As the F-E-R cycle continues to pick up speed, more companies will find themselves in the fateful third phase, where redefinition is essential. The issue for executives is what to do when that day arrives. Some will decide to man the fort and defend the status quo. Others will try to transform their companies all at once through a big merger or a leap into a hot new market. All such strategies, it turns out, are inordinately dangerous. But a number of companies, we discovered, have found a far less risky alternative. They search out and uncover hidden assets—assets that the company already has, but that have been overlooked, undervalued, or underutilized. They then proceed to redefine their core around those hidden assets.

The importance of a company's hidden assets to its strategic regeneration cannot be overstated. Our close examination of 25 companies that have successfully confronted issues of core redefinition revealed that, in 9 out of 10 cases, a hidden asset was the centerpiece of the new strategy.

Why would well-established companies even have hidden assets? Shouldn't valuable assets long since have been put to work or disposed of? In fact, large, complex organizations always acquire more skills, capabilities, and business platformsthan they can focus on at any one time. Some are necessarily neglected—and once they have been neglected for a while, the people at the top of a company often continue to ignore them or discount their value. But then something happens. Market conditions change, or perhaps the company acquires new capabilities that complement its forgotten ones. Assets that were once secondary to the past strategy now take center stage.

The real question, then, is how to open management's eyes to the hidden assets in their midst. One way is to identify the richest hunting grounds.

Our research suggests that hidden assets tend to fall into three categories:

• Undervalued business platforms
• Untapped customer insights
• Underexploited capabilities

Undervalued business platforms

The first category of hidden assets identified in Unstoppable consists of assets that could become the epicenter of a new wave of growth, either as an entirely new business or as a way to redefine the center of gravity of the old core business. These can be an undervalued business or product family, an underused support function, or a set of adjacency moves that combine to create the fulcrum for a new strategy.

Bain & Company's study of the paths of the Fortune 500 companies suggests that 30 to 35 percent of the single-core companies that made significant changes in strategic direction did so by building on a hidden platform, an asset that was once peripheral but now assumes a position at center stage. In the twenty-five examples in Unstoppable, about half redefined their strategies based on such an asset.

In a separate study, we analyzed a sample of 105 strategy cases undertaken by Bain for clients pursuing the next wave of profitable growth and, often, strategic renewal. We found that these types of hidden platforms were often central to the ultimate strategy. In 7 percent of the cases, the key platform asset was an underused product line; in 34 percent, a key element was a set of unexploited adjacency moves that created further strategic opportunities; and in 26 percent, a major capability or internal support function proved to have much more potential than had been realized.

We identified three primary types of platforms:

• Adjacencies (new geographies, new channels of distribution, and so on) that had been entered to expand the core business and now offer even more potential in their own right as the platform for a new strategy
• Support services and activities to the core (e.g., the customer service organization or a unique information system)
• Noncore businesses and orphan product groups

Untapped customer insights

Most large companies gather considerable amounts of data about the people and businesses that buy their wares. But it's not always clear how much they actually know about those customers. In a recent series of business seminars, a team administered an online survey to the participants. Though nearly all came from well-regarded companies, fewer than 25 percent agreed with the simple statement, "We understand our customers." In a 2005 Bain & Company survey, we asked respondents to identify the most important capabilities they could add to their business to trigger a new wave of growth. "Capabilities to understand our core customers more deeply" was at the top of the list.

For just this reason, customer insights and relationships are often hidden assets. A company might discover that one neglected customer segment holds the key to far more growth than it has enjoyed in the past. It might find that it is in a position of influence over its customers, perhaps because of the trust and reputation that it enjoys, and that it has not fully developed this position. Or it may find that it has proprietary data that can be used to alter, deepen, or broaden its customer relationships. All these can stimulate renewed growth around a new core.

It is somewhat unusual to find an untapped segment of customers that is poised for rapid growth. But it isn't at all unusual for a company to realize that it has deeper relationships with customers than it realized, or that it has more knowledge about customers than it has put to work.

Hyperion Solutions, a producer of financial software, was able to reinvent itself around new products and a new sales-and-service platform precisely because corporate finance departments had come to depend on Hyperion software for financial consolidation and SEC reporting. "We totally underestimated how much they relied upon us for this very technical and sensitive part of their job," said CEO Jeff Rodek. American Express transformed its charge-card business on the basis of previously unutilized data showing how different customer segments used the cards and what other products they might be interested in.

Underexploited capabilities

Hidden business platforms and hidden customer insights are assets that companies already possess; in theory, all that remains is for management to uncover them and put them to work. A capability—the ability to perform a specific task over and over again—is different. Any capability is potentially available to any company. What matters is how individual companies combine multiple capabilities into "activity systems," as Michael Porter calls them, meaning combinations of business processes that create hard-to-replicate competitive advantage. Ikea's successful business formula, Porter argues, can be traced to a strong and unique set of linked capabilities, including global sourcing, design for assembly, logistics, and cost management (see "What Is Strategy?" from the Nov-Dec 1996 issue of Harvard Business Review).

An underexploited capability, therefore, can be an engine of growth if and only if it can combine with a company's other capabilities to produce something distinctly new and better.

Of course, a company may find that it needs to add one or more capabilities to complement those it already possesses before the combination makes for a potent activity system. Apple indisputably capitalized on its strengths in design, brand management, user interface, and elegant, easy-to-use software in creating the iPod. But Apple also needed to acquire expertise in the music business and in digital rights management. Once that was done, it gained access to content by signing up the top four music companies before anyone else did and creating the iTunes Music Store. It also created a brilliantly functional approach to digital rights management through its Fairplay software, which ensures that the music companies obtain a highly controllable revenue stream. This combination of existing and new capabilities proved transformational for the company.

The holy grail of capability development is to create a unique set of capabilities—no longer hidden—that can build one growth platform after another, giving a company repeated competitive advantage in multiple markets. This is a difficult task, and indeed it has proved to be a siren song for many. But a few companies have achieved it: Emerson Electric, Valspar (in industrial coatings), Medtronic (in implantable devices), and Johnson & Johnson, to name a few.

By deploying hidden assets in the form of business platforms, customer insights or capabilities, a company can transform itself to become truly unstoppable.

Chris Zook is a partner in Bain & Company's Boston office. He was coleader of the Global Strategy practice for 20 years.