Book review: Islands of Profit in a Sea of Red Ink

Note: This review was originally published in The Hamilton Spectator.

Islands of Profit in a Sea of Red Ink

By Jonathan Byrnes

Portfolio / Penguin ($35 Cdn)

The next time all your managers get together for a meeting, here’s something worth adding to the agenda.

Get each manager to list the five customers you shouldn’t do business with. The five products you shouldn’t sell. And the five services you shouldn’t offer.

Now, compare lists. If everyone’s top five is different, you’ve got yourself a serious problem with profitability.

And odds are your problem goes like this.

Forty per cent of your business is unprofitable.

Thirty per cent of your business is so profitable that it keeps you in the black and subsidizes your losses.

And the remaining 30 per cent makes no more than marginal contribution to your bottom line.

In other words, you’ve got islands of profit in a sea of red ink.

Author Jonathan Byrnes, a senior lecturer at MIT, first discovered these tiny islands and the red, red sea while working with a lab supply company 20 years ago.  Every department was making their numbers but that wasn’t translating to a healthy bottom line.

And the pattern has kept repeating itself in Byrnes’ consulting work with more than 50 of the highest-performing firms across business and industry.

Turning the islands into continents and draining the sea starts with a smart and sound business strategy. “Strategy is the foundation on which all profitability initiatives are built,” says Byrnes, who believes that three core principles capture the essence of a good strategy.

One, it’s all about customer value.

Two, strategy is defined by what you say no to.

And three, you have to be best at something.

“If you get these right, chances are strong that you’ll succeed.”

Too many organizations take their customers for granted. They assume that already know what their customers want. And they believe those wants never change.

“The starting point in strategy development must be the creation of value for customers by deeply understanding their real underlying business needs and developing innovative ways to meet them,” says Byrnes. “Customer needs are a moving target.”

Trying to be everything to everyone guarantees unprofitability. “A manager can develop a winning strategy only if he or she is willing and able to define crisply and clearly what is out of bounds. In this way, strategy acts like a laser, bringing the whole company into phase, and enabling the company to burn a hole right through its target market.” Strategy is all about focus and alignment. You need to know which customers, products and services aren’t a right fit for your organization.

And your organization must absolutely be the best at something. If you’re not the best, someone better will always beat you. “Companies that fall into the trap of trying to be everything to everyone almost by definition cannot be best at something,” says Byrnes. “This leads to a vicious cycle.”

The good news is that hunt for profitability can start in your own backyard. “There is an enormous amount of money to be made by improving the business you already have in hand,” says Byrnes. “For some managers, it’s easier to spend money on glossy new initiatives than to systematically improve the business. But when your business is tuned up to its full potential, you can drive it like a Ferrari. It’s hugely fun and immensely satisfying to manage. It’s also very rewarding.”

Byrnes lays out a gameplan for doubling down on the 30 per cent of your business that makes money, improving on the 30 per cent that’s marginal and phasing out the unprofitable 40 per cent.

Pulling this off requires what Byrnes calls paradigmatic change. To break through the inevitable wall of “the way we have and the way we will always do business”, you need to build a strong, clear and convincing case that there’s no choice but to change. The platform may not be burning but the clock’s ticking.

And the most important thing any president or CEO can do to maximize profitability? “Creatively, systematically and relentlessly build the capabilities of the company’s middle management team,” says Byrnes. “Middle management performance is the single most important element in corporate performance.”

The key to excellent performance is to manage at the right level. “As managers progress up the business hierarchy, their focus must increasingly shift from managing the company as it is (or as it was) to building the company for the future.”

So, the next time your managers are all in a room, get them making a list, check it twice and find the 30 per cent of your business that’s keeping you in business.

Book review: Getting change right

Getting Change Right: How Leaders Transform Organizations From the Inside Out

By Seth Kahan



There’s something you should know before sending out that all-staff missive announcing the latest and greatest change initiative.

Most of us won’t read your memo. We’re too busy with our day-to-day responsibilities and 40 other initiatives. We’re too distracted and too overloaded with information.

Yes, some of us will make time to give your memo a cursory read. But even then, a few of us won’t understand it. Others won’t buy it. And by the time the day is done, none of us will remember a word of it.

If you want to get change right, you need to ease off the memos and double down on meetings. Stop wordsmithing. Get out of your office. Meet with us one-on-one and in groups large and small.

Strike up conversations. Be genuine. Be bold. Listen more and talk less. Figure out what’s going on in our world. Find out what matters to us. Ditch the PowerPoint and tell stories. Invite debate and discussion. Welcome feedback and pushback. Be willing to reconsider, rethink and refine your game plan.  

Yes, these conversations will be messy, repetitive and sometimes frustrating. You’ll blow out your calendar. You won’t always like what you hear. But if you don’t invest the time upfront to find common ground, gain trust, earn respect and build relationships, change simply will not happen. And that’ll waste a whole lot more time, money and effort.

“Success at leading change – dramatic, sustained improvement – is largely determined by a leader’s capacity to not only enrol others but engage them in a mutually supported vision of the future,” says author  Seth Kahan, a change leadership consultant who’s worked with CEOs and senior leaders the world over.

“Create ways for people to get together and converse. Get them participating, engaged and involved. This is the road to personal investment, enthusiastic support and genuine buy-in. This is how you move people across the line from ‘I have to do this’ to ‘I want to do this’. And that makes all the difference in the world.”

According to Kahan, the trick is stop believing you need to figure everything out in advance and to start doing a better job of jumpstarting conversations and getting the right people involved.

So what are the conversations and who are the right people?

Kahan says there are eight conversations that create the future. What is the best possible thing that can happen as a result of our efforts? How do new ideas successfully take root in our culture? Where do the trajectories of our efforts converge? What motivates us to succeed? What would be the consequences if we were both successful? If we were to generate dramatic results, what partnerships would we rely on? What prerequisites do we both rely on to achieve big wins? And how can our interdependence be improved?

As for people, every successful change initiative relies on select group. Kahan calls them your most valuable players. 

“They are not always your friends. They do not always have clout, political power or resources. But they are powerful in the truest sense of the word and deserve your respect. Your MVPs will midwife the future you are working hard to realize.”

Look at all the groups you must reach for your project to succeed. Now pinpoint within those groups the folks who will be instrumental to your success. Who can block or slow down your progress? Who has something to gain or lose from your change project? 

Your list of MVPs will include political leaders within your senior leadership ranks. Policymakers, resource providers and influencers. Thought leaders, technical experts, practical visionaries and frontline executers.

To engage your MVPs, grab their attention by issuing a challenge. Kahan says they’ll respond to high goals and extraordinary opportunities. Make becoming an MVP a professional development opportunity. Generate magnetism that pulls people to you. And talk about the leadership potential you see in them. “We all respond to others who see who we are or can be,” says Kahan.

To be a great change agent, you need to be an ace at bringing people together, creating healthy interaction, defining a shared future and building engagement.  Before people buy-in, they need to see how your change will make their life easier and better.

“You need to become expert at getting people involved in co-creating the future, jump-starting bold conversations that draw people in, and triggering professional excitement,” says Kahan.

“Getting change right is less about producing communiqués and more about cultivating relationships. This is a true paradigm switch – from a model in which you design and assemble messages to one in which you till, plant, nurture, weed and harvest affinities.”

So let’s skip the memo and strike up a conversation instead.

Book review: Convince them in 90 seconds

Convince Them in 90 Seconds: Make Instant Connections That Pay Off in Business and in Life

By Nicholas Boothman

Workman Publishing


It doesn’t happen often but it happened a few weeks ago.

I sat in on a really good presentation. A mercifully brief and tightly focused talk that got straight to the point.

The senior management team was on the receiving end of pitch from a business executive who’s winding down his career and ramping up his volunteer work here at home. 

He got 10 minutes on the agenda to talk with us about a local non-profit that could use a helping hand. 

In making his pitch, he told us some great stories about the organization. Talked about the past, the present and highlighted what we could accomplish together in the future.  He also shared his personal story.

He walked us through a few stripped down PowerPoint slides. Pointed out that we’re both in the business of building leaders. And then he  asked for the order. We were willing and able to get involved and help out?

All in all, he delivered a great presentation and made a strong first impression with the folks around the table.

What’s more, he would of made author Nicholas Boothman proud. Boothman is a licensed master practicioner of neuro-lingusitic programming. To put it another way, Boothman is really good at making instant connections and he knows how to harness the power of persuasion.

Having spent a quarter century as a photographer in high-end fashion and advertising, Boothman became very good at spotting who had the innate ability to connect with anyone in a warm and spontaneous way. Those connections were usually made within the first minute and a half of people getting together for a photo shoot.

“The first 90 seconds of any encounter isn’t just a time for making a good first impression,” says Boothman. “In the first few moments of any meeting, you connect with a person’s instincts and their human nature – their hardwired responses.”

Boothman says in those opening seconds, our subconscious survival instincts kick in and our mind and body make some snap judgements and lightning quick decisions. Do we run, fight or interact? Break out or put away the Crackberry and give you our undivided attention and an open mind? Is the person in front of us an opportunity or a threat? Friend or foe?

In those first 90 seconds, we’re sizing you up and deciding whether you’re okay or if you should go away. Do we trust and feel safe with you? Are we going to play ball together?

To improve the odds of making an immediate connection, Boothman encourages us to adopt the KFC formula for success communications. Know what you want. Find out what you’re getting. And change what you do until you get what you want.

Define what you want in positive terms and in the present tense.  If you don’t know what you want, chances are we’re not going to give it to you. So always remember the golden rule. If you don’t have a point, don’t make a presentation.

Pay attention to the feedback you’re getting and learn from it. What messages are hitting and missing the mark? Figure out what’s moving you to your goal and what’s distracting you. And if you don’t get what you want, try different approaches.

Keep close tabs on your attitude. It’s a mash-up of your body language, your tone of voice and your choice of words. Attitude is the first thing people pick up in face-to-face communication, says Boothman. Do you come across as warm or cold? Happy or miserable? The good thing about your attitude is that you can control it and adjust it.

 Successful leaders share three really useful attitudes. They’re enthusiastic. They’re curious. And they embrace humility, with a public persona rooted in modesty and service to others. “When a large ego is generously wrapped in humility, it is a handsome package,” says Boothman.

There’s a lot more practical advice from Bootham. It’s advice that can help you do a better job of connecting with other people and pitching your next big idea, project or partnership.

“No matter your line of work, you are first and foremost in the business of connecting with other people – and those people are deciding whether that’s going to happen or not, in about the same time it takes to glance at a photograph.” And, like posing for a photo, always remember to smile when making a connection.

Jay Robb lives and works in Hamilton and blogs at