Confronting the reality of new business model is the essence of this book.
A business model consists of 3 components:
1. External Realities: 1) Financial history of your industry, 2) Overall business environment, 3) Customer Base, 4) Root-cause analysis.
2. Financial Targets: 1) Operating margins, 2) Cash flow, 3) Capital Intensity, 4) Revenue Growth, 5) Return on investment.
3. Internal Activities: 1) Strategy, 2) Operations, 3) People, 4) Organization.
Harmonizing the three components by repeatedly reviewing them as you add new information, and analyzing the subsequent changes in relationships among them.

The author uses 3 technology companies as examples: EMC, Sun and Cisco. Of course, you can probably predict what the bad apple is among the 3. Sun, of course. The author cited Scott McNealy’s slow response to the structural change of the business model.

The authors also credited Nardelli for doing a banged up job at Home Depot in remaking Home Depot’s business model due to the rapidly dwindling cash position. He was able to centralizing purchasing to cut costs, improve the management quality, install the information systems needed to manage inventory more efficiently. Of course, this book came out before Nardelli was removed from Home Depot as the CEO. The stock price of Home Depot did not go up that much during his tenure but he seems to have kept up Home Depot’s competitive position against Lowe’s.

In looking around corners chapter, they go over the tools for staying ahead. Some ideas are interesting:
– Look for the customer chain: all the way to the end users.
– Converse with people from different parts of the business, at a trade show, or at lunch with a supplier.
– GE’s strategy sessions – look for external changes and issues that seem relevant for the future then discuss the strategy.

How to condition your culture for reality:
– Pick a initiative to mobilize the organization and lead an initiative by learning the guts of the initiative yourself and then invest your time and energy in the initiative.
– Pick the right people to implement the initiative.
– Be courageous.
– Changes in rewards can add muscle.

What stands out from this book is how easy it is to tell people to confront reality and respond to them. Sometimes, the consequence is so dire that one may need to go through the normal grief process just to achieve the transformation. Having worked at Sun during the last 13 years, I saw how Sun went through the transformation of the roller coaster ride. The elephant was in the living room, everyone saw it but nobody wanted to do anything about it because it takes courage from the top to make the change. Sun is changing the business model to embrace the open source strategy. Whether this change will save Sun or not, it remains to be seen.

Einstein, well known for Theory of Relativity, has a rather adventurous life. The following stand out for me:

– Not particular good at math but eventually warmed up to math because he needed to solve his physics problems. Very pragmatic.

– It helps to have a good sounding board like Michele Besso, his best friend, and his Olympiad group that allow all the great minds to debate and challenge one another. This may have contributed a great deal to his accomplishment.

– His relationship with his first wife, a fellow physics classmate, was all about his passion for the same subject. It’s like have a soul mate. She might have contributed to it by being his sounding board. He eventually divorced his first wife and gave all his Nobel prize winning to her and their two Children. His second child came down with mental illness. And his eventually married his cousin, who was more of his opposite, protector and business manager and left him pretty alone. Strange that a mature relationship tend to be a symbiosis-type.

– A general rebellious attitude toward establishment, Newtonian theory, prompted him to question and came up with the Theory of Relativity. Sometimes, it takes a rebel to make the paradigm shift.

– His appreciation for simplicity was out of his own belief that God would not make nature too complicated for man kind. This allowed him to put two and two together, combining EM wave theory with Newtonian Law. The example about the man in the train and the synchronicity of time and space is very brilliant. Of course, it helps to work in a patent office next to train station with a clock tower. It’s amazing how our environment plays a huge role in how we perceive the world.

– Of course, his rigid idea about how a grand unified theory should be able to explain the entire universe include quantum mechanics also pushed him to doubt the quantum mechanics as being incomplete and forced him to purse the unified theory until his death. Sometimes a certain way of thinking – like a business model – can help you to reach fame and can sink you at the end because you’re not able to adapt to a new model.

– Einstein, being born into Germany at its most turbulent time, has a great international perspective about the good and evil of mankind. His fear for the use of mass-destruction weapons prompted him to advocate mutual arm reduction among the superpower nations. His famous letter to Franklin Roosevelt resulted in the creation of the Manhattan project, the Atomic Bomb. Though he was wrong that German scientists were pursuing the same bomb, the end result is that it ended the world war in Asia and brought about the nuclear era.

– Einstein enjoyed his celebrity statute and yet lived a very simple life. He used his fame to advance his course including the establishment of Israel, after seeing first hand how his people was treated by Germen. And yet he was prophetic in his urge to live peacefully with Arabs or suffer the dire consequence.

Overall, I enjoyed listening to this abridged audio book. It’s fascinating to see how he arrived at all the theories – the bending of light due to gravity, general theory of relativity, and etc. It’s also comforting to see a great man so down to earth with all the same problems we have – relationship with spouses, children, colleagues, and the academia world. Too bad, he didn’t live long enough to see the how quantum mechanic has transformed the world as we know today w.r.t. to the internet and computer. It would be great if he can come up with the grand unified theory. But we’ll need to wait for the next Einstein…