#88/111: Skunk Works

What is it about?

If you never heard of Skunk Works, it is a innovation branch of Lockheed which specialized in building air crafts. Kelly Johnson managed since the creation to 1971 and was succeed by the author Ben Rich. Ben Rich tells about their projects, their philosophy and why Skunk Works was one of the most special projects in the USA.

What can I learn?

Prototype and improve: The Skunk Works was originally built as a prototyping/R&D/innovative branch of Lockheed. Therefore they approached problems differently. Instead of years planing, they built lots of prototypes, tested them and improved them. They never wanted to achieve perfection (80% is good enough). This allowed them to give 3-5 prototypes to their customer (often the CIA or Air force), so their customers could test them in depth without spending hundreds of millions of dollars.

Rapid development cycles: This was an other main advantage of Skunk Works over lots of other innovation branches. Kelly Johnson wanted the engineers to be at most 40 feet away from the shop workers because he wanted them to see how their designs were created. Furthermore, it allowed both sides to communicate more easily and the shop workers felt that they are important.

Bureaucracy is your enemy: Ben Rich tells about two similar projects. One was completed in 6 months and with about 50 people. The second one took 24 month and about 200 people. Why? Thanks to comptrollers, regulations and such. Skunk Works worked independently from Lockheed which was unique and extremely important. Kelly Johnson hadn’t promoted people because of seniority, which is quite normal in most corporations. He also hadn’t allowed outsiders (e.g. gov’ officials) to stay at the Skunk Works for a long time. He managed the shop independently and successful.

Conclusion

Skunk Works is a awesome book but although a bit lengthy. It’s extremely interesting to see how such great air vehicles were built and which methods they used to keep their startup spirit alive. Essentially this book covers so much stuff which was rediscovered recently, like MVPs, lean development, etc. Definitely worth reading. Recommendation!

#80/111: Built To Sell

What is it about?

It took me fifteen years to build this service company, now I want to retire and spend more time with my kids. But how? Even if you aren’t going to sell your company immediately, John Warrillow will show you how to make your company sellable and your job as a CEO more comfortable. I will focus a bit more on service companies because for most products companies these things are obvious.

What can I learn?

Recurring revenue and a repeatable sales process: A main key to increase the value of your company is to create recurring revenue. It could be subscriptions, consumer goods or long-term contracts. This helps you to create a more consistent cash flow and less short-term liabilities. Furthermore, your sales process should be repeatable. Try to create a product which could be sold without (much) customization and hire at least two sales people. Why two? Because they love competition! In the book, the owner of a creative agency, created a simple five step process to sell and create logos.

Hire managers: If you created your product, you are probably going to scale your business a bit. Besides the two sales people, you may want to focus more on your product and hire more people how are awesome at creating your product. After some time you may increase your sales force and the amount of creators. Instead of managing them by yourself, hire/promote people to managers. Your goal is to sell this company or at least make you dispensable. 

Sell big: If you finally decided to sell your company, you should look for brokers which help your sell your company. Later when talking to the future owners you should emphasize on the possibilities your company offers. You created a great management team, a repeatable sales process and product and it could be scaled to the unlimited. Sell big and sell a superb vision of what could be.

Conclusion

Built To Sell is an awesome book! I love the story about the agency owner who wants to sell his company. It reminded me of the E-Myth but here’s the story is a bit deeper and more interesting. The second part of the book explains each principle again in detail. Awesome book and clear recommendation!

#74.0/111: My Life in Advertising

What is it about?

This book is actually two. My Life in Advertising, the autobiography of Claude C. Hopkins and his famous publication Scientific Advertising. In this post I will review My Life in Advertising.

What can I learn?

Fun is subjective: Claude C. Hopkins was raised in a highly religious household. His mother forbid him seeing plays or playing cards, because she believed that these are diabolic activities. Therefore, he looked for other activities and began cleaning at his school and distributing fliers. He said: “The only game I’ve ever learned is business.”. It’s his occupation and recreation.

Simple, natural ads with a coupon: His most successful ads followed this scheme. Firstly, he said that he was raised as a simple man, so he could only sell to other simple man, which were the majority. Secondly, the ads were natural, i.e. no lies, no marketing speech. Often he described how something was created and built a campaign on this obvious fact. For example, he created a campaign for Schlitz Beer in which he described how everything was cleaned twice a day and the bottles were washed four times. This was industry standard but nobody ever used it in an ad before. Thirdly, he inserted coupons for free samples because he wants to decrease the prospects risk and truly convince them that the product is excellent.

His great mistake: There is a chapter called My Great Mistake where he talks about don’t starting a company on his own. Many of his former scholars, i.e. which learned from him how to create great advertising, started their own companies and succeeded. He said that he never had enough self-confidence. After many years working for other people and agencies, he finally decided to start his own businesses which were successful. However, he thinks that this isn’t an advice for the majority. Everyone should decide on his own where he fits and what he wants.

Conclusion

I truly enjoyed My Life in Advertising. This is an other vintage classic from 1927 and most observations are still true today. It’s interesting how he worked his way up from a fruit picker. Then decided to get a degree in accounting. There he realized that accounting is just a overhead and costs will always be minimized. Therefore he started to switch to the money earners, i.e. into advertising. In the last chapter he wrote that he helps juvenile delinquents to love work as he do which is impressive for this time.  All in all a great biography. Recommendation.