The full title of this book by Adrian Slywotsky and David Morrison is
“The Profit Zone: How Strategic Business Design Will Lead You to Tomorrow’s Profits“.
In my review posted on Amazon.co.uk, I gave the book Four Stars. This means I think it is Good and Well Worth Reading.
Here is my book review.
A superb book when it was published which is still valuable in 2015
This is a fascinating look at the power of business models to determine the success of a business.
The authors argue that the traditional sources of profit in many businesses and industries are broken. No longer can higher market share and market growth be assumed to “guarantee” financial success because there are many cases where high market share is unrewarded and where fast growing markets become profit traps.
The profit zone is where high profit is generated. It used to be high market share but it’s now moved to the business using the best, most relevant profit model. This builds on the causality argument about market share. Is market share the cause of high profitability or the reward for providing high value for money to customers which also ultimately drives profitability?
While high market share can provide big advantages, it can be delivered efficiently or inefficiently. It can be increasing (indicating a stronger competitive performance) or it can be decreasing.
The authors argue that winning business designs that put you in the profit zone are based around four key dimensions – customer selection, value capture, differentiation / strategic control and scope.
The book is written in three parts:
1 – The theory – succeeding in the changing world of business
2 – The examples – the re-inventors and how they succeeded – stories of how business models have been changed to move into the profit zone including Jack Welch and GE, Andrew Grove and Intel, Michael Eisner and Disney and Bill Gates and Microsoft
3 – The practical application of the business model thinking in the profit Zone Handbook
These three sections and the way they build upon each other makes it a very well thought out and crafted book.
The authors, at this stage, had identified 22 profit models and the best business designs include two or three of these profit models in a way that makes sense to the customers and the business.
The book emphasises the importance of continuing to move and develop your business design as the customer needs and priorities change. I like this strategy quote from the Lew Platt, CEO of Hewlett-Packard. “The single biggest problem in business is staying with your previously successful business model… one year too long.”
I like The Profit Zone very much and the only reason why I haven’t given it a five star rating is because a book about cutting edge change in business models risks getting out of date. I think there’s plenty to learn from The Profit Zone which was published in 1997 but I can’t help thinking to myself “what would the authors be saying about business design innovations now?”Business Books Reviews by Paul Simister (Please click). I've also narrowed these down to a list of the 12 Best Business Books For Business Owners & Entrepreneurs (Please click).
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