Profit First

Transform Your Business from a Cash-Eating Monster to a Money-Making Machine

The book review for this week is Profit First by Mike Michalowicz.

Michalowicz introduces a new and unique way of managing the financial side of your business. Rather than running your business using traditional GAAP based reporting, he introduces an approach that keeps the business owners focused on profits not on Revenue, SG&A or COGs.

His point is that profit is not an event . . . Profit must be baked into your business every day, every event, every transaction. The best way to do this is to build a system that puts profit first and not GAAP accounting (although the accounting still must happen). Michalowicz lays out a simple but powerful system that does this.

How to Be Relentlessly Committed to Self-Disruption

Disruption is highly uncomfortable! Purposefully causing disruption inside your business seems like a stupid thing to do! For what reason would you want to disrupt something that is running smoothly?

Well, for starters, building a business that never changes is a flawed business strategy. A business that is too rigid to change will be obliterated by the fast-changing marketplace! As Clayton Christensen pointed out in the Innovator’s Dilemma, the fact that you are successful makes it hard to keep the edge you need to win in the future!

We do not have to look too hard before we find prime examples of businesses that were once at the top of their game and now have failed or are basically on their death bed! It is clear that they were not relentlessly committed to self disruption.

The easy examples that always get the spotlight are businesses like Blockbuster, Sears, and Toys R Us. But, there are countless others including Radio Shack, Vitamin World, Gymboree, Swissair, Woolworth’s, Sharper Image, Polaroid, and the list goes on!

So, what can a business leader do to productively disrupt their business?

How to Be Urgent with the Tactic and Patient with the Strategy

I attended a “Jamie Clarke” keynote earlier this year and was struck by a number of things he said and how they apply to business.

Clarke is a fellow Calgarian who has summited Mt. Everest twice, climbed the Seven Summits, written a few books, and is the CEO of Live Out There Ltd. He was a very engaging speaker with a ton of life experience and wisdom.

Of the topics he covered in his keynote, there was one statement he made that every business leader needs to practice:

“Be urgent with the tactic and patient with the strategy”

It is really easy to get stuck on one side of this equation and forget about the other. Some people gravitate towards tactics and are always busy but never really “move the ball forward.” Other people are so focused on creating a legendary strategy that they don’t get anything practical done!

About 10 years ago, my son and I decided to build a remote-controlled submarine. We talked through some ideas, drew up a few conceptual plans but never really had a solid strategy in place before we went a bought a bunch of parts from Lowes. Once we had the parts, we went into full-on build mode.

We had a ton of fun while we created an amazing submarine prototype that ended up having so much buoyancy it probably could have floated a full-sized car! We were too focused on tactics and should have stepped back and built a solid design strategy!

In the end, after a lot of discussion and some quick Google searches, we discovered it was way cheaper to just buy a remote-controlled submarine online. However, we still have yards of white PVC pipe glued together somewhere in the shed as a reminder of our glaring failure!

We often hear that execution eats strategy for breakfast or that action without strategy pointless . . . So what is the answer?

Blue Ocean Shift

Beyond Competing - Proven Steps to Inspire Confidence and Seize New Growth

The book review for this week is Blue Ocean Shift Beyond Competing by W. Chan Kim and Renee Mauborgne.

Blue Ocean Shift is the second book in the “Blue Ocean journey” for Kim and Mauborgne. Here they expand on the concepts defined and outlined in Blue Ocean Strategy published in 2005. It is easy to see that the authors have been busy with research, consulting and projects since then! This book has updated tools, concepts and compelling case studies. Entire countries have got on board and kicked off Blue Ocean initiatives (Malaysia’s National Blue Ocean Shift Summit)!

My takeaway from this book is the Blue Ocean shift diagram (below) and the understanding behind it. Each business leader must continuously strategize on how to move into or stay in a Blue Ocean market. This is a daunting task and takes significant effort, creative thought, innovation, wisdom, and action. However, the alternative, the Red Ocean of cut throat competition, MUST be avoided to avoid the slip into becoming a Red Ocean commodity!

The Business Blockchain

Promise, Practice, and Application of the Next Internet Technology

This week’s book review is The Business Blockchain by William Mougayar.

Although this is not an easy read, Mougayar does an excellent job of explaining the blockchain and how it is positioned to fundamentally change the way we do business. These fundamental business changes will radically impact society. The blockchain is positioned to transform any transaction or interaction requiring any level of trust. This includes; financial transactions, contract verifications, private records storage and sharing, contractual work completed, identity verification, title ownership, etc..

My takeaway from this book is that the impact Blockchain will have on our world is unknown at this point. Trying to understand the impact it will have is like someone in 1990 trying to predict the impact that the Internet would make and how things would look in 2010.

My best guess is that the Blockchain technology will evolve (like the Internet and world wide web did) and it will look quite different in 10 years from what it looks now. However, business leaders must stay abreast of the technology changes and ensure that we are leveraging them so we are riding the technology wave and not crushed by it!