Trinity MBA Book Club — #4
Poll is here: https://forms.gle/AhWRE4T9fngBfvk36
Some more information about the selected books.
Free Lunch Thinking: How Economics Ruins the Economy by Tom Bergin, an investigative financial journalist for Reuters. His work has prompted parliamentary inquiries and won numerous awards in Britain, the United States and Asia, including a Gerald Loeb Award for Distinguished Business Journalism and the Orwell Prize for Journalism.
Economic theories and models shape our everyday lives. They are relied on by politicians when tax rises or cuts are being considered. They inform debates about everything from bonuses for CEOs to minimum wage rates to the level of job protection enshrined in law. They determine what levels of tobacco or petrol duty are charged, and influence government approaches to issues as diverse as obesity and climate change.
The question is: are policy makers right to be so slavishly reliant on them? Tom Bergin is sceptical, and in Free Lunch Thinking he subjects eight of the most prevalent economic mantras to close scrutiny, assessing how they play out in practice. Again and again, he shows how individuals, companies and markets fail to respond to policy changes as theory predicts. He exposes the missed opportunities and wasted resources that result. And by tracing the development of key economic tenets, he demonstrates how their champions’ tendency to believe in phenomena for which they have little hard evidence leaves accepted economic wisdom frequently being more about faith than facts.
His book both exposes and challenges lazy thinking. It also sets out a path for more considered future.
Amazon link: https://www.amazon.co.uk/Free-Lunch-Thinking-Economics-Economy/dp/1847942733
The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by William Thorndike, founding partner of private equity firm Housatonic Partners.
“What makes a successful CEO? Most people call to mind a familiar definition: “a seasoned manager with deep industry expertise.” Others might point to the qualities of today’s so-called celebrity CEOs — charisma, virtuoso communication skills, and a confident management style. But what really matters when you run an organization? What is the hallmark of exceptional CEO performance? Quite simply, it is the returns for the shareholders of that company over the long term.
In this refreshing, counterintuitive book, author Will Thorndike brings to bear the analytical wisdom of a successful career in investing, closely evaluating the performance of companies and their leaders. You will meet eight individualistic CEOs whose firms’ average returns outperformed the S&P 500 by a factor of twenty — in other words, an investment of $10,000 with each of these CEOs, on average, would have been worth over $1.5 million twenty-five years later. You may not know all their names, but you will recognize their companies: General Cinema, Ralston Purina, The Washington Post Company, Berkshire Hathaway, General Dynamics, Capital Cities Broadcasting, TCI, and Teledyne. In The Outsiders, you’ll learn the traits and methods — striking for their consistency and relentless rationality — that helped these unique leaders achieve such exceptional performance.
Humble, unassuming, and often frugal, these “outsiders” shunned Wall Street and the press, and shied away from the hottest new management trends. Instead, they shared specific traits that put them and the companies they led on winning trajectories: a laser-sharp focus on per share value as opposed to earnings or sales growth; an exceptional talent for allocating capital and human resources; and the belief that cash flow, not reported earnings, determines a company’s long-term value.
Drawing on years of research and experience, Thorndike tells eye-opening stories, extracting lessons and revealing a compelling alternative model for anyone interested in leading a company or investing in one — and reaping extraordinary returns.”
Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Taleb, Distinguished Professor of Risk Engineering at New York University’s School of Engineering. A former derivatives trader and mathematical finance practitioner turned essayist and scholar-scientist specializing in problems of uncertainty. His work focuses on practical, mathematical, and philosophical problems with probability, particularly model error. His work on risk covers issues of political stability, convergence of risk measures, statistical mechanics, psychological biases, and risk-based systems of ethics.
In his most provocative and practical book yet, one of the foremost thinkers of our time redefines what it means to understand the world, succeed in a profession, contribute to a fair and just society, detect nonsense, and influence others. Citing examples ranging from Hammurabi to Seneca, Antaeus the Giant to Donald Trump, Nassim Nicholas Taleb shows how the willingness to accept one’s own risks is an essential attribute of heroes, saints, and flourishing people in all walks of life.
As always both accessible and iconoclastic, Taleb challenges long-held beliefs about the values of those who spearhead military interventions, make financial investments, and propagate religious faiths. Among his insights:
- For social justice, focus on symmetry and risk sharing. You cannot make profits and transfer the risks to others, as bankers and large corporations do. You cannot get rich without owning your own risk and paying for your own losses. Forcing skin in the game corrects this asymmetry better than thousands of laws and regulations.
- Ethical rules aren’t universal. You’re part of a group larger than you, but it’s still smaller than humanity in general.
- Minorities, not majorities, run the world. The world is not run by consensus but by stubborn minorities imposing their tastes and ethics on others.
- You can be an intellectual yet still be an idiot. “Educated philistines” have been wrong on everything from Stalinism to Iraq to low-carb diets.
- Beware of complicated solutions (that someone was paid to find). A simple barbell can build muscle better than expensive new machines.
- True religion is commitment, not just faith. How much you believe in something is manifested only by what you’re willing to risk for it.
The phrase “skin in the game” is one we have often heard but rarely stopped to truly dissect. It is the backbone of risk management, but it’s also an astonishingly rich worldview that, as Taleb shows in this book, applies to all aspects of our lives. As Taleb says, “The symmetry of skin in the game is a simple rule that’s necessary for fairness and justice, and the ultimate BS-buster,” and “Never trust anyone who doesn’t have skin in the game. Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them.”
Book Depository link: https://www.bookdepository.com/Skin-in-the-Game-Nassim-Nicholas-Taleb/9780141982656
The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company by Robert Iger, Executive Chairman of The Walt Disney Company and Chairman of the Board of Directors.
Robert Iger became CEO of The Walt Disney Company in 2005, during a difficult time. Competition was more intense than ever and technology was changing faster than at any time in the company’s history. His vision came down to three clear ideas: Recommit to the concept that quality matters, embrace technology instead of fighting it, and think bigger — think global — and turn Disney into a stronger brand in international markets.
Today, Disney is the largest, most admired media company in the world, counting Pixar, Marvel, Lucasfilm, and 21st Century Fox among its properties. Its value is nearly five times what it was when Iger took over, and he is recognized as one of the most innovative and successful CEOs of our era.
In The Ride of a Lifetime, Robert Iger shares the lessons he learned while running Disney and leading its 220,000-plus employees, and he explores the principles that are necessary for true leadership, including:
- Optimism. Even in the face of difficulty, an optimistic leader will find the path toward the best possible outcome and focus on that, rather than give in to pessimism and blaming.
- Courage. Leaders have to be willing to take risks and place big bets. Fear of failure destroys creativity.
- Decisiveness. All decisions, no matter how difficult, can be made on a timely basis. Indecisiveness is both wasteful and destructive to morale.
- Fairness. Treat people decently, with empathy, and be accessible to them.
This book is about the relentless curiosity that has driven Iger for forty-five years, since the day he started as the lowliest studio grunt at ABC. It’s also about thoughtfulness and respect, and a decency-over-dollars approach that has become the bedrock of every project and partnership Iger pursues, from a deep friendship with Steve Jobs in his final years to an abiding love of the Star Wars mythology.
“The ideas in this book strike me as universal” Iger writes. “Not just to the aspiring CEOs of the world, but to anyone wanting to feel less fearful, more confidently themselves, as they navigate their professional and even personal lives.”
Book Depository link: https://www.bookdepository.com/The-Ride-of-a-Lifetime-Robert-Iger/9780399592096
