Posts Tagged ‘book summary’
Creating distinction is critical for small businesses to survive. Larger companies with established brands will have a longer stay without distinction but overtime their market cap will erode if they don’t create new value for customers. Scott’s book shows us how to create distinction.
Why is this important to me?
I always want to ask this question as if I am sitting in your shoes. Will this summary benefit you if you review it? Incremental innovation is like a staircase for product improvement. Once your product or process is released then through thought and engineering they get better.
Is the customer always right? This is a rhetorical question because customers do not always know what they want.
Henry Ford said it best: “If we did a customer survey in 1929, the customer would have suggested faster horses.” This is the rub with surveys in general and only focuses on incremental innovation.
I am going to profile the 4 cornerstones of distinction outlined by Scott. Quick note: We run an enterprise software company and our customers are our lifeblood. If we listen to everything they tell us about the product then incremental innovation will take off. If we are not careful then our product will become obsolete because true innovation is missed. Paradigm shifts do not happen with simple feature requests. Customers did not request IPods.
1. Clarity – Defining who you are as an organization is critical for differentiation. You cannot be all things to all people. Case in point: The Dodge Viper was a sports car created by Bob Lutz. The first rendition of the car had no top, the doors did not open and it had no bells and whistles. It was designed for the true sports car enthusiast. If you looked at the Ford Thunderbird in that same year, the car was created by committee trying to be all things to all people – different engines, feature sets for all markets etc. and the sales of the 1992-1993 Thunderbird were horrible.
2. Creativity – Creativity is not anarchy. It is critical to foster creativity from the bottom up through clarity. Creating distinction through creativity is critical for outpacing your competition. In our enterprise software business, we do this through our DSS Direct Advantage®. This allows us to sell, support and work directly with our customer and not through a reseller network. This has been a true competitive advantage and allows us to outpace the competition.
3. Communication – Communication is critical to creating a tribe. If you consider Apple and Zappos, these two organizations are great at communication. Steve Jobs was one of the best presenters in history. Nobody could deliver a product launch like him. Apple’s communication is so strong that people stand in line all through the night to be the first person to but the new gismo. With customers like that, who needs sales people?
4. Customer Experience Focus – Customer Experience Focus needs to be engineered from all customer touch points within your organization. This sounds easy in theory but requires granular detail and focus. According to Peter Drucker, there is only one valid definition of a business and that is to get a customer.
5. Collapse of Distinction is a must read for any business person that wants to survive in today’s economy. This book is packed with excellent information and to do’s to help you implement the strategies.
I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this book is CLARITY. This seems easy but in reality requires a great deal of thought and collaboration. Spend 30 minutes each day until you have refined elevator pitch defining exactly what you company does. One component of clarity is the understanding of what you do NOT do as well.
Warren Buffett has amassed a fortune of more than $60 billion. This book is a bit older so it only shows Mr. Buffett’s worth at $30 billion. The wealth and job creation based on his work is truly revolutionary. Berkshire Hathaway, which is the entity that he works out of, is a conglomerate of businesses that employ more than 250,000 people through companies like GEICO, Burlington Northern Railroad, See’s Candy and Helzberg Diamonds. When Warren Buffett evaluates a business it is a straight forward decision: YES, NO and Too hard. The too hard category keeps him focused on his circle of confidence which we will touch on in the book.
Why is this important to me?
I start all of the book summaries with this question because if we cannot answer it then there is no sense in wasting your time watching the video. The simple answer here is knowledge. One of the best ways to learn is by what I call OPE. OPE stands for other people’s expertize. Since Mr. Buffett probably won’t take my phone call and mentor me personally, does not mean that I can’t learn from him. Timothy Vick outlines in the book several things that Warren does to generate wealth. The real power in all of his strategies comes down to the power of compounding. Understand this concept and you too can benefit financially from this book.
OPT – Other people’s time is really where Mr. Buffett has been able to amass true wealth. Berkshire Hathaway’s tax return in 2009 was over 15,000 pages long. The corporate headquarters does not look like Enron. They have 20 people at corporate. The true value of OPT comes from betting on the right “Jockey”. All of the CEO’s that run the various businesses of Berkshire Hathaway are world class. This is a key component to investing in the RIGHT business. OPT is a critical component to how Mr. Buffett invests. He does NOT want to run the businesses. He simply wants to allocate capital.
If you know anything about Warren Buffett then you know that he loves to invest in Insurance Companies. This gives big tax advantages as well as access to free money known as “Float”. The float invested wisely can bring in big returns. This is the classic example of using other people’s money to make a profit. One other thing that is relevant under OPM is the concept, “Velocity of Money.” Understanding this concept can make you rich. Have you ever wondered how a grocery store can make a profit if their average profit margin is 2%? The answer is inventory turns which are a classic example of “Velocity of Money.”
Timothy Vick breaks down the book into 5 sections. I will cover portions of each section for the sake of time. Developing a mathematical Mind – Before you hit the pause button or jump away from this video let me put a disclaimer on this one. You do not need to be a math geek to do these principles. With the internet, all of this stuff is done for you. What I am going to highlight are the differences small movements make which can determine losses and gains.
1. Understanding Opportunity Costs – This concept is important for any part of your life. The concept is simple. If you decide to cook dinner tonight then you cannot simultaneously go out to dinner as well. You have chosen one over the other. If you buy a $50,000 car then you can NOT use that $50,000 to invest. Also, that car does not cost you $50,000 but costs you $1,000,000.
2. Price and Value compound together. Price and value are not the same thing in terms of investing. Some people would say that a $5 per share stock is cheaper than a $50 per share stock. Understanding value will let tell you if that is true or not. The $50 stock may be “cheaper. Buying at the right price and value together magnifies your results through compounding.
3. Hitting for a high average – Ted Williams was a great baseball player with a batting average over.344 in his career. He broke down the strike zone into areas that he could most likely hit successfully. Basically what this means is that he controlled his swing to make sure he had the highest success rate. Mr. Buffet does the same thing to guarantee a.900 batting average on his investing. Thus he only focuses on companies that he understands, great businesses that can be run by average people and buying at a cheap price.
One thing that value investors do is analyze companies to determine if they are overpriced or underpriced. I have invested in the stock market BEFORE learning these tools and I can tell you from experience that I have received everything but the kiss in terms of losses. These principles are an absolute necessity if you want to guarantee your financial future. Simply turning over your money to a quote “financial person” is not the way to secure your future.
1. Coveting Moats – This basically means that the company must have a durable competitive advantage. If you look at See’s Candy, this company has been in the business for 100 years and has a coveted moat. They make high margins in a relatively “Easy” business. They do NOT have to plow all of their profits into capital for the next model year. This means that this business is NOT capital intensive where a car manufacturer is capital intensive. Another Buffet owned company is Dairy Queen. I am sure you have heard of it. They sell ice cream and have a durable competitive advantage through their brand. The good news is you can measure the power of the moat through the numbers.
2. Rule Number One – There are two rules of investing that HAVE to be understood. Rule One is don’t lose money and Rule number two is don’t forget rule number one. This simple rule has power. Let’s say you invest $1,000 and you make a 50% gain. You now have $1,500. Let’s say you have a 50% loss instead. Now you have $500. For you to get back to even, you need a 100% gain on the $500. This is the hidden power of Rule one.
3. Valuing a business – This book along with a few others that we will profile in future videos describe in simple terms how to value businesses. Once you know how to do this then investing in stocks is much more comforting and easy. The goal here is to find a $2 value and pay $1 in price. If you buy stocks like you buy groceries then this becomes easy to do and takes the mystery out of all the tech terms of investing. Understanding Return on Equity, Free Cash flow, Sales Growth and other indicators is the key to valuation.
We have two main competitive advantages over Mr. Buffet today. When he started investing, he had to do all the calculations manually. He would read financial statements 12 hours per day. Today we can use the internet for all of our investigation and you can simple plug in numbers and do simple multiplication, division and addition to figure out future value of the companies you are interested in. Also, we have the BENEFIT of size. The average size of a stock market purchase is 400 shares. When companies trade a millions of shares per day then our orders do NOT affect price. When Mr. Buffet has to allocate billions of dollars, this action can move markets. The analogy here is Mr. Buffet is a freighter and we are jet skis. This means we can buy and sell before the market turns. An excellent follow up book which I will profile is called Rule One Investing by Phil Town. It really goes into detail on these points.
Everything rises and falls on leadership. The fate of our country in the coming years will be determined by jobs and small / medium sized businesses. To run these organizations effectively, leadership is needed. Orrin and Chris do an excellent job profiling the five stages of leadership.
Why is this important to me?
I don’t want to waste your time and I want you to get actionable information from this summary. With that said, there are a couple of components that I want to point out as it relates to influence. Leaders sell the difference between their vision and today’s reality. If the vision is compelling and the leader has character and integrity, people will follow.
People need to be hone-able, honorable and hungry to become leaders. Leadership takes effort. I can personally tell you that leading people is not easy. I am also a beginning leader with a lot to learn. To gain mind share of people, you have to influence them and compel them to the cause.
discusses 5 levels of influence on the leadership staircase. For the sake of time, I will profile each part in summary. Leadership can be like herding cats because people are different. To that end, it is the goal of the leader to unite people toward the common cause.
1. Learning – Continuous learning is required now for any field especially leading. You have to be committed to learning every day. This needs to be a habit. You cannot influence people in mass if you are not willing to take the hits and do the work. Learning leads to better performance and enlightenment. Without it, you cannot lead. The world is to sophisticated today for ignorance. You need to be a lifelong learner.
2. Performance – It is not the number of hours you put into an endeavor but the effort you put into the hours. Leaders have to perform. NFL Coaches have a three year life span. If they do not perform and create a winning team, they are fired. People expect performance and want to follow winners. Everybody remembers Muhammad Ali and George Forman. Do you remember Ernie Shavers or Jerry Quarry? These two fighters were good but they were not the champions. There are a couple of keys to performance: 1. 80/20 Rule – focus on what matters and discard what doesn’t and 2. Parkinson’s Law – Focuses on effectiveness and states that a task swells to its allotted time table. Shorten the deadlines on tasks and they will get done. In college, how many of you finished term papers in the last week before they were due? This is Parkinson’s Law in its negative affect. The term paper could be done in one week instead of 15 weeks.
3. Leading – “To serve is to rule” – Leaders know that they have to serve others to get the job done. Selfish egotistical leaders will typically be stuck in positional leadership which is the lowest rung on the leadership ladder. Lee Iacocca was a good leader but not a great leader. He lost his focus and started focusing on his ego after the Chrysler turnaround. His focus became too “I centered”. To be a great leader, you need to be humble and have the collective put ahead of yourself. If you look at truly great leaders you will see this trait – Mother Teresa, Mahatma Gandhi and George Washington.
4. Developing Leaders – Developing other leaders is the real key multiplier effect. Having great people who lead allows organizations to scale. In business, this is the difference between being self-employed and owning a business that does not require your full attention. Do you have a local dentist? Typically what you see at these practices are very successful people that do all the work. They make an excellent living but cannot scale beyond a certain point because THEY can only do so much work and there are only so many hours in a day. Contrast this to Warren Buffett. Warren owns several businesses and does not run any of them. He buys them with excellent management and leadership in place. He provides additional leadership and capital to expand the business and scale. That is one benefit of developing leaders.
5. Developing Leaders who develop leaders – This is the holy grail of leadership. Orrin gives a great example in the book. Christianity is 2000 years old and it is primarily that way because of the Apostle Paul. His ability to develop leaders who developed leaders was un-parallel in history.
is a good book that is worth the time to study. Orrin and Chris do a good job of profiling the key aspects of influence and leadership.
I hope you have found this short video summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this book is learning. The major ingredient to get your leadership skills off the ground is to learn. Make it a daily habit to read a few pages, watch educational videos and tap into associations outside your comfort zone.
Book Summary – Lessons Learned – Crisis As Opportunity – Straight Talk From the World’s Top Business
Crisis as Opportunity is part of the 50 Lessons series. These short books are great quick references from business leaders. Leveraging knowledge is one key to running a highly successful business.
Why is this important to me?
I believe that business and niche markets are the key to the future. The old days of working for 30 years and retiring with the gold watch are gone. It is time to create your own destiny and this book along with others can help you garner the knowledge to do it.
Leveraging OPE (Other People’s Expertise) is a way to cut out 20 years of hard knocks. I know this sounds cliché but it is true. If you proceed with an open mind and truly learn from other successful business leaders than your business will grow.
Crisis as Opportunity has 14 short chapters from key business executives. For the sake of time, I will profile my 3 favorite.
1. Be Alert to New Opportunities – J.W. Marriott Jr. shares the story of their acquisition of the Ritz-Carlton hotel chain. He and his management team are always on the lookout for new opportunities. They define exactly what they are looking for and know what fits. Likewise, they know what does not fit which is critical as well. This simple lesson is excellent. When I first got into business, I would ask my dad how he knew of certain opportunities. He said you will know when you are in it. I did not understand this because it seemed so nebulous. Now that I am in it, I do understand it because we came across an industry acquisition and moved on it quickly. This business move was excellent for us and it happened quickly. We would have missed it if we were not open and alert to new opportunities.
2. Change is Good – David Brandon CEO of Domino’s Pizza – David talks about his college football days and practicing for “Sudden Change”. With technology today, things can change on a dime. Preparing your team and practicing sudden change allows you to prepare for it and embrace it when it happens. The key to embracing change is to talk about it and collaborate. The opposite of this strategy is red tape and bureaucracy. Bureaucratic organizations eventually die.
3. A Counter-intuitive Downturn Strategy – Anders Dahlvig – IKEA. The counter-intuitive strategy is planning for bad times during the good times. This means capitalizing your company well. Anders talks about how sales were going through the roof and they understood that it would not last. They expected the best and planned for the worst. When the economy shifted, IKEA was in a great position to expand while the competition was frantically cutting back. Basically, cash is king. Save your money and pounce on great opportunities.
The Lessons Learned series is functional material that will benefit you and your business. I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days. One thing you can take away from this book is cash is king. 90% of the world today is leverage to the hilt. Conserve and save your cash and deploy it correctly and your business will grow while your competition stumbles.
Negotiation is at the heart of human communication. Think about it. Most conversations are a sale in the making. You are either selling to a yes or accepting a no in everything you do. At work this shows up in what you do, how you do and what you get paid. All of these facets are negotiable. Deepak and Max go far beyond the Win/Win, Win/Lose and Lose/Win mentality and show how to create value. The whole goal of the book can be summed up in a quote by Emerson: “Man Hopes; Genius Creates”
Why is this important to me?
I start all of the book summaries with this question because if we cannot answer it then there is no sense in wasting your time watching the video. People do anything to avoid pain and gain pleasure. When in the middle they attain their COMFORT ZONE! The comfort zone may be the only place where good negotiation is not needed. Otherwise you need to know how to negotiate – PERIOD. This book will show you how.
Win/Win is seen as the ultimate end to good negotiations. Is it the best outcome? Negotiation genius will show that it is not always the best outcome. Amateur negotiators pull at each side of the rubber band hoping it does not break before they can come to an agreement or settlement. This is claiming value in a nutshell. Johnny wants to pay only $50,000 and Jane wants $100,000. Typically, they meet somewhere in the middle at $75,000. Claiming value is not nearly as powerful as creating value which we will examine in more depth.
Deepak and Max break down the book into 3 sections. I will cover portions of each section for the sake of time. Claiming value is the first part. Claiming Value – is when each party tries to gain the most out of negotiations for themselves.
1. BANTA – Best Alternative to Negotiated Agreement! Identify all of your best options. Do your homework and prepare
2. RV – Reservation Value – This is your walk away point. Understanding BANTA allows you to really know what your Reservation Value.
3. ZOPA – is the ZONE of Possible Agreement – This is the spread between sells reservation value or walk away point and the buyer’s reservation value.
Common negotiation mistakes are as follows: 1.) You made the first offer when you were not in a strong position. 2) You made a first offer that was not sufficiently aggressive. 3.) You talked but did not listen 4.) You tried to influence the other party but did not try to learn. 5.) You did not challenge your assumptions about the other party. 6.) You miscalculated the ZOPA and did not reevaluate it during the negotiation. 7.) You made greater concessions than the other party.
Contingency Contracts are designed to draw out lies and deception as well as extremes in any contact. They leave certain elements of the deal unresolved until uncertainty is resolved in the future.
Silence – be comfortable with silence. Just remind yourself that if you speak when it is their turn, you will be paying by the word.
Investigative negotiation is just what it says. Probe and ask questions to gather information. How can we get information so we can create value, resolve conflicts, and reach efficient agreements?
1.) Trust is critical in all relationships. You can have a weak agreement with good people and have a great outcome. You can also have a rock solid agreement with bad people and have a terrible outcome. Trust is the glue that holds the deal together after it is done. Sharing information can help you gather information.
2.) Negotiate issues simultaneously – When you do this then more information is shared and the dialogue is more open. Once people are comfortable with you then they will dump more information.
3.) Ask good questions and LISTEN – If you take nothing else from this video review then this one piece of advice will serve you well. Asking open ended questions in their TERMS like “Why”, “Tell me more”, “Can you be more specific” will allow you to get a full spectrum of what they are concerned about, what is important to them and what areas are NOT important to them.
The power of questions can be mind blowing. Think about if Microsoft wanted to buy your software company. You value it at three times revenue which is $15 million dollars. If you accept this offer with knowing all you can know then this may be good enough. What if because of their distribution that they will be able to generate $100 million per year in revenue with your software. Don’t you think they would pay you more? They could pay you triple your price. The key here is knowledge. Understand why they want to buy and the consequences if they don’t and this will yield exponential results.
Several principles are critical for you to learn. Remember that in any negotiation if you get a No, don’t accept it. Your goal is to understand “Why NOT”. Once you do you may be able to open it back up and get to a yes.
I hope you have found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes habit. Habits form in as little as 21 days.
One thing you can take away from this book is don’t accept NO. Instead ask why!