Profit Patterns: 30 Ways to Anticipate and Profit from Strategic Forces Reshaping Your Business [Executive Summary Edition]

The premise of Profit Patterns by Adrian J. Slywotzky and David J. Morrison is that we learn from experience by studying patterns. Good managers are skilled at strategic pattern recognition and see the whole picture. Industries are reshaped by patterns, which may build slowly or move rapidly, and the ability to recognize and capitalize on these patterns allows an organization to create strategies that lead to sustained value and profitability. In his article titled "Crafting Strategy", Henry Mintzberg, another well known author on the subject of business strategy, indicates that a "key to managing strategy is the ability to detect emerging patterns and help them take shape. The job of the manager is not just to preconceive specific strategies but also to recognize their emergence."

Part I of the book is titled 'The New Game of Business' and describes the changes occurring in business which call for a new skill set. These changes are called Getting It, Polarization and Mindshare. Getting It refers to the ability of managers to become masters of pattern recognition. Instead of seeing chaos, these managers see the strategic pattern unfolding within the complexity, and discover the pattern behind it all. In short, they "get it". Polarization is the result of early recognition and exploitation of patterns in that the company that "got it" first realizes great momentum, its market value explodes and value is no longer proportional; it has polarized. Many examples are given such as Cisco vs. Bay Networks, Coca-Cola vs. Pepsi, and Nike vs. Reebok. Polarization means "winner takes all", and is spreading to other industries. The focus of competition in more and more industries is competition for mindshare, and is crafted as a three-part strategy: 1) mindshare with customers, 2) mindshare with investors and 3) mindshare with talent. Getting It, Polarization and Mindshare are critical skills in the war for dominance in an industry.

Part II of Profit Patterns describes thirty patterns that have affected business designs over the last two decades. The patterns are organized into the following categories:

o Mega - No Profit, Back to Profit, Convergence, Collapse of the Middle, De Factor Standard, Technology Shifts the Board

o Value Chain - Deintegration, Value Chain Squeeze, Strengthening the Weak Link, Reintegration

o Customer - Profit Shift, Microsegmentation, Power Shift, Redefinition

o Channel - Multiplication, Channel Concentration, Compression/ Disintermediation, Reintermediation

o Product - Product to Brand, Product to Blockbuster, Product to Profit Multiplier, Product to Pyramid, Product to Solution

o Knowledge - Product to Customer Knowledge, Operations to Knowledge, Knowledge to Product

o Organizational - Skill Shift, Pyramid to Network, Cornerstoning, Conventional to Digital Business Design

Numerous examples are given of the patterns, and case studies of successful companies such as Nokia, Dell, and Cisco Systems show how a company can detect patterns and trends, organize around them and create significant value, even polarization, from these patterns. The case studies, since all are well known companies, are very useful in understanding the patterns and comprehending how they can be applied in real-life business situations. This infrastructure of patterns can be used to organize and correlate the relevant experiences of well known corporations to your own organization. The patterns are equally applicable to large corporations or small-to-midsize companies.

Part III of Profit Patterns is called 'Putting Patterns to Work' and includes chapters on putting the patterns into action (company case studies), accelerated pattern detection, putting the patterns to work in your organization, and a patterns workbook. This is perhaps the most useful section of the book, in that it offers practical advice on applying the pattern thinking theories.

"Profit Patterns" is written in a practical, thorough, no-nonsense style and the theories are backed up with many real-world examples. I will definitely use the workbook section in the future to analyze business patterns and strategies. The authors are prolific, respected writers, and this book will become one of the staples of business literature. My only criticism is that the graphics are crude and unsophisticated and that a more professional approach to the graphics would lend more credibility and clarity to the concepts they illustrate.