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Prescription drugs are sold through different channels than the rest of P&G’s products. Even if customers pick up prescriptions in supermarkets, near other P&G products, the drugs may be handled by different distributors, are bought in a pharmacy and are chosen largely by doctors rather than by the consumers themselves. Regulatory issues are obviously stricter. Even P&G’s vaunted advertising expertise doesn’t necessarily extend from consumer products into prescription drugs because of all the restrictions on how prescription drugs can be advertised.

We aren’t as sanguine about some of the other divestitures that analysts are now speculating that P&G will pursue. After all, P&G’s shaving products and toothpaste are often bought by the same customers in the same place, and the shaving and toothpaste businesses may have more similarities than differences. Some of the shuffling that may happen from here in P&G’s portfolio sounds like the kind of thing that mostly benefits the investor bankers who handle the deals. But, at least with the prescription drug business, P&G is clearly doing a smart thing.

The problem seems to be that companies focus too much on how their core markets resemble the supposedly adjacent one while not focusing enough on the differences. In Nokia’s case, it sees cellphones and netbooks as both being small computers with communications capabilities. True enough. But look at the differences. Packaging components in teeny packages is crucial in phones but far less important in netbooks; there’s simply far more real estate to use. Designing the interface for a cellphone, in particular the keyboard for a smart phone, is a key differentiator, but the interface is far more standard in a netbook. Cellphones are largely about voice, while netbooks are about data. Cellphones can command a premium if they become must-haves, while netbooks will look much more like commodities.

Perhaps the biggest difference is the distribution channel. Nokia currently distributes its phones through cellphone carriers, but to sell netbooks it will have to deal with the retail electronics channel. Nokia has enough of a name that it will be able to get some retail space, but dealing with Best Buy or Walmart is surely far different from selling through Verizon.

The strong demand for netbooks seems likely to create the kind of craze that regularly afflicts the technology world. If you go back far enough, to the early days of the personal computer, demand was so strong that 10 companies decided to stake a claim to 20% of the U.S. PC market; they killed profit margins while all failing to achieve that share. More recently, demand for flat-panel TVs convinced Dell that it could move from computers into more conventional consumer electronics, only to find that the differences in the markets outweighed the similarities.

The only good part of Nokia’s netbook announcement is that it says it’s going into the market with its eyes wide open. Maybe Nokia is limiting its investment in netbooks and is prepared to pull out of the market quickly if things go poorly. Let’s hope, for Nokia’s sake, because the odds are very low that Nokia’s move will succeed.

While the decline in the U.S. housing market is slowing, and a rebound may even be beginning, the problems in the sector are so profound that it will take many years to work through them. Any company that decides it wants a much bigger presence in the housing market needs to have a very strong rationale.

So, what does Pulte offer?

Mainly, it says the additional size will let it build a national brand. But building a brand is a tricky thing, and housing doesn’t seem to lend itself to brand development. Brands are often built by advertising, but the depths of the housing downturn will put such pressure on margins that little money will be available for years. In addition, the market will be hard to target. People considering building a home tend to rely on word of mouth; there’s no trade publication that they consult, and trying to reach them through mass media would mean paying high rates to reach an awful lot of people who aren’t in the market for a home builder. Brands can also be built through repeated experiences, but home-building tends to be a one-off for people; at most, someone might build two or three homes in a lifetime. Pulte may have more luck with big developers, whom it could reach through marketing, but developers tend to have long-established relationships with builders that will be hard to change.

It’s worth looking at the experience of Macy’s, whose industry lends itself to brand building and which decided to buy a series of retailers as a way of increasing its presence and developing a national brand. After struggling for years, Macy’s has now decided it can’t build a truly national brand. It’s going to leave many more decisions about merchandising to local managers.

Pulte also says its newfound size will let it save on costs, but such attempts often fail. While there may be some back-office efficiencies, Pulte already has enough size that it gets big volume discounts from suppliers. How much can it really drive down the price of lumber? The market is so fragmented that Pulte’s newfound size just means it will be “one of the leading builders in half of the nation’s top 50 markets”–”one of” and “half of the. . . markets” not being phrases often associated with Walmart-like pricing power. While we’re having trouble finding figures at the moment on what Pulte’s share of the total home building market will be, let’s say they’ll be going from 5% to 8%. How much extra pricing power does that really give the company?

The potential problem shows up in the experience of Oshkosh Truck, which bought JLG, another heavy-equipment maker, three years ago for $3 billion. Much of the rationale was that Oshkosh would double the amount of steel it purchased each year and would drive down prices. But, even doubled in size, Oshkosh had so little share of the steel market that no material savings occurred. Oshkosh’s total market cap is less than $2 billion at the moment, even though the stock price has tripled in recent months because of businesses that have nothing to do with the JLG acquisition.

Pulte likely was driven by the thought that it could get Centex for a bargain price. At its peak, Centex was generating more than $8 billion a year in revenue and was a major force in the industry. Isn’t it worth $1.4 billion to buy a business with that kind of potential? Isn’t there enough margin of safety built into such a low price?

Maybe not. Centex’s revenue fell by half to less than $4 billion in fiscal 2009, which ended March 31, and revenue fell 50% again in the first quarter of fiscal 2010. Centex’s recent losses have more than wiped out its earnings during the boom years. Where does it end?

Like many companies, Bank of America focused on long-coveted assets when it agreed to buy Merrill Lynch last fall and assumed that Merrill’s businesses wouldn’t deteriorate too much further.In the process, BofA grossly underestimated the problems it was acquiring along with those assets. Pulte seems to be making the same mistake.

Looking at Pulte’s market cap of some $3.3 billion might suggest that investors are optimistic about the company’s prospect. But realize that, following the acquisition, Pulte has $3.4 billion of cash on hand. Investors are saying they’d pay you $100 million if you’ll take the company off their hands.

But the fact is that the Internet is now wreaking real havoc in some areas, and organizations sometimes have their head in the sands. As we put it in “Billion-Dollar Lessons,” they have adopted a strategy of Staying the (Misguided) Course.

The latest example comes from a recent report from the U.S. Government Accounting Office about the U.S. Postal Service. Here are some highlights from the report:

“GAO is adding the U.S. Postal Service’s (USPS) financial condition to the list of high-risk areas needing attention by Congress and the executive branch to achieve broad-based transformation. Amid challenging economic conditions and a changing business environment, USPS is facing a deteriorating financial situation in which it does not expect to cover its expenses and financial obligations in fiscal years 2009 and 2010. This year, USPS expects to increase its year-end debt to $10.2 billion and incur a cash shortfall of about $1 billion.

“Another key risk factor is the accelerated decline in mail volume. Mail volume declined by 9.5 billion pieces in fiscal year 2008 to about 203 billion pieces. As of the end of May 2009, mail volume had decreased another 18.5 billion pieces, and USPS expects to end fiscal year 2009 with mail volume of 175 billion pieces—about 28 billion pieces fewer than in fiscal year 2008. Further, it expects flat or continued volume and revenue declines over the next 5 years. These trends expose weaknesses in USPS’s business model, which has relied on growth in mail volume to help cover costs and enable USPS to be self-supporting.”

In response, as reported by the Associated Press, the USPS is considering closing or consolidating nearly 700 offices, out of a total of 32,741.  Think about this: Mail volume is expected to drop more than 10% this year, after a big decline last year, and the Postal Service says it may close 2% of its offices. Does that really sound like they’re addressing the problem?

It’s been obvious for years–at least since that Internet bubble thing–that e-mail was going to take a big chunk out of mail volumes. But the USPS has primarily responded with price increases and, as the GAO report points out, continued to assume growth in mail volume in its business model. We realize the USPS is in an awkward situation because of the federal government’s role, and we’ve also seen the trial balloons that the USPS has floated about, for instance, possibly cutting mail delivery one day a week. Our general sense, though, is that the USPS is fighting a rear-guard action rather than really addressing its problems in a thoughtful, strategic way.

There’s a lesson there. Many companies can’t bring themselves to imagine Armageddon. They can maybe foresee a bad year or two, but not a scenario that would wipe out their core business. Yet Armageddon is possible. Just ask the record labels, newspapers, Kodak and other traditional photography companies. And more devastation is on the way as the next wave of innovation takes hold on the Internet.

So, established businesses are either going to figure out how to be more objective about the possibility of a bleak future and are going to learn to prepare better, or they’re going to continue to create opportunities for smaller companies to wipe them out, and profit in the process.

It’s surely a lot more fun these days to be in the business of using the Internet to nurture singers and bands, or to be streaming songs, than it is to be a major record label.

The company has taken advantage of the weakness of competitors–principally, Linens & Things, which is going out of business–and has expanded aggressively. Bed, Bath and Beyond has positioned itself for further growth, too, because its buybuy Baby stores, currently concentrated in the Northeast, can be expanded throughout the rest of the country.

It’s worth noting that, while companies thinking of expanding have often focused on opportunities for acquisitions or have tried to move into new markets, Bed, Bath and Beyond took a safer route by staying within its existing, core business. Yet the company is still winning big-time. As the WSJ notes, the stock is already up 18% this year, and the article suggests there could be a further 25% gain in front of investors.

Not bad for a company operating in the retailing sector, which has been hammered. Imagine the opportunities available in healthier parts of the economy.

Organized medicine actually does a better job of learning from mistakes than the vast majority of industries do. Because medicine deals with life and death, there are lots of very objective studies about best practices and after-action reviews when mistakes may have been made.

Still, the threat of malpractice suits, various issues concerning compensation and numerous other factors make investigations in the medical world far from perfect. The sort of organization recommended by the writer in the Times could be a way of cutting through the fog and getting a better understanding of reality, allowing for greater efficiency and much better results.

There’s a lesson for other businesses, too: If medicine, despite its emphasis on gathering objective information, isn’t getting the straight scoop, just imagine how much negative information gets filtered out in other industries before it reaches the decision-makers.

It’s no secret that the Internet’s mix of free and cheap individual tracks is killing physical album sales (which fell 20% last year). In addition, established stars like Radiohead, the Beastie Boys and Barenaked Ladies have been using the Internet to go direct to music buyers, cutting traditional record labels out of the process and keeping a much larger share of the revenue.

As if those problems weren’t enough, it now seems that traditional labels may lose out to new players in the competition for the cream of the crop of up-and-coming musicians.

An example of these new playes is Polyphonic, a venture co-founded by Brian Message, manager of Radiohead.  As Brad Stone reports:

“Under the Polyphonic model, bands that receive investments from the firm will operate like start-up companies, recording their own music and choosing outside contractors to handle their publicity, merchandise and touring.

“Instead of receiving an advance and then possibly reaping royalties later if they have a hit, musicians will share in all the profits from their music and touring.  In another departure from tradition in the music business, they will also maintain ownership of their own copyrights and master recordings — meaning they and their heirs can keep earning money from their music.”

We’re not saying that music labels will disappear, but their business model is certainly doomed.  The question is whether they will stay the misguided course or adapt while there is still time.