Nerd Guru

Because technical people need good soft skills to get ahead.

Monday, July 23, 2007

Book Report: Every Business is a Growth Business

On its face, Every Business is a Growth Business: How Your Company Can Prosper Year After Year, by Ram Charan and Noel M. Tichy looks like a market analysis book. In a broader sense, though, it is about taking something and trying to look at it a different way. In doing so, you find more creative uses for what you already have or realize there is something else you might go about building instead that's a lot better. Such things aren't exclusively directed at the marketers of the world, but can help everybody.

The best example of this is the book's opening anecdote. Prior to rereading it for this review, I hadn't picked up this book in 5 years but this story stuck with me, lending some credibility to the idea that being memorable through anecdotes is a key presentation skill. The incident described involves long time Coca-Cola CEO Roberto Goizueta and how he thought differently about the business his company was really in.

In the early 1980's, soft drinks were considered a "mature market" where the players and consumer trends were well known. Rival Pepsi gained market share at Coke's expense through a series of image advertising campaigns (think, Michael Jackson's hair on fire) and Coke found itself defending every percentage point of traditionally measured market share for soft drink consumption. Charan and Tichy's take the story the rest of the way:

"Goizueta had an insight - a simple but stunningly powerful one that he shared with his senior executives in the 1980s. What, he asked almost casually, was the average per-capita daily consumption of fluids by the worlds 4.4 billion people? The answer was: 64 ounces. And what, he asked, is the daily per-capita consumption of Coca-Cola? Answer: Less than 2 ounces.

Finally, he asked: What's our market share of the stomach? Not Coca-Cola's share of the U.S. cola market or the world soft-drink market, but of all the fluids everyone in the world drinks on a given day. Coca-Cola's share was scarcely measurable.

Coca-Cola's people had invested a lot in the idea of PepsiCo as their enemy. But Goizueta led them to see that the enemy was coffee, milk, tea. The enemy was water."
The transformation this had for Coca-Cola was pretty dramatic. They began pushing their products in places they hadn't thought of before simply because they now chose to look at themselves in a different way. While you can argue that the proliferation of Coke machines in places like bus stations and elementary schools has been a huge factor in the U.S. obesity epidemic, it was a big financial windfall for the Coca-Cola company.

Most of the book focuses on 3 kinds of growth opportunities that businesses tend to miss:

  • Expanding your pond - Coke's example. Think of a broader context for what you already have to offer to find more customers.

  • Re-segmenting your markets - The best book example here deals with Nike's basketball shoe business in the early 1990's. Instead of just "basketball shoes" and their star endorser Michael Jordan, Nike re-segmented the idea of their basketball market to really be made up of several sub-markets that identified with particular playing styles. "Force, for the aggressive style exemplified by Charles Barkley; and Flight, for the quick, high-flying style of Scottie Pippen." It's akin to filling a jar with rocks and thinking it's full when really, you can still get a lot of sand in it too. Finding a set of smaller niches in what you previously thought was exclusively a broad topic.

  • Moving into adjacent segments - Moving up or down the price/quality curve from where you are now can open opportunities while taking advantage of current skills and resources. Charan and Tichy cite car makers Toyta, Nissan, and Honda as examples of this when they introduced Lexus, Infiniti, and Acura (respectively) in an attempt to compete in a higher market with BMW and Mercedes.
All these ideas fall into the more general approach of trying to look at an existing product line with a fresh and different perspective to find opportunities. This isn't just true of entire products, though. Engineers design subsystems that get plugged into products all the time and using this approach to analyze them may lead you to new levels of reuse or change opportunities you might not have otherwise considered.

The rest of the book goes into a long list of examples, tips on how you can structure your organization for growth, and presents a set of exercises and templates aimed at helping groups find new ideas. The big takeaway, though, is this concept of finding different ways to examine your pre-existing ideas to discover new uses for them. Reuse and get a bigger bang out of that buck you've already spent money on.


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posted by Pete Johnson @ 11:58 PM   3 comments


At 7:13 AM, Blogger Sacha Chua said...

Hey, that's an awesome book report! Thanks for posting the key insights. I'm glad to find another geek who also likes reading about business and soft skills!

Speaking of presentations and anecdotes, have you read The Story Factor: Inspiration, Influence, and Persuasion Through the Art of Storytelling? It's a good book on how to write and tell anecdotes to support your points.

I've just started sharing quotes and ideas on my Booksnake blog, and I hope to get up to your level! =)

At 7:47 AM, Blogger Pete Johnson said...

Thanks for the kind words Sacha and for the top. I'll definitely add The Story Factor to my book list as I think that's an important skill.

At 7:39 PM, Blogger Tac said...

I always knew water was the enemy :)

How to actively grow your business is something that large companies all the way down to start ups seem to forget.


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