The Profit Zone: A book review by Bob Morris

The Profit Zone: How Strategic Business Design Will Lead You to Tomorrow’s Profits
Adrian J. Slywotzky and David J. Morrison with Bob Andelman
Crown Business (2003)

Note: I recently re-read this book before beginning to formulate questions for an interview of Skywotsky. With all due respect to current business bestsellers, none offers more and better insights of immediate and substantial value.

The Place to Be

In Part One, the authors argue that “market share is dead” as an overall strategy goal. Instead, to achieve sustained growth in profits and shareholder value, companies need a “customer-centric business design” which anticipates and addresses constantly shifting customer priorities. There is no single design which fits all circumstances. but the most effective designs will start with customer priorities.

In Part Two, the co-authors shift their attention to several “reinventors” who have achieved extraordinary success. Most are familiar: Welch, Hayek, Goizueta, Schwab, Grove, Eisner, Hatsopoulos, Barnevik, and Gates. However, and this is an excellent example of the book’s unique and substantial value, Slywotzy & Morrison note that “the principles and techniques of reinveniting a company’s business design to get it into the industry’s profit zone…apply with equal force to small companies, to divisions of larger companies, and to the middle managers who run them. In fact, the reinventors we will be reading about in the future are already honing their skills at innovative business designs today.” The authors then examine several smaller firms such as Madden Communications, Cardboard Box, Inc., and Clozaril Patient Management System.

In Part Three, the authors provide a “handbook” which explains in detail how innovation works.This book is relevant to all organizations (both for-profit and non-profit) which seek to increase their economic value. Non-profits must also make critically important decisions (such as those involving allocation of resources) if they are to achieve their objectives. The appendices provide additional guidance so that the reader can implement whichever of the book’s ideas and suggestions are most relevant.

If optimizing your organization’s profits is your destination, here’s a map to get there.

Slywotsky’s new book, Demand: Creating What People Love Before They Know They Want It, will be published by Crown Business (October 2011).