Author: William N Thorndike Jr
Format: Audible / Kindle
Subject: Capital Allocation
The outsiders is an investigation into what makes a truly great CEO. The Outsiders is written about eight exceptional CEOs. These CEOs delivered returns that trounced the S&P500 over the long-term. These CEOs are in many ways the polar opposite of the household name CEOs we think of today. The book spends a significant time covering the importance of sound Capital Allocation strategies.
- CEOs need to do two things well to be successful: run their operations efficiently and deploy the cash generated by those operations.
- There are two basic types of resources that any CEO needs to allocate: financial and human.
- Stiritz “disdained the false precision of detailed financial models” and instead focused on a handful of key variables: market growth, competition, potential operating improvements, and cash generation.
- These CEOs “used leverage selectively, bought back a lot of stock, minimized taxes, ran decentralized organizations, and focused on cash flow over reported net income.”
- Warren Buffett has proposed a simple test of capital allocation ability: has a CEO created at least a dollar of value for every dollar of retained earnings over the course of his tenure?
- Buffett believe the key to long term success is “temperament,” a willingness to be “fearful when others are greedy and greedy when they are fearful.”
- Buffett upon finally closing Berkshire’s textile business: “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.”
- “It is impossible to produce superior performance unless you do something different.” – John Templeton
- You are not wedded to a particular business or industry
Capital Allocation Tool Kit
- Raising Capital:
- Tap internal cash flow
- Issue debt
- Raise Equity
- Invest in existing operations
- Acquire other businesses
- Pay down debt
- Issue dividends
- Repurchase stock
I had the privilege to attend a local Vistage meeting as a guest this morning. The speaker was Craig Weber and the topic was about piercing conversations and conversational capacity. Weber is an engaging speaker and did an excellent job of educating the group on the concept of conversational capacity.
The idea behind conversational capacity is that for any given group of people, there is a list of topics and / or issues that we could rank from most difficult at the top to the easiest at the bottom. If we started at the bottom of the list the group could have productive conversations and proactively solve issues. But as we work our way to the top of the list, the group will eventually stall out and become unproductive. The higher up the list a given group can productively converse is a measure of its conversational capacity.
Weber states that when conversations get difficult most people tend to begin either “minimize” the conflict or trying to “win” the conflict. The problem is that these two behaviors are unlikely to lead to the best possible outcomes. And the most effective teams will find a way to operate in the “sweet spot” which is the middle ground between minimizing and winning.
After explaining the concept, Weber went on to provide some tips on how to build the conversational capacity in our given groups.
Tips for Maintaining the Correct Mindset in Meetings:
- Ask yourself, “What am I seeing that others are missing?”
- Ask yourself, “What are we all missing? What are our blind-spots?”
- Ask yourself, “What do others see on this issue that I don’t?”
Actions for effective decision making:
- State your Position.
- Explain your thinking.
- Test your hypothesis: “What am I missing?”
Common behaviors of Minimizers:
- Passive body language.
- Withholding their concerns.
- Asking leading questions in an effort to backdoor their positions.
- Feigning agreement.
- Emailing opposing ideas as opposed to face-to-face conversations.
Common behaviors of Winners:
- Aggressive body language.
- No inquiry into opposing ideas or positions.
- Dismissive of others ideas.
- Stating opinions as fact.
- Use of hyperbole.
- Asking leading questions in order to sabotage other persons position.
Other interesting ideas and quotes from the presentation
- Management’s business is building an organization that works!
- Authority figures should generally weigh in last.
- Your ego is the biggest enemy to your conversational capacity.
- “Be that as it may,” is a very sophisticated way of saying “Whatever!”
- A drowning person might know that they are drowning, but that is no substitute for knowing how to swim.
- Most often in life, in order to actually get smarter, we have to feel dumber first.
- The job of the executive is to to be right at the end of the meeting, not at the beginning of the meeting.
Harley Davidson Decision Levels:
- Top Down – No input required.
- Consultative – My Decision, but I want input.
- Consensus – Group Decision, and group input needed.
Author: Jeffrey Thull
Format: Audible / Kindle
I recently told my boss that if I had to do it again, I would have focused my early career in sales. Great sales people are immensely valuable and incredibly hard to find. A few weeks later, a member of our board of directors recommended I read Exceptional Selling. In fact, he was even kind enough to send an electronic copy of the book directly to my Kindle. But as usual, I opted for an Audible copy as well.
Thull’s research is based on some of the most successful salespeople in the world. And one key point that stuck out to me is that the most successful salespeople in the world are comfortable talking about pricing. Their comfort is driven by the understanding of the value they bring into collaborating with the customer in an effort to solve the customer’s problems. Thull also spends a lot of time covering his four-step sales sequence: “Discover, diagnose, design and deliver.”
Side Note: Hat Tip to Mickey Miller for recommending this book.
Qualities of a good Diagnostic Sales Proposal:
- Contain no surprises (good or bad.)
- Will have the customer’s fingerprints all over it (uses language and terminology used by the customer.)
- Will Solicit feedback (which allows for fine-tuning before the final proposal.)
- Will be formally presented, in part by the customers own people.
- We need to be professionally involved and emotionally detached from our customers.
- The customer is the judge and the jury in the sell, but you are the expert, the guide.
- Silence is a sign of wisdom. It is okay to think.
The Value Triad:
- Sources of Value
- Uses of Value
- Absence of Value
- When you’re feeling pressure, you’re doing something wrong.
- Do not answer unasked question.
- The initial contact with a prospective customer is the most critical.
- Salespeople are guilty until proven innocent.
- When in doubt, do the opposite of what a salesperson would do!
- In absence of quality decision process, the decision will degenerate to the lowest common denominator: price.
- Diagnosis is something you do with your customer, selling is something you do to your customer.
- You can’t lose something you don’t have.
- You are either part of your system or someone else’s.
- Do Not allow the customer to self diagnose.
- One opinion does not make a consensus.
- People never say what they really mean at first.
- You must always protect the customers self esteem.
- Needs do not equal expectations.
- You have competitors; your customers have alternatives.
- The purpose of a proposal is to reinforce decisions that have already been made.
- When you are presenting on a piece of a larger solution, don’t confuse selling with installing.
- Professionally involved, emotionally detached.
- If you don’t have a cost of the problem, you don’t have a problem.
Speaker: Nancy Duarte
Title: The Secret Structure of Great Talks
Keys to a compelling Call to Action:
- The listener is the hero.
- Begin with what is.
- Transition to what could be.
- Alternate back and forth between What Is, and What Could Be.
- Need a Call to Action.
Duarte wrote a blog post for Harvard Business Review on this same subject.
Author: Kelly McGonigal
McGonigal points outs that there are three distinct types of willpower: I Want Power, I Will Power, and I Won’t Power. When most of us think of willpower, we are actually thinking of “I Won’t Power.” We are exercising “I Won’t Power” when we try to resist instant gratification such as eating a cookie, or binge-watching a favorite show. “I Will Power” comes into play when we sacrifice comfort in the present moment, in order to achieve a larger payoff in the future. We exercise this power when we save for retirement, or invest 4 years in college in order to have our dream career. Lastly, we have “I Want Power.”
McGonigal gives several tips for developing and maintaining self control, and cites multiple studies that support the sometimes counter intuitive findings. I plan to add a kindle electronic copy of this book to my library, and I may have a few future post about my experience with the willpower exercises in the book.
I can’t quite remember how this book wound up on my reading list. I do know that the I find the topic of willpower to be interesting. But I’d expect the key selling point was actually a TED Talk that I watched a few years ago; The speaker was none-other, but the authors twin sister Jane McGonigal.
What I liked Most About the Book:
- Willpower is like a muscle, it becomes exhausted over time.
- Willpower is like a muscle, it can be trained.
- The simplest way to improve willpower is to meditate which increases the blood flow to the pre-frontal cortex.
- Start Meditating with 10 minutes a day and work toward 20 minutes.
- “Pause and Plan Response” when dealing with internal conflict. This redirects energy from your body (Fight or Flight) to the brain.
- The excitement of anticipating a reward is almost always greater than the excitement from actually receiving the award
- Dopamine’s primary function is to drive us to seek happiness, not to actually make us happy.
- Self-Criticism drains the willpower, leads to low motivation and loss of self-control.
- We overestimate our future selves ability to address the willpower issues we face today.
- We don’t control our impulses, we only control our reactions.
- Do most important task first.
- Avoid decision-making fatigue; try to make decisions as quickly as possible.
- Sleep is critical to recharging your willpower.
Best Methods for Dealing with Stress:
- exercising/playing a sport
- praying/religious service
- reading/listening to music
- spending time with family and friends
- Spending time on a creative hobby
Author: Robert B. Reich
Economics to be a pretty captivating subject, so long as it doesn’t get too deep into theory. I also enjoy listening to ideas that are somewhat counter to my own. Its an exceptionally effective way to broaden one’s views. Reich’s writing is based on the idea that we spend most of our time debating the wrong question: Free Market versus Government. He argues that (rightly so,) that the Free Market cannot exist without the government, and that the real question is how should the laws that govern the free market be determined.
Reich focuses a lot of his attention on laws governing bankruptcy, property, and contracts have changed over time. He highlights those changes as specifically helping corporations and the wealthy while weakening the every day citizen. Reich truly believes that capitalism can exist in a manner that is much more beneficial to the masses. His final call to action is that Americans don’t have to accept things the way they are.
What I liked Most About the Book: It served as an excellent reminder that the free market is fundamentally a human construct.
- The idea of a free market separate and distinct from government has functioned as a useful cover for those who do not want the market mechanism fully exposed. They have had the most influence over it and would rather keep it that way. The mythology is useful precisely because it hides their power.
- Government doesn’t intrude on the free market. It creates the market.
- The free market does not exist in the wilds beyond the reach of civilization. Competition in the wild is a contest for survival in which the largest and strongest typically win. Civilization, by contrast, is defined by rules; rules create markets, and governments generate the rules.
- Economic historian Karl Polanyi recognized, those who argue for less government are really arguing for a different government—often one that favors them or their patrons
- Moreover, people who believe the game is rigged are easy prey for political demagogues with fast tongues and dumb ideas.
Authors: Pam Farrel / Bill Farrel
One morning last fall, I was having a casual conversation with a coworker about a remodeling project my wife and I were planning. “I drive my poor wife crazy,” I said. We will be discussing the project and next thing I know she is rambling off a seemingly never-ending list of ideas, questions, and concerns. My response, “Whoa, one thing at a time!” That is when my coworker laughed, and jokingly told me that I was a waffle. She told me about a book she had read with her husband as part of their small group at church. I was immediately intrigued. In fact, I downloaded the book and began listening to it that day on my way to lunch.
The title of the book aptly defines its thesis that men process thoughts and emotions very differently than women. Men tend to compartmentalize thoughts and emotions and subsequently deal with them one at a time. The author relates these compartments to the individual squares you see on a waffle. On the other hand, women tend to approach thoughts an emotions as part of a grand picture where everything is interconnected with everything else. Hence the term spaghetti. When you combine the two concepts, you wind up with spaghetti and waffles.
What I liked Most About the Book: The title says it all. Having a better understanding of how men and women process thoughts and emotions differently pays some hefty dividends. The concept helps me communicate better with my wife, friends, and coworkers.
What I liked Least About the Book: The author took an exceptional lesson and stretched it way to far. This book could have easily been about a quarter of the length. After the author teach the title-lesson, they spend the rest of the book desperately trying to project other aspects of their individual personalities and marriage onto the audience.
- A man will strategically organize his life in boxes and then spend most of his time in the boxes he can succeed in.
- The bottom line with men is: they feel best about themselves when they are solving problems. Therefore, they spend most of their time doing what they are best at while they attempt to ignore the things which cause them to feel deficient.
Author: Roger Dawson
Negotiating is a big part business and everyday life, so I was eager to dive into the details of this book. Dawson didn’t disappoint me in the least; this is a well written book. The author intermixes a variety of negotiating tactics with real-life examples. The chapters and tactics build upon one another in an easily understood manner. Furthermore, the book does an excellent job of mapping out the negotiation process from beginning to ending. Dawson also covers strategies for dealing with impasses, stalemates, mediation, and arbitration.
After reading this book, I truly believe that I am an above average negotiator. As a matter of fact, I have also already used several of these tactics during negotiations in both my personal and professional life. Lastly, I am completely confident that this book has already paid for itself many times over since I read it last fall.
What I liked Most About the Book: I gained a ton of insight about the topic of negotiating, and it was an easy read.
- Be Prepared to Walk Away
- Never Offer to Split the Difference
- Always ask for more than you expect to get.
- Be a Reluctant Buyer or Seller
- Flinch at Proposals
- Refer to a Higher Authority
- Use Bracketing
Author: David Allen
I am a big fan of David Allen’s book: Getting Things Done, so I was very excited to listen to Making It All Work. Unfortunately, that excitement quickly disappeared, and then turn to disappointment the more I listened.
I thought this book would serve as either a building block for the GTD system, but it is pretty much a rehashing of the previous book. The core focus of the book seemed to be implementing the GTD system into your personal life. That is all fine and well, because I really like the system. In fact, incorporated GTD into all aspects of my life while reading the first book.
I listened to about two-thirds of Making It All Work before I gave up on it. I am quite certain that I won’t be missing out on any key information that I won’t pick up on somewhere else.
What I liked Most About the Book: The topic of the GTD system.
What I liked Most About the Book: The lack of any new pertinent ideas or techniques. The Horizons discussed in the book are hardly new concepts.
New GTD Concept: Horizons
- Projects: 10,000 Feet – The are the shorter items that take need to be completed in about a year’s time and will take more than one action to complete. Pretty much standard GTD.
- Areas of Focus: 20,000 Feet – This is essentially a list of all the roles you assume or want to assume in life: husband, father, accountant, mentor, manager… So the purpose of this list is to serve as a trigger for your weekly review.
- Goals and Objectives: 30,000 Feet – A list of Projects that will take more than a year to complete. You only need to review once a quarter or so. This list will help trigger projects.
- Vision: 40,000 Feet – Where do you want to be in five years. Are your actions taking you there? What about your projects?
- Purpose: 50,000 Feet – What is your reason for being? to your ancestors, your descendents, or your god?
Author: Timothy Ferriss
Subject: Lifestyle Management
The title “The 4 Hour Workweek” instantly signals the skeptic in me. So But I chose to take a chance on this book since it had so many raving reviews. It is written in a semi-instructional / semi-narrative format and is theoretically based on Ferriss’s own experiences.
I enjoyed the concept of lifestyle management and “having freedom of time and location,” when it comes work. There were also a few other nuggets of knowledge buried throughout the first half of the book.
However, the second half of The 4 Hour Workweek is a half-baked mix of getting “Newly Rich” quick schemes scattered in between boastful tales of Ferriss’s adventures in life and business.
To be fair, maybe I just didn’t get the message Ferriss was pushing in the later parts of the book. After all, early on in the book he aptly advises the readers to not waste their time reading information that doesn’t add any value to their lives. I failed to heed his warning and wasted several more hours of my life listening to the author ramble on about nothing of any serious value.
What I liked Most About the Book: The 4 Hour Workweek is the first book I have read on lifestyle management.
What I liked Least About the Book: In theory the author’s experiences should make him a well-rounded and very interesting person. However, after listening to his many tales of adventure he comes across as pretty much a shell of a real person without any real substance.
- Apply the Pareto Principle (80% of results come from 20% of the effort) to as much of your life as possible.
- Master the art of “Not Finishing.” As soon as you determine that any particular activity is wasting your time, stop doing it. This advice makes a ton of sense, but sort of goes against the way most of us were taught to behave.
- Side Note: I wish I would have applied the art of “Not Finishing” to this book, but I digress.
- Become fanatical about delegating unimportant tasks, empowering subordinates, and eliminating anything that is not a key in driving results.
- It is smarter to Ask for Forgiveness, then to Ask for Permission. I have been applying this mentality for years.
- Focus on increasing your expertise in certain areas as opposed to overcoming your weaknesses.
- Ferriss advocates a “Low-information Diet,” which he applies to pretty much all information. I agree that much of the information that most of us consume is pretty meaningless. But, knowledge is power. And new information is critical to our continued growth as well-rounded people.