Why has Chrysler been twice as profitable as GM and Ford during the 1990s even though it is a much smaller company with plants that are less efficient than Ford’s? Why does Toyota continue to have substantial productivity and quality advantages long after knowledge of the Toyota Production System has diffused to competitors? The answer, according to Jeff Dyer, is that Toyota and Chrysler have been the first in their industry to recognize that the fundamental unit of competition has changed–from the individual firm to the extended enterprise.

In this book Dyer demonstrates the power of collaborative advantage, arguing that, in the future, competitive advantage will increasingly be created by teams of companies, rather than by the single firm. Managers who do not recognize this development–regardless of their industry–are in danger of adopting the wrong strategies for their firms. Dyer draws on eight years of study of the automotive industry, including a wealth of data from interviews with over 200 executives and surveys of over 500 suppliers, as he offers detailed case studies of Toyota and Chrysler to show managers how to create collaborative advantage with their supplier networks. Dyer demonstrates how to build trust in the extended enterprise, how to exploit and manage knowledge (describing how Toyota manages knowledge across organizational boundaries), and how to create advantages through dedicated asset investments. In turn, these processes generate stunning performance advantages and an identity for the extended enterprise.

To be successful in future years, executives will have to convert their corporations into fully integrated, extended enterprises. In Collaborative Advantage, Jeff Dyer shows them how.