The one-sentence summary

A simultaneous blend of loose and tight properties is the perfect blend for running a successful business.

WHAT THE BOOK SAYS

There are eight basic principles of how to run a successful business and stay ahead of the competition. These are:

• A bias for action – get out there and try something
• Close to the customer – don’t be distracted by the internal stuff
• Autonomy and entrepreneurship – even if you’re big, act small
• Productivity through people – that’s all companies are made of
• Hands-on, value-driven – top companies make meaning, not just money
• Stick to the knitting – business diversity almost never works
• Simple form, lean staff – have a simple structure and outsource a lot
• Simultaneous loose-tight properties – a combination of centralised and decentralised gives the best blend

Communication works best when systems are informal, intensity is extraordinary, it is given physical supports, there are forcing devices, and it acts as a tight control system.

WHAT’S GOOD ABOUT IT

• There is a lot of material to work on. When they turned up the lights at Western Electric’s Hawthorne plant, productivity went up. It went up again when they turned them down. In many companies management is no more than an endless stream of Hawthorne effects.
• Chronic use of the military metaphor leads people repeatedly to overlook a different kind of organisation.
• The McKinsey 7-S Framework shows shared values surrounded by structure, systems, style, staff, skills and strategy.
• The exclusively analytical approach run wild leads to an abstract, heartless philosophy.
• Analysing a dead fish does not tell you everything about the live fish.
• Positive reinforcement nudges good things onto the agenda rather than off.
• Adhocracy is needed to offset bureaucracy (Alvin Toffler)
• Small groups are great chunking devices for getting things done.
• Do it, fix it, try it is the mantra of experimenting organisations:bootlegging
• We don’t kill ideas but we do deflect them

WHAT YOU HAVE TO WATCH

• At the very least people should be aware of what the book proposes
• The biggest criticism of it is that many of the featured companies have since disappeared. The authors’ response is that there weren’t writing Forever excellent and one can still be inspired by the good things
• The halo effect claims that books such as this are little more than story telling – if it were that easy to follow eight basic principles then all companies would have done so and been a roaring success – which clearly they have not.

The one-sentence summary

Endless choice is creating unlimited demand so you probably need to re-think your business model: make everything available and help customers find it easily (online).

WHAT THE BOOK SAYS

• Endless choice is creating unlimited demand.
• Traditional business models suggest that high-selling hits are required for success. These are at the high-volume end of a conventional demand curve.
• But in the Internet era, the combined value of the millions of items that only sell in small quantities can equal or even exceed the best sellers.
• Modest sellers and niche products are now becoming an immensely powerful cumulative force. In this respect, many “mass” markets are turning into millions of aggregated niches.

WHAT’S GOOD ABOUT IT

• This is a very original and thought-provoking book. It takes a while to get into, but it’s worth it.
• It introduces reasonably complicated mathematical theory in a user-friendly way, particularly micro-analysis of the very end of a very long tail. This is where helpful truths about the economics of your market can be seen properly.
• Contemporary examples from music (radio and album sales), books and films lend a populist slant to the theory, which should appeal widely.
• Old theories such as the 80/20 rule receive a thorough going-over. It’s never exactly 80/20, and the percentages can apply to different things (products, sales or profits). And they don’t add up to 100.
• The nine big rules of the Long Tail are:

WHAT YOU HAVE TO WATCH

• The model works best with true Internet and digital products that do not take up any storage space. For example, Amazon books still require storage space that has a cost. I-tunes do not. So careful thought is required as to the nature of the market you are analysing.

Note: Undoubtedly the bit everyone will latch onto is in chapter 5. When a big volcano erupts it fills the atmosphere with enough sulphur dioxide to cool the earth for a year or two. If we pumped this into the atmosphere anyway, it would achieve the same effect, but ironically upset environmentalists in the process.

As those of you who know me will know, I have a few views on volcanos myself (recent Radio 4 interview). Enjoy the debate…

The one-sentence summary

The more that you look at the world with an economist’s mind, the more straightforward it gets, and the funnier, because even the most obscure people respond to incentives.

WHAT THE BOOK SAYS

The more that you look at the world with an economist’s mind, the more straightforward it gets, and the funnier. Even the most obscure people respond to incentives.

This ‘freakquel’ claims to be bolder, funnier and even more surprising than its predecessor, the multi-million selling Freakonomics. It is full of things you always thought you knew but didn’t, and things you never knew you wanted to know but do.

Everything can be explained by economics, such as:

• Suicide bombers should buy life insurance because that would make them less likely to appear on any search for potential terrorists.
• You are more likely to be killed walking home drunk than driving.
• Elephants are more dangerous than sharks (200 deaths a year vs. 4).
• Sex has become cheaper since more women started giving it away for free.
• Some prostitutes are like Santa Claus because they only sell sex at holiday time.
• Crime increases as TV coverage spreads

Price discrimination affects most markets, and some customers have clearly identifiable traits that place them in the willing-to-pay-more category.

There are birthdate bulges everywhere – where certain deadlines, term times and so on dictate that the best in various occupations will be born in the same month (this is also covered in Outliers by Malcolm Gladwell).

WHAT’S GOOD ABOUT IT

• It should make you look more deeply, ask more questions and think a little differently.
• There is a huge difference between real behaviour and what people claim in surveys: this is the difference between declared and real preferences.
• Going to hospital slightly increases your chance of surviving if you have a serious illness, but increases your odds of dying if you don’t (because of infections and complications).
• People aren’t ‘good’ or ‘bad’ – they respond to incentives and can nearly always be manipulated.
• The Endangered Species Act is actually endangering species because it encourages landowners to cut down trees and make their property less suitable to be designated as protected habitat.
• The final chapter on climate change will cause a stir. Al Gore and Mount Pinatubo in the Philippines have a lot in common – they both influence global cooling.  When a big volcano erupts it fills the atmostphere with enough sulphur dioxide to cool the earth for a year or two.  If we pumped this into the atmosphere anyway, it would achieve the same effect, but ironically upset environmentalists in the process.

WHAT YOU HAVE TO WATCH

It’s not a textbook, so roll with the narrative and dig out the nuggets.

The one-sentence summary

Ignore charismatic leaders, complex strategies and the competition – if you want enduring success, concentrate on having a common sense of purpose.

WHAT THE BOOK SAYS

• This is the 1994 classic about the successful habits of visionary companies.
• It uses a 6-year research study to examine companies from their conception, in some cases 100 years ago, to their current position, using a comparison company in each case along the way. All have outperformed the stock market by a factor of fifteen.
• There are twelve shattered myths about companies and leadership:

1. It takes a great idea to start a company
2. Visionary companies require great and charismatic visionary leaders
3. The most successful companies exist first and foremost to maximize profits
4. Visionary companies share a common subset of “correct” core values
5. The only constant is change
6. Blue-chip companies play it safe
7. Visionary companies are great places to work, for everyone
8. Highly successful companies make their best moves by brilliant and complex strategic planning
9. Companies should hire outside CEOs to stimulate fundamental change
10. The most successful companies focus primarily on beating the competition
11. You can’t have your cake and eat it too (the power of AND over OR)
12. Companies become visionary primarily through “vision statements”

• None of these are true and the examples explain why.

WHAT’S GOOD ABOUT IT

• Although this book has taken on revered status, much of it remains helpful and relevant.
• Given the authority and rigour of the study, it is perhaps surprising that so many companies still don’t pay attention to the findings
• If you are interested in providing a counterpoint to stodgy corporate approaches, you will probably find convincing evidence here from a respected source

WHAT YOU HAVE TO WATCH

• It is in some respects out of date given recent economic changes
• The evidence per company is highly detailed, so if you do not know the company (they are all American) or are not interested in it, then you have to wade through for the bits you want
• If you read The Halo Effect, you may think the whole study is rubbish

The one-sentence summary

Trust your first instinct, because a snap judgement made very quickly can actually be far more effective than one you make deliberately and cautiously.

WHAT THE BOOK SAYS

• Our ability to “know” something in a split-second judgement, without really knowing why we know, is one of the most powerful abilities we possess
• A snap judgement made very quickly can actually be far more effective than one we make deliberately and cautiously
• By blocking out what is irrelevant and focusing on narrow slices of experience, we can read seemingly complex situations in the blink of eye
• This is essentially “thinking without thinking”
• He introduces the theory of “thin slicing” – using the first two seconds of any encounter to determine intuitively your response or the likely outcome
• He demonstrates that this “little bit of knowledge” can go a long way, and is accurate in over 80% of instances.

WHAT’S GOOD ABOUT IT

• There are scores of vivid examples in which peoples’ first instincts have been right, but they cannot explain why. These include an art dealer identifying a fake statue that the Getty museum believes to be genuine, a tennis coach being able to predict every time when players are about to serve a double fault, and a psychologist accurately guessing years in advance if married couples will stay together or not
• The thinking is a welcome counterpoint to a world in which too much reliance on proof and data has replaced hunch and instinct
• The value of spontaneity is highlighted by the example of a forces commander who comprehensively beats better-equipped opposition in a US military exercise because he consistently does the opposite of what the computers predict
• He goes on to show that, strangely, it is possible to give “structure” to spontaneity, by consciously going against the grain in order to generate an outcome that is surprising to the other party, but not to you.

WHAT YOU HAVE TO WATCH

• Although the subject matter is fascinating, there are so many experts interviewed that the average reader would not be able to enact any of the skills necessary to take advantage of the findings, other than the basic point that you should trust your first instincts more.