Plotting the structure of industries across markets and geographies reveals a startling and increasing inequality in size and performance among even the largest companies.

What emerges is a “power curve” pattern characterized by a short “head,” comprising a few companies with extremely large incomes, and quickly dropping off to a long “tail” of significantly smaller competitors.

These power curves can be a useful diagnostic tool for understanding the structural dynamics of an industry and a company’s role and options in its evolution.

As products evolve into commodities, services become more important. But companies that play this new game must understand its rules.

BCG has developed an analytical framework—the Global Advantage Diamond—for assessing a company’s current market position and devising strategies to achieve global competitive advantage. The Global Advantage Diamond differs from previous global-strategy models in its focus on all four aspects of global advantage: market access to reach new markets and segments, resource access to maximize competitive advantage, local adaptation to meet the full range of needs of RDE customers, and network coordination to capitalize on the business’s global reach.

Twelve strategies to shape a company’s destiny.

Traditional strategy becomes limited when variables are constantly shifting. Organizations with an adaptive advantage achieve superior outcomes by continuously reshaping the enterprise through a process of managed evolution. Readiness, responsiveness, and resilience are necessary for surviving turbulence, but a recursive approach—in which better strategies evolve iteratively in response to change—is essential for sustainable advantage. Choosing the best style of adaptive strategy depends on the rate and predictability of change in the industry and the degree of change it necessitates for the enterprise.

In this interactive presentation, McKinsey director Lowell Bryan talks about the origins of the portfolio-of-initiatives framework. Developed to address the need for strategy in a more fluid, less predictable environment, this approach treats strategies as actions that require continual monitoring and evaluation.

Though often missing, a formal operations strategy can guide the crucial decisions that build competitive advantage.

Identifying and assessing growth options are complex, critical processes. Even more critical, and intricate, is the measurement of risk associated with each option. These authors provide a robust framework that will enable managers and their firms to choose those growth options that have the best chance of succeeding.

In this interactive presentation—one in a series of multimedia frameworks—Steve Coley, a director emeritus in McKinsey’s Chicago office, describes the three horizons framework. Based on research into how companies sustain growth, this approach illustrates how to manage for current performance while maximizing future opportunities for growth.

Can 'Complexity Theory' explain why strategies and change programs seldom deliver the results that were intended? Does it mean that we should leave everything to chance and abandon any attempts to shape our organizations for the future? In this article Dr Jean Boulton and Dr Peter Allen, from Cranfield's Complex Systems Management Centre, explain how this 'new science' can be used by managers to rethink their approaches to strategy and change management.

How should a corporation decide whether to buy, sell, or keep a business unit? In the late 1980s, McKinsey developed its market-activated corporate strategy (MACS) framework, which answered that question in a surprising way. The obvious considerations—the attractiveness of the industry in which the unit competes and its competitiveness within that industry—are both relevant, but the acid test is which company can extract the greatest value from the business. If the present owner should be that company, it probably ought to keep even a mediocre or poorly performing unit.

Drivers such as globalization, deregulation, or technological change, just to mention a few, are profoundly changing the competitive game. Scholars and practitioners agree that the fastest-growing firms in this new environment appear to have taken advantage of these structural changes to compete "differently" and innovate in their business models. However, there is not yet agreement on what are the distinctive features of superior business models. This dispute may have arisen, in part, because of a lack of a clear distinction between the notions of strategy, business model, and tactics. HBS professor Ramon Casadesus-Masanell and Joan Enric Ricart present an integrative framework to distinguish and relate the concepts of business model, strategy, and tactics.

Irrational thinking doesn’t just affect individual economic decisions; it affects corporate strategic planning as well. These results highlight the practices of companies that have made successful strategic decisions—and also reveal what the same companies have gotten wrong.

Past success can become tomorrow's liability. But instead of throwing out the old and taking a bold leap into the new, leaders in uncertain times should focus on creating conditions for internally generated growth. Columbia's Rita Gunther McGrath presents a portfolio of opportunities that managers can employ, including a questionnaire to help you pinpoint the greatest sources of uncertainty in the business, and thereby focus your investments in learning accordingly.

Buffeted by years of offshoring, formidable Asian competitors and a global economic downturn, some companies are finding ways to make manufacturing in the U.S. a competitive advantage.

Fixed costs turn growth into profit. But they can also turn declines into big losses. Variabilization—transforming your fixed costs into variable ones—offers an attractive alternative. A variabilized cost structure is responsive, adapting rapidly to both increases and decreases in demand. Many companies are doing more than variabilize their own costs, they are developing and offering “variabilization solutions” to their customers. This trend suggests that the basis of competition will shift from scale to agility, orchestration, and risk management.

In highly effective companies there is a commitment to aligning stated beliefs with actual choices. In this article we'll consider a company's strategic planning process to look at how the gap works in many ways to weaken capability. We'll diagnose problems in the traditional planning process. Finally, we'll recommend a positive approach that leaders can take to reduce the gap.st

This BCG Report summarizes our recent research into how leading companies are adapting their strategy development processes to today’s increasingly unpredictable competitive environment. Based on 100 executive interviews, we found that they are stretching their time horizons to give the short, medium, and long term each its due. Stretching their thinking with new techniques to boost creativity and insight. And stretching their engagement models to foster dialogue, preparedness, and alignment. The Report builds on the thinking in an earlier Perspective.

The traditional approach to strategy requires precise predictions and thus often leads executives to underestimate uncertainty. This can be downright dangerous. A four-level framework can help.

When developing business strategies, it is wise to think about "frictions," the forces that make it difficult for buyers and sellers to connect. Those elements -- location, convenience or lack of information -- help explain how different firms, such as a small local retailer and a national store, can coexist in the marketplace, according to research by Wharton management professor Olivier Chatain and an INSEAD colleague.

When large companies are organized in the traditional division structure, strategic decisions too often fall to managers under pressure to meet budgetary demands. Success in one unit masks underperformance in others, while ventures that promise strong future growth go underfunded because they don’t contribute to short-term bottom-line numbers.

One way to shake things up is to review the strategy and performance-management processes and to make decisions at the more granular level of value cells. By emphasizing these value cells rather than aggregated bottom-line division numbers, this approach sheds light on which activities should be the target of additional investment—and which should be divested entirely.

For niche companies, years of growth can quickly turn into losses when facing industry consolidation, and a wobbly economy is only increasing the peril. As Fritz Kroeger, Andrej Vizjak and Mike Moriarty write in this adaptation of their recent book, Beating the Global Consolidation Endgame: Nine Strategies for Winning in Niches (McGraw-Hill, 2008), long-term success is reserved for niche companies that truly understand the playing field.

In this interactive presentation—one in a series of multimedia frameworks—McKinsey alumnus Kevin Coyne describes how companies can use the business system to evaluate their choices at each stage in the process of creating and delivering products. Aligning conduct at every step with the company’s value proposition creates a truly integrated business strategy.

In one of a series of interactive presentations, McKinsey director emeritus John Stuckey comments on SCP, a framework that illustrates the influence of an industry's structure on the conduct and performance of industry players, and the effects of external shocks on all three.

In the first in a series of interactive presentations, McKinsey examines 7-S, a framework introduced to address the critical role of coordination, rather than structure, in organizational effectiveness.