An adaptable company is one that captures more than its fair share of new opportunities. It’s always redefining its “core business” in ways that open up new avenues for growth. If it had been more adaptable, Best Buy might have seen the opportunity for mail order DVDs and beat Netflix to the punch, Coca-Cola might have grabbed the lead in the sports drink business from Gatorade, and General Motors, rather than Toyota, might have the world’s best selling hybrids. An adaptable company is always reinventing itself, always pioneering new markets. This malleability gives it a P/E premium relative to its less dexterous peers.

An enterprise that is constantly exploring new horizons is likely to have a competitive advantage in attracting and retaining talent. When a once successful company runs aground and starts to list, its most talented employees usually don’t stick around to bail water, they jump ship. A dynamic company will have employees who are more engaged, more excited to show up to work every day, and thus more productive.

And finally, an adaptable company will be proactive in responding to emerging customer needs and will take the lead in redefining customer expectations in positive ways (think of Apple’s pioneering retail stores or its top-rated technical support). The result: higher levels of customer loyalty and better margins.

– Gary Hamel