Business Book ClubFriday, 02 September 2011 15:50
September's top business books
Fit To Bust: How great companies fail by Tim Phillips
(Kogan Page, $29.95)
Here’s one for the bedside table: 36, self-contained, easy-to-read, short chapters about where things went wrong in business. When I couldn’t face the long novel, I’d read a few before drifting off.
Spotting what hasn’t worked has become a small industry over the last five years. It’s not just as a result of the global financial crisis. It began when people started noticing that companies that were labelled “built to last” were not lasting. Even Jim Collins, who wrote a best seller of the same name eventually had to follow it up with a book on why great companies fail.
Phillips doesn’t try to distill too many grand principles out of the stories in Fit to Bust. He just tells you what happened in each particular case. There are cheeky comments and the odd theme, but the main one seems to be “stuff happens”.
That “stuff” can be a tumultuous event that couldn’t be predicted, a la Black Swan, but most of the time it’s unfortunate decision-making, inappropriate strategy or the build up hubris around previous success.
Some examples stem from corrupt practices. The opening story is Bernie Madoff’s ponzi scheme. But even here, it was built on uncritical support from a lot of gullible investors, many of whom should have known better.
Alternatively, one of the closing chapters looks at the collapse of Long Term Capital Management (LTCM). Here, the investment model itself was developed by two respected academics who should have known better. Both Nobel Laureates no less. But they offered the same thing as Madoff – a return that was always positive.
In the end, it wasn’t, but not before it had been backed by some of the biggest names on Wall Street.
In between, there are case studies in all sorts of industries, ranging from accountancy to motorcars.
There’s also the problem of celebrity CEOs. The book quotes a warning from the American Management Association – they display the features of a cult: “they inspire devotion, have charismatic leadership and separate you from your community”.
That’s almost identical to Fortune magazine’s criteria for Best Places to Work: A sense of purpose, inspiring leadership and knockout facilities. Thereafter, Phillips quotes celebrity failures from Iceland to Albania.
Overall, this book is a warning. Beware grand notions of business principles. Unforeseen events can kill any great business. On the flipside, it is often a fortuitous turn of events that underwrites success rather than widely espoused business theory. Don’t mistake it for a robust winning formula.
Corpus Rios: The how and what of business strategy by Christopher J Tipler
(RIOS Press, $65)
My first thoughts on seeing Corpus Rios: “not another book about strategy that claims to be different to all the previous ones”. I put it in the pile with others of the genre. There’s no shortage of “new” takes on strategy.
When I eventually picked it up, my view started to change on page 49, when the author introduced the problem of “values”. As someone who has both sat through, and run, more than a few strategic off-sites, I find most efforts in this area completely wasted.
How many times have we left a strategy session motivated and inspired only to find nothing much changes?
I got so frustrated with this that I introduced a slogan for every such meeting: less strategy, more action. Not that strategic thinking isn’t important; just that it’s useless if it doesn’t lead to action.
Demanding real outcomes often got results, but Tipler’s RIOS model is much more than that. It’s a comprehensive model that moves the conversation beyond the who and why and into the action realm of how and what. It seriously stress-tests strategic notions to generate whole-of-firm solutions that have lasting impact.
It was the conversation about “values” that made this clear. In Tipler’s words, value statements “are neither process (how) or content (what)… rather they are result of behaving in a certain way over a period of time.”
In other words, values are not a starting point for the strategic dialogue. Instead, they are an outcome of the strategy you put in place. How refreshing is that?
He is similarly dismissive of Corporate Social Responsibility (CSR), seeing it as a remote bolt-on that achieves little. Triple bottom lines and corporate philanthropy go in the same drawer. That’s also refreshing.
The author’s view is not socially or environmentally irresponsible (Tipler has sound “green” credentials) but he makes the obvious point: “genuinely good social outcomes and… a low environmental footprint (are) not necessarily found by following fashionable concepts.”
He returns to this later in the book with an elegantly argued chapter on how a structured focus on sustainability can yield lower costs, better products, motivated employees and more market power.
In between, the RIOS model is explained in depth. At times this makes for less exciting reading but that is part of the RIOS argument. You can’t develop robust, actionable, strategy without rigorously drilling down to find real ways of translating it into practice.
This is not a book written for start-ups or SMEs, yet you cannot come away from it without ideas.
Perhaps there’s a case for RIOS Lite. Although a full implementation probably requires the resources only available in larger entities, it’s not that hard to apply the thinking to a business of any size.
4.5 stars out of 5.
Alan Hargreaves has spent 35 years in financial services and business consulting, in the US, Asia and Australia. He is also a regular speaker, consultant and investor. He is author of the management book, Recharge, published by John Wiley and Sons. www.alanhargreaves.com
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