Tag Archives: business

The Little Book of Valuation

This is a highly relevant topic for my work life. I don’t value companies, but being familiar with the concept is important. And who better to walk the reader through this than Aswath Damodaran, a finance professor at the Stern School of Business at NYU? In general, he presents a great way to get a deeper understanding of financial statements for any business person, whether investor, CEO, or owner.

This is also a great refresher for any finance professional because the other, more subtle thing this book does is help with the big picture of linking rows and columns of numbers to value. On the very last line of the book Damodaran says “convert stories to numbers,” which I find myself constantly trying to do for clients. Convert… link…, choose your word, but if you’re in finance you need to be able round-trip this concept. You need to be able to take stories, convert them to numbers, then convert the numbers back to stories.

Damodaran tells a lot of stories in this book and you can use his examples to learn how to distill business performance, risk, the market, etc… into a set of numbers that any business person can relate to. The first and perhaps most general story is an intrinsic valuation of 3M, which occurs in chapter 3. For your reference, here is a link to the PDF of the 2007 Annual Report that Damodaran uses (I was able to tie out about half of the numbers, I couldn’t figure out the others).

It may be worth pulling it up while you’re reading the book. I did it after the fact and it was helpful.

Like I do with a lot of business books, I made a reference sheet to refresh my memory on the topic, pull out some highlights, and give me an indication of where to go quickly if I need to look something up. You can see that it’s a pretty short book and can probably be read in just a few sessions. It should be more than enough information for 95% of the non-financial people out there.

It’s not a trend yet, but this is the second short and focused business book I’ve read this year. The other was Harvest, which concentrated on the topic of selling a small business. They are similar in length and scope. Reading them doesn’t prepare you to go out on your own and sell your company or value a firm, but they do arm you with a lot of specific knowledge that will guard against being confused or even mislead by so-called experts.

Finally, I just started following Damodaran’s Musings on Markets blog and it looks like he posts five or six times a month. He just finished a series of posts on valuing growth companies and uses Groupon as an example. It looks like good stuff and I have a feeling that it will help me “convert stories to numbers.”

Positioning

This marketing book was suggested by a childhood friend and businessman named David Worrell. You can read his take on the subject in his post about lame business names. Great rant David. For me, the book is a much needed treatise on some of the most important principles in marketing. I have my own business and as you can probably tell, it’s not in marketing. I certainly always need marketing help.

To give you a feel for the definition of positioning, I’ll use a few quotes from the authors, Al Ries and Jack Trout:

The basic approach of positioning is not to create something new and different, but to manipulate what’s already up there in the mind, to retie the connections that already exist.

Today’s marketplace is no longer responsive to the strategies that worked in the past. There are just too many products, too many companies, and too much marketing noise.

Keep in mind, this book was first written in 1980 and revised in 2001. Even considering the update, they were talking about “too much marketing noise” before Facebook and Twitter were even conceived and Google was mostly a search company. If you want discussions about information overload, we have discussions about information overload. I’ve talked about it in detail in a post over at my business site. Ries and Trout use this great visual of a “dripping sponge”:

The average mind is already a dripping sponge that can only soak up more information at the expense of what’s already there. Yet we continue to pour more information into that supersaturated sponge and are disappointed when our messages fail to get through.

I find this interesting because when I wrote my post I was under the impression that this was new and groundbreaking science. But Ries and Trout have been making the same point about information overload for decades. Quoting from the book:

Scientists have discovered that a person is capable of receiving only a limited amount of sensation. Beyond a certain point, the brain goes blank and refuses to function normally.

So that’s where we stand folks, now more than ever. Getting someone to hear what you’re saying, listen to your pitch, or pay attention to what you’re selling, becomes more difficult every day.

Ries and Trout have the antidote with plenty of specific, albeit dated examples. They go through the details on advertising, communication, and public relations campaigns for companies ranging from Avis to Xerox, and many in between. Each is tied to a specific positioning principle.

It’s highly relevant stuff, but I need help thinking through if it’s more or less relevant now in the information age. Take this assertion for example:

Changing minds in our overcommunicated society is an extremely difficult task. It’s much easier to work with what’s already there.

Isn’t this even more relevant today? Not only are we bombarded with more information, but it’s easier than ever to find information that’s agreeable, that corroborates feelings and emotions already in place. So there’s a good case for it being even more difficult to change minds in this day and age. However, it’s not as easy to fool the educated consumer these days because information is a lot more accesible for those who know how to get at it. Can’t their mind be changed simply with facts and data? Can they even be swayed by positioning-speak like “we try harder” or “it’s the real thing”?

These are questions that a finance guy like myself needs help on. I would buy an update to the book. Heck, it could be valuable to look an line extensions alone. Ries and Trout are highly negative on line extensions, but they don’t seem to have lost favor yet. Gosh, the candy aisle is full of Dark Chocolate Kit-Kats, Pretzel M&Ms, and Snicker’s Peanut Butter. They seem to be doing alright, but I don’t have any hard data on that.

I have a feeling that certain assertions stand the test of time. Ries and Trout would still stand behind their idea that to be successful, a marketer has to deal with reality. What’s in the mind stays in the mind, it’s a monstrous task to change it. To do so you have to be skilful, analytical, creative, and subtle. Their six guiding questions are still relevant I think:

  1. What position do you own?
  2. What position do you want to own?
  3. Whom must you outgun?
  4. Do you have enough money?
  5. Can you stick it out?
  6. Do you match your position?

To answer these, the examples in the book help a lot. It’s a fast read. It would be a cliche to call this book timeless, but it very well could be.

Harvest

You’ve heard me talk about my hometown before. Great town, although it’s been a rocky ride lately (you know, with the flood and such). But this small town has had some successes in the last few years – a National Championship basketball team and, heck, this book entitled Harvest. Harvest is a fine piece of work co-authored by a gentlemen who graduated with me from Findlay High School.

So in the interest of full disclosure, you should know that co-author Chris Younger grew up in my neighborhood and was a childhood friend of mine. Chris and his business partner/co-author David Tolson run an investment banking firm in suburban Denver called Capital Value Advisors.

This book spans the process of selling your business, which certainly encapsulates an important part of the services provided by Capital Value Advisors. It begins at the moment you simply contemplate what life would be like if you sold your business and ends at the moment you sign the closing documents. Tolson and Younger touch on everything you need to think about throughout this process. Everything. They go into detail on some things and mention others in summary, making it clear where they expect you, the business owner, to dig deeper. I think they nail the mix of detail and summary, concrete and abstract.

In fact, in terms of balancing weight/length with relevant knowledge, this book excels. It’s less than 200 pages and can be read over the course of a couple of days even by the most harried business owner. But I strongly suggest longer study and quiet contemplation of the content.

The payoff for reading it? I can imagine an immediate boost in confidence for small business owners as they walk into their first meeting to discuss selling their business. And confident they should be. By giving this book the appropriate attention, they’ve taken great measures to guard against any lawyer, accountant, banker, or consultant misleading them on any key aspect of the sale of their business. A confidence borne of knowing that they’re prepared intellectually and emotionally for what could be a long and taxing process.

In my work life, I’m associated with this industry. I’m a numbers guy with a consulting business focused on helping finance organizations in mid-sized enterprises do things faster and more accurately with fewer resources. This book is relevant for me because it clearly links the role of the finance organization to the rest of this process. Tolson and Younger go into a fair amount of detail on valuation, understanding financial statements, and capital structure. By the time any business owner is done reading it, they’re surely going to understand the value of rigorous and regular analysis of financial results.

Besides finance, the book covers other detailed, procedural items like:

  • Finding and hiring an advisor
  • Preparing the “book” that describes your business
  • The process of marketing your business to potential buyers
  • The legal document estate
  • Due diligence

And finally, Tolson and Younger throw in a wealth of “soft” information, real stories on the strategic and managerial side of things. They have chapters addressing these issues:

  • Are you (the owner) ready for this?
  • When is the best time to harvest?
  • Value outside of the financial statements
  • Dealing with deal fatigue
  • Communicating to employees and customers

In fact, I just purchased a handful of Harvest to have in hand the next time a client mentions something like, “I will probably want to sell this business someday.” It’s worthy of breaking out just for the glossary and appendices alone. The appendix includes a sample RFP for hiring an investment banker, a sample due diligence list, and an explanation of financial ratios. It’s rich stuff and written to appeal to a generalist.

Besides specific deal issues, I can envision it also being useful as a general reference for a variety of situations where strategy and finance intersect (valuation, performance metrics, and capital structure). Eventually, I’ll be writing more about this over at my business site. That is, when I actually start consistently posting over there.

Linchpin

This was a suggested book when I purchased Rework. It asks the question, “Are you indispensable?” Valid question, I guess. Somewhat motivational. Could Seth Godin deliver on the premise that he can help you become indispensable to your employer/clients? Wow, that would unlock untold riches and career fulfillment.

Trust me, I’m not making fun. This is great stuff. I like reading Seth Godin because he has a ton of great things to say and he usually does it in very manageable sound bites. Godin ships stuff. A lot of it. Artists ship! That’s his point, and it’s highly motivational.

So what’s an artist? Godin says this:

Artists are people with a genius for finding a new answer, a new connection, or a new way of getting things done.

That would be you.

But you’re struggling, huh? Godin paints a picture of “stagnant wages, no job security, and lots of stress” for members of the working middle class. The best way to break this cycle is to change your attitude, change how you go to work. Starting shipping great stuff:

Stop settling for what’s good enough and start creating art that matters. Stop asking what’s in it for you and start giving gifts that change people. Then, and only then, will you have achieved your potential.

Godin uses a lot of terms above like ship and art and gifts that don’t appear to fit into a conversation that is supposed to clarify how the average working stiff does great work; but don’t worry, Godin explores each of these in great detail.

Let’s start with this line of thought. Do you remember that book the E-Myth (actually E-Myth Revisited, by Michael Gerber)? I own it. Godin sites a passage in the E-Myth Revisited where Gerber says:

The business model should be such that the employees needed possess the lowest possible level of skill necessary to fulfill the functions for which each is intended.

Godin takes issue with this, here is his take:

Here’s the problem, which you’ve already guessed. If you make your business possible to replicate, you’re not going to be the one to replicate it. Others will. If you build a business filled with rules and procedures that are designed to allow you to hire cheap people, you will have to produce a product without humanity or personalization or connection. Which means that you’ll have to lower your prices to compete. Which leads to a race to the bottom.

Now I don’t care if Godin misconstrued Gerber’s message or even if he’s taken it out of context. Either way, Godin’s passionate passage above is inspirational and sheds some light on the type of people that Godin terms linchpins. Linchpins are the artists, the connectors, the geniuses in any business that are integral to the success of that business. Linchpins rebel against procedures and rules that eliminate options for creativity. They rebel against stability and continuity to create work-product that they are proud of (to ship art). In short, Godin says, “There are no longer any great jobs where someone else tells you precisely what to do.

You gotta be indispensable.

You know what’s valuable? Godin tells us:

Depth of knowledge combined with good judgment is worth a lot. Depth of knowledge combined with diagnostic skills or nuanced insight is a worth a lot, too. Knowledge alone, though, I’d rather get faster and cheaper from an expert I find online.

That’s an important point. That gets you on the road to being indispensable. To being someone who gets product out the door, solves problems, and leads.

Godin relates that it was Steve Jobs who said, “Real artists ship.”

When Steve Jobs said that, he was calling the bluff of a recalcitrant engineer who couldn’t let go of some code. But this three-word mantra goes deeper than that. Poet Bruce Ario said, “Creativity is an instinct to produce.”

But producing is hard work. It doesn’t always feel good, and stable, and comfortable.

And so, the conflict. The conflict between what feels good now and what we ought to do. This explains how someone with throat cancer can persist in smoking, or how an obese person who clearly knows better can persist in eating “just one more doughnut.” In the face of greed or fear from the amygdala, an untrained person surrenders.

This sets off one of Godin’s greatest contributions, his idea that you can’t surrender, you can’t give in to the lizard brain that says resist change, you can’t give in to the resistance. This is how Godin does it in his life – his workflow:

By forcing myself to do absolutely no busywork tasks in between bouts with the work, I remove the best excuse the resistance has. I can’t avoid the work because I am not distracting myself with anything but the work. This is the hallmark of a productive artist. I don’t go to meetings. I don’t write memos. I don’t have a staff. I don’t commute. The goal is to strip away anything that looks productive but doesn’t involve shipping.

That, my friends, is a productive artist. Kind of reminds of something Jay-Z says in D.O.A. (Death of Auto-Tune)

I don’t be in the project hallway talking ’bout how I be in the project all day. That sounds stupid to me, if you a gangsta this is how you prove it to me.

Jay-z is an artist, a linchpin.

Godin goes into details also. Here is his formula for being so productive over the years:

  1. Write down a due date.
  2. Brainstorm like a madman.
  3. Organize the brainstorm.
  4. Build the description. It’s a blueprint (Jay-Z ref?).
  5. Get approval from the boss/investors.
  6. Start.
  7. Ship.

There you have it. The formula. Which is something like the project planning method in Getting Things Done.

  1. Define purpose and principles
  2. Envision outcome
  3. Brainstorm
  4. Organize
  5. Identify next actions

I think these guys are on the same page.

And finally, Godin’s drawing of the Quadrants of Discernment is frickin’ priceless. Picture two axes; horizontally it goes from passive to passionate and vertically it goes from attachment up to discernment. Try and figure out where you would put the Bureaucrat, the Whiner, the Fundamentalist Zealot, and the Linchpin. I suggest you read the book to hear it from the horse’s mouth.

Thank you Seth Godin for the knowledge combined with insight and judgment.

Rework

These guys seem to have their act together. They run this Chicago company called 37 Signals which is headquartered in my neighborhood. I use a few of their products, albeit sparingly, and they are truly excellent. In fact, after reading this book, I’m going to dig a little deeper into Basecamp and Highrise because maybe I should throw them in the mix with my other productivity tools.

They grabbed me early on with this simple truth that actually drives a chunk of my consulting business:

Technology that cost thousands is now just a few bucks or even free. One person can do the job of two or three or, in some cases, an entire department. Stuff that was impossible just a few years ago is simple today.

This is both exciting and frightening for me. There are some awesome tools out there to do financial analysis and because I’m slightly ahead of the curve I’ve been able to capitalize on their value. However, if this simplification continues, I’m going to have to continue to innovate or be oversimplified!

But enough about me. Let’s talk about this book. It’s a massive stack of quick hits (3-5 page chapters) on how to thrive in today’s competitive environment. What makes these dudes an authority on the subject? Well, they are thriving in today’s competitive environment and this gives an indication of the value system that has allowed them to do so.

I’m interested in what they say also because I agree with just about everything they say. Like this:

Small is not just a stepping-stone. Small is a great destination in itself.

How appropriate. I’m trying to get smaller as we speak. I’m stripping things down to the core.

Sure, they take a lot of heat for this. They got harangued by many in the media when they took Mint to task for selling out to Intuit. But I love it because they practice what they preach. They seem to live in a nice little zone of anti-hypocrisy.

Here is their take on the concept of less.

Ever seen the weapons prisoners make out of soap or a spoon? They make due with what they’ve got. …

or:

… And we always keep features to a minimum. Boxing ourselves in this way prevents us from creating bloated products.

and finally:

… Be a curator. Stick to what’s truly essential. Pare things down until you’re left with only the most important stuff. Then do it again. You can always add stuff back later if you need to.

Lotta stuff. Lotta stuff that I can live by. Lotta stuff on the alone zone and no meetings and visual prioritization and teaching and wabi-sabi and spending other peoples money. And it all has examples, either from their own company or other professions and firms.

The only question is how do I keep reminding myself of this stuff. I read it on the Kindle so I have the Kindle App on all of my devices; should I just read through the bookmarks I added for this book occasionally? Should I create a calendar item to repeat this every other month or something? How about posting quotes on my bathroom wall?

I’ll think of something.

Guerilla Marketing

This is the 4th Edition, published in 2007, so it’s pretty up to date. It’s a treatise on marketing for small businesses and individuals, the breadth of which is kind of astonishing. It’s been around for a long time and Levinson has since built a whole infrastructure of co-authored books on more specialized marketing topics. But this is the one that started it all, the one that forms the basis for all of those other ones, and, I’m betting, the one that mentions his other books the most. It’s clear that he has applied most of what he espouses to a high degree of success.

I needed this book. I’m at a point in my business where I need to have my marketing strategy in the front of my mind at every moment. It needs to roll off my tongue like a downhill putt at Augusta, if you know what I mean. Levinson gets the business owner pretty far down the road on this pursuit, but he doesn’t stop there. He spends a little more time on saving money and doing market research, then launches into a detailed discussion of all of the different types of marketing and advertising know to humankind. He groups them as (1) Minimedia (like business cards), (2) Maximedia (like TV), and (3) New Media (like e-mail and blogs).

It’s pretty comprehensive and he goes into a fair amount of minutia on each. He had an interesting digression on classified advertising and talked fondly about the $500/month he earned for about a dozen years selling his self-published book Secrets of Successful Free-Lancing (pg 137). He sold it only via classified ads and uses it to illustrate how lethal and simple classified advertising can be if you monitor your response rates.

He spends a fair amount of time on direct mail (that’s maximedia), going into detail on the style of the envelope, the color of the paper used, and the content of the mailer. He goes through it all man, I’m telling you.

I got a lot out of these three segments, but I also blew through a lot of it very quickly. Radio and TV advertising are not in the cards for me so I couldn’t stay focused on topics like these.

He finishes up the book with three chapters on the “nature of the guerrilla.” In this section he goes into the attributes and attitudes of the marketing guerrilla. It is motivating and some good stuff, but I think the Gitomer books cover a lot of this stuff and I like reading them a lot better. I’ve slapped together some notes on Guerilla Marketing that I’ll use them a lot as I hammer through my marketing strategy over the next 60 days, but I have a feeling that I’m going to be spending more of my time in the Gitomer books than in Guerilla Marketing.

This was a good read and brought a lot of stuff to mind, it’s going in the stack of books at my office that I’m going to be referring to in the near future.

The Essential Drucker

My familiarity with Drucker is mostly from reading certain excerpts of his stuff as an undergrad. I regret not “getting” the management classes I took in school. I liked pouring through the detailed concepts of finance, economics, and accounting but I didn’t expend the same amount of resources on management. In retrospect, this stunted my development as a businessperson. There is a certain aspect of thinking from the organizational and personal development level that I didn’t do until my mid-30s.

Maybe it’s a function of age, but now management books are really interesting to me. This book is especially interesting because of its scope and efficiency. It distills a big chunk of Drucker’s management theory into a well-organized and relatively short book. The subtitle is “The Best of Sixty Years of Peter Drucker’s Essential Writings on Management.” It’s the management book you read before you read other books on management; actually, before you read another business book period.

The first chapter sets management in the intellectual realm. Drucker first describes the task of management with a caveat (page 4):

To be sure, the fundamental task of management remains the same: to make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change. But the very meaning of this task has changed, if only because the performance of management has converted the workforce from one composed of largely unskilled laborers to one of highly educated knowledge workers.

He then proceeds to broaden the scope of the term management (which I wish I would have read in 1987) and eventually describes management as a liberal art.

Management is thus what tradition used to call a liberal art – “liberal” because it deals with the fundamentals of knowledge, self-knowledge, wisdom, and leadership: “art” because it is also concerned with practice and application.

I agree with Drucker, management is worthy of focus. It doesn’t come naturally except for the gifted few and you will be better positioned to help yourself, your business, and society if you at least have a rudimentary understanding of what it’s all about.

There is so much in this book that to begin pulling out the gems is difficult. The easiest way for me too depict it is with a cheat sheet of some sort. Check it out below. There are 26 chapters and they are grouped into Management, The Individual, and Society. I’ve taken things a few steps further and sub-grouped the chapters to assist the reader. I’ve also highlighted a few quotes and lists that I think represent the point of each chapter.

The Essential Drucker

It’s very theoretical and very fascinating. Drucker is a national hero in Japan (reminds me of Ben Franklin and his stature in France) and he clearly has great fondness and high hopes for the country. Applying his experience from that country to the US and management in general is a keen aspect of many of Drucker’s writings.

I highly recommend this book just to have around. You don’t need to read it all in one sitting. If you are in a reflective mood around your annual performance review, read chapters 13-17. If you are thinking of starting a new business, read chapters 10-12. In either case, Drucker will satisfy your needs or provide a basis for digging deeper into the topic.

First, Break all the Rules

Management books and the practice of management are kind of mushy. Think about the premise; Jack Welch managed GE – GE had good returns while he was there – you can become a better manager by reading Straight from the Gut and acting like Jack. This seems sensible to me. But what if my persona and skills don’t line up with Jack’s? Can I reasonably expect to be able to incorporate his policies and practices? Or worse, what if his management skills had less to do with GE’s success during his tenure than the corporate culture, the economy, and the great line managers that made their way through the legendary training ground in Crotonville? Or more subtly, does reading a management book by a rock star CEO really give a line manager the stuff needed to build a rewarding work environment that churns out great financial results?

I don’t have answers to these questions. I can’t really even take credit for asking them because these are effectively the questions that Buckingham and Coffman (B&C) ask (and answer) in their fine book. They didn’t focus on one great manager, or even a group of successful managers. They used statistical techniques to compile the results of thousands of interviews of both managers and employees over the course of a few decades, and it ends up being a pretty impressive body of work.

B&C work for the Gallup Organization, which sponsored this huge study. The study ties together employee satisfaction, management practices, and business unit results in a quantitative manner. First they figured out how to measure the strength of the workplace. Then they linked the strength of the workplace to performance in the areas of productivity, profitability, employee retention, and customer satisfaction. Then, after being certain that a strong workplace means stellar business unit performance, they honed in on the management practices that build a strong workplace. Quite fascinating for a digit head like myself.

To assess the strength of a workplace, one that can “attract, focus, and keep the most talented employees,” you just have to ask twelve questions. The more yes answers you get, the stronger the workplace. They know this because they talked to over a million employees over some 20+ years. Here are the questions:

  1. Do I know what is expected of me at work?
  2. Do I have the materials and equipment I need to do my work right?
  3. At work, do I have the opportunity to do what I do best every day?
  4. In the last seven days, have I received recognition or praise for doing good work?
  5. Does my supervisor, or someone at work, seem to care about me as a person?
  6. Is there someone at work who encourages my development?
  7. At work, do my opinions seem to count?
  8. Does the mission/purpose of my company make me feel my job is important?
  9. Are my co-workers committed to doing quality work?
  10. Do I have a best friend at work?
  11. In the last six months, has someone at work talked to me about my progress?
  12. This last year, have I had opportunities at work to learn and grow?

But that’s just the start. They took these twelve questions out to the field and posed them to employees of about 2,500 business units in 24 different companies. They matched up the answers (1 being strongly disagree and 5 being strongly agree) with business outcomes (profits, productivity, employee retention, customer satisfaction) and reviewed the data. Yes, you guessed it, positive answers to the twelve questions correlate strongly with great business unit results.

So then, as a manager, what are the best ways to get yes answers to those twelve questions? That should be the goal, since yes answers mean great results, right? Additionally, are certain questions more important than others? Great managers have the answers to these questions, so Gallup went out to the managers to document them. Once again, they interviewed thousands of managers. They “listened to the tapes, read the transcripts,” and compiled answers. The result is a treatise on “what great managers know” and “what great managers do.”

Great managers know that there is an order and a grouping aspect to these twelve questions. B&C put them into a mountain climbing analogy.

Base Camp (questions 1-2): What do I get?

Camp 1 (questions 3-6): What do I give?

Camp 2 (questions 7-10): Do I belong here?

Camp 3 (questions 11-12): How can we all grow?

If you answer yes to all 12, you’ve passed the Camp 3 level and reached the Summit of employee satisfaction and productivity. The most important levels are Base Camp and Camp 1, these questions are more closely correlated high performing organizations than the others; they build a strong foundation for happy employees that consistently deliver great results.

As they say, to be the catalyst to get positive answers, especially to Base Camp and Camp 1 questions, “a manager must be able to do four activities extremely well: select a person, set expectations, motivate the person, develop the person.” But there is another ingredient underlying all of this is that they discovered; an insight that came out on top as the most “revolutionary” and the “most common.” Here it is in the manager’s words (collectively):

People don’t change that much.

Don’t waste time trying to put in what was left out.

Try to draw out what was left in.

That is hard enough.

B&C have only been setting the table at this point, we’re at about page 70. They take all of this information and settle on “the Four Keys” of great managers. The rest of the book delves into each of those Four Keys of great management in detail. They are:

When selecting someone, they select for talent…not simply experience, intelligence and determination.

When setting expectations, they define the right outcomes…not the right steps.

When motivating someone, they focus on strengths…not on weaknesses.

When developing someone, they help him find the right fit…not simply the next rung on the latter.

I’m not going to dig into these as part of this post, but I’m going to keep this book around as a reference. I think it’s that good. I think it’s the kind of book you keep in your office and bat around every time you think about your employees and if you’re doing right by them.

Purple Cow

I read Godin’s blog regularly and I like his take on things. This book is about creating remarkable products and services. In fact, the subtitle is “Transform Your Business by Being Remarkable.”

According to Godin, we are past the age of the TV-industrial complex. This is Godin’s term for the “symbiotic relationship between consumer demand, TV advertising, and ever-growing companies that were built around investments in ever-increasing marketing expenditures.”

You can’t win this way any longer. We are too smart to be fooled by advertising nowadays. You have to be better at marketing than thinking of catchy slogans or funny commercials. Godin’s solution is to do some remarkable marketing. That is “the art of building things worth noticing right into your product or service. Not slapping on marketing as a last-minute add-on, but understanding that if your offering itself isn’t remarkable, it’s invisible.”

So he has 145 pages in a sort of stream-of-consciousness presentation of how to do remarkable things. I learned a lot of very useful concepts from it.

One great concept that he brings up often is that of otaku. It’s a Japanese word that’s used to describe something that is “more than a hobby but a little less than an obsession.” He gives examples, but for me, otaku is getting up at 4:30am and driving two and a half hours into Wisconsin to play a golf course that I heard was something special and driving back the same day. This is not obsessive, but it does show a keen appreciation for the game of golf. I have golf otaku. About this, Godin says:

Consumers with otaku are the sneezers you seek. They’re the ones who will take the time to learn about your product, take the risk to try your product, and take their friends’ time to tell them about it. The flash of insight is that some markets have more otaku-stricken consumers than others. The task of the remarkable marketer is to identify these markets and focus on them to the exclusion of lesser markets – regardless of relative size.

Ahh, I like otaku. I think I need to make it a regular part of my vocabulary. It ranks up there with another fine Japanese phrase; hara hachi bu, which means “eat only until you are 80% full.” That’s from Okinawa. I’m also a heavy user of Mizuno products. I need to make a visit to Japan because I think I would fit in well there. But I digress.

Godin has case studies and examples to illustrate all of his points. Sometimes he treads dangerously close to oversimplification and hyperbole. He says things like it’s “so popular, no one goes there anymore.” Or “marketers no longer: now we’re designers.” He does back these up though with examples and thoughtful discussion so you can filter out his bias and get the point.

I thought it was a great book and a ton of fun to read. I strongly suggest that you at least subscribe to his blog, if you don’t buy one of his books, so you can get a feel for how he thinks through things. He is certainly a thought leader in the the area of marketing.

I’m gong to finish this take with one of the last paragraphs in his book. He says:

Remember, it’s not about being weird. It’s about being irresistible to a tiny group of easily reached sneezers with otaku. Irresistible isn’t the same a ridiculous. Irresistible (for the right niche) is just remarkable.

I don’t know, with my web presence, I wonder if I’m thought of as weird. What’s that damn fool finance guy doing writing about food, books, golf, and weight loss? Eventually, I will pour out my takes on finance and controllership at my consulting site, but first, I have a lot of stuff to get off my chest.