Wednesday, July 10, 2013

2013 Top 20 Business Books List (Part I)

Q&A Section
  • Question: Can you Recommend Any Good Business Books for Executives?
  • Answer: Absolutely! 
Photo of black hard cover book with the phrase "2013 Top 20 Business Books" embossed on its cover
2013 Top 20 Business Books List
I will split it into two parts. Today, I will cover the first ten books.

Many years ago, my grand father thought that the time had come to push my father, who was a teenager at the time, to read a real book. As a normal youngster, my father had many more important things to deal with than to read books. Tired of the pressure nonetheless, my father asked grandpa for a book to read. "I want to make sure that I read a good one", he said. To what my grand father replied, "how would you know it's good if you haven't read the bad ones?"
If I was to follow my grandfather's advice, I would have you read the good books as well as the bad ones. But just this time, it may be a good idea not to follow the wise-man's suggestion.
I have read over 250 books, most of which were business related. At an average speed, reading all of them should take about five months of solid dedication. Unfortunately, about half of them were a waste. From the rest, I consider 20 or 8% of the books to be fantastic.
As a way to benchmark the list, let's compare to Zappos' Library. Zappos, the online shoe retailer owned by Amazon, has 38 books as part of the library they offer to their employees. Zappos lets its employees take any of these books home any time they want. This is part of their seriously solid culture. I visited their offices and found their library to include the books I had read and many of the ones I am suggesting in this article. As someone who admires the company, I felt this was a great coincidence.
Photo of reading glasses over an open book. The subtitle reads "Lee un Buen Libro" in Spanish.
Lee un Buen Libro
But what if your top book is not on my list? Well, consider the fact that I have not read everything. Besides, it is always possible that I may be wrong.
In any case, you can still feel reassured that all the books on my list are serious contenders when compared to all other books, even if not absolute number-ones for each category.
A few of the books I am recommending are easy to read thanks to their narrative style. Books from authors Louis Gerstner and Jack Welch fall under this category. Then there are those that are densely packed with technical information. These may need to be read twice. But don't even think of skipping them. While harder to read, these contain incredibly innovative concepts. That is why they make it into the list. Paco Underhill's book and Clayton Christensen' fantastic trilogy fall under the latter more difficult category.
As a group, these books cover most topics within business; a coincidence that makes me feel good about the selection. From reading the blog you should know by now that I like to maintain broad business coverage.
The books are placed within various business categories to prevent having to rank unrelated books together. There are books on Economics, the Environment, Human Resources, Leadership, Marketing, Operations and Strategy.
Following are the first ten books from my 2013 Top 20 Business Books List. The second set of books will be available in a following post. Enjoy!

If you manage a business, you must understand economics. How else will you see the environment outside your window with the clarity needed to allow you to chart a successful plan? Let's also not forget that economics helps us understand how is it that people make buying and selling decisions; something of paramount importance.

Beauty shot picture of book by Tim Harford, "The Undercover Economist", "Exposing Why the Rich Are Rich, the Poor Are Poor-and Why You Can Never Buy a Decent Used Car!"
The Undercover Economist
The Undercover Economist
Exposing Why the Rich Are Rich, the Poor Are Poor-and Why You Can Never Buy a Decent Used Car!
Tim Harford
I have read more books on economics than on any other subject. While many of them are easy to read and understand, these are often so basic that they feel repetitive; covering the same simple principles over and over.
Then, there are a few more that offer interesting new ideas but at a high access-cost to the reader. They are just hard to follow by those not intimately familiar with economics concepts and terminology. Because I felt that a general and clear understanding of the subject is preferable for typical executives, I stayed away from the latter; those books covering complex concepts. Instead. I opted for a book that could communicate with a high degree of clarity and relevance.
Tim Harford's book exceeded my threshold. It is simple to understand, broad in nature, focused when it matters and, at times, very funny; if there is such a thing as a funny economics book. It breaks the ideas discussed into easy-to-relate fragments. Why is it impossible to get a good used car? Read the book. You'll enjoy it. By not getting deep into the weeds, this is a book worthy of periodic recommendation.

Talking about the environment turns off many executives. But things are changing. While there was a time when employees were abused by their employers, today the best companies are those who treat employees with dignity.
I am not talking about feeding a sense of entitlement or giving in to value-eroding unions. Instead, I am referring to understanding that we are all members of a community that thrives when we all thrive. Game Theory tells us that to win big and often, everybody needs to give-in a little.
When we learn to honor our civil responsibility, by eliminating all harmful outputs, companies and citizens win. Notice that I didn't say we should protect this or that part of the environment. Making such statements inevitably leads to the kind of debates that derails the conversation away from the real issue. No harmful outputs is the goal instead.
This is not a matter of being a tree-huger or a regulation-lover; neither of which I am. In fact, I believe that regulations lead to wrong and unexpected outcomes; no matter how well intended such regulations may be.
In markets, greed is behind the creation of all of the value gained by every participant. That is what Adam Smith's invisible hand time-tested concepts suggest. Likewise, I feel that it is possible for greed to drive environmental responsibility. In other words, I believe that market forces, and not an over reaching government, lead to the right environmentally responsible solutions. It just takes leadership and confidence. The same stuff needed to treat employees with dignity. Note that this section may prove to be of greatest difficulty to many leaders.

Beauty shot picture of book by Ray Anderson, "Confessions of a Radical Industrialist", "How my company and I transformed our purpose, sparked innovation, and grew profits--by respecting the earth"
Confessions of a
Radical Industrialist
Confessions of a Radical Industrialist
How my company and I transformed our purpose, sparked innovation, and grew profits--by respecting the earth
Ray C. Anderson
Innovation is the best tool for business. At least from the point of view of economics, innovation is the only multiplier in the master productivity formula. To establish the size of a given economy, add labor and capital together and multiply the result by innovation. While labor and capital lead to linear growth, innovation leads to exponential expansion.
It is therefore essential that we deploy innovation to solve the challenge of creating businesses that are free from harmful outputs; as we have now defined our environmental responsibility. The target is for the same engineers that find better ways for business to profit to also devise creative solutions to the environmental challenge.
Interface Inc., lead by former CEO Ray Anderson, did exactly that. It didn't need regulations to become more responsible. Along the way, the company discovered that solutions that eliminat harmful outputs also improved company efficiency and subsequently raise profitability.
What would you do if you were trying to find the best way to transport a product from China to the US; at the lowest cost, fastest time, with the lowest risk of loss, and in the most customer-centric form? You would hire expert engineers to design everything: from packaging, to inner and outer cartons, to the best logistical route. Well, the environmental challenge is no different. You need engineers that will innovate for you. They will design changes that will eliminate waste and thus save you money. If you do it better than your competition, customers will be happier to spend more money with you. This is exactly what Interface Inc did. And Ray Anderson clearly describes every aspect of this process in his fantastic how-to guide for business leaders.
That Mr. Anderson was able to uniformly motivate so many professionals to solve environmental problems while increasing corporate profits shows his leadership ability. He empowered people to a higher goal.
At some point through the book, it will be clear that Anderson's environmental plans became a strong influence on President Obama's initial months in office. But don't let this turn you away from the book. Anderson accomplished incredible results by motivating and empowering others. In contrast, Obama uses fiat and dictatorship as part of a plan that has predictably failed to gained any traction. One was a competent leader while the other is not. Anderson obtained the results that Obama can't. The book is simply about doing things right and in no way endorses the incompetent White House resident.
Because it deals with an inevitable future where there will be less resources available, this book is a must-read for all leaders; especially those who use LEAN.

Human Resources
For Jack Welch, Human Resources was the most important side of business while at General Electric. This is, after all, the department that finds and develops the best employees the market can offer. HR establishes compensation, educates and gauges adherence to rules. As a result, this department can make or break your business.
What's interesting is that there aren't a lot of good books that deal with HR. It is as if legal compliance and insurance contracts were all that HR had to deal with. These facts make the following book even more valuable as it deals with the fundamental science behind human success instead.

Beauty shot picture of book by Daniel Goleman, "Emotional Intelligence", "Why It Can Matter More Than IQ"
Emotional Intelligence
Emotional Intelligence
Why It Can Matter More Than IQ
Daniel Goleman
I doubt that Daniel Goleman had the slightest idea that his research would become a cult. The term Emotional Intelligence has certainly taken over the business education industry.
While he wasn't the first to coin the term or even to discover that IQ (Intelligence Quotient) scores failed to have any correlation with human success in life, he did develop the subject to its point of critical mass. Thanks to him, Emotional Intelligence has now been democratized. We can all benefit from it.
Be prepared to read a highly technical book. It is, after all, a seriously scholar paper. This means that since you are not a psychologist, you will probably find much of the initial terminology a little dense. But be patient. Soon, you will be describing the Limbic System with the same degree of dexterity as any surgeon.
Today, every business school offers courses on Emotional Intelligence, the kind of intelligence that matters in the real world and which is the focus of this book. Look online and you will find countless Emotional Intelligence groups and certification programs. Regardless, this book is the only original.
Next to Emotional Profiling, Emotional Intelligence is the most important concept to master. Unfortunately, I have yet to come across a good book on Emotional Profiling. Thankfully, Emotional Intelligence is well covered here.
Understanding the book's concepts will also result in a much happier you. Not because this is a Kumbaya book, but because it clearly explains how you are and what can be done with what you have. This book is so good that it is often quoted by the best business writers.

The books in this section are by far the easiest to read. Narratives seem to always resonate with people. Deep inside, we all like stories. But these are not just superficial stories. No endless Rich-Dad-Poor-Dad narratives where one is left wondering where the new insights were. No! These are documents full of the right stuff. They have as much essence as a Harvard Business School case study.

Beauty shot picture of book by Andrew Grove, "Only the Paranoid Survive", "How to Exploit the Crisis Points That Challenge Every Company"
Only the Paranoid Survive
Only the Paranoid Survive
How to Exploit the Crisis Points That Challenge Every Company
Andrew S. Grove
Only the Paranoid Survive is an incredible book. It narrates the difficulties endured by Intel on its way to becoming the company we now know. There was a time that things were so bad that Andy Grove, the author, faced the possibility of being fired. This prompted him to explore what would happen if he was fired and then re-hired for the same position? He asked, what would a recently hired Andy do with the problems? What would the changes be? Then, with his new insight, he executed. There were no sacred cows or pet projects left. This became a unique moment highlighting the importance of introspection; a point discussed in Emotional Intelligence.
The book addresses how Intel was reinvented after the company had to completely abandon what it did best in order to survive. Andy also discusses the interesting concept of 10x performance improvements.
After reading Only the Paranoid Survive, you will be left with the conviction that seeing way into the future is indeed possible when surrounded by capable people.

Beauty shot picture of book by Louis Gerstner, "Who Says Elephants Can't Dance?" "How I Turned Around IBM"
Who Says Elephants
Can't Dance?
Who Says Elephants Can't Dance?
How I Turned Around IBM
Louis V. Gerstner
I came across this book by accident. I found it on a bargain shelve at a TJ Maxx. You know, the kind of shelve where everything looks like garbage. It was quite a find, if there was ever one.
Since the book is old, you may have difficulty buying it. It is nonetheless worth the search.
Louis Gerstner came from McKinsey via American Express. Next to the Boston Consulting Group and Bing and Company, McKinsey is at the top of the business consulting world.
His ability to be both incisive and a clear thinker meant that he was born to solve complex problems; and it turns out that IBM had massive problems indeed. This book narrates his experience trying to break bureaucracy and lethargy at Big Blue. After his arrival, Wall Street analysts asked what his strategic plan was. He responded that IBM had lots of those in their file cabinets. Clearly, that statement took backbone.
Under Gerstner, IBM went from a capital-intensive electronics manufacturer to a high return-on-capital consulting firm. Profits and employee morale skyrocketed. It is perhaps the best reinvention of a company in the history of American capitalism. Gerstner prevented IBM from experiencing a Kodak moment. The book serves as a guide on how to successfully turnaround a business.

Beauty shot picture of book by Jack Welch, "Jack", "Straight from the Gut"
Straight from the Gut
Jack Welch, John A. Byrne
To many, Jack Welch is the best CEO of our time. Direct and unstoppable, this man was once known as Newton Jack. After taking the leader's chair at General Electric, he cut employees by such large numbers that it was said that only the buildings were left standing. He then started the turnaround. Under his control, GE became insanely profitable. Employees delivered much more value for him than for any other executive anywhere.
Jack introduced the idea of cutting the bottom 10% of employees to replace them with better people. His belief in education resulted in Crotonville, GE's Leadership Development Center where all promising stars are prepared to lead one of GE's many companies. Jack also took Six Sigma, Motorola's operational invention, to the ultimate level. By defining clear but demanding goals, Jack created a culture of performance never before seen in industry. If you like your job as a corporate leader, you will love this book.

The art of creating demand for your products depends on your ability to understand your customers. The two books listed here are, without question, miles above any marketing theology books. Both rely on very solid research. They have proven to be effective under all circumstances.

Beauty shot picture of book by Paco Underhill, "Why We Buy", "The Science Of Shopping"
Why We Buy
Why We Buy
The Science Of Shopping
Paco Underhill
When it comes to Paco Underhill's work, I could go on and on dishing out accolades. I understood consumers and their shopping behavior only after reading this book. Before the book, I thought I knew something. After understanding Paco's work, I realized I was wrong. Chances are that you too will find much of what you're missing.
This book has tons of great information; so much so that it is like drinking water from a fire hose. No matter how thirsty you are, it is still a lot of information coming your way. I therefore recommend that you allocate enough time to fully digest the many great concepts Paco shares with his readers.
For a short insight into the solid work done by Paco and his army of researchers, read my previous post on this book.

Beauty shot picture of book by Clotaire Rapaille, "The Culture Code", "An Ingenious Way to Understand Why People Around the World Live and Buy as They Do"
The Culture Code
The Culture Code
An Ingenious Way to Understand Why People Around the World Live and Buy as They Do
Clotaire Rapaille
Do you know what's the difference between what Americans and the French think of cheese? American's view cheese as dead. It comes in a body bag. You keep it in the refrigerator. It's cleansed through pasteurization. The French, on the other hand, view their cheese as alive. It constantly evolves (grows more mold). It is kept outside the refrigerator. It's not pasteurized.
But the interesting question here is not about cheese. Instead, all value lies on the methods Clotaire Rapaille used to figure what we think about cheese. Think about it: we all know that consumers would never describe their food as dead, for example. This is what's most impressive about his work. He synthesizes research results until the solution is clear. What looks like a soft science after initial review, turns out to be very effective at deciphering what people want; all without asking them for a description. No need for the usually misleading focus group. Even Henry Ford commented that if he had asked customers for what they wished for during the developing the Model T, they would have asked for faster horses.
Mr. Rapaille's work and credibility are simply fantastic. He is on retainer with almost all the big companies in the US. His book is therefore a very important tool for anyone wishing to create strategic initiatives aimed at satisfying consumers.

What would you answer if I asked: what's the main goal of your operations department? I have asked this same question to dozens of operations managers and found the results to be quite disappointing.
The elimination of all waste! That's the goal. Time, labor, money and space are just a few forms of the resources that could be wasted. As a result, operations should engage with every aspect of business. Sadly, I have come across managers who think that operations are only responsible to supply desks and pens to employees. What a waste of opportunity.
Think about it. As a manager, you have two main responsibilities: to increase sales plus reduce costs. Operations deals with half of this equation. Yet, it is seldom taken seriously in business. Some managers think that being tough while negotiating with a vendor is all they can do to eliminate waste. Others think that counting toilet paper sheets delivers the goods. The problem with either is that they are treated as an art that only the manager is capable of doing, rather than a portable system that could be carried by all employees. They'll never become part of the company's culture and will have no chance at creating continuous improvements. To be of real value to the business, any waste-eliminating practice must be systemic. The books I selected send this message very clearly. They also show how important operations are for a business. Best of all, they do not get lost in the statistical jungle of LEAN and Six Sigma as many other books do.

Beauty shot picture of book by Charles Fishman, "The Wal-Mart Effect", "How the World's Most Powerful Company Really Works—and How It's Transforming the American Economy"
The Wal-Mart Effect
The Wal-Mart Effect
How the World's Most Powerful Company Really Works—and How It's Transforming the American Economy
Charles Fishman
This book by Charles Fishman left me with a feeling of awe. It is clear that there is no company in the planet that is as equally committed to efficiency and the elimination of waste as Wal-Mart. They are, literally, vicious about savings.
Be prepared to read about how the company focuses on activities that would be viewed as trivial by competitors. From the way boxes are reused to the constant pressure they put on their vendors to reduce costs. Did you know that it was cheaper for Walmart to pickup products from Procter & Gamble than to have P&G ship them to Wal-Mart?
In their world, every fraction of a cent matters. There are just so many ready-to-use business practices within this book that it would be a terrible shame to skip it. The author does a great job keeping things objective. In today's Occupy Wall Street world, it would be easy to criticize Wal-Mart for their practices. But doing so would miss the institutional improvements that they have implemented for the benefit of their customers.

Beauty shot picture of book by James Womack and Daniel Jones "Lean Solutions", "How Companies and Customers Can Create Value and Wealth Together"
Lean Solutions
Lean Solutions
How Companies and Customers Can Create Value and Wealth Together
James P. Womack, Daniel I. Jones
This great book by James Womack, professor at the Massachusetts Institute of Technology, made me understand the true value of LEAN. It gave me a rare a-ha moment.
The book keeps the message clear from jargon or data. It is therefore accessible by every executive regardless of statistical-analysis experience.
LEAN focuses on the elimination of all non-value-add activities. But this phrase carries no meaning without context. You will need the explanations contained in this book.
Best of all, the book takes a manufacturing-centric idea and expands it to other business areas. When you read it, don't just follow the words. Instead, take everything the book describes and ask how it could be applied to your industry. LEAN is a great concept because it is naturally flexible and adaptable. It's therefore very possible that you may turn into an executive who gives LEAN new uses.

The Second Part
In my next post, I will tackle the rest of the books. As a matter of coincidence, the second part of my 2013 Top 20 Business Books List deals exclusively with Business Strategy.

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