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The Profit Zone: How Strategic Business Design Will Lead You to Tomorrow's Profits Paperback – February 26, 2002
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The Profit Zone looks at how profit happens in today's customer-driven economy. The authors demonstrate why market share often leads to a "no-profit zone" and identify 22 profit models that have helped dozens of companies consistently make money. Included are in-depth looks at companies--Disney, GE, Microsoft, Intel, Charles Schwab--that have successfully redesigned their businesses and dramatically increased the value of their companies. Instead of focusing on market share, these innovators first looked at their customers' needs and how they could profit from fulfilling them. The book considers example after example of how the profit zone works, from Disney's theme parks to Schwab's marketing and selling of mutual funds. The final chapter is a handbook that allows managers to apply the ideas to their own companies. Clearly written and immensely practical, The Profit Zone deserves a place on every manager's bookshelf. --This text refers to the Hardcover edition.
From Library Journal
Copyright 1998 Reed Business Information, Inc. --This text refers to the Hardcover edition.
Top Customer Reviews
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.
Traditionally, companies have focused on selling more to anyone willing to buy products and services. The driving belief was growth was a function of capturing larger amounts of market share. This belief is not factually true. Many companies gained significant market share only to discover, they were not growing in profits.
The authors main argument is that market share does not equate always to profits because the customers needs and priorities are changing. This observed fact means companies not responding to the customer needs and priorities will loss market share even if they currently have massive market share. Failure to hear the customer needs and priorities will lead to the lost of profits: IBM (IBM had the market share in mainframes)yet faced decreasing trends in profits. IBM moved towards customer solutions. IBM mainframe business struggled (Read Who said Elephants can't dance) - IBM moved to solutions. IBM profits increased as they responded to the customer not the fact that they acheived market share. Market share is an indicator the company is meeting the customer needs not the reason to meet the customer needs. The egg before the chicken philosophy where meeting the customer needs produces the gold egg of profits.Read more ›
One of the most useful sections of this book is the one covering different profit models. The book covers 22 different profit models. For example, Product Pyramid Profit, which is basically having products tailored to customers desires that cover customer income and preferences. An example of this would be GM, which sells cars, but varies features and prices (Chevy to Cadillac) to cover a range of customer incomes.
One of the revelations of this book is that many of these profit models may have a five to seven year life (or shorter). Having a range of profit models allows the reader to see how to apply several profit models or understand transitions from profit model to another.
The Profit Zone is basically broken in three sections:
The first lays out the importance of the customer and the component that make up a business model. See Value Net review for more details, but basically value proposition, scope, profit capture and strategic control.
The second section is extremely useful in that is shows business that have due to changes in their industry or customers have had to recreate their profit model. Companies such as GE, Microsoft, Charles Schwab as well as others are used as case studies in business design reinvention.
The third section is a toolkit for apply "profit zone" thinking to your business.Read more ›
Most Recent Customer Reviews
Profit Zone was thought provoking but all of the example are from the 90's or earlier causing me to question the validity of some of those models today. Read morePublished 11 months ago by Samantha Murphey
I love this book because it’s based on a variety of stories from famous business leaders sharing their business models and advice. Read morePublished 12 months ago by Anne C. Graham
Excellent overview of different business models. Adrian has a great way of categorizing why different models work in different situations.Published 20 months ago by Anders
Had to read it in college...decent book but nothing special. Would recommend other business books before this one.Published 23 months ago by Zach
Michael Porter explained what to do regarding strategy. Adrian truly explained how to do it. His models work great when you integrate that with Lean Product Development and Lean... Read morePublished on December 9, 2013 by Sam
A superb book. Definitely an eye opener. A good book for someone trying to understand strategy. Gives you a new way to think about your business or even if you want to start one.Published on May 19, 2013 by Analyst
This is a quick read and according to me a rather good book in the quick-read-business-genre. It is divided into three parts where the first part discusses business models and how... Read morePublished on December 11, 2009 by Anders Sundelin