Selecting just five business books from the many classics that have shaped our world of work and wealth is an unenviable task, if only because of the sheer volume of superb contributions that have debuted over the past century. Thus I limit my selections to books on management; which, in my view, is the discipline at the heart of the engine of wealth creation and is responsible for the prosperity and progress of any modern economy. I reluctantly omit the works of several obvious candidates – C.K. Prahalad, Gary Hamel, Michael Porter, Henry Mintzberg, Clay Christensen — and I assume other faculty more astute than I will chastise me and subsequently treat these giants with the respect that is their just due. With that genuflection, here are my five favorite management books, the books that inform my own perspective on the management profession and on the teaching of the profession:
The Practice of Management
(Peter Drucker, 1954)
Peter Drucker is generally recognized as the father of modern management. His academic career spanned more than six decades in the 20th century and on into the 21st. He penned 40 books, most of them on the art and practice of management. It is difficult to recommend a single Drucker book because they are all so influentially powerful.
His books are constructed from the raw material of business verities and provide a comprehensive body of work to guide us even in these parlous times. His 1954 book, “The Practice of Management,” practically created many of the verities about business management that we take for granted today.
And, if for no other reason, I recommend this book for Drucker’s chutzpah. He subtitled the book: “A study of the most important function in American Society.” That’s moxie, and well-served.
Peter Drucker asked tough questions of business, fundamental questions. He forced us to examine our assumptions, and no one likes to do that. In the process, he laid the basis for how we think about business in general – management, in particular.
Drucker speaks to us not as students, not as academics, not as politicians, but as managers responsible for running the vast machinery of wealth creation that contributes to our prosperity and to our progress.
That’s why this book is a must-read for those who endeavor to perform this most important function in American society.
(Walter Isaacson, 2011)
This biography of Steve Jobs is not a management book, and this is why its lessons in management, strategy and entrepreneurship are so valuable. They spring organically from the context of Steve Jobs’ larger-than-life journey of self-discovery.
Everyone has an opinion – usually sharply drawn – about Steve Jobs, the late founder of Apple, Inc. and the driving force behind innovations in six different industries. He was a polarizing figure – driven and impulsive, focused and brilliant, demanding and brutal. This biography of Jobs, written by Walter Isaacson, captures it all and much more.
In fact, this biography provides valuable lessons in entrepreneurship and business strategy as it traces the personal and professional life of a man driven to succeed.
Strategy and strategic thinking can, of course, be taught. But some people embrace it and adopt it far more naturally than others. Steve Jobs was such a person. He wore strategy like a tailored suit. And the Isaacson biography captures the core of the Steve Jobs strategic phenomenon – focus, discipline and the courage to choose and to act.
Steve was never paralyzed with self-doubt. Where we might see night and fog, Steve saw with clarity. He carried an extreme bias to action. He never tried to foresee the future. He believed in creating his own future, and this powerful personal ethos was captured in his mantra and lifelong goal to “put a dent in the universe.”
He strove to do this with a welter of magnificent products and services to change people’s lives for the better. Personal computers and telephony, animated films and music – all were shaped by the heart and mind of Steve Jobs.
This book is the chronicle of the adventure of an entrepreneur and master strategist. It has much to teach us.
The Power of Intuition: How to Use Your Gut Feelings to Make Better Decisions at Work
(Gary Klein, 2004)
In business, we make high stakes decisions under complex conditions of uncertainty. These are, in fact, the major defining characteristics of business – uncertainty and risk.
The questions on the table for us are not academic exercises; we’re not practicing for something else, later down the road. We make decisions for the here and now. We can go only in one direction, making one crucial choice. And the cost of actually choosing to go in that direction is the payoff we otherwise might have obtained in another direction.
Trade-offs are necessary, responsibility clear.
Oftentimes, the survival of our company and the livelihoods of hundreds, if not thousands, of employees depend on the outcome of choosing wisely. So how do we decide?
Most of us know the classic decision-making model. It’s often characterized as a four-step process: 1) analyze the problem, 2) list available options, 3) evaluate the options against common criteria and weight the criteria according to importance and 4) add up the results to reach a decision.
This process – or something akin to it – permeates the way many folks think about business decision-making. But do we really make decisions this way? Psychologist Dr. Gary Klein says no.
Gary Klein is the nation’s top authority on intuitive decision-making under conditions of uncertainty. According to his research, decision-makers do not generate multiple options and then pick one.
Instead, they study a situation, and the problem and the solution come to them at the same time. Klein’s study shows that first responders of all types act this way. Medics, emergency room personnel, soldiers, police and firefighters all use “strategic intuition.”
Dr. Klein’s book actually helps us learn to make better and timelier decisions by incorporating intuitive processes. It’s a useful book, with a valuable payoff at the end. Some books make you better for having read them and this is one of them. It’s a favorite of mine.
Good Strategy/Bad Strategy: The Difference and Why it Matters
(Richard Rumelt, 2012)
This 2012 book by Richard Rumelt is the kind of study that compels you to repeatedly slap the page with the occasional, “That’s exactly it!”
Richard zeroes-in relentlessly on strategy, both good and bad. He is unsentimental and does not brook the petty nonsense that masquerades as strategy these days.
Through anecdotes and direct tales of company woe, Richard methodically takes apart our current love-affair with consultant-based strategic guidance. The book offers a breathless narrative that moves us along briskly. Case studies and interesting examples abound. This is no abstract textbook. In fact, I recommend it as one of the finest books published in the last ten years that cuts to the very heart of strategy.
Rumelt is merciless with shoddy thinking and he is relentlessly logical. He teaches us to look deeper than the surface, to plumb the depths of difficult business situations to discover what’s really going on.
In fact, that’s the question he urges on his students when they confront the confusing dynamics of difficult business situations. Don’t accept the first or second solution to a problem. Step back, and ask the question:
“What’s really going on here?”
Rumelt forces us out to the efficiency frontier, where choices must be made, our resources allocated, where the risks are great, and where we might actually fail. It’s easy to shy away from the efficiency frontier in good times. It’s comfortable to substitute jargonized programs for real strategy.
But crises can force us out to the efficiency curve whether we want to or not. At crisis time, we find our options are limited and the pressure is high, the odds of stumbling are great. Why not show courage to make strategic choices now?
That’s what Richard Rumelt teaches us in “Good Strategy/Bad Strategy.”
Blue Ocean Strategy
(Renee Mauborgne and W. Chan Kim, 2005)
In much of our strategic discourse, we often hear a shopworn cliché: “think outside the box.”
The cliché is unintentionally ironic. I suppose it means that we should embrace fresh, innovative thinking of the kind that might lead to a fresh, innovative way of expressing our thinking without use of a tired cliché. But it turns out that many business folks don’t really want fresh, innovative thinking when it comes to strategy. They don’t want to be reminded of constraints and trade-offs, the battle for resources out on the front lines of the efficiency curve.
They want something off the shelf, a safe and ready-made “strategy” that can be plugged in to any business and provide a rhetoric that gives the impression of a strategy. This is the Holy Grail, this plug and play strategy. But there is no such thing as a ready-made strategic formula that tells you exactly what to do for your particular business.
The myth of this formula persists, and this is why so many efficiency tools are packaged as “strategy” when they’re really best practice tools that masquerade as strategy.
For real strategy, you must move out to the efficiency frontier, where resources are scarce and there’s little margin for error – where trade-offs are necessary, where risks go up.
Enter: “Blue Ocean Strategy.”
This book strikes a balance. It doesn’t provide answers, but it ensures that you ask the right questions about how you compete. And through this process of self-examination and pondering your industry, you develop a real strategy unique to your firm.
Authors Renee Mauborgne and Chan Kim offer a framework that compels us to face the tough questions and answer them, and prevents us from substituting efficiency tools for especially powerful and genuine strategy.
It’s a kind of modern version of the Socratic method – with it, we can achieve real competitive strategy for our firm with a unique position in the marketplace. And that is an especially powerful achievement for any business.