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The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success Hardcover – October 23, 2012
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From the Publisher
The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success
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.”
About the Author
- Publisher : Harvard Business Review Press; Illustrated edition (October 23, 2012)
- Language : English
- Hardcover : 272 pages
- ISBN-10 : 1422162672
- ISBN-13 : 978-1422162675
- Item Weight : 14 ounces
- Dimensions : 5.6 x 1.1 x 8.2 inches
- Best Sellers Rank: #16,905 in Books (See Top 100 in Books)
- Customer Reviews:
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Top reviews from the United States
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The book is unique in the sense that there are not many books on Corporate Finance case studies. This book is exactly that. Each of the CEOs/Companies profiled here is a separate case, dealt with in separate chapters. I like that.
It is also a well-written, well-researched book. It is an entertaining read and, on top of everything, it has the endorsement of Warren Buffett. You cannot ask for much more than that. Oh wait! Yeah, the presentation is pretty nice. I like good looking, elegant hardcover books.
Now, why am I holding back one star? See below:
1- The book is kind of dogmatic about certain rules deemed as universal (e.g., never pay dividends, never issue new shares, etc). If things were so simple, then Corporate Finance would not exist as a discipline.
2- The author kind of pounds on Jack Welch as someone who, even though successful, has not accomplished the same level of results that the CEOs included in his book did. Well, guess what, you cannot compare apples to oranges. Jack Welch was the CEO of GE. These other CEOs took over when their companies were very small, and completely unknown. I'm not saying the they do not deserve credit for what they accomplished. All I'm saying is that you cannot expect GE's stock price to grow at the same pace small cap stocks grow. Scale is important. So, when adding Jack Welch into the mix, the relevant question is no longer who grew the stock price the most, but who generated the most profits (in absolute dollar value) for their shareholders. Again, scale is important. It's not the same to be the president of the US than the president of Uruguay.
I guess the ultimate goal of the book is not so much to teach Corporate Finance lessons but to help value investors select good CEO's. "Good" in this sense means CEO's who are focused on maximizing shareholder value in the long term. In other words, CEO's whose interests are in line with those of the owners of the company. Now, this might be an outdated approach since good Corporate Governance practices are nowadays widespread, which ensures that the compensation of executives is tied to business results. Not to say that there are still not principal-agent issues around, but it is definitely not as pervasive of a problem as it was decades ago.
Hope this helps.
As a venture capitalist and owner of many companies, I learn so many insightful strategies such as capital allocation, rolling up companies to maximize scale, margin and cash flow strategy to acquire companies. I get so many ideas to scale my investments.
Thanks William Thorndike to write an insightful book on capital allocation. Recommended for CEO, entrepreneurs and investors.
The Outsiders is a great book that looks at eight CEO’s who produced above average returns for shareholders over the long term. In most cases these CEO’s were not attention junkies and were not only great capital allocators but also time allocators. Over 29 years Tom Murphy of Capital Cities produced a 19.9% compounded annual return. Over 27 years Henry Singleton of Teledyne produced a 20.4% compounded annual return. Over 17 years Nick Chabraja of General Dynamics produced a 23.3% compounded annual return. Over 46 years (to 2011) Warren Buffett of Berkshire Hathaway produced 20.7% compounded annual returns for shareholders.
These CEO’s as well as four others in the book were not your cookie cutter capital allocators and did not fit the mold of most business books you read today. Every one of the CEO’s was a first time CEO (no past history of success) and more than half had very little industry experience before taking over as CEO. I found these two things very interesting especially has it relates to microcap investing. So often I’m trying to find great management in microcap, which can be difficult if there is no prior resume. In all instances the Outsider CEO’s led decentralized organizations empowering others to make decisions and they were great capital allocators.
Outsider CEO’s ran high cash flowing businesses, which allowed them to take on debt (few ever issued equity) to make the strategic acquisition or to buy back stock when it was historically cheap. All but one of the eight companies bought back 30%+ of outstanding shares over a period of time. Some took on debt to buy back shares at depressed levels. For those that did use equity to make acquisitions they always knew when to do it (when the stock was expensive).
There are many more takeaways from the book, but you’ll just have to read it. I found the book very easy to read and in many cases reinforced management principles I’ve always felt were important. You will enjoy The Outsiders.
Top reviews from other countries
1. Full decentralization of operating management;
2. In contrast, capital allocation is kept strongly centralized;
3. Aggressive, big-ticket acquisitons, however these are usually done rarely, or significantly less frequently than in other companies;
4. Share buybacks done infrequently and in bulk. So not a certain amount each year but a few big tender offers for shares at the time when the shares are cheap;
5. Asset sales are used also aggressively, sometimes resulting in a substantial shrinking of the company.
What I found useful and interesting was the description of the work of five CEO-s that were unknown to me before (Tom Murphy, Henry Singleton, Bill Anders, John Malone, Bill Stiritz, Dick Smith). Katherine Graham I knew from her biography. However the author talked a lot about Warren Buffett and there was even one chapter devoted to him. For me this was a bit of a waste as so much is already written about Buffett that it a bit watered down the rest of the material.
As a separate issue I have to mention that from time-to-time I got the feeling that the author was not fully on top of the subject. For example:
1. On page 159 under the chapter „Optimising the Family Firm“, the author describes the added table 7-1 as „outlining sources and uses“. But if i check the table then it is not a sources-and-uses table but rather a description of how much each class of security holders in the acquired distressed HBJ got;
2. On page 174 in the Buffett chapter, the author mentions that the See’s Candy original investment did not really matter because if they would have doubled the acquisition price the return would „still have been a very attractive 21 percent“. This is a bit funny statement -the difference in capital accumulated between 21% and 32% over 27 years is over 10 times!.
The ony reason to give two stars instead of one is that he did choose 8 interesting CEOs to analyse.
Book is incredibly well written, very succinct.
In my humble opinion a book that is a necessary read for anyone who is self-employed, runs a business - small or large, etc.
It is one of the 9 recommended 'must reads' by Warren Buffett.