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Tuesday's Wall Street Journal has an article about efforts to win the Tour de France. They quote a support person for one team who has the title "head of marginal gains."

Tour de France Wow. What a wonderful title. Let's step back and catalog how companies (or non-profits or governments) advance:

  1. Marginal gains are small, like three yards and a cloud of dust. The Tour de France team with the great title did things like have a truck that carried the beds of each of the nine team members. A good night's sleep is important, so they each slept on their own bed, albeit in a different hotel room every night.
  2. Blockbuster gains are huge, like the iPhone (AAPL), changing the game for everybody. Think sliced bread, interchangeable parts, nuclear bombs.
  3. Strategic Positioning is not about better products, but about getting to the right place at the right time. Nokia (NOK) got into cell phones at the right time, IBM (IBM) moved from hardware into services, Western Union (WU) emphasized money transfers over telegrams.

The marginal gains should come regularly. Starbucks (SBUX), as I've written about, is using a classic time and motion study to improve efficiency in their stores.

Some companies gamble on a blockbuster improvement, but usually they wait until their back is against the wall. A better approach is to regularly evaluate blockbuster possibilities. Perhaps after the annual plan is completed, management teams across the company could take half a day and brainstorm on blockbuster opportunities.

Strategic positioning is usually the purview of the executive suite, and the question should be framed as: what business segments in the neighborhood of our competencies are likely to grow rapidly in the next three to ten years.

Many senior business leaders like to focus, but the best companies cover all the bases.

Disclosure: No positions

Source: How Companies Advance: Marginal Gains, Breakthroughs and Strategic Positioning