Book Review: The E Myth Revisited

Title: The E Myth Revisited: Why Most Small Business Don't Word and What to Do About It
Author: Mechael E. Gerber
Publisher: HarperBusiness
Pages: 268
ISBN: 0887307280

The statistics are grim. The vast majority of businesses that are started fail within the first five years. According to Mr. Gerber, 80% of businesses fail in this time. The culling does not end here. In the next five, 80% of the businesses that have survived so far fail. The bad news does not end over here. Of the businesses that survive thus far, most provide their owners with at most a subsistence level of existence in return for insane amount of work - work that is required to just barely keep the business alive. But is this a law of nature? Are most startups doomed to failure? The author of this text thinks not.

According to the author, there are three distinct personalities inside each entrepreneur. Each of these has its own desires and needs. When they are in harmony and balance each other, the result is a business that can go on to succeed. When (as is more often the case) they are in conflict, the result is a dysfunctional business that sucks the life out of the putative entrepreneur. These three distinct personalities are identified as Technician, Manager and Entrepreneur. A new business is usually started by the Technician aspect of a person. This is because of an underlying assumption that Mr. Gerber says is a fatal one. The assumption is "if you understand the technical work of a business, you understand a business that does that technical work." The problem is that the technical work of a business and a business that does technical work are two different things. Failure to understand this leads to problems later on. These problems arise once the business is established and starts growing. The Technician is used to doing all the work himself. As the business grows, the Technician suddenly starts getting overwhelmed; at this point previously established standards start to slip. In a panic , the Technician goes out and hires a preferably experienced hand. At this point, the Manager kicks in. But now, there is a tussle going on between the Manager and the Technician for control. In the meanwhile, the Entrepreneur is also trying to gain control in order to devise a future and a strategic direction for the company. This continuous tussle means that the person who started the business starts to feel overwhelmed and trapped by the business; the very business that was supposed to liberate him from the drudgery of working for someone else. This is the basic reason why most businesses fail and most of the rest struggle indefinitely at a subsistence level.

Is there any hope? Hope lies in the fact that a small number of businesses not only prosper, they thrive. All large companies started out as small ones. There are also a number of companies that may be small in size but are thriving businesses. What do they do differently from the run of the mill small business? Mr. Gerber advocates turning a business into a franchise. More to the point, he advocates a turn-key view of business. In other words, he says that a successful business will be one which the entrepreneur (the person who started the business) can give to a total stranger and it will continue to operate in the same fashion as the original owner intended. This is an important point. It takes a business from being personality driven to being process driven. In the former case, the business owns the person while in the latter case, the person owns the business. A personality driven business will by its nature consume the life of the person who started it. By contrast, the process driven business will give all three aspects that were mentioned above - the Technician, the Manager and the Entrepreneur - full leeway to their respective capabilities and interests and allow the person to engage in his or her interests.

Mr. Gerber has written an important book that should be read by anyone who wants to or is thinking about starting his own business. Read this book before taking the plunge. It will save you a lot of grief later on.

Book Review: Fail Better: Stubmbling To Success In Sales & Marketing

Title: Fail Better: Stumbling To Success In Sales & Marketing
Author: Stephen Brown
Publisher: Cyan Books
Pages: 189
ISBN: 0-462-09904-0

Most business books (nearly all as a matter of fact) focus on how to achieve success. Different authors have different ideas on the best methods of achieving and sustaining long term success in a harsh and unforgiving market. Yet, it is also commonly acknowledged that failure is a better teacher in most respects than success; especially failure that is eventually leveraged into success. Most business books ignore the lessons to be learnt from failure. This book is one of the few that focuses on failure and the lessons that can be learnt from it. More specifically, it focuses on failure as a stepping stone to (eventual) success.

Stephen Brown's book Fail Better presents case studies of 25 individuals, past and present, who should have failed and in many cases failed spectacularly permanently. However, these individuals have confounded critics and have achieved success, in some cases multiple times. Most of these people were serial failures for most of their careers. In many cases, they undertook a large number of and varied types of jobs before settling (or stumbling) on their forte. Some of these names are familiar like for example Steve Jobs, P. T. Barnum while others were well known in their time but are now not so well known like Anna Held and Gabriele D'Annunzio. Nearly all these people have usually done the opposite of what business books recommend for success. They treat their customers with disdain, ignore things like market research and generally behave as if they know better than their customers what the latter really want. At the end, the author highlights what he considers to be common characteristics amongst all the people he highlights.

After reading the book, the conclusion I drew was that the one thing all these case studies had in common was that they satisfied some basic need better than others. Take the case of Michael O'Leary. Ryanair makes one promise: to get you from point A to point B in a fast, cheap, no-frills fashion. It then proceeds to fulfill this promise sufficiently repeatedly to make customers keep coming back. There is no concept of over-promising service and then causing disappointment. Similarly, Thomas Lipton made a promise: to provide quality basic foodstuff cheaply. He then kept on fulfilling his promise causing his customers to return repeatedly. This I believe is the basic take away from this book.

Final conclusion: an interesting book; worth a read but a bit unfulfilling. Whets the appetite but doesn't quite satisfy the hunger.

Book Review: On The Road to Kandahar

Title: On The Road To Kandahar
Author: Jason Burke
Publisher: Penguin Books
Pages: 281
ISBN: 978-0-141-02435-6

Radical Islam (so-called) has been on the news since 9/11. That incident promptly pushed a hitherto little known group that styled itself as Al Qaeda into prominence. A lot of words were written and spoken which sought to explain the agenda of the Islamists and their popularity amongst the Muslim populations. Mr. Burke's book is a personal journey through Muslim lands over the course of more than a decade. Through the medium of a personal account of journeys in Islamic lands, the author traces the recent history of Western interaction with the Muslim world.

If you seek to understand Islam as a religion or Muslim beliefs and practices, then this is not the book. While the author does highlight wrong notions prevalent specially among so-called experts in the West regarding Muslims and he does give his own explanations, ultimately this book leaves the reader unsatisfied. If someone has lent you this book and you have some afternoons free, then pick this book up; otherwise there are plenty of better books to read.

Book Review: Predictably Irrational

Title: Predictably Irrational: The Hidden Forces That Shape Our Decisions
Author: Dan Ariely
Publisher: Harper-Collins

Are people rational? Ask this question to almost anyone and he/she will answer (typically indignantly) with a resounding yes. This is also carried over into the field of Economics where it is assumed that people are rational beings who seek to maximize their satisfaction - a Homo Economicus.

Professor Dan Ariely begs to differ. He believes that people are not fundamentally rational. They behave in irrational ways under many situations all the while thinking that they are behaving perfectly rationally. Moreover, people are irrational in a predictable fashion. In his book, Predictably Irrational, Professor Ariely gives many examples - backed by experiments carried out by him and his colleagues - of people behaving in an objectively irrational manner while believing that they were behaving rationally.

The author divides irrational behavior into several categories. For example, there is the problem of relativity. Nope, I am not talking about Einstein's famous discovery. Relativity in this context means that people take decisions in a relative way and compare them to the available alternative. He gives the example of the price of subscription of the magazine The Economist. While browsing, he came across the subscription page for the magazine. Three options were given: Economist.com subscription (1 year) for $59.00; print subscription (1 year) for $125.00; print and web subscription (1 year) for $125.00. What's going on here? Faced with choices like these, the author in an experiment discovered that more people would choose the third option because compared to the second option, it seems like a great deal. When the author undertook another experiment in which the third option had been removed, he discovered that most people chose the first option. The presence of the third option prompted more people to go for the more expensive subscription because relatively speaking it seemed a great deal as compared to the second option.

Taking another example: the laws of supply and demand are a staple of Econom

Image via Wikipedia

ics. Every student studies these laws typically illustrated by nice charts like the one shown. These show demand decreasing as price increase and the reverse happening with supply. It is assumed that where the two curves intersect is where the price point will be set. But as the author discovered, people are not so rational. It seems that exposure to the initial price point for a product will determine what people will subsequently pay. If they are exposed to a high price, they will be more willing to pay higher prices than if they are initially exposed to a low price.

There are a number of other examples given where people think they are behaving rationally, but it turns out that their behavior is being governed by irrational factors of which they are not even aware of.

This book is an eye opener into human behavior. It should be considered as a must-read for any manager. It exposes the irrational in people and shows that they are not irrational in a random manner; instead the irrationality is very predictable. I highly recommend this book.

Book Review: 10 Deadly Marketing Sins

Title: 10 Deadly Marketing Sins: Signs and Solutions

Author: Philip Kotler

Why is marketing not working? Why is it that the vast majority of new products, services and business fail. Is there something wrong with marketing theory or does the fault lie with marketing practice? This book asserts that the problem is not with marketing theory but with marketing practice. Mr. Kotler identifies 10 practices – which he calls “Deadly Marketing Sins” that lead to this large incidence of failure.

As the author points out, marketing is supposed to drive business strategy. According to the author, marketers are supposed to research new opportunities and then apply Segmentation, Targeting and Positioning (STP) to point the company in the right direction. Only after this are marketers supposed to flesh out the famous 4Ps (Product, Place, Price and Promotion). Then marketers are supposed to implement the plan and monitor it. Unfortunately, in too many cases, this process does not happen. In far too many companies, marketing has virtually no say in development and design of new products and services but instead is required to try and sell the firm’s current products and services. Thus the marketing function gets reduced to one P (generally Promotion). So what, according to the author are the 10 deadly marketing sin?

• The company is not sufficiently market focused and customer driven.
• The company does not fully understand its target customers.
• The company needs to better define and monitor its customers.
• The company has not properly managed its relationships with its stakeholders.
• The company is not good at finding new opportunities.
• The company’s marketing plans and planning process are deficient.
• The company’s product and service policies need tightening.
• The company’s brand building and communication strategies are weak.
• The company is not well organized to carry on effective and efficient marketing.
• The company has not made maximum use of technology.

The book addresses each of these issues; identifies the signs that characterize each “sin” and proposes possible remedies. In the end, the author proposes a list of 10 commandments, each of which addresses a corresponding fault and the whole of which constitutes good marketing practice.

After going through this book, I felt that the author was talking in too generic terms. While all the points mentioned in the book are worth considering, there is no meat. One comes away with the feeling that this is marketing lite. Treat it as a generic reference book but don’t look to it for inspiration.

Book Review: FAQs Marketing: Answered by the Guru of Marketing

Title: FAQs Marketing: Answered by the Guru of Marketing

Author: Philip Kotler

Publisher: Cyan Books

Mr. Kotler is one of the definitive authorities on marketing. His books are standard required reading in universities around the world. As one of the foremost marketing authorities, Mr. Kotler receives a large number of marketing related questions. In this book, he answers the most frequently asked questions on the subject.

Unlike a standard text book, this book is in a question-answer format. The author covers a wide range of topics covering not just the traditional aspects of marketing but also the new areas which will increase in importance in the future.

The author divides the book into several parts.

• Part 1: Markets and Marketing.
• Part 2: Marketing Strategy.
• Part 3: Marketing Tools (The 4Ps).
• Part 4: Marketing Planning.
• Part 5: Marketing Organization.
• Part 6: Marketing Control.
• Part 7: Marketing Areas of Application.
• Part 8: Marketing Excellence.

Each section is further divided into topics which then explore various marketing issues within each topic. For example, the marketing tools section is further divided into subsections like product, price, place etc. Various topics in each of these are then discussed like the brands and branding topic in the product subsection.

Overall, this small book covers a wide range of topics that are pertinent to marketing in the 21st century. Not only are traditional issues (like the 4Ps) covered, but also newer issues like internet marketing are discussed. This book should be an essential part of a marketers library as it serves as a very handy reference guide to the various marketing issues that such a person will encounter in their career.

Definitely recommended reading. If you haven't got it, get it, read it and keep it as a reference.