race but also address the organizational and managerial impediments to entrepreneurial action in an established company. Companies that focus on atomized market slivers are likely to outperform their rivals—and to generate superior value for shareholders.
  


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