Customer Reviews

Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth

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In two previously published books, Profit from the Core (2001) and then Beyond the Core (2004), Chris Zook shares what several years of extensive and intensive research revealed about "how companies fail to recognize the potential of their core business and, as a result, prematurely abandon it in pursuit of hot markets or sexy new ideas, only to realize their error - often, when it is too late." He suggests a systematic way for organizations to assess their full potential and to make certain, also, that they do not fall into "this common, and typically human, trap."

In this volume, Zook draws upon an even wider and deeper wealth of research sources that include about fifty interviews, mostly of CEOs. The title is explained by the fact that he and his associates chose to study most closely those companies "that beat the odds. We also analyzed patterns of failure and estimated the odds of success offered by various paths in various situations." He goes on to observe that all of the success stories built their renewal on their "hidden assets" that had been previously been undervalued, unrecognized, and/or underutilized. "These assets were not central to the strategy of the past, but they held the key to the future. Furthermore, the older and more complex the company, the greater was the likelihood of finding promising hidden assets." In other words, many companies already "hold most of the cards for "a winning hand" but do not realize it.

I highly recommend all three of Zook's books because, together, they answer three separate but related, and critically important questions:

1. How to define and grow an organization's core assets? (Profit from the Core)
2. How to expand its boundaries into new territory? (Beyond the Core)
3. How to redefine and renew its core? (Unstoppable)

No company is forever "unstoppable" but most (if not all) companies can take full advantage of the information and counsel Zook provides in this book to find correct answers to all three of these questions achieve core renewal without "leaps to distant and hot new markets, ...being the first adopter of a pioneering new strategy,...[or making] as `big bang' acquisition." In fact, unless a given organization has "beaten the odds" by sustaining profitable growth, it should first define or redefine its core assets and then grow or renew them, before committing any resources to organizational and/or territorial expansion.

Zook is to be commended on the care with which he defines various terms. For example, undervalued business platforms "that might have once been secondary in importance but now have the potential to be the foundation for a new major core business"(e.g. IBM's Global Services Group). Also unexploited customer assets that tend to exist in three primary forms: "knowledge gathered as part of serving the customer but that, over time, accumulates an inherently greater value of its own...a unique position of trust of relationship with a set of customers [that gives] much more access and influence than has been recognized (e.g. American Express and Harman International). And finally, underutilized capabilities ("the most difficult hidden asset to discern but no less powerful") that result in losses of position to competitors in terms of cost, speed, logistics, design, and quality of customer service (e.g. the United States Postal Service's inability to invest as much as FedEx and UPS in system upgrades). "At the root of such competitive reversals we often find a yawning capability gap that was undetected, dismissed, or ignored."

I especially appreciate Zook's skillful use of various reader-friendly devices such as check-lists that focus on key points covered within a chapter: "Seven Steps to Redefining Your Core" (pages 24-25), a "State of the Core Diagnostic" (Figure 2-3 on Page 44), "Detecting Undervalued Business Platforms" (Pages 82 and 83), "Identifying Hidden Customer Assets" (Page 115), "Defining Your Core Capabilities" (Page 140), and "Ten Principles of Core Growth and Redefinition" (Page158). These and other check-lists facilitate, indeed expedite frequent review of key points later.

Although hidden assets are the "real key" to redefinition and capabilities are "the building blocks of renewal," and I agree with Zook that they are, it is important to keep in mind that transformation and renewal initiatives should never end. Zook asserts that "the real focus of business should be external - on competitors, shifts in technology, and customer dynamics." However, ironically, for many companies now searching for profitable growth, some "of their most challenging demons are internal" and their "most difficult foes" are often themselves. Unless they identify and then leverage the hidden assets they already have or to which they have easy access, they will either be out-of-business or acquired by another company within the next ten years.

Nothing stays the same in the business world, and even successful businesses will face their own demise if they are not thinking ahead to their next "core" business. Chris Zook examines this redefinition of business in the book Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth. This is an important book for all businesses, especially those who think they're on top of the curve right now...

Contents:
Unsustainable to Unstoppable; When to Redefine the Core; Undervalued Business Platforms; Untapped Customer Insights; Underutilized Capabilities; Managing Through the Growth Cycle; Appendix; Notes; Bibliography; Index; About the Author

When a company is trying to redefine their core, often they'll do one of three things. They'll either commit ever more deeply to what they currently do, they'll move into an area where they have no experience, or they'll merge with some other group to form a new mega-power. But Zook shows through research that each of those moves has a very small chance of success over the long term. The odds are much better when companies examine what they already have, and then map out how to leverage those hidden assets. They often fall into the categories of undervalued business platforms, unexploited customer assets, or underutilized capabilities. By moving in these areas where you already have traction, the company can be redefined to meet the next growth period. Zook has plenty of case study examples to back up his premise. PerkinElmer went from precision optics to genetic research using a small niche subsidiary they had. American Express took their massive data assets and redefined how they catered to customers. These and many other stories help to flesh out an important message... Change is inevitable, and it's best to be out in front of it, rather than playing catch-up in survival mode.

I can't think of too many businesses that wouldn't benefit from a structured examination of what they do and where things are going. Even if you don't feel you need to change right now, it's important to be thinking along those lines. That time *will* come, regardless of whether you want it to or not...

Normally the third book in a series either rehashes the prior two books, or requires that you read all three to understand the authors points. Unstoppable is unique in this regard as the book stands on its own and does not require you to read the other books.

Zook talks in depth about how enterprises can find source of growth from the core of their company either by finding hidden assets, customers or capabilities. The strength of this book is its detailed discussion of each of these sources of growth from the core and extending the core. Zook also provides detailed tools to help the reader apply these ideas to their company. This is particularly unique in a book that addresses issues of growth and growth strategy.

In some ways, Zook's book should be used as a companion to the book "BLUE OCEAN STRATEGY" which talks about identifying opportunities where there are no competitors. Used in combination, Blue Ocean will open up new possibilities, while Unstoppable will provide a way to execute on these opportunities and build off of your core to achieve them.

The book is clearly written with detailed case studies and verbatims form actual companies going through their growth processes. This is unique for any business book and Zook's use of extensive interview comments makes the book seem real and actionable rather than academic.

While Zook's book is well researched, there is a subtle and important bias in the research. Zook's results and statistics are largely based on analyzing projects that he and his company have conducted, rather than looking at the general marketplace. This is strength in that the book can talk about implementation details because they did the work. However, it is a subtle weakness in that the cases suffer from selection bias that has a tendency to color the results and conclusions. Zook's attention to detail, pragmatism, and exposing tools do compensate for this research weakness and for most it will not matter, but recognize that it is there.

Overall, I would recommend this book for any executive who is looking to change their enterprise or recognize the need to do more in order to grow. This is one of the top 10 business books I have read so far this year so highly recommended.

I have not read the author's other two books. The instant one is his latest, and from what I gather it is kind of part three of a 3-part series. But I really liked this book. I'm a volunteer SCORE counselor and earlier this week I got an email from a client who had just closed the doors to his franchise. He still owed on a multi-year lease and he wanted to know how he could minimize his losses. I mention this here because as I read this book my recommendation to the client came to mind. I recommended that even though the business was failed, it could still be sold. And I recommended that an attempt should be made to turn the business around before it was sold.

This book is about not letting a failing business go under. It is about taking the existing assets (and liabilities) of a business and using them to move in a new direction so the business will not fail. By shifting the direction the company moves in so it can get back in a growth mode (or at least a sustainable mode) the leader/manager of the business will not let the business fail.

The book is comprised of five chapters as follows:

1. Unsustainable to unstoppable.
2. When to redefine the core.
3. Undervalued business platforms.
4. Untapped customer insights.
5. Underutilized capabilities.
6. Managing through the growth cycle.

The author talks about tapping on hidden assets. Those are the assets a business has that it underutilitzes. My understanding of "hidden assets" is that they are assets that do not fit the business model of the failing business, but they exist and are owned by the business. And when the business model (or business goals) are changed, then those hidden assets show themselves and they become very valuable assets to the business. It's because of the existence of those hidden assets that an unsustainable business can be morphed and made into an unstoppable business in its quest to sustain itself and grow.

If you are interested in turnarounds, performance renewal, organization, management, and leadership, then this book will have something for you. It's all about not relying on past formulas for success when the chips are down. It about having an open mind and making the most with what you have. You'll be able to do that if you are able to redefine your business' strategy to make money. Just figure out what you've got and work with it in order to maximize profit that can be sustained. Don't ever go down with the ship - patch the hole and revamp the boat so it can sail again. Sometimes this requires just adapting. While at other times it demands reinvention. 5 stars!

I read Chris Zook's other two books when they were published and I must say I thoroughly enjoyed them. But if I reread those books today, I am not sure whether I will find them relevant to current business conditions anymore. Most probably I will not. I bought The Unstoppable in 2007 when it was first published but only recently had a chance to read it. I must say I was utterly disappointed. There are a number of reasons for this.

1. First of all, as the author himself admits at the outset, this book draws mainly on the works of some other powerful business writers. Zook says that Unstoppable is at the intersection of these three bodies of work but in effect it draws mainly on two separate literature. First is the book by Slywotzky, How To Grow When The Markets Don't where Slywotzky puts forward the concept of internal "intangible assets". The second body of work is Hamel&Prahalad's' 'core competence' literature, but mainly the book Competing For the Future. Zook takes the main concepts of these two bodies of work and merges them under a supposedly new term "HIDDEN ASSETS". Voila! Business management literature has a totally new terminology. The concept of hidden assets is no more than a cocktail of core competence and intangible assets concepts. However, neither concept is clearly handled in Unstoppable. If the reader refers to a wonderful book by Peter Skarzynski and Rowan Gibson (Innovation to the Core: A Blueprint for Transforming the Way Your Company Innovates) he/she will find a much more useful definition and handling of the concept of 'core competence', for example. Moreover, if you want a really good insight into the concept of intangible assets, I suggest you stick with Adrain Slywotzky's original work which is miles away in depth and in prose than the present one.

2. The author argues that "it looks like maintaining the core as the basis of your profitable growth will not last long in a rapidly changing business world and that every company must question their core business and must find ways to redefine their core, i.e. reinvent their business". He rightly argues that this can only be done by business model innovation. He then moves on to suggest three methods for finding insights into new business model generation. These are (a) Undervalued Business Platforms, (b) Untapped Customer Insights and (c) Underutilized Capacities. I must say first of all that the handling of these three subjects is poor. Examples are usually wishy-washy, sometimes irrelevant. There is, for example, a Hyperion case in the Untapped Customer Insights section which, I must say, is a showcase of how Zook provides case examples. I personally do not know what Hyperion does and I don't think that I have to. He presumes that the readers are all Americans and they all know who Hyperion is. Who are they? What is their current business model? What went wrong in layman's language? How did they correct it? I could not get even a hint. Two and half pages of techno mumbo jumbo so as to make the author look like an expert on tehcnology and leave the reader an ignorant person role so that he/she admires the author more. Not me, I am sorry.

The book draws heavily on the case of De Beers diamond company. You know De Beers, the products of which you all use in your daily lives. There is a lot of info about De Beers diamond company but what we learn as their business model innovation is this: Formerly they were controlling the supply side of diamond business and hence acting as a monolopy. Then circumstances changed, monopoly went and De Beers was left with a need for business model change. What did they do? They focused on the demand side, pushed branding and decided to become closer to the final customer. Eureka. Is this business model innovation for god's sake? This is sheer necessity. And are you, referring to De Beers chapter after chapter, telling us that 'branding' is business model innovation? If so, please don't because it isnt.

3. The book, by drawing on a 'mystic' concept like 'HIDDEN' assets makes the already tough job of business model innovation tougher. Why hidden? And why is it correct that there is always a possibility of having hidden assets hiding somewhere? Business model generation is first and foremost about coming up with a radical Customer Value Proposition (CVP). For this, you first need to look outside your company. You must look at the changing needs of not only your core customers, but also the forceful trends and discontinuities in the overall category. Only then can you come up with radical CVP's. This book, however, follows an inside-outside approach and looks mainly at the inner capabilites of the company. Even the Untapped Customer Insights section cannot escape this inside focus. For example in the same Hyperion example, the customer insight comes from the company's Finance department's customer information. Not from market research, etnography etc.

Another major defect in this book is it is too much CONGLOMERATE-FOCUSED. Most of the examples show that. For example Underutilized Capabilities and Undevalued Business Platforms concepts target mainly large conglomerates. You have, for example, 25 or so not-necessarily related businesses, at some point in time you come to a standstill, hire new management, they initiate a turnaround program, chop off some business units, but discover a potential in one of those companies while chopping up and concentrate on this undervalued gem and turning it into big business. Remember Lou Gerstner and IBM's turnaround by focusing on their small Services Company? This is sheer nonsense. The author is Bain's strategy department's head but obviously and most probably because of working mainly with large conglomerates (typical clients) they lost vision of the real world. The world is full of smaller companies and hence advice related to conglomerates does not come very helpful. There are not many IBM's around.

4. This is not a good book on business model innovation. Actually it is not a good business book at all. It relies on a rather flimsy concept (hidden assets) which is formed by merging Slywotzky's 'intangible assets' and Hamel&Prahalad's 'core competence' concepts. The original concepts are much more powerful. The cases he gives are not enlightening. The way he explains the case examples is not good, and unsatisfactory. Each case example, for instance, cites a lot about market values, revenues, revenue growth etc. which is all publicly available information, but very little detail on how the company did what they did successfully. The methodolgy he proposes is unworkable.

5. I regret having read this book. It added NOTHING to my knowledge on business strategy and business model formulation. It only wasted my time. Comparing to what is available in today's writing on business model innovation, this book looks very very rudimentary. The following books are much much better and a lot more powerful then Unstoppable: Game-Changing Strategies by C. Markides; Business Model Generation (by Alexander Osterweld) and Seizing The White Space by Mark Johnson. Also, Adrian Slywotzky's book The Upside has a lot more insight on business model redefinition than this one, even though the objective of the book is 'managing strategic risks' and not business models. For customer insights, you can also look at the wonderful book by Ram Charan and A.G. Lafley, The Game-Changer.

Chris Zook has written two previous books about paying attention to the core of your business and how to mine it for every dollar it will yield. This book talks about what to do when your core is beginning to falter. Rather than letting the rapid changing marketplace stop your company he suggests redefining your core. However, rather than leaping onto some popular bandwagon that has nothing to do with your present core, he advocates finding hidden assets within your company. He offers a process for understanding where you are in your strategic cycle, the Focus-Expand-Redefine (FER) growth cycle. Using this structure, he shows you how to know when it is time to redefine your core and the dangers of getting it wrong.

Zook shows you what to look for in the way of platforms that you could promote from secondary status to become primary areas for your business. These might be technologies you acquired along with the purchase of a company, but it wasn't why you bought the company. It could be adjacent geographic areas, or markets that you could expand into without having to completely recast your company. Or it might be orphan products that you can use to exploit changing market conditions and the new opportunities they often create.

I also agree with and enjoyed the author's emphasis on paying attention to the things your customers can teach you. If long term customers are leaving you they are being served by new competitors, new technologies, or are going out of business. You need to find out exactly what is happening. This also includes learning to segment your customer base as finely as possible. If you can learn to serve micro-segments of your customer base rather than having to treat them as if they were all the same kind of person, you will be able to develop those markets more fully. Your customers will also offer suggestions for improvements to your existing products and services, so pay attention. If you don't meet their needs, your competitors will. When they suggest new products to you, listen even more closely.

The other place to find hidden assets are in your capacities. That is the ability your company has to execute and repeat value creating tasks at a high level of quality. You should inventory the dozens to hundreds of capacities your company has and then figure out which are the most critical. Those are your core capabilities. Are there other things you could use them for? Are there capacities that are important in supporting the core that could be recast to become core capabilities in their own right?

I think this book offers some important food for thought. When you can work the FER cycle of growth you can become unstoppable, not because the old core doesn't burn out, but because you kindle and ignite a new fire to run your company's engine before it does.

reviewed by Craig Matteson, Ann Arbor, MI

In an age of ever-shortening corporate life-cycles, Chris Zook examines the way in which some companies have successfully adapted to a harsher and more investor and public conscious corporate environment by expanding, redefining and reinventing their core businesses. As the future of large successful corporate conglomerates becomes increasingly uncertain in the wake of market forces, such as private equity buyouts, hostile or activist shareholder activity and other evolving market forces, which threaten to undermine long-standing successful market strategies, some companies somehow emerge from the shark-infested waters with little resemblance of their former selves and do so with greater vitality, profitability and vigor than ever before. Never before has one author caused a reader to re-examine the strategies that have shaped the global corporate atmosphere for so many years. Companies can no longer simply search for traditional market synergies among affordable competitors, or simply aim to lower production costs or hope to engineer a new product or discover a new market. Instead, these companies will be forced to seek out lesser known `hidden assets' in order to shift their core profit structure. They will also be forced to focus and refine that core and defend it vehemently against emerging low-cost competitors who seek to steal or infringe upon their core. Companies today will be forced to take actions such as these in their aim to become unstoppable, or they will inevitably suffer the consequences which more and more companies find themselves succumbing to.

I have read and enjoyed all three of Chris Zook's strategy books, Profit from the Core, Beyond the Core, and his latest, Unstoppable. They are filled with compelling analysis, which Zook uses to offer practical insights on how companies can grow profitably and create value for shareholders.

Zook's description of the focus, expand, redefine cycle of growth is insightful. As the business world becomes less certain, more and more companies will need to move through this cycle. The stories that Zook describes of companies that have successfully navigated around this growth cycle offer guidance to other companies wishing to survive and grow.

All of Zook's books are focused on implementation. In Unstoppable, he clearly outlines the questions that need to be answered in order to understand how your business is doing and where to look for hidden assets that can help redefine a company. Any corporate executive should think through Zooks's ten principles of core growth and redefinition and take to heart his message about the need to focus. It is not often that you find action-oriented advice written in such an easy-to-read style.

I highly recommend reading Unstoppable.

All businesses ultimately approach a natural limit to their growth that demands change in strategy or even the core. How to make that change is what "Unstoppable" is all about. Virtually all the success stories built their renewal on "hidden asses" previously unrecognized or underutilized.

Conversely, big bang transforming moves like AOL's merger with Time-Warner are rarely made, and the odds of success low. Another example is McKesson's move from drug distributor to medical information technology with the purchase of HBO. None of the 15 most heralded big-bang transformations of the past ten years increased market value over the period by greater than the stock market average increase; 11 decline, 7 by more than 50%.

Zook presents a model to determine where a company is and what its emphasis should be vs. the sustainable growth cycle: 1)Focus - strengthen core differentiation, drive for superior cost economics. 2)Expand into related adjacencies. 3)Redefine - build dependable new forms of competitive differentiation, target profits of the future.

Example: The New York Times by 1993 had plateaued at $126 million in profits. It then became a national paper by developing new distribution channels outside New York, bringing profits to $539 million, and used increased profits to buy strong regional papers like the Boston Globe. Next, the Internet and CNN etc. brought the need to redefine itself. Unfortunately, neither the Times nor Zook had offered successful answers. The Times did try charging for access to some content (aka "The Wall Street Journal," which charges for any on-line access), but gave up - Zook should have laid out the rationale for why the "Times" was correct or incorrect in that latter decision. Perhaps the "Times" should simply sell out, such as General Dynamics largely did upon recognizing that falling defense spending would create low future profits. (Are newspapers today's buggy-whips?)

CBS' reaction to CNN, G.M. to Toyota, KMart's to Wal-Mart, Xerox's initial to Canon, etc. suggest that the emergence of a superior competitive model is difficult to objectively react to. (Lower costs seem to always be a major part of the problem.) Zook, however, offers no insight - see Clayton Christensen instead.

Another general criticism - "Unstoppable" is often overly vague. Example - "Frito-Lay has driven competitors away while continuously improving on cost, market share, and ROI," without any information as to how this was done.

Zook moves on telling us that the typical industry has more than six competitors. The top two usually capture more than 75% of the profit pool, and market leaders have nearly 2X the market-to-book ratio of followers, and their success rate pursuing adjacencies within two steps of their core is also much higher (40% vs. 17%). Strong leaders also have ore loyal customers (eg. Southwest Airlines 55% vs. Delta's 11%). Only about 10% of followers (#3 or lower ranking) moved up within a decade, while 30% moved lower. Gainers did so either with a new product (eg. Sony's Play Station in video games) or a low-cost model (Southwest Airlines or Amazon).

Samsung was #1 in memory chips, but also spread among numerous other businesses. Overall, its financial results were poor, and headed down. It sold or shut-down 76 product-line, while its head-count fell about half. Samsung focused on improving its memory business (eg. JIT, shorter design cycles). IBM triggered its business renewal by boosting capabilities essential to the core hardware business - its "Integrated Systems Services Corporation" that became larger than hardware by 2001. G.E.'s neglected finance arm became a focus, made 170 acquisitions, and provided 35% of profits and two-thirds of shareholder value. American Airlines' expansion of its SABRE reservation system, American Express' broadening its card beyond travel, Apple's iTunes boosting demand for iPod - are other examples. This entire section of Zook's book is invaluable.

Variations in customer loyalty are likely to indicate differing market segments.

This is the concluding volume in Chris Zook's trilogy on the business core. The previous two books focused on supporting, exploiting and expanding your current core, whereas this book shows what you can do when your current core falters. Zook points out the high risks of defending your core until your company dies, or of jumping to the next new thing and getting it wrong. Then he shows you how to find and exploit your hidden assets. He uses many examples to illustrate his points in a compelling way. The approach is action-oriented and he provides many good questions to ask, lists to use in working things through, and some useful charts and graphs (but not too many). We recommend this book if you are thinking of taking on such a project: It will whet your appetite and motivate your team for what you are going to do. However, before you undertake something this complex and risky, you may want to enlist somebody like Zook who has the expertise to help you.