The Art Of Profitability

I recently read Adrian Slywotzky’s The Art Of Profitability. Simply put, it’s one of the best business books I’ve ever read. In it, Slywotzky frames a 23 week tutorial in the various models of profitability between a hypothetical expert and his student. The models range from Multi-Component Profit, such as Coke – where products are sold in stores, restaurants and in machines, Blockbuster Profit – a model that Hollywood and the Pharmaceuticals live by, and Entrepreneurial Profit – where profit is spurned by a strong idea and entrepreneurial spirit, as in Honda and Wal-Mart. “The Art Of Profitability” has made me think a lot about the companies I’ve worked for, and what our clients need. Profitability is the main objective of business and Slywotzky proposes that some companies are just not that focused on it. I saw his point when I looked back at some of the companies I knew. I’ve worked for terrestrial and cable broadcasters, which have literally printed money in their net margins. On the other side, I’ve worked for startups who have chased the exit at the expense of profitability, while not seeing that the shortest path to profitability will ultimately enhance the exit proposition. I was reminded of the lessons of this book last week in YouTube Is Doomed (GOOG) Ben Wayne’s excellent post on SAI about Google’s  loss of $470 million per year on YouTube…. even the smartest companies struggle with profitability. I’ve now moved on to two of Slywotzky’s newer books – “How To Grow When Markets Don’t” and “The Upside”.

Tagged as: google, profitability