Jonathan Cronstedt on The Star Principle and success
How much can a star, a cow, a dog and a question mark help with your success? A lot, if you read The Star Principle by Richard Koch. This book has tremendously helped my understanding of business and investing. I’ll talk a little about it here, but you can also get more details from my YouTube video at http://youtu.be/vTE5WH4s7uo.
People often ask me for recommendations on favorite authors, and the name Richard Koch is typically near the top of the Jonathan Cronstedt Inspiring and Instructive Authors list. I recently wrote a blog post about another of his books, The 80/20 Principle, and now I’m pleased to discuss The Star Principle because, hey, in the endeavor to be more successful, I’ll take all the help I can get.
The Star Principle is based on the Matrix framework, which the Boston Consulting Group developed in the 1960s. Koch used both of these principles to guide his investments, and the results have been extraordinary, taking him from a few million dollars to more than $200 million.
The principle basically divides companies into four categories:
- Stars: businesses that are in a high-growth sector and are the leaders in their niche markets
- Cows: companies in lower-growth markets but which are still the leaders in their industries, making them big cash generators
- Question marks: businesses in markets that are growing quickly but the companies aren’t the industry leaders
- Dogs: companies in low-growth markets where they’re not the industry leaders, putting them behind the times with no industry innovations
Following this principle will help you can choose the best companies to invest in or work for. You can also use it to build a star company of your own.
I should also point out that this book is easy to understand. Koch takes lofty concepts and makes them consumable, actionable and enjoyable.
So follow your old pal Jonathan Cronstedt and pick up a copy of The Star Principle. Have I ever steered you wrong?
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