August 8, 2007
Five Business Book Classics - The Essay
I wrote a piece for the July/August issue of Corporate Dealmaker. The magazine did eight pages on business books and their impact on the M&A industry. Here is my contribution where I discuss books that should be on every executive's reading list:
And Don't Forget The Classics
There are M&A books, and there are business books that should be required reading for every executive. Here are five guaranteed to help you be more productive and make smarter decisions.
by Todd Sattersten
Books on mergers and acquisitions often take a distinct nuts-and-bolts approach. No mystery there: Deals are complex projects and dealmakers want practical advice on how to execute them. Even for dealmakers, though, transactions are just part of a bigger strategic picture, on where decisions of many kinds are needed. Every executive, dealmaker, or otherwise, is ultimately judged on the quality of the decisions he or she makes, and there's no shortage of books aimed at helping those managers make smart choices. Here are five that should be on every executive's reading list.
1 - "Competitive Strategy" by Michael Porter
If you boil business down to its essence, you are left with two key elements--strategy and execution. Strategy is deciding what direction to go, and execution is how to get there. Michael Porter's "Competitive Strategy" gives us the clearest view of the first element. Strategy is about competition, and prior to the book's 1980 publication, competition was defined as other companies operating in the same industry. Porter's five forces model created a much richer view, adding suppliers, buyers, substitutes, and new players to the definition. Those added dimensions made Porter's work ground-breaking. Without Porters' model, it is hard to see how PC manufacturers' margins quickly shrank in the 1990's. The cause was not competition among industry players, but the superior bargaining power of their two primary suppliers--Intel and Microsoft. In my industry of publishing, substitutes have become the primary source of competition as readers' attention is diverted to other forms of media.
2 - "Execution" by Larry Bossidy, Ram Charan, and Charles Burck
But strategy is only one half of the equation. An organization must be able to carry out the plan and "Execution", released in 2002, is one of the best book out there on the topic. In their book, Bossidy, who spent 40 years running industrial conglomerates, Charan, who provides insights as a guru to Fortune 500 CEOs, and writer and editor Burck mapped out "a system for getting things done through questioning, analysis, and follow-through." Identifying and developing leadership talent lies at the core with the goal not to evaluate people for what they are doing today, but for the positions they will hold tomorrow. Leaders then lay out clear goals everyone in the organization can understand, follow-through to clear internal obstacles, and reward the doers who are producing results. Finally, organizations that understand execution inject a healthy dose of realism into their culture through open, informal dialogue to eliminate false consensus and by making needed changes today rather than waiting for tomorrow for things to get better.
3 - "In Search of Excellence" by Tom Peters and Bob Waterman
"In Search of Excellence", published in 1982 was the result of a McKinsey project started five years prior to find out what successful organizations look like. The authors found that the most effective organizations were those that recognized the irrationality of the humans that inhabited them. Those companies were clear about their beliefs and created a strong value system that acted as a compass for organizational decision-making. Inside companies like Boeing, 3M, and Hewlett-Packard, Peters and Waterman found small, passionate teams accomplishing big, game-changing feats and meetings taking place in hallways as executives exercised management by walking around.
4 - "Good to Great" by Jim Collins
Jim Collins also looked at successful companies in his 2001 best-seller. Using a methodical approach, Collins identified companies that went from average to sustained periods of growth. Walgreens, Pitney-Bowes, and Nucor were among the 11 companies that made the cut and his book's metaphors have become a lexicon for business in the 21st century-the flywheel, BHAGs (big hairy audacious goals), level 5 leadership, to name a few.
5 - "The Effective Executive" by Peter Drucker
Before Stephen Covey's "Seven Habits" and David Allen's "Getting Things Done", Peter Drucker det the standard for books on productivity with "The Effective Executive". Decision-making, playing to your strengths, and "first things first" are all presented with the signature clarity Drucker brought to the study of management.
Todd Sattersten is vice-president of 800-CEO-READ and author of an upcoming book from Portfolio on the 100 best business books of all time.
Posted by Todd S. at August 8, 2007 10:24 AM
"Competitive Advantage" by Michael E. Porter is a must read too.
Here are 5 books I recommend: The Leader's Handbook by Peter Scholtes, New Economics by W. Edwards Deming, Lean Solutions by James Womack and Daniel Jones, Ackoff's Best by Russel Ackoff and The Innovators Solution by Clayton Christensen. See some more management book recommendations. http://curiouscat.com/management/essentialmanagementbooks.cfm
Here are my modern classics:
1. Blue Ocean Strategy by W. Chan Kim and Ren�e Mauborgne
2. Re-imagine by Tom Peters
3. The Innovator's Solution by Clayton Christensen
4. The Art of the Start by Guy Kawasaki
5. Free Prize Inside by Seth Godin
Executives who read Competitive Strategy as if it is a strategic Bible and all they need to know will be and are predictable and hence eminently beatable by strategists who think more creatively.
I heard Kenichi Ohmae, the other 'world's greatest living strategist' say this recently: "My friend Michael Porter and others will tell you your strategy is based on how you create value through your value chain. But, good strategists by-pass the value chain completely. Michael Dell's business plan was rejected by his Professor because it defied Porter's reliance on a value chain. So, Dell launched it anyway".
Ohmae says strategy frameworks like Porter's are too rigid and self-limiting. They put walls around your strategic thinking.
"Think about the product, service or company five years from now and how it should be. That is where your strategy starts: it frees you from having a limiting framework," says Ohmae.
I was skeptical till I heard Porter talk at length about Southwest Airlines' strategy and why it was successful, without once mentioning or acknowledging a (or possibly the most)significant reason for Southwest's continuing success - the incredible people culture Herb Kelleher and his successor cultivated that makes that company so great...and profitable.
Good list, Todd. Here's a comment and then my recommended adjustments.
I've always thought that Porter got the part of strategy that they teach in MBA programs. It's all head and no heart. That's why he could miss the key to SWA's success. It's still a classic, though, because it's influenced so many and because it effectively established a language for talking about strategy that almost everyone uses.
I'd leave it on the list, but I'd make two adjustments to what's there.
Drucker first. I consider The Effective Executive and Managing for Results as two parts of the same book. The former is about management of self. The latter is about managing the enterprise. I'd include them on the list as one entry.
I'd remove Execution and replace it with Kouzes and Posner's The Leadership Challenge for two reasons. First, I don't think Execution has been around long enough to have stood the test of time and rate "classic" status even though it is a great book.
There's also no book on Todd's list that's about the people part of management. The Leadership Challenge is the best comprehensive book on the subject.
Todd, this is a fantastic list. I dare you to be bold and make it a "6 pack" with this add that cranks up the human element exponentially: Fierce Conversations by Susan Scott.
This is a powerful book combination. I might suggest creating a second list - more on personal development. To execute great strategy - to make an organization really rise to the next level - takes a team. A team at its most "micro" level is composed of individuals. Develop each individual team member - combine their natural talent and energy with great strategy and you have something magical My all time favorites for personal development...
- The Four Agreements - Don Miguel Ruize
- Brand You 50 - Tom Peters
- The Art of Possibility - Ben and Roz Zander
- QBQ Personal Accountability - John Miller
- The Secret - Rhonda Byrne
Some of my other suggestion may be found at www.therainmakergroupinc.com - hit the "Inspire Me" link...
Thanks for all the comments.
These are great suggestions for additional reading.
Phil: Porter matters and his model is only rigid if you let it be.
Sue: Fierce Conversation is a favorite of mine.
Chris: I think you are right about their being various levels in the company - individual, team, and organization. Each require different skills.
I beg to differ: "Execution" does not belong on a top 50 list, let alone a top 5 list. The book includes heaping doses of hero worship of EDS CEO Dick Brown, who later led the company to ruin, resulting in his dismissal and humilation of himself, the company and cratering of its stock.
A good business book is, IMHO, long on relevance, short on words, and self-importance/pretentiousness on the part of the author(s) should be conspiculously absent. That said, the only book I can strongly agree with in the above top 5 is Good to Great, along with these three that are essential (in no specific order):
"CEO Logic" by C. Ray Johnson
"Differentiate or Die" by Jack Trout
"How to Win Friends and Influence People" by Dale Carnegie. (Carnegie's conversational writing tone remains fresh and runs rings around the extra-dry, astonishingly overrated Covey).
And whilst reminding people of the timeless classics by Drucker, Porter and Peters, don't forget Mary Parker-Follett, who'd written most of it before those guys were gurus.
Very little new under the sun.
I would like to direct readers to an excellent page chock full of recommended non-fiction and fiction any professional should seriously consider reading.
Fiction frees the mind to think innovatively and creatively; the best non-fiction provides mind-stretching ideas without self-aggrandizement by the author.
http://headrush.typepad.com/creating_passionate_users/2006/10/the_book_i_wish.html
This is from the tragically now-defunct "Creating Passionate [Software] Users" blog.
Excellent list for the FORTUNE 500 crowd -- however, I would love to hear what you would recommend for the real engines of our economy -- the "gazelles." They live a different business dynamic. I don't think there can be a universal list that covers small business owners vs. growth companies vs. the FORTUNE 500.
1. The tragedies and histories of William Shakespeare
2. Carnegie's How to Win Friends and Influence People and his books on public speaking.
3. Thomas Watson, Junior's A Business and Its Beliefs and the business part of his Father, Son, & Co. and Lou Gerstner's Who Says Elephants Can't Dance
4. Clair Vough's Productivity
5. Collins and Porras' Built to Last and Collins' Good to Great
But that's not enough.
6. Red Auerbach's "On and Off The Court" and "MBA Management by Auerbach."
7. Muhammad Yunus' "Banker to the Poor"
Verne - You are right. Different parts of the economy need different knowledge. Let me think about that.
fascinating topic for discussion.
any such list must start (and end) with peter drucker.
too, conspicuous by its absence: up the organization, robert townsend.
