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The Models of Profitability
on 1 October 2002
The relationship between top managers and strategic business planning has changed profoundly over the past few years. All of this after a decade in which top managers were content with dramatic downsizing to produce mammoth gains. Without missing a beat, the book publishers have outdone themselves by pushing out an ever-increasing torrent of strategic titles. Most of these tiresome titles serve little purpose other than to keep you scratching your head and wondering what company this author has been working for. It is noted by the majority of us the obvious, what most top managers need is expert knowledge that is previously unbeknownst to them.
The Art of Profitability, by Adrian Slywotsky is just that, expert knowledge being passed on from mentor to protégé. Writing with wit and provocative insight, Mr. Slywotsky tells the story of forward-thinking strategy teacher David Zhao and his student Steve Gardner. The author cautions readers to "please read only one chapter per week... Think about it. Let it stew." The premise of the book is once you fully understand the customer you will be heading down the pathway to profitability.
Slywotsky begins the book with Steve nervously waiting for his first meeting with his future mentor David Zhao. After a handshake and a few laughs, Steve convinces David to mentor him about profitability. The two spent the next few months discussing The Art of Profitability. The book's strength lies in each of the twenty-three business models strategically presented throughout the text. If I asked you what Mattel, American Express and Nokia Cell Phones had in common would you say they all represent one of the most powerful business models called pyramid profit? Probably not! However, if I asked you the same question after reading this book, you would have the knowledge necessary to answer this question and add a few more to the list. How about Nike, Coke, and Marlboro? They all employ another model called brand profit. With scores of examples presented by the mentor himself, the reader is sure to find each chapter both challenging and dynamic. After reading this book you will have a better understanding of how your company as well as your competitor's create profit. Mr. Slywotsky states, "more than models and equations, profitability is a way of thinking. Physics tell us about physical energy. Profitability tells us about financial energy. No profit means no energy, no ability to play in the future, no ability to build the future."
One of the great assets to this book is the style in which the information is delivered. Each business model reads more like a business parable as opposed to technical jargon that is sometimes hard to understand. According to Slywotsky, " the primary reason behind my style of writing in this book is due to client request." The author continues by saying his clients have determined their employees identify with the information better in story form as opposed to manual type training. Next, Mr. Slywotsky went on to say, "as the external environment changes, managers are going to have to keep up with these changes. With this type of writing, managers can create their own questions and think their own thoughts therefore, creating a unique answer to any given situation."
I agree with the author's suggestion to only read one chapter per week. Each chapter in the text is easy reading however, if you try and read too many chapters during one session, things can and will get confused. Due to certain time constraints, I was unable to only read one chapter per week during my first reading of the book. Consequently, I found myself going back through chapters and taking notes at various intervals just to keep from getting confused. This is not one of those books that you can read tonight and apply tomorrow. It takes understanding and patience as well as discipline from the reader. For that reason, if you are reading this book looking for a quick fix to a long-term problem, I would not suggest purchasing this book.
On the other hand, if you are reading this book to fully understand profits and management techniques you are definitely on the right track. The key to this book is to read the weekly chapter, understand the model, do the exercises, apply the situations in the book to situations at your own business and reap the multitude of benefits.
Any practitioner or academia that aspire to a deeper understanding of management should read this book. Many of the models presented in this book are sure to assist your business in the growth toward profitability. Explore your thoughts, enter the classroom and study which of these models will best assist in your company's profit- making strategies.