Design of Business


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Hardcover
191 pages
ISBN 9781422177808 Published Oct. 2009
Harvard Business School Press
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Design of Business
Why Design Thinking Is the Next Competitive Advantage
By Roger L Martin 

Related Blog Posts
Healthy Competition
Posted Aug. 2, 2011 8:26 a.m. by jon
In - 800 CEO Read Blog

Business books can deal with some very serious advice regarding competitive advantage, but sometimes it's fun to take the lighter side of things. We sell business books, and Stone Creek Coffee sells coffee. We never cross paths in the marketplace, but ping pong? That's a different story.

We found out via Twitter that Stone Creek Coffee employees were working just as hard on their game as we were, so we figured we'd see what they were made of. If they played anything as good as their coffee, we knew we'd have a challenge on our hands.

Phil Lenaghan from SCC and Zach Karpinski from 8cr were the first match. Zach unfortunately bit the dust. However, Dylan Schleicher (8cr) then proceeded to cream SCC president Eric Resch. A good way to end this tournament! But fair is fair - with an even win/lose ratio, we'll have to have a rematch after a bit more practicing.

Want to take competition a little more seriously? Check out these books if you haven't yet:



Fixing the Game
Posted May 17, 2011 5:38 a.m. by dylan
In - 800 CEO Read Blog

With the NFL owners and players union currently in court over the lockout, it might seem like an odd time to use the NFL as an example for how to run anything. But current labor disputes aside, the NFL is by far the most successful business operating in sport today—it must be doing something right. And Roger L. Martin has done a great job of highlighting one of those areas in Fixing the Game, released earlier this month by Harvard Business Review Press.

This is not Martin's first time out as an author. He also wrote The Opposable Mind, which was a runner-up in the leadership category of our 800-CEO-READ Business Book Awards in 2007, and The Design of Business, which won our Innovation & Creativity category two years ago. So, we're obviously big fans. He has a great knack for taking big and somewhat complicated ideas and distilling them for readers. He tackled brain and design issues in management in those previous books. Here is is addressing American capitalism's decades-long dogma that the purpose of a company is to maximize shareholder value.

The only way we can avoid increasingly frequent stock market meltdowns—and all the pain, suffering, and economic dislocation they cause—is to explore the theories that underpin American capitalism. Our theories about the fundamental goal of corporations and the optimal structure of executive compensation are fatally flawed and have created stock market upheavals. Acting on these theories, we have built structures into our capital markets system that threaten the future of American capitalism.

He begins to build his argument in the first chapter by taking on the flaws in Michael Jensen and Dean William Meckling 's agency theory, which has had a huge influence on American business since they first set it forth in their 1976 paper “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.”

Like all good theories, agency theory had limitations and unexpected side effects, a fact its disciples have chosen to ignore (though Jensen himself has acknowledged them). In particular, the theory had the unfortunate effect of tightly tying together two markets: the real market and the expectations market.

The real market is the world in which factories are built, products are designed and produced, real products and services are bought and sold, revenues are earned, expenses are paid, and real dollars of profit show up on the bottom line. That is the world that executives control—at least to some extent.

The expectations market is the world in which shares in companies are traded between investors—in other words, the stock market. In this market, investors assess the real market activities of a company today and, on the basis of that assessment, form expectations as to how the company is likely to perform in the future. The consensus view of all investors and potential investors as to expectations of future performance shapes the stock price of the company.

Historically, professional managers played entirely within a single market: they were in charge of performance in the real market and were paid for performance in that real market. That is, they were in charge of earning real profits for their company and they were typically paid a base salary and bonus for meeting real market performance targets.

As we've seen from the numerous recent examples of executives running their companies into the ground and walking away with huge paydays, this is obviously no longer the case. So where does the NFL come into all of this? Martin believes that "While it isn’t a perfect metaphor for business, it is a highly instructive one."

In both the NFL and in business, as the real game grew in stature and prominence, the expectations game became more and more sophisticated. In both cases, dedicated individuals emerged to ply their trade in the expectations market, becoming NFL bookies or bettors, capital markets brokers or investors.

But unlike American capitalism, the NFL looked thoughtfully at the relationship between the real game and the expectations game and identified a serious danger. After the 1962 season, Paul Hornung, the Green Bay Packers halfback and the league’s most valuable player (MVP), and Alex Karras, a star defensive tackle for the Detroit Lions, were accused of betting on NFL games, including games in which they played. Pete Rozelle, just a few years into his thirty-year tenure as league commissioner, responded swiftly. He suspended Hornung and Karras for a full season, and fined five Lions players who admitted to placing $50 bets on that year’s Championship game between the Packers and the Giants. Rozelle also created NFL Security—what is often called the NFL’s FBI—to work with law enforcement agencies across the country to detect and stamp out player involvement in betting on the NFL.

Why did Commissioner Rozelle take such a definitive stand against players and coaches betting on football? He must have envisioned the consequences if he didn’t.

If you'd like to learn more and see what Martin suggests are the "five major things we need to do to heal American capitalism, to fix the game and get real again," you can download the first chapter of the book at the Harvard Business Review.



The 800-CEO-READ Business Book Awards of 2009
Posted Dec. 15, 2009 3:00 a.m. by dylan
In - 800 CEO Read Blog

The 800-CEO-READ Business Book of the Year

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—And Themselves by Andrew Ross Sorkin, Viking Books, 624 pages, $32.95

Even though Too Big to Fail was written during the same year the financial collapse occurred, Andrew Ross Sorkin has written what we predict will be the definitive book on the subject. Sorkin not only tells a gripping “perfect storm” story—reporting the gory details as our 401k’s disappeared and our financial system became nationalized—but he humanizes the players as well, resulting in an imminently readable, albeit lengthy, book.

It’s a sobering reflection and a critical reminder of what transpired in recent financial history. But it is the great stories and detailed, insider information—the sense one gets of being in the room while history is being made—that will place this book among the greats.

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Leadership

best in category ➻ Maestro: A Surprising Story About Leading By Listening by Roger Nierenberg, Portfolio, 128 pages, $19.95 | Leadership is something that can be learned. However, the most respected leaders are not textbook cases, but those who wield the necessary traits and knowledge with a very personal sense of purpose. A parable, which Maestro is, is an ideal way to create a scenario for that sense of purpose to develop, as ideas are presented in ways that are interpreted personally by those who read them, rather than listed as bullet points or chapter summaries. By using the metaphor of a conductor and his orchestra, important details are revealed, from interpersonal communication skills, individual effort to benefit the group, group dynamic to celebrate the individual, and the role that listening (both physically and intuitively throughout all experience) plays in creating the most successful results.

best of the rest:

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Management

best in category ➻ The Four Conversations: Daily Communication That Gets Results by Jeffery Ford & Laurie Ford, Berrett-Koehler, 238 pages, $19.95 | At the core of management is the practiced skill of communication. The Fords present four kinds of the conversations and the best situations to use each of them. More performance conversations (asking for promises) and less understanding conversations (are you OK with all of this?) are needed, they say.

best of the rest:

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Marketing & Advertising

best in category ➻ Trust Agents: Using the Web to Build Influence, Improve Reputation, and Earn Trust by Chris Brogan & Julien Smith, John Wiley & Sons, 271 pages, $24.95 | Social Media took off in big ways this year, and while technology has become an important tool for communication, marketing, and advertising, Trust Agents reels the tech-excitement back in by advocating a not-so-new element that is essential: trust. If the people who put out the messages aren’t people we’d like to work with and buy from, their messages, no matter how easy to broadcast, won’t hold their weight. It’s not about how to master technology, but about being the kind of person, the kind of company, that people like to do business with. This book is filled with prime examples, great stories, and hard facts that convince us not to be blinded by innovation as we communicate with our audiences.

best of the rest

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Sales

best in category ➻ A Seat at the Table: How Top Salespeople Connect and Drive Decisions at the Executive Level by Marc Miller, Greenleaf Publishing Group, 174 pages, $19.95 | In A Seat at the Table, Marc Miller shows that selling is based on the simple concept that the only thing a customer desires is value. The value this book will have for salespeople is that in the discussions of the customers need for value, Miller guides the reader step by step how to provide strategic help for their customers and deliver new and different forms of value.

best of the rest

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Finance & Economics

best in category ➻ False Economy: A Surprising Economic History of the World by Alan Beattie, Riverhead Books, 321 pages, $26.95 | Alan Beattie not only provides engrossing snapshots of mankind’s economic history; he demonstrates how naturally fragile economies are—and continue to be—and how they are guided by the choices we make, not by some invisible hand. It’s a great lesson in these uncertain times that we are—or at least can be—in control of our own economic future.

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Entrepreneurship & Small Business





best in category ➻ Escape from Cubicle Nation: From Corporate Prisoner to Thriving Entrepreneur by Pamela Slim, Portfolio, 340 pages, $25.95 | “Should I go solo?” The collapse of companies and careers over the last year has many asking themselves exactly that question. It’s the avalanche of concerns that follow like “What would I do?” to “Do I have enough money?” that stop most. The power of Escape from Cubicle Nation is that it removes all the roadblocks to saying “Yes.”

best of the rest

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Biographies & Narratives

best in category ➻ The Match King: Ivar Kreuger, the Financial Genius Behind a Century of Wall Street Scandals by Frank Partnoy, PublicAffairs, 272 pages, $26.95 | In The Match King, Frank Partnoy brings Ivar Krueger, the match king, and exciting (though terrifying) time to life. We learn how he cornered the market on matches in his native Sweden and using “creative” accounting was able to ride that success to riches beyond belief until the market collapsed and so did his house of cards. So brilliant is Partnoy’s portrayal that I wanted to keep reading the book even as I walked to my car from the office at night. A great story, told well—there is nothing better.

best of the rest

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Current Interest

best in category ➻ Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—And Themselves by Andrew Ross Sorkin, Viking Books, 624 pages, $32.95 | How could we not pick a book on the financial crisis to lead the Current Interest category this year? And if we are going to pick a book on it, how could it not be this one? Too Big To Fail is the definitive book on the events leading up to, as well as on the characters involved in, the financial meltdown. In his reporting, Andrew Ross Sorkin has managed to weave together an entertaining narrative and recreate a nearly unbelievable sequence of events on Wall Street and in Washington—one that will likely be referenced as long as the topic is studied.

best of the rest

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Personal Development

best in category ➻ Power of 2: How to Make the Most of Your Partnerships at Work and in Life by Rodd Wagner & Gale Muller, Ph.D., Gallup Press, 243 pages, $24.95 | Wagner and Muller contend that it is a myth, or a rarity at least, that the best work happens when one heroic person who is somehow more superiorly gifted than average wrestles an insurmountable task and wins. Instead, Power of 2 proposes that a great partnership can more reliably produce transcendent work by capitalizing on the strengths of both persons engaged in the venture. It’s not a surprise then that Power of 2 was published by Gallup Press, the experts on strengths theory, and it is a pleasure to read a book that encourages collaboration based on strong research and communicated through enjoyable stories, particularly at time when many people are more often encouraged to “look out for #1.”

best of the rest

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Innovation & Creativity

best in category ➻ The Design of Business: Why Design Thinking Is the Next Competitive Advantage by Roger L. Martin, Harvard Business Press, 191 pages, $26.95 | Design thinking is a popular trend in innovation thought this year and a number of good books submitted to this category offer various and useful treatments. The Design of Business by Roger Martin lays out the most applicable system to integrating design thinking into an organization or applying it to a singular problem. Martin also shows just how design thinking can reside harmoniously with more analytical or quantitative approach to strategy. Using memorable metaphors, Martin brings his professorial experience to the topic teaching the uninitiated and the theorist alike this new way of problem solving.

best of the rest

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Big Ideas

best in category ➻ What Would Google Do? by Jeff Jarvis, HarperBusiness, 257 pages, $26.99 | Don’t be confused. This book is not about Google. Jarvis is delivering the virtues of clickable, linkable, searchable, and transparent using the Internet powerhouse as the metaphor. The thought experiments in the final third of the book (Google Cola, Google Capital, and The United States of Google to name a few) make concrete the ways in which the web is quickly changing what we expect from those who serve us.

best of the rest

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