Summary.
It is a wonder how many management teams fail to exploit, or even perceive, the full potential of the basic businesses they are in. Company after company prematurely abandons its core in the pursuit of some hot market or sexy new idea, only to see the error of its ways—often when it’s too late to reverse course. Bausch & Lomb is a classic example. Its eagerness to move beyond contact lenses took it into dental products, skin care, and even hearing aids in the 1990s. Today B&L has divested itself of all those businesses at a loss, and is scrambling in the category it once dominated (where Johnson & Johnson now leads). And yet it’s also true that no core endures forever. Sticking with an eroding core for too long, as Polaroid did, can be just as devastating. Both these companies were once darlings of Wall Street, each with an intelligent management team and a formerly dominant core. And in a sense, they made the same mistake: They misjudged the point their core business had reached in its life cycle and whether it was time to stay focused, expand, or move on.