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| WDC Patents Experience: |
What are Control Points?
By Winthrop D. Childers
A famous investor once said that a company with a great business and a mediocre management is more attractive than one with a mediocre business and a great management. What makes a business great are control points. Control points provide a sustainable advantage over competitors. Below are some examples of control points and well known companies that hold them.
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Patents (Qualcomm, Microsoft, Pfizer)
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Copyrights (Microsoft, Publishers)
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Branding & Trademarks (Proctor & Gamble, Coca-Cola)
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Proprietary Knowledge & Know-How (Consultants, Top Attorneys)
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Financial Strength (GE, Johnson & Johnson, Citicorp)
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Network Effects (Western Union, First Data)
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Economies of Scale and Infrastructure (Wal-Mart, Coca-Cola, PepsiCo)
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Logistics and Supply Chain (Wal-Mart, Coca-Cola, PepsiCo)
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Limited Natural Resources (Exxon and Oil-Rich Countries)
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Natural Monopoly (Water Company or Other Utility)
The companies listed tend to be quintessential examples of each listed control point. The best companies have more than one.
What do you see as your company's control point(s)?
How do these compare to your competitors?
Some control points such as patents on pharmaceuticals are almost insurmountable when enforceable but instantly lose their purchase upon expiration or beyond geographic bounds. Others such as branding may not be as insurmountable but have longer and broader effects. A company such as GE has many different kinds of control points that operate in synergy that do not depend on any one particular patent or factor.