I’m going to start a new activity for this blog: brief synopses of books I’ve read or reading — some on topics relevant to the 4HWW and some on topics relevant to my MBA program. It will consist simply of the title of the book, a one paragraph summary of the main ideas, and three bullets of the most important take-aways. I figure more can be said and remembered about an important book that way than in any other lengthy discourse.

Book: Competing for the Future

Author: Gary Hamel, C.K. Prahalad

In a nutshell: A strategy for staying successful in highly competitive industries is to periodically reinvent yourself and continuously challenge your own time-proven successes (“you can’t intercept the future by repeating the past”). This books helps readers understand the full scope of evaluating the market and the company and strategies for reinventing while reducing risk.

Top Three Take-aways / Unique Insights:

• Definition of a “profit engine”:
  • Defining and understanding the served market
  • Defining and understanding the value proposition for that market
  • Determining the margin and value-added structure for services/products to the market
  • Configuration of skills and assets to yield the margins
  • Configuration of administrative and supporting systems to support continued yield

• Decomposing the Profit Engine into 4 parts, with 4 questions to be answered each
  • The Concept of the Served Market
    • What is the basic value proposition?
    • How is the market segmented?
    • What kind of customers are served?
    • Where are the customers?
    • (What customers and needs aren’t you serving?)
  • Revenue and Margin Structure Definition
    • Where in the business system do you take profit?
    • Where do the margins come from?
    • What determines the size of the margins?
    • What are the major cost and price drivers?
    • (Could profits be extracted at a different point in the supply chain?)
  • Configuration of Skills and Assets
    • What do you believe you know how to do well?
    • What physical infrastructure supports the business?
    • What kind of skills predominate in the company?
    • What is the trajectory of development spending?
    • (Might customer needs be served better by an alternate configuration of skills/assets?)
  • Flexibility and Adaptiveness
    • How alert are you to new value delivery models?
    • How easily can investment programs be reoriented?
    • How easily can infrastructure be reconfigured?
    • Which constituencies would most resist change (inside and outside the company)
    • (What is the vulnerability to market changing factors?)
• The best way to remain competitive is to be the first (or one of the first) to conceive of alternate value-delivery models, even if that means jeopardizing existing, legacy business models and profit engines. Be your own toughest competitor and challenge all your assumptions, even if in the short-term it adds more risk.

If you only had to read 10 pages: Pages 67-72

Click to Buy the Book

But on to my point.

I finally understand now why Tim says that he always used to shrug off the “What do you do?” question by babbling about selling drugs. Because “I sell a weightlifting supplement over the internet and through magazine ads” is a little… well… cheesy. It’s not really something to write home about, or brag about. No wonder he was relieved to publish 4HWW so that he could start answering, “I’m a published author”! And after months of trying to think up muses of my own, I’m beginning to suspect that they’re all like that, sort of inherently.

I think that’s part of why I and probably other entrepreneurs like myself have had trouble redirecting our existing businesses towards creating muses. Our original business ideas had more inherent value… they had more depth and substance. We had goals like “Become the best-known technology consulting company in North America” or “Dominate the content management system market with the most useful and best-priced system.” We were, to use Guy Kawasaki’s phrase, “making meaning.” We were trying to create something BIG that other people would want to get on board to do, with ideals and dreams we could recruit with. And we wouldn’t have gotten as far as we have if we didn’t believe in what we were doing.

Muses, on the other hand, are just there to make some cash. They’re cotton-candy businesses, all artificial color and sugar and no nutritional value. They’re small by definition. If you’re an ambitious and idealistic person, it’s almost embarrassing to tell people what you’re doing. It feels like a big letdown from your original purpose. You don’t even want to recruit for it, and the goal is to be a one-man outfit with an outsourced army anyway.

So what’s the solution? What if your dream IS owning your own business… and it’s important to you to be contributing something of significant value to society? (Granted, I’m sure it isn’t impossible to create muses with inherent social value, depth, and substance… I just haven’t been able to think of any yet!)

Well, my theory is that even if you’re embracing 4HWW wholeheartedly, you can still end up being the president of your own company doing the exciting & worthwhile work you originally set out to do. Naturally, as president, you’ll make the executive-level decisions while other people do the hands-on work. But since you’re creating your own company culture, you can build in 4HWW values like freedom of time and location for everyone, including yourself. Sounds nice, doesn’t it?

The trick is getting there. I think you can “DEAL” your way out of working on the business fulltime (assuming you’re working fulltime now) without reducing income, then use your spare time to build muses which generate cash you can then use to expand the company (by hiring, automating, and outsourcing, not by getting sucked back into working longer hours). Building your own one-man outfit into a “real” company is always a challenge, but you’ll have muses to carry you through the expansion, and even get you through outright failure if that should happen. And, with this in mind, building cheesy muses is a backburner activity… not something you even have to tell people about (unless you’re blogging about it – LOL).

If what you’re doing as an entrepreneur right now is pretty cheesy already, then you probably don’t really get what I’m talking about -grins-. You’ll just “DEAL” your way out of it, like you would a day job you dislike, while you’re building muses and picking out your dreamline activities – which also makes total sense.

Thoughts and opinions? I’ll pay attention to the comments here and respond.

Now I need a place to put the incoming funds. As you all know, you need to use a business bank account for your revenue — no mixing personal and business revenue streams. I’ve recently been banking with Bank of America, but not out of pleasure — just convenience. Since my new muse doesn’t require me to be physically close to my bank account (almost all incoming funds are electronically deposited), I am open to better options. BofA fees you to death. And their service is sorely lacking. If it weren’t for their omni-present branches and ATMs, I wouldn’t have even bothered. But then again, I didn’t bother in the first place — they just kept buying all the banks I actually did do business with!

So, let’s leverage the power of the Internet and networking– have any of you had good experiences with a bank that caters well to the Small Business? One that is low in fees, high in service, makes it easy to do the odd in-person deposit (or allows you to do e-deposits like K-Bank does), has low or no balance minimums, allows you do to things like ACH Debits and Credits as well as online banking and has a decent online web experience? Would love your thoughts and help!

Updated: I just checked out the First National Bank of Nevada… While it’s no where near where I live, I’m intrigued by: * free business checking and *e-deposits that allow you to deposit physical checks without ever having to leave the office. A 4HWW-ers dream? I’m not sure if they’ll do business with me in my state, but I’m wondering if there’s anything similar somewhere else or if anyone has experience with something like that?

Products that are Sold vs. Products that are Bought

Having been in the startup and consulting business for a while, I know that everything a company offers has a “sales cycle” — that is the amount of time it takes to go from interest in a product to actual receipt of payment or purchase order for that product. Some products have very short sales cycles of minutes (such as books on amazon.com or items on eBay) whereas others have very long sales cycles (especially large consulting projects sold to large companies that involve lots of decision-makers).

There have been tomes written about sales cycles and the such, so no point in going into that here. The real insight is that to achieve the sort of work/time balance proposed by the FHWW book, one needs to strive for a business in which products are bought vs. products that need to be sold.

What’s the difference?

A product that is bought requires that a company make its product easy to understand, easy to find, and easy to purchase. The emphasis is on marketing — increasing the awareness of a product, its value, and differentiating it from others in the market so as to facilitate the sale. But the sale is not facilitated by a person — it doesn’t take someone calling you up and convincing you of those merits to make the sale happen. Rather, users who are interested make the move to purchase the product. The customer is in control of the sales cycle and as such all a company can do is focus on marketing, order processing, support, and improving the quality of the product.

On the flipside, a product that needs to be sold is one that requires a person to communicate a products benefits. A sales person needs to find leads, qualify them, make the pitch, differentiate the product, prepare the proposal, and then shepherd this proposal through the close. For individual sales, the aspects of the proposal and close might be simplified, but the remainder is the same. Sales-oriented products require people involved, which means it requires time. Reducing the work week to 4 hours in these instances can have a significant, detrimental impact on revenue.

The punchline: go for Products that are Bought, not Services, or Products that need to be sold

The aspiring 4-hour-a-week entrepreneur or employee not only needs to shy away from services that require in-person delivery, but also products that require in-person sales (whether really in person or via phone). If you can’t make that transition, I can’t see how the reduced-hour workweek can be a reality unless you outsource the sales process itself. Even in the case where sales is outsourced, you’re just automating an inefficient task. You’re better served simply trying to change the way the product is offered. If you can find a way to make it so it’s bought rather than sold, you’re gold.

Quick note on blog test: this is my first attempted use of a trackback, and using the instructions at the Optiniche blog by Teli Adam, I think I’ve managed to make it work. Maybe.

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