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Reading Notes: The Outsiders

Author:  William N Thorndike Jr

Format: Audible / Kindle

Subject:  Capital Allocation

Rating: 8/10

Summary:

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.

Useful Quotes:

  • 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:
    1. Tap internal cash flow
    2. Issue debt
    3. Raise Equity
  • Deploying:
    1. Invest in existing operations
    2. Acquire other businesses
    3. Pay down debt
    4. Issue dividends
    5. Repurchase stock

 

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Reading Notes: Secret Powers of Negotiating

Negotiation: discussion aimed at reaching an agreement.

Author:  Roger Dawson

Format: Kindle

Subject:  Negotiations

Rating: 8/10

Summary:

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.

Knowledge Nuggets:

  • 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
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Reading Notes: Traction–Get a Grip on Your Business

eos-systemAuthor:  Gino Wickman

Format: Hardback

Subject:  Business Management

Rating: 8/10

Summary:

Traction is an instructional manual that documents the Entrepreneurial Operating System or EOS.  EOS is designed to allow business leaders  maintain traction toward the company’s vision.  I actually read it the book in November 2015 as I prepared to start as CFO for Staley Inc.  I thoroughly enjoyed the book and EOS process, and have since gone on to participate in local round tables on the EOS implementation process.  I am convinced that I would be twice as successful as I am today if I had read this book ten years sooner.

The concept of Rocks would have been very beneficial to several of my colleagues in past jobs.  The ability to prioritize efforts around a long-term vision is easy to understand.  But many managers have a difficult time accepting  that it means allowing other issues to fester until a later date.

Six Parts of the EOS System.

  • Vision:  Successful business owners have compelling visions for their organizations and diligently communicate those visions to ensure that everyone one in the organization has a clear image of where the company is going and how it is going to get there.
  • People:  Successful leaders surround themselves with great people.  You can’t build a great company without great help.
  • Data:  The best leaders rely on a handful of metrics to help manage their business which frees you from the quagmire of managing personalities, egos, subjective issues, emotions.
  • Issues:  Issues are obstacles that must be faced to execute your vision. Just as an individual’s success is directly proportionate to his or her ability to solve any issues that arise, the same holds true for a company.

Issues should be documented on one of three list until they are resolved.

VTO Issues List: Issue that are not a priority for this quarter

Leadership Team Issues List:  Tactical issues that must be solved this week or quarter, and that must be solved at the highest level in the company.

Departmental Issues List.  All Tactical issues that live at the department level.

  • Process:  Processes are your way of doing business.  Successful organizations see their way and constantly refine it.  This is the most neglected of the Six Key Components.
  • Traction:  In the end, the most successful business leaders are the ones with traction.  They execute well and they know how to bring focus, accountability and discipline to their organization.

Successful companies make use of the Vision, Traction, Organizer, or VTO:

  1. What are your core values?
  2. What is your core focus (also known as Vision Statement, Mission Statement, Sweet Spot…)?
  3. What is your 10-year target (or long-term strategy)?
  4. What is your marketing strategy?
    1. 3 Uniques
    2. Your Proven Process
    3. Your Guarantee
    4. Target Market
  5. What is your 3-year focus (short-term strategy)?
  6. One is your 1-year plan? (tactics)
  7. What are your quarterly rocks?  Company Level
  8. What are your issues?   Company Level

Accountability Chart:  An organizational chart that lays out all of the positions in the company along with their Core Responsibilities

Right People in the Right Seats:

  • Right People = Core Values + People Analyzer
  • Right Seats = Unique Abilities + Accountability Chart

Rocks:  Are short time priorities that help you achieve your vision.  Establish the 3-7 most important priorities that must be done in the next 90 days.  These priorities are called rocks.  The company has rocks. The leadership team has rocks, and team members have rocks.   The primary purpose is to help focus the organization, and to break the habit of trying to focus on everything at once.

L10 Meeting (Level 10):  Meetings with a specific agenda that are held with the same people, in the same space, and at the same time each week:

L10 Agenda:

  • Check-in
  • Review Rocks
  • Review Scorecard
  • Announcements
  • Issues Solving
  • Score the Meeting
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Reading Notes: Getting Things Done

Author: David Allen

Format: Audible / Kindle

Narrated By: David Allen

Subject: Productivity

Rating: 8/10

Summary:

Getting Things Done has transformed the way I conduct my life, which really says a lot.  The book itself describes a system for dealing with the immense variety of activities, commitments, and projects we each struggle to juggle in our daily lives.  The system is built around 5 key steps: Capturing, Clarifying, Organizing, Reflecting, and Engaging.  The purpose of the system is to get all of your obligations out of your mind and into a known centralized location in the form of lists, which should allow you to have a “mind like water,” and more capable of being in the moment.  It should also allow you to have the ability to spend your time working on the activities that you can possibly complete in any given situation.  This system is a lot like Chess in the fact that it takes a moment to learn, and a lifetime to master.

In the three or so weeks since I started reading the book I have made the following progress:

  • My Physical In Box at work is habitually empty (this doesn’t mean I have completed all of the work and don’t have any pending action items.)
  • My Email In-Box is also habitually empty (see above.)
  • I have adopted contextual list-taking as a way of life.
  • Actively adopting checklist for repetitive activities in my life.
  • I have noticed an uptick in my productivity and less loose-ends across the full spectrum that is my life.
  • My mind wanders less when I am in meetings and having conversations.

That last bullet point is a substantial benefit.  Having said that, I found my mind constantly wandering to projects, ideas, and activities as I worked my way through the book because I found it very difficult to digest the information without trying to apply it to my life.  So that was a bit of a viscous cycle.  I will definitely keep a copy of this book for reference.

What I liked Most About the Book:  Seeing my empty In-Box, and the focus on defining the “Next Action.”

What I liked Least About the Book:  The information tends to become more and more repetitive as you read through the book.  All in all, Getting Things Done book reads much like a textbook which to be fair, it pretty much is.

Illustrates the Getting Things Done process.

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Reading Notes: The FIVE Dysfunctions of a TEAM

The pyramid of the Five Dysfunctions of a Team

Author:  Patrick Lencioni

Format: Audible

Narrated By: Charles Stransky

Subject: Teamwork / Leadership

Rating: 8/10

Summary: 

The Five Dysfunctions of a team covers the basic issues that stop otherwise successful people from leading a company.  These issues are revealed and solved through a fictional tale of a new CEO, Catherine Petersen, who takes over a struggling Tech company that should be wiping the floor with its competition.  She spends the lion-share of her time focusing on getting her leadership team to work together to achieve results as opposed to merely just existing together.  She accomplishes this by educating the team of its dysfunctions, and ultimately helping it to overcome them.

What I liked about the book: 

The book is written as a fable as opposed to a reference manual.

Part of the book that most applied to me:  

It helped me develop a better understanding of the need of conflict in teams.

TLDR:

  • The Five Dysfunctions of a Team according to the book:
    • Absence of trust—unwilling to be vulnerable within the group.
    • Fear of conflict—seeking artificial harmony over constructive passionate debate.
    • Lack of commitment—feigning buy-in for group decisions creates ambiguity throughout the organization.
    • Avoidance of accountability—ducking the responsibility to call peers on counterproductive behavior which sets low standards.
    • Inattention to results—focusing on personal success, status and ego before team success.
  • Not everyone who started on the leadership team, stayed on the leadership team.