Book Short: The Most Rapacious Guys in the Room
I just finished The Smartest Guys in the Room, by journalists Bethany McLean and Peter Elkind. This is the story of Enron, and what a tale it is! The book is a good quick business novel read. It reminded me a lot of Barbarians at the Gate, except that it made me far angrier. I’m not sure if that’s because I’m at a different place in my career now than I was 10 years ago and therefore have a different appreciation for what goes on in companies, or if the Enron guys were just far worse than anyone surrounding RJR Nabisco. But in any case, as my Grandpa Bill would have said, this one certainly raised my hackles.
Anyway, I can’t even get into the details without working myself into a frenzy about these crooks, but suffice to say there are lots of “what not to do” lessons in this book, starting with CEO Ken Lay’s wuss-like, disconnected approach to leading the company and ending with CFO Andy Fastow’s insane rationalizations for using the company as his own piggy bank. Anyway, I thought it would just be easier to just list out a few simple things to look for in your own company if you’re concerned you might be having some financial scandals within. You know you have a problem if…
– Your company has 3,000 off-balance sheet special purpose entities, including 800 in the Caymans
– Your CEO has waived your company code of ethics twice so that the CFO could negotiate deals for his own profit against the company
– Your President combatively calls an analyst an asshole on an earnings call when asked why the company couldn’t produce a balance sheet and cash flow statement with its income statement and earnings release
– Your staffers meet someone from your auditor and say “oh, you’re the guy that won’t let us do something”
– Your accounting department becomes viewed as a major profit center because of its treatment of revenue
It’s truly astonishing what these bozos thought they could get away with. Thank God they’re going to jail. Thanks to my colleague Patty Mah (a friend of the author) for this book.
Book Short:Â Reality Doesn’t have to Bite
I just read Confronting Reality (book; audio), the sequel to Execution, by Larry Bossidy and Ram Charan. Except I didn’t read it, I listened to it on Mariquita’s iPod Shuffle over the course of two or three long runs in the past week. The book was good enough, but I also learned two valuable lessons. Lesson 1: Listening to audio books when running is difficult – it’s hard to focus enough, easy to lose one’s place, can’t refer back to anything or take notes. Lesson 2: If you sweat enough on your spouse’s Shuffle, you can end up owning a Shuffle of your own.
Anyway, I was able to focus on the book enough to know that it’s a good one. It’s chock full of case studies from the last few years, including some “new economy” ones instead of just the industrial types covered in books like Built to Last and Good to Great. Cisco, Sun, EMC, and Thomson are all among those covered. The basic message is that you really have to dig into external market realities when crafting a strategic plan or business model and make sure they’re in alignment with your financial targets as well as people and processes. But the devil’s in the details, and the case studies here are great.
Book Short:Â Go Where They Ain’t
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, by W. Chan Kim and RenĂ©e Mauborgne isn’t bad, but it could literally be summed up by the title of this post. I think it’s probably a better book for people who aren’t already entrepreneurs.
That said, there are two chapters that I found pretty valuable. One is called “Reconstruct Market Boundaries,” which is a great way of thinking about either starting a new business or innovating an existing one. It’s a strategy that we’ve employed a few times over the years at both Return Path and Authentic Response. It’s hard to do, but it expands the available territory you have to cover. The classic Jack Welch/GE “we don’t just sell jet engines, we sell AND SERVICE jet engines” which expanded their addressable market 9x.
The other useful chapter was “Get the Strategic Sequence Right.” The sequence of questions to answer, according to the authors, is:
- Will buyers get enough utility out of it?
- What’s the right price?
- Can you cost it low enough to make good margin?
- Are you dealing with adoption hurdles?
The reason I found this sequence so interesting is that I think many entrepreneurs mix the order up once they get past the first one. It’s easy to start with market need and then quickly jump to adoption hurdles, cost things out, and go with a cost-plus pricing strategy. The book documents nicely why this order is more productive. In particular, pricing first, then costing second, is both more market-focused (what will people pay?) and more innovative (how can I think creatively to work within the constraint of that price point?).
The common theme that’s most interesting out of the book is that new frameworks for thought produce killer innovation. That’s clearly something most entrepreneurs and innovators can hang their hat on.
Book Short:Â Which Runs Faster, You or Your Company?
Leading at the Speed of Growth, by Katherine Catlin at the Kauffman Center for Entrepreneurial Leadership is a must read for any entrepreneur or CEO of a growth company. It’s one of the best books I’ve ever read targeted to that audience – its content is great, its format is a page-turner, and it’s concise and to the point.
The authors take you through three stages of a growth company’s lifestyle (Initial Growth, Rapid Growth, and Continuous Growth) and describe the “how to’s” of the transition into each stage:Â how you know it’s coming, how to behave in the new stage, how to leave the old stage behind.
I didn’t realize it when I started reading the book, but Brad had one of the quotes on the back cover that says it all: “There are business books about starting a company, but they tend to deal with the mechanics of business plans and financing. Then there are books about ‘how to be the CEO of a Fortune 500 company.’ This is the first book I’ve seen that details the role of the CEO of a small but growing company.” Thanks to my colleague George Bilbrey for pointing this one out to me.
UPDATE:Â Brad corrects me and says that I should mention Jana Matthews, who co-wrote the book with Katherine Catlin and is actually the Kauffman Center person of the duo.
Book Short:Â Catchiest Title in a Long Time
You have to admit, a book called The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich has a pretty enticing title. The email geek in me thinks that if it were a subject line, it would have a good open rate. Anyway, the book, by Timothy Ferriss, is a breezy read that blends self help with entrepreneurship, has a lot of good resource lists in it, and is worth reading if you don’t take it too seriously.
There are some good central points to the book. First, life has changed, and people don’t want to slave away until they’re 65 any more so they can do all the fun stuff in their old age — they want to change directions, unplug more regularly, and enjoy life with their families when they’re younger. I buy that.
Second, good companies are increasingly allowing employees more degrees of freedom in the where and when and even how of getting things done, just as long as they get things done — and people should take advantage of that. I buy that as well — we practice that at Return Path, generally speaking. Third, startups that are mainly virtual organizations and internet-based are easier, cheaper, and potentially more profitable than most businesses have been, historically speaking. Ok, fair enough.
Fourth, anyone can be just like the author and do all of this stuff, too, right? Start a business that turns into a cash machine that requires little to no maintenance while becoming one of the best tango dancers in the world in South America, etc. etc. etc. Well, maybe not. I guess the point of self-help books is to show an extreme example and inspire people to achieve it, and I do think there’s a lot to what Ferriss says about how people can live richly without being rich, but the fact is that the world would fall apart if everyone did what he does. And the other fact is that Ferriss is well above average in intellect and drive, and probably some physical talents as well from his descriptions of tango dancing and kick boxing, which must contribute to his success in life far more than his operating philosophy does.
But as I said, it’s a fun read, and if you don’t take it too seriously, or at least take the feedback directionally as opposed to whole hog, it’s well worth it.
Book Short:Â Finishing First
The Power of Nice: How to Conquer the Business World with Kindness, by Linda Kaplan Thaler and Robin Koval, is one of those “airport books” that takes about an hour to read. I had an ear-to-ear grin reading the book, in part because, well, it’s just a happy book, filled with anecdotes about how a smile here or a gesture of kindness there made a difference in someone’s life — both personally and professionally.
But part of my interest in the book was also driven by a long-standing debate we have at Return Path over whether we’re “too nice” as a company and whether we should have “sharper elbows.” I was struck by a few comments the authors made, things you would expect like “nice doesn’t mean naĂŻve” as well as things you wouldn’t like “help your enemies.” To me, that says it all about success in business: you can be a fierce competitor externally and demand accountability internally and still be a warm and kind person, and that’s the best (and most rewarding) place to be.
Book Short:Â Wither the Team
I keep expecting one of his books to be repetitive or boring, but Patrick Lencioni’s The Five Dysfunctions of a Team held my interest all the way through, as did his others. It builds nicely on the last one I read, Death by Meeting (post, link).
I’d say that over the 9 1/2 years we’ve been in business at Return Path, we’ve systematically improved the quality of our management team. Sometimes that’s because we’ve added or changed people, but mostly it’s because we’ve been deliberate about improving the way in which we work together. This particular book has a nice framework for spotting troubles on a team, and it both reassured me that we have done a nice job stamping out at least three of the dysfunctions in the model and fired me up that we still have some work to do to completely stamp out the final two (we’ve identified them and made progress, but we’re not quite there yet.
The dysfunctions make much more sense in context, but they are (in descending order of importance):
- Absence of trust
- Fear of conflict (everyone plays politically nice)
- Lack of commitment (decisions don’t stick)
- Avoidance of accountability
- Inattention to results (individual ego vs. team success)
For those who are wondering, the two we’re still working on at the exec team level here are conflict and commitment. And the two are related. If you don’t produce engaged discussion about an issue and allow everyone to air their opinions, they will invariably be less bought into a decision (especially one they don’t agree with). But we’re getting there and will continue to work aggressively on it until we’ve rooted it out.
There’s one other interesting takeaway from the book that’s not part of the framework directly, which is that an executive has to be first and foremost a member of his/her team of peers, not the head of his/her department. That’s how successful teams get built. AND (this is key) this must trickle down in the organization as well. Everyone who manages a team of group heads or managers needs to make those people function well as a team first, then as managers of their own groups second.
At any rate, another quick gem of a book. I’m kind of sorry there’s only one left in the series.
So far the series includes:
I have one or two more to go, which I’ll tackle in due course and am looking forward to.
I wrote part I of this post in 2011, and I feel even more strongly about it today. I generally keep this blog away from politics (don’t we have enough of that running around?), but periodically, I find some common sense, centrist piece of information worth sharing. In this case, I just read a great and very short book, Six Amendments: How and Why We Should Change the Constitution, by former Supreme Court Justice John Paul Stevens, that, if you care about the polarization and fractiousness going on in our country now, you’d appreciate.
If nothing else, the shattered norms and customs of the last several years should point people to the fact that our Constitution needs some revision. Not a massive structural overhaul, but some changes on the margin to keep it fresh, as we approach its 250th anniversary in the next couple decades.
Book Short: Sequel Not Worth It
Mastering the 7 Essentials of High Growth Companies, by David Thomson, was a poor sequel to the solid Blueprint to a Billion [review] [buy]– and not worth reading if you’ve read the original. It was very short for its price and contained mildly interesting examples of “blueprint companies” that augmented the original book but didn’t uncover any new material or add any thinking to the mix. Basically, it was like another couple chapters that should have been part of Blueprint.
It is not a bad buy in lieu of the original if you haven’t read either one yet, as Blueprint is a bit longer than necessary, but otherwise, you can skip this one.
On a side note – the author’s interactive scorecard is a decent diagnostic tool (though also, I am sure, a lead gen tool for his consulting business).
Book Short – A Smattering of Good Ideas that further my Reboot path
Ram Charan’s The Attacker’s Advantage was not his best work, but it was worth the read. It had a cohesive thesis and a smattering of good ideas in it, but it felt much more like the work of a management consultant than some of his better books like Know How (review, buy), Confronting Reality (review, buy), Execution (review, buy), What the CEO Wants You to Know ( buy), and my favorite of his that I refer people to all the time, The Leadership Pipeline (review, buy).
Charan’s framework for success in a crazy world full of digital and other disruption is this:
Perceptual acuity (I am still not 100% sure what this means)
- A mindset to see opportunity in uncertainty
- The ability to see a new path forward and commit to it
- Adeptness in managing the transition to the new path
- Skill in making the organization steerable and agile
The framework is basically about institutionalizing the ability to spot pending changes in the future landscape based on blips and early trends going on today and then about how to seize opportunity once you’ve spotted the future. I like that theme. It matches what I wrote about when I read Mark Penn’s Microtrends (review, buy) years ago.
Charan’s four points are important, but some of the suggestions for structuring an organization around them are very company-specific, and others are too generic (yes, you have to set clear priorities). His conception of something he calls a Joint Practice Session is a lot like the practices involved in Agile that contemporary startups are more likely to just do in their sleep but which are probably helpful for larger companies.
I read the book over a year ago, and am finally getting around to blogging about it. That time and distance were helpful in distilling my thinking about Charan’s words. Probably my biggest series of takeaways from the book – and they fit into my Reboot theme this quarter/year, is to spend a little more time “flying at higher altitude,” as Charan puts it: talking to people outside the company and asking them what they see and observe from the world around them; reading more and synthesizing takeaways and applicability to work more; expanding my information networks beyond industry and country; creating more routine mechanisms for my team to pool observations about the external landscape and potential impacts on the company; and developing a methodology for reviewing and improving predictions over time.
Bottom line: like many business books, great to skim and pause for a deep dive at interesting sections, but not the author’s best work.
Thanks to my friend and long-time former Board member Jeff Epstein, I recently downed a new book, You’re in Charge – Now What?, by Thomas Neff and James Citrin. I’m glad I read it. But it was one of those business books that probably should have just been a Harvard Business Review article. It’s best skimmed, with helpful short summaries at the end of every chapter that you could blow through quickly instead of hanging on every word.
The authors’ 8-step plan is laid out as:
- Prepare yourself during the countdown
- Align expectations
- Shape your management team
- Craft your strategic agenda
- Start transforming culture
- Manage your board/boss
- Communicate
- Avoid common pitfalls
Ok fine, those make sense on the surface. Here are three things that really stood out for me from the book:
First, “working” before you’re officially working – the countdown period. I tried hard NOT to do this when I was between things, but I’m glad I did the things I did, and now, I wish I had done more. The most poignant phrase in the book is “scarce time available during your first hundred days.” That is an understatement. As my “to read” pile grows and grows and grows with no end in sight…I wish I had done more pre-work.
Second, remember that in every interaction, you are being evaluated as much as you are evaluating. And note that for many people, they will be thinking very critically, things like “do I want to work with this person…is he/she showing signs that he/she wants to work with me?” Yes, we all know as leaders, we live in a fishbowl. But I think that may be even more true during the first couple months on the job.
Finally, this phrase stood out for me: “Acknowledging and in some cases embracing your predecessor can sustain a sense of continuity within the organization and instill a sense of connectivity with employees’ shared past.” There is frequently a temptation to focus on things that need change, which invariably there are…and which invariably you will hear from people who are happy to find a willing new ear to listen to them. But this posture of acknowledge/embrace is especially true in my case, where my predecessor is the founder and 25-year CEO who continues on as our active chairman.
I know there are a ton of books like this on the market, and while I’ve only read this one, I’d say that if you’re starting a new CEO or executive-level job, this is a good one to at least skim to get some ideas.
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