Article at a glance:

Unbundling the corporation

Most companies are really three businesses combined: one that focuses on customer relationships, another developing products, and one that supplies the infrastructure. Although organizationally intertwined, their cultures differ greatly: customer relationships are service oriented, product innovation serves employees rather than customers, and infrastructure has to serve both with a one-size-fits-all mentality. Conventional wisdom holds that all three should be combined in one company to save the costs of coordinating them if they were separate companies. But this article claims those costs are falling to levels that will make it possible—and desirable—to unbundle vertically integrated companies into their component activities.

The take-away

Eventually, companies come up against a cold fact: the economics of the three core activities conflict. Bundling them into a single corporation forces management to compromise the performance of each in ways that reengineering can't overcome.