McKinsey Classics Newsletter
Articles of enduring interest
December 2011

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The most basic question about companies

A typical big corporation traditionally combined three kinds of businesses—building customer relationships, developing new products and services, and producing and distributing them. Although the economics and mind-sets of these activities differ vastly, they have usually coexisted within one overarching organization because the interactions (meetings, conferences, and so forth) required to coordinate them would usually have been too difficult and costly if each was undertaken by an independent, specialized company.

But as a McKinsey Quarterly article noted more than a decade ago, the Internet makes sharing data cheap, fast, and easy, while the three businesses are as different as ever. More and more, “executives will be forced to ask the most basic and discomfiting question about their companies: what business are we really in?”—the question ConocoPhillips, for example, had to ask itself before the company’s recent announcement that it planned to divest its downstream businesses. Don’t miss “Unbundling the corporation.”

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May 2006
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November 2005
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August 2001
The future of the networked company