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The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success Hardcover – October 23, 2012
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One of the Most Important Business Books in America.” Forbes
This book completely changed my business life... If you want to build a company that generates incredible returns, this book should be on your required reading list.” Dave Morin, Founder & Partner, Slow Ventures as seen on Medium
easily the best investment or business book published in the past few years ” Brendan Matthews, Motley Fool
an important insider’s perspective, an unapologetic glimpse into the hard-core investor view of what success looks like.” Forbes.com
"It focuses on the less sexy but equally important job of a CEOcapital allocation." Mebane Faber, CIO and portfolio manager at Cambria Investment Management (Business Insider’s Wall Street Reading List for 2014)
Thorndike wants to give any manager or business owner the confidence to occasionally do things differently from your peers to make the most of the cards they’re dealt and to delight their shareholders.” Financial Times
[Thorndike's] findings turn received wisdom about CEO success on its head. It’s not revenue and profit growth, but the increase in a company’s per share value that offers the ultimate barometer of a CEO’s greatness Thorndike may have discovered an alchemic formula for CEO success. But will existing CEOs listen?” economia
Thorndike has done extensive research on each of the people features, and their success story makes for an inspiring and most definitely, compelling read.” The Hindu (India)
An extremely instructive read well worth the effort.” Business Traveller magazine
This is an eminently readable volume with plenty of lessons.” The Irish Times
ADVANCE PRAISE for The Outsiders:
Jim Collins, author, Good to Great; coauthor, Built to Last and Great by Choice
Will Thorndike dissects an eclectic and fascinating group of business leaders who created exceptional long-term value. He takes the unique angle of examining great CEOs as chief allocators of capital, so disciplined in their empirical rationality as to be nonconformists in the very best sense. Thorndike’s take is fresh, smart, and provocativeand well worth learning.”
Michael J. Mauboussin, Chief Investment Strategist, Legg Mason Capital Management; author, The Success Equation
Will Thorndike provides management principles that are as rock solid as they are rare and shares the engaging stories of eight CEOs who lived by them. The ideas in this book provide both executives and investors with the North Star of value. Follow it and prosper.”
Mason Hawkins, Chairman and CEO, Southeastern Asset Management
The Outsiders is a must-read for leadersand aspiring leadersstriving to become exceptional CEOs, and for investors interested in partnering with exceptional stewards of corporate capital.”
Walter Kiechel, author, The Lords of Strategy
If creating wealth for shareholders is the ultimate test of a CEO, meet the champions. The names of these outsiders’ may come as a surprise, but you will learn valuable strategic lessons from their iconoclastic ways.”
Thomas A. Russo, Partner, Gardner Russo & Gardner
The Outsiders celebrates leaders who kept their firms focused, rewarded their management despite long periods of inactivity, andby keeping their companies out of troublefound themselves free to pounce when compelling opportunities arose. A highly effective playbook for excellence.”
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As a graduate from a top MBA program, I can tell you that the book's topic is rarely studied at the world's best business schools. But that doesn't mean the lessons are not important. Far from it.
The basic premise is that a successful CEO needs to do two jobs - a) run their operations efficiently and b) decide how to deploy cash generated by those operations. Business schools are great at training future CEOs to do the first. The skills required to be effective at the second job is closer to those of an investor and aren't a focus for those entering Corporate America.
The Outsiders makes the case for why these jobs are not mutually exclusive and instead are both crucially important for a CEO to generate consistent outperformance overtime. The book profiles 8 CEOs whose day job more closely resemble a shrewd investor of a firm's resources than a prototypical CEO operator. The author shows how these CEOs are able to outperform the market and their peers by adhering to a common set of principles on how to allocate capital.
The Outsiders will not only help aspiring managers gain a better understanding of the value of capital allocation, but will also provide investors with a healthier appreciation of what great capital allocators look like.
1) Good capital allocators are exceptionally rare. In the business literature, Thorndike, struggled to find them. So take note when you see them! The capital allocators mentioned in the book are: Henry Singleton (Teledyne), Warren Buffett (Berkshire Hathaway), Tom Murphy (Capital Cities), John Malone (TCI), Katherine Graham (Washington Post), Bill Stiritz (Ralston Purina), Dick Smith (General Cinema), Bill Anders (General Dynamics).
2) When a proficient capital allocator is combined with a competent execution, the results can be really quite stunning. The average CEO profiled in this book had returns averaging 22% over a period averaging 28 years of when they were in charge. This is simply stunning!
3) Many of these capital allocators have similarities, in terms of their characters, they were: (1) away from centers of conventional thinking (i.e. Wall St/NY-Boston Corridor); (2) emphasis on frugality and humility; (3) analytical prowess; (4) understated; (5) devotion to families; (6) did not typically relish the outward-facing part of the CEO role; (7) they did not exude charisma.
4) The characters in the book shared a common belief and experiences about how their businesses should be run: (1) often first-time CEOs; (2) very frugal or no dividends; (3) huge (30%+) share repurchases; (4) large sporadic acquisitions (>25%+ of market cap.); (5) decentralized organizational structure; (6) virtual absence of Wall St guidance; (7) laser-like focus on a few relevant and typically ‘idiosyncratic metrics’; (8) a central focus on tax implications and heavy use of tax minimization culture; (9) thought as owner-operators rather than high-paid employees.
5) Some of the lessons that we ought to learn are: (1) Always do the math; (2) The denominator matters; (3) maintain a feisty independence; (4) Charisma is overrated; (5) A crocodile-like temperament that mixes patience and occasionally bold actions; (6) Consistent application of a rational, analytical approach to decisions large and small; (7) A long-term perspective
The eight CEOs studied by Thorndike had remarkably similar approaches to questions such as "should I buy my competitor or should I pay a large dividend to my investors", "should I invest in a new plant/market or should I offer to buyback shares from my investors", "should I spend our excess cash on growing our market share or should I return this cash to investors".
In a nutshell, Thorndike gives you the secrets of eight outstanding CEOs and how they think about whether you should spend your cash to grow the top line, to pay a dividend, or to buyback shares and thereby reduce the denominator of shares outstanding.
Most recent customer reviews
Rationality, patience and decisiveness are their key traits.