Three Star Leadership

Here's the Review in Brief for The Breakthrough Imperative by Mark Gottfredson and Steve Schaubert. See below for the Review in Depth and for Additional Resources.

How this book is different:

The authors lay out four practical and usable ways to analyze your business and competitive situation. These are basic, but they're worth reviewing and well-presented. That makes this book an excellent quick-reference whether you're a new manager or one with loads of experience.

Strengths:

The descriptions of the "Four Laws" are excellent and helpful.

There are well-chosen and well-presented examples throughout the book.

Warnings:

Jargon alert! If consultant-speak makes you break out in a rage, do not read past chapter five.

Bottom Line:

If you're looking for simple ways to understand and analyze your business and competitive situation, this is an excellent book. The introductory chapters and the chapters on the Four Laws are excellent. The chapters on strategy and execution are not as crisp, but still helpful. This will be a good read and a ready-reference regardless of your level of experience.

Now for the Review in Depth.

When I started reading this book it was like discovering that an old friend you hadn't seen for a while was staying at the same hotel. It made me want to catch up.

The old friend in this case was the experience curve. It was a staple of management wisdom, lo these many years ago, but no one seems to talk about it any more, even though it's a simple and powerful tool.

A good thing about this book is that the authors' aims are clear, helpful, and modest. They tell us: "Our aim is not to convey new strategies; rather it is to articulate a short list of business fundamentals that are essential to performance improvement and then show how to apply them." They do that well.

The first chapter is about the "Two Keys to Breakthrough Results." We learn about the increasing pressure on CEOs and others to deliver results quickly. The "two keys" that the authors identify turn out to be both obvious and in need of re-stating.

Key 1: Breakthrough leaders have a deep understanding of the fundamental laws of business.

Key 2: Breakthrough leaders identify and follow a clear path to performance improvement based on their assessment of the organization's potential using their understanding of the fundamental laws of business.

It's tempting to blow this off as third grade stuff, but it's profoundly simple. And it's worth re-stating because so many people seem to have forgotten it. For a recent example of someone who got it, read Jim Kilts' book about the turnaround at Gillette or Lou Gerstner's book about the turnaround at IBM.

In both cases you'll witness a seasoned and savvy executive bring a deep understanding of the laws of business to bear to determine the best course of action to take. Then you'll see that same executive lay out a clear path to improvement (easier said than done) and follow it. It's simple, but it's not easy.

To help you get at those "laws of business" the authors lay out four of them. Each one gets its own chapter.

Law 1: Costs and prices always decline. This is my old friend, the experience curve. It's a visual tool that shows the relationship between accumulated experience and the long-term decline in costs. This tool isn't as popular as it used to be, but it's still a powerful way to understand market dynamics and it's easy to use.

Law 2: Competitive position determines your options. The authors suggest another chart, this one showing you and your competitors' returns on assets plotted against your market shares. Do this and it's easy to see why driving down costs should be a continuing obsession.

Law 3: Customers and profit pools don't stand still. The advice is basic: protect your existing profit pool while you find new ones. The value-added in this book is the description of some of the predictable aspects of the ways customers' tastes and behaviors change.

Law 4: Simplicity gets results. You don't have to stand out on every dimension. Three is enough. The simpler you can keep your product line and your strategy, the more likely you are to win in the end.

The authors tell us that their four laws aren't prescriptions. They're descriptions of how business works. Then they move on to strategy or, as they put it, defining your path to success. That's what the final three chapters of the book are about.

These fellows must have taken a course in "branding" because in these chapters they can't seem to use the language that everyone else uses. I can only guess, but it seems like they think calling a goal a "point of arrival" will make them stand out from the crowd. Perhaps it will, but only in the same way as a lime green polyester leisure suit.

Make no mistake, there is a lot of good stuff in these chapters, but it's much harder to get at it than the material on the four basic laws. There's an appendix on the use of the experience curve that will be useful if you're not familiar with the tool. Another appendix is titled "The Full-Potential Performance-Improvement Diagnostic." I would have preferred a title like "How to figure out what to do."

If you're looking for simple ways to understand and analyze your business and competitive situation, you should buy The Breakthrough Imperative. The introductory chapters and the chapters on the Four Laws are excellent. The chapters on strategy and execution are not as crisp, but still helpful. But, this will be a good read and a ready-reference regardless of your level of experience. You'll want to keep it handy.

Additional Resources

Though they don't discuss the specific laws and methods covered in this book, the books that Lou Gerstner and Jim Kilts wrote about their turnaround efforts each tell a tale of doing that the authors of Breakthrough Imperative direct.

Who Says Elephants Can't Dance? by Lou Gerstner

Doing What Matters by Jim Kilts

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