Profit Patterns: 30 Ways to Anticipate and Profit from Strategic Forces Reshaping Your Business - Hardcover

Moser, Ted; Mundt, Kevin; Quella, James A.; Slywotzky, Adrian J.

Hardcover

ISBN 10: 0812931181 ISBN 13: 9780812931181

Publisher: Crown Business, 1999

Synopsis

Picasso changed the way we look at art. Profit Patterns will change the way we look at business.Picasso's work reflected the social and technological changes that swept through the early twentieth century. Equally pronounced changes are sweeping through today's business landscape, often at breathtaking speed.
        
Profit Patterns provides a powerful discipline to see order beneath the surface chaos. Pattern thinking helps entrepreneurs, managers, investors, and key talent anticipate the likely direction of changes even before they happen. It reveals the economic meaning of these changes and provides the tools to capitalize on them.
        
Based on groundbreaking research into over two hundred companies in forty industries, from major industrial firms to upstart competitors, Profit Patterns contains a set of ideas and action steps that can be taken by you and your team. Here's a sampling of what you'll find:

Practical  STRATEGIC  ideas:
        
Strategic Anticipation--the ability to "get it," to spot an emerging opportunity and chart a path there before the competition does.
        
Polarization--the winner-takes-all game, and why it's spreading to more and more industries.
        
Mindshare--the importance of seizing and holding on to the attention of key customers, investors, and talent.

Thirty Patterns:
        
A repertoire of moves and countermoves to help you understand and exploit the forces changing your industry. This knowledge base of patterns will allow you to harness the strategic learning of the past two decades, eliminating the need to create strategies from scratch.

In-Depth Examples:

How Cisco Systems, Honeywell, Capital One, SAP, Staples, Nokia, Dell Computer, Amazon.com, and Bang & Olufsen detected patterns in their industries and put them to work and, in many cases, developed an almost insurmountable lead over their competitors.

A Workbook:

An aid to launching your own process of responding to change.

In today's turbulent and discontinuous business world, it's no longer useful to analyze your industry in static, conventional ways. Profit Patterns provides the means to act before the ground shifts beneath you once again. It is the mental operating system for winning when the rules of the game change with such great frequency.

About this title

About the Author

Adrian J. Slywotzky, the author of Value Migration and co-author of The Profit Zone (chosen by Business Week as one of the "Ten Best Books of 1998"), is a vice president of Mercer Management Consulting. David J. Morrison (co-author of The Profit Zone), Ted Moser, and Kevin A. Mundt are also vice presidents of Mercer Management Consulting. James A. Quella is a vice chairman of the firm. Mercer is a leading strategy consulting firm that is recognized for helping enterprises achieve sustained shareholder business growth through the discipline of business design

From the Back Cover

"Know the Forces Changing Your Business...and How to Profit FROM Them "Microsoft uses the principles found in Value Migration, The Profit Zone, and now, Profit Patterns, to train our personnel in strategic business thinking. These concepts really generate radically different perspectives and increased creativity in planning for the future."
--Bob Herbold, Executive Vice President and COO, Microsoft

"Profit Patterns crisply argues for a radically new approach to strategy. Start-ups and established players alike can harness these ideas to drive competitively superior performance."
--Alex J. Mandl, Chairman and CEO, Teligent, Inc.

"Profit Patterns looks at the world of business with remarkable clarity. The authors help sort through the chaos of sensory overload and find patterns. They force you outside your comfort zone, but then take you into a structure of innovation. Profit Patterns can move you from complacency to curiosity, from discomfort to deliberation and purposeful action."
--Daniel P. Burnham, President and CEO, Raytheon Company

"Here in the Wild West of the Internet, we will read Profit Patterns and remind ourselves . . . 'It's the customer, stupid!'"
--Ted Leonsis, President and CEO, AOL Studios

"Once again, Adrian Slywotzky has struck gold. With Profit Patterns, he builds on his breakthrough thinking in Value Migration and The Profit Zone, which we have incorporated into our strategic planning process. Slywotzky has inspired us to take a fresh look at the way we do business, and has helped us sharpen our focus on delighting customers and creating value for Honeywell shareowners."
--Michael R. Bonsignore, Chairman and CEO, Honeywell, Inc.

"Profit Patterns offers a powerful framework for making sense out of a complex and changing business landscape. I hope our managers read it and our competitors don't."
--John W. Madigan, Chairman, President, and CEO, Tribune Company

"In consumer financial services, as in so many industries today, the sources of profit are shifting. Banks no longer compete exclusively with banks, as consumers view them as part of a portfolio of financing, cash management, and investing options. In this landscape, anticipating and capturing future sources of value are essential. The insights and examples in Profit Patterns will help management teams to see those opportunities and to make bold and decisive bets with both creativity and confidence."
--Donald L. Boudreau, Vice Chairman, The Chase Manhattan Bank

"Success in today's marketplace requires not just anticipating change, but identifying patterns and strategies that move us ahead of change. Adrian Slywotzky and his Mercer colleagues provide an insightful look into that and other dynamics of profitability for the new millennium." --John Alden, Vice Chairman, UPS

From the Inside Flap

ged the way we look at art. Profit Patterns will change the way we look at business.Picasso's work reflected the social and technological changes that swept through the early twentieth century. Equally pronounced changes are sweeping through today's business landscape, often at breathtaking speed.

Profit Patterns provides a powerful discipline to see order beneath the surface chaos. Pattern thinking helps entrepreneurs, managers, investors, and key talent anticipate the likely direction of changes even before they happen. It reveals the economic meaning of these changes and provides the tools to capitalize on them.

Based on groundbreaking research into over two hundred companies in forty industries, from major industrial firms to upstart competitors, Profit Patterns contains a set of ideas and action steps that can be taken by you and your team. Here's a sampling of w

Excerpt. © Reprinted by permission. All rights reserved.

In May of 1997, Gary Kasparov-arguably the greatest chess player alive-was defeated by Deep Blue, a computer program written by IBM scientists. In the aftermath, pundits rushed both to declare and to decry the ascendancy of machine over man.

We see a different lesson in Deep Blue's victory.

Chess is a game of patterns; patterns about how the game has unfolded, about where the game stands at the moment, and, most importantly, about where the game is heading. In chess, the player with the best skill at pattern recognition has a critical advantage.

Gary Kasparov was not beaten by a machine. He was beaten by a team of IBM employees who took patterns so seriously that they invested several years and millions of dollars to build a machine that could recognize and manupulate all of the patterns that they had learned.

The IBM team had three advantages which ensured that it was only a matter of time before Deep Blue won:

  The real contest (learning and applying patterns) was played out between dozens of very smart individuals vs. one genius, long before the physical contest occurred. In the long run, bet on the team.

  The IBM team approached patterns with incredible discipline. They cataloged and set up relationships between every pattern that matters in chess-even Kasparov-specific patterns.

  The IBM team used computing power-which never forgets a pattern and is fast enough to review all necessary patterns before the next move-to create cumulative learning.

In the end, Kasparov found himself facing a far more dangerous foe than he had anticipated. He knew it, and his tirades at the end of several games betrayed his frustration.
        
Deep Blue's victory was not a case of machine over man. It was a case of teamwork, of systematic dedication to knowing patterns, and of cumulative learning, over genius. It was a human victory. And it was a parable for business managers and investors everywhere.

Pattern Thinking Applied to Business Strategy

Deep Blue's victory was an event that provides a window on the future to every senior manager and investor. With a little imagination, we can see how the IBM chess experience is an early indicator of a critical tool that we will all use to do business and investment strategy in the future.

We propose that any company that makes a pattern investment similar in direction (not in cost) to that of the IBM chess team-a combination of management teamwork, systematic pattern development, and cumulative learning-will generate superior innovative strategies, and superior sustained long-term returns. This book aims to help any company jump-start the development of its own database of patterns, thus minimizing both investment and time to payback.
        
An investment in patterns can empower executives to win in the game of business where-unlike chess-the rivalry never ends. For at the heart of business strategy is pattern recognition. Patterns of how the game has unfolded to date, where it stands today, and where the game is headed.
        
Masters of business pattern recognition are accustomed to staring at what looks to the newcomer like chaos. Instead of seeing chaos, they see the strategic picture unfolding within the complexity, and discover the pattern behind it all. They "get it."
        
"Getting it" is all-important. It is like putting on infrared vision goggles on a cloudy, moonless night. It helps you see danger three moves early. It helps you see where the pathway to opportunity lies, and what moves and combinations will turn the game in your favor.
        
"Not getting it" has all the opposite effects. Blindness to danger, blindness to opportunity, playing the game on the run, reacting rather than creating.
        
That is why those who know the power of pattern recognition in business play so intensely and study so hard. Those who "get it" use their experiences to build their strategic skills and raise their game to the next level. Those who don't "get it" lose and fall further behind.

Patterns Are Not a New Phenomenon

The good news is that all businesspeople are already engaged in pattern thinking. From CEOs to middle managers to securities analysts, we already traffic in patterns as basic tools of our work and our strategic thinking.
        
Many managers can describe and apply the "consolidation and shakeout" pattern. Many can articulate the characteristics and consequences of the "commoditization" pattern, the "disintermediation" pattern, or the "deregulation" pattern.
        
Similarly, most players can recognize the "power shift" pattern as power moves from manufacturer to distribution channel. They've seen it with Wal-Mart, Home Depot, and Toys "R" Us. They can anticipate what is likely to happen with CarMax, AutoNation, or Amazon.com.
        
Strategic patterns are neither new nor mysterious. We use them all the time. They are a critical shortcut for capturing and highlighting the essential economic characteristics of a complex, changing picture.
        
Compared to the late 1980s, the number and complexity of the patterns required to know and understand business have grown. Back then, we all operated, explicitly or implicitly, with a dozen or so strategic patterns at our fingertips. Today, we need to know several times as many. And what we have to know about them, particularly about buyer behavior and how profit really happens, implies a more detailed and nuanced understanding than was sufficient for effective performance ten years ago.

Pattern Proliferation-and Importance-Is Increasing

For most of the twentieth century, the idea of understanding value patterns was irrelevant. Things did not change very quickly. Everyone knew the fundamental formulas for success, because the formulas were straightforward in nature.
        
In manufacturing, the key pattern to understand was that profit was a function of relative market share. The strategic tools and thought technology needed for this universe were straightforward and extremely useful. The growth/share matrix, the experience curve, Total Quality Management, and a solid knowledge of core competencies all served us well. Many manufacturers became experts at playing the relative market share game.
        
But today, we see more and more contradictions to these rules, such as smaller automakers being consistently more profitable than much larger automakers, or Starbucks being more profitable than much larger coffee companies. We are not even surprised by the idea that Dell is the most valuable PC maker, even though it doesn't manufacture its own core products-paying a point or two more to outsource key components because its overall business design saves ten extra points of cost in the way it goes to market.
        
In retail, another simple pattern reigned: location, location, location. Location closest to home, location in the best shopping malls. In that world, there were no destination superstores, no e-commerce, no kiosks, almost no branded retail, and no "entertainment-while-shopping" to confuse our thinking.
        
Services also had their own pattern. Good service meant personalized service by someone you knew, someone who called you by name, someone who put a personal touch into everything they did. In that world, there was no remote service, no 24-hour, 7-day-a-week service, no self-service for a lower price, no service via an intelligent agent.
        
As the above examples begin to show, knowledge of traditional patterns is no longer adequate. The modes of analysis that developed them-linear, logical, two-dimensional, bottom-up-also don't work. Even worse, they can fail in spectacular fashion. Traditional market share leaders doing traditional strategic analysis donated $700 billion in shareholder value to newcomers in the past decade and a half.
        
Traditional patterns are not always wrong-they are just no longer right all the time. They should be treated as one value pattern of many, not as our North Star or our compass. There are now many other patterns that supplement them and that explain much of the new value creation in business today. There are companies that break the old rules to their benefit, and in doing so create new rules that can be exploited by others via pattern thinking.

Patterns and Leadership

Most science fiction fans are familiar with the light-speed travel depicted in movies such as Star Wars and Star Trek. With the flick of a button, our hero's spaceship hurtles into hyperspace and escapes from the clutches of the enemy. The audience sees an incredible stream of light rushing past. Viewers' visual and auditory senses are flooded with an overload of impressions.
        
Any diligent reader of the current business press will also experience a sensory excess, a broad stream of data rushing at us at Mach 2. The psychological effects are confusion, overload, and chaos. Managers today face hyperspace without a map. New and old customers are changing their priorities. New business designs are emerging from all angles, and old competitors are resurfacing as challengers in entirely new ways. Thousands of "inputs" crowd into managers' decisio...

Edition details

• Publisher: Crown Business
• Publication date: 1999
• Language: English
• ISBN 10: 0812931181
• ISBN 13: 9780812931181
• Binding: Hardcover
• Edition number: 1
• Number of pages: 448