B4B – Reinventing the Customer-Supplier Relationship – Book Review

I just finished reading B4b: How Technology and Big Data Are Reinventing the Customer-Supplier Relationship and it helped me understand the company I’ve been working for and others in the industry.

One of the models the book puts forth is one of 4 levels of companies. A company can stay at one level or try and progress to next levels. The authors put emphasis on the need for adding levels with AND, instead of OR.

The four levels are organized by the complexity of the offer and the result the customer is expecting.

  • Level 1: Simple Offer
    • This is like a simple product company, where the manufacturer distributes product to re-sellers that distribute to end users. An example might be a company that sells toasters.
  • Level 2: Complex Offer
    • This is like an IT or enterprise software company that sells a complex system. This offer requires someone to manage the system after purchase. This level of company will sell the product to a customer, like a hospital, and then leave and let the hospital engineers maintain the system.
  • Level 3: Optimize
    • This level of company offers complex products, but adds additional services. An example might be a software vendor that sells a product with an annual maintenance contract. This vendor might remotely monitor the software or perform routine maintenance or other programs to make sure the customer is able to use the product.
  • Level 4: Outcome
    • This level of company offers customers outcomes. An example is a copier machine company that does not sell copiers, but puts copiers in office buildings and sells per page. People are not buying copiers, not buying maintence contracts, but are buying a copy. Another example is Amazon Web Services offering servers by the minute.

The book takes these categorizations of companies and spells out useful advice for each. The Level 4 companies require more automation and not just per-outcome pricing. The authors warn that if a Level 4 company tries to sell using Software-as-a-Service (SaaS) pricing without the necessary level of automation, then it will cost the company a lot more. This is because the company will have guaranteed an outcome, but without automation, the delivery of each unit will vary. We know this in IT because depending on the employee and depending on different factors, the time required to set up a server can vary.

A lot of small and medium size traditional IT and software vendors are doing Level 2 and Level 3 offers, where they offer complex products and selling annual maintenance contracts. The book makes the argument that because customers are getting introduced to Level 4 companies in the consumer space, that they will increasingly expect Level 4 companies, like Salesforce and Amazon in the commercial space.

B4B makes the case that many software vendors products offer way more features than are actually used by any individual customer. This gap between the customer’s usage and available capabilities is something that software vendors should take notice of. What ratio of your developers work is going to adding new features, that might not actually contribute to value-add for the customer? With this feature/usage gap, those developers have cover to use an increasingly larger portion of their work time to implement the underlying platform needs, to bring their company to Level 4 automated offers. This requires deep instrumentation and understanding how customers use the product.

Make an Impact With These Powerful Insights

This video is a great interview with T. Harv Eked for people between 24 and 35. I have listened to Tony Robbins and Robert Kiyosaki before, but this video was the first time I heard of this guy.

Powerful quotes from the interview:

  • “If you want to be rich, why don’t you just do what rich people do?”
  • “What do rich people do?” … “Learn it. I studied rich business people.”
  • “I want to tell you the seven principles I found that all rich people have in common. Don’t tell me. Do it. See if they work.”
  • “I was sure if I bet on the right race car (sold the right product) that I would get rich. I just had to find the right product. That was a mistake. That principle is wrong.”
  • “It’s not about the car, it’s about the driver of the car.”
  • “Being rich is a result.”
  • “You are the only root to your success.”
  • “Your mind has got to be right. Your character has to be right. Your habits have to be right.”
  • “If you are a success, then everything you touch will be a success. Work on you.”
  • “It wasn’t about the business. It wasn’t about the business. It was about me.”
  • “First comes thought. Then comes action. Then comes results.”
  • “Get rid of every thought that does not support success now.”
  • “If you’re focusing on money, you’re too late.”
  • “Where do you get money? From other people.”
  • “People will give you there money if you help them. You are going to solve a problem for them.”
  • “An entrepreneur is a person that solves problems for people at a profit.”
  • “No body pays you be a success.”
  • “Your job is to find a problem you can truly help people with. Not BS.”
  • “Find your passion and your ability.”
  • “You should believe these things not because it’s true, but because it’s helpful.”

Tony Robbins, Money Strategies Book Review

Tony Robbins has a new book titled Money: Master the Game. Tony interviews 50 “legendary financial experts” and asks them each what portfolio, principles and money strategies they would leave behind to family and friends if they could not leave them any money.

The first half of the book is Tony building the case why the strategies are important. This helps the reader fully appreciate the advice later in the book, instead of the strategies just being listed right at the beginning. This foundation covers:

  • The Deleterious Effect of Fees and Active Managed Mutual Funds
  • The Value of Compounding
  • Dollar Cost Averaging
  • Why taxes will probably increase in the future and how you can use a Roth IRA to pay taxes at todays low rates instead of in the future.
  • The need for different buckets, your safety bucket, risk bucket and fun bucket.
  • Why no ones consistently beats the market and what you can do instead of trying to beat the market.
  • The goal of investing is a lifetime income.
  • Why some fixed index annuities are great.
  • The difference between a fiduciary and a broker. A fiduciary is like a dietician who will recommend the best diet for you. A broker is like a meat salesman.

The middle of the book has specific strategies. For example, Ray Dalio recommends a balanced portfolio (generalized and without leverage because this is a book for the common man). Tony’s financial team back tests the portfolio for the past couple decades to prove that it works. Some of the strategies include:

  • The all seasons balanced portfolio that Ray Dalio recommends.
  • Investing in a market index fund, like a Vanguard S&P 500 index fund.
  • Investing in a fixed indexed annuity because it protects 100% of the principle and still lets you participate in some of the upside. The gains from the previous year are locked in each year. The book ecommends website http://www.lifetimeincome.com/
  • Investing in a fixed indexed annuity within a Roth IRA.
  • Fixed indexed annuities are backed by insurance companies, not banks. Individual insurance companies are backed by insurance guarantee
  • Why the order of returns are important, not just the average rate of return.
  • Immediate annuities are for people at retirement age and deferred annuities are for people not yet at retirement.
  • Private placement insurance is a tool of the ultra-wealthy. This is life insurance policy where the value is based on low-fee index funds that you can take a loan out against, instead of withdrawing. There is no tax consequence if you take out a loan. The value of the insurance policy is based on the investment growing. You can structure to pay off the loan in the future or have your life insurance pay off the loan when you die. Must be an accredited investor or buy through TIA-CREF for non-accredited investors. Remember to talk to your fiduciary or the TIA-CREF representative to fully understand what is offered.
  • “One of the simplest things to protect your family is to establish a living revocable trust.” The trust can own your house a brokerage account. The key benefit is when you die, then those assets will avoid probate, which is a costly and length process and makes everything public record. You can setup a trust inexpensively through Legal Zoom or for free at Get Your Shit Together. A will does not protect you like a living trust.
  • Asymmetric risk/reward.

The last part of the book is the transcript of Tony’s interviews with the legendary financial investors, including:

  • Carl Icahn
  • David Swensen
  • John C. Bogle
  • Warren Buffet
  • Paul Tudor Jones
  • Ray Dalio
  • Mary Callahan Erdoes
  • T. Boone Pickens
  • Kyle Bass
  • Marc Faber

Invent to Learn: New Book About Makers

There is a new book titled Invent To Learn: Making, Tinkering, and Engineering in the Classroom that I came across recently. I have not read the book yet, but wanted to share it for the people interested in 3D learning, or how 3D printing or makerspace culture can be used to help teach students.

Like how the web changed learning with Google, Wikipedia and YouTube how-to videos, the new makerspace culture and tools will change how students learn a decade from now. The change will happen whether schools endorse it or not, but the teachers that embrace it will better prepare their students for the future than those that ignore it. For years, Wikipedia and other online resources was shunned by the school establishment in favor of paper books. A decade later, encyclopedias aren’t sold in large quantities door-to-door or on software DVD. Most information is available on the web.

The End of Competitive Advantage – Book Review

I’m reading this book now titled The End of Competitive Advantage by Rita Gunther McGrath. The book is relevant to company stock picking. It describes the new environment that a lot of digital-first (information-first) and other companies find themselves in compared to old industries. The book gives frames of reference to think about the new environment and actionable steps to improve business strategies in this new environment.

An example, in contrast to Warren Buffet (who doesn’t invest in a lot of technology companies because he says he doesn’t understand them) is that Buffet has metrics described in Buffetology and other books on how to analyze the balance sheets and cash flow statements of different businesses and “to compare them to other businesses in the same industry”. The End of Competitive Advantage book defines a new term, “arena” with some criteria to frame competition boundaries in a world where Netflix, TiVo and iTunes show purchases are not in the same industry as the big network operators, but the new companies are hurting the old big network industry. So even though Netflix (on-demand movies technology company on many devices) is different from Network Television (a single living room device with static programming) they compete in the same arena. The book defines “arena” as a connection between a a certain group of customers and solutions/offers.

Another example is Borders was not in the same industry as iTunes but Borders CD music section and whole store doesn’t exist anymore. Borders industry competitors were Barnes and Noble and Books a Million, but they were in the same industry as iTunes and the whole book store industry mostly lost to iTunes.

So industry may not be the most relevant way to consider competitors. This matters in company stock picking because who you compare one balance sheet or cash flow against another matters so you know who the strong performers are and who the weak performers are.

The book also introduces the concept of businesses with transient competitive advantage being stronger than businesses with sustainable competitive advantages. An example is Kodak vs Fuji. Kodak is bankrupt and it defended its sustainable competitive advantage (chemical-based photo processing) until the industry became irrelevant. Fuji invested heavily in different waves and has transient competitive advantage as it rides the wave of digital photography, copiers, printing, etc…

There’s still quite a few sustainable competitive advantage companies in the world, like Coke. They have a brand and large capital investments that form a high barrier to entry, but Borders, Kodak, Blockbuster and others had sustainable competitive advantages and large capital expenditures as well until their industry became irrelevant and their large capital investments became rigid straight jackets preventing them from pivoting and riding a new wave.

61 Ways to Sell More Nonfiction Kindle Books

I read Steve Scott’s book 61 Ways to Sell More Nonfiction Kindle Books and came away with actionable steps to take to help my info-product business and steps that are transferrable to help me with my blog.

Scott describes his books as “Proven Internet Business Strategies for the Price of a Coffee.” Below is a brief overview of the book.

Key Strategies Covered

  • 10 Pillars of a Rock-Solid Kindle Business
  • Create an Author Platform
  • Cross-Promote
  • Using Amazon’s tools effectively, like Author Central

Key Features

  • 61 specific ways to sell more nonfiction kindle books. Scott shares specific strategies, tactics and how-to steps.
  • Actionable. This is a guide with specific how-to instructions.
  • Proven Practices. Learn from Scott’s experience.

Chapters at a Glance

  • Your Free Gift
  • Want to Sell More Nonfiction Kindle Books?
  • 10 Pillars of a Rock-Solid Kindle Business (Strategies #1 to #10)
  • 4 Rules of Internal Book Marketing (Strategies #11 to #14)
  • Maximize Your Amazon Book Listing (Strategies #15 to #21)
  • Using the Author Page to Sell More Books (Strategies #22 to #27)
  • Increase Book Sales with Free KDP Select Promotions (Strategies #28 to #32)
  • How Pricing Affects Your Total Book Sales (Strategies #33 to #37)
  • How to Build a Loyal Audience with an Author Platform (Strategies #38 to #41)
  • Why an Email List is the Ultimate Author Platform (Strategies #42 to #46)
  • Advanced Book Sales Techniques (Strategies #47 to #52)
  • Follow “White-Hat” Kindle Practices (Strategies #53 to #58)
  • Closing Thoughts
  • Book Excerpt (How to Write a Nonfiction eBook in 21 Days – that Readers Love!)
  • More Kindle eBooks by Steve
  • Thank You
  • One Last Thing