Book review: Good to Great by Jim Collins

Good to Great: Why some companies make the jump… and others don’t – Jim Collins

Synopsis:
Jim Collins and his research team set out to answer the questions, “can a good company become a great company?” and “if they can, how?”. By studying countless articles, interview transcripts and data, the research team came up with a definition of a ‘great’ company. The team would study two companies that started off in similar situations with similar future prospects but in one point in time (what they call the transition point) one company skyrocketed while the other withered. The great company (the one that skyrocketed) is compared to the comparison company (the one that underperformed). The results are the basis of this book. The chapters explain concepts and principles that were consistent among all the great companies but lacking in the comparison companies.
Companies such as Wells Fargo, Gillette and Circuit City (among many others) are analysed throughout the chapters. The book concludes with a very insightful FAQ section and wealth of information in the appendices.

What I gained from reading this book:
I read this book expecting it to be very similar to The E-Myth. It turned out to be very different. I am still undecided if I like this book or not. While I could clearly see that much effort has gone into the research, I’m not too convinced on the value of the results. Some concepts seemed so obvious that it seemed a waste of time to read about them.
The main problem I had with this book is the way the concepts were explained. Phrases such as ‘Getting the right people on the bus’, ‘the hedgehog concept’, ‘the three circles’, ‘grasp the flywheel, not the doom loop’, ‘level 5 managers’ pretty much sum up the type of lingo used throughout the entire book. I was expecting straight forward explanations and was disappointed to find that most explanations followed the lines of ‘make sure you get the right people on the bus in the right seats and the wrong people off the bus’. While using metaphors continuously may work for some people, it sure didn’t work for me.
Most people could probably guess the principles and values the great companies have before even picking up the book. So I was not impressed when I came across the part where the author explains why the company that gave the executives lavish perks in expensive buildings underperformed the disciplined company that cut executive’s pay 75% when times became tough and ran the business in a dental sized suite.
Although I do feel that most of the findings could have been explained better on a single A4 sheet of paper, I did enjoy reading this book (only some parts). For example: hearing about Walgreens and how they crammed so many stores in a small area and why was very interesting.

Positives:
Provides insight into many great companies and their culture. Very thorough explanations on the principles and concepts. Plenty of information in the appendices.

Negatives:
Most concepts and principles are obvious before even reading the book. A lot of buzz words and metaphors are used that may distract rather than assist. The viability of the study and the results is questionable.

Recommended for: Small business owners
I recommend this book for small business owners to get a better understanding of the types of principles and values they should apply to their business. Although many of the principles are obvious and common sense, it always helps to read up about them to help you apply them.

Genre: Business

Overall rating: 6 out of 10 stars

Australians can buy the book by clicking the picture below:

Where to from here:
I recommend reading The E-Myth: Revisited instead of this book. Read my review to understand why.

If you have read this book, feel free to give it your own rating by posting a comment below.

Book review: The 7 Habits of highly effective people by Stephen Covey

The 7 Habits of highly effective people – Stephen Covey

Synopsis:
This book focuses on principles (or habits) that can help you build more effective relationships, learn to trust and be trusted, communicate better and become more efficient is your life. It is a self-help book that takes a look at your principles and values and whether they are effective or not.
The book opens by discussing paradigms and how we view the world. This leads on to the first habits that deal with ‘private victories’ or in other words, rising from a dependent person to an independent person. The later habits deal with ‘public victories’ or in other words, rising from an independent person to an interdependent person.
From time management skills to analysing paradigms of human interaction, the book looks at many different aspects of life and how you can improve those situations. The appendixes contain highly detailed information so the flow of the book isn’t disrupted.

What I gained from reading this book:
This is an incredibly detailed book that is full of useful tips and suggestions. The way the seven habits are described and how they connect are explained so well. I really enjoyed this book because it has no ‘quick fixes’ or gimmicks. The book follows a very logical flow: starting from analysing paradigms before moving on to the habits. The step by step flow of the chapters and the habits makes it very easy to understand. The main gain I received from this book would be the increased understanding I have on my own paradigms and what habits I need to improve.
When I first picked up the book and read the titles of each habit, I thought they sounded too obvious and the book would contain very general advice. I was surprised that this was not the case and the simple headings are very misleading for the quality of the information given. I realise now that the simple headings such as ‘Think Win/Win’ or ‘Be Proactive’ are simple to help you remember them.
I know that I will not become a perfect person and I am sure that I will fail many of these habits, but this book does give me a guide on what I should focus on and how to become more effective.

Positives:
Very useful information that is based on solid principles: no quick fixes, fads or gimmicks. Very detailed discussion that clearly explains our perceptions and how we can change them. The examples and scenarios are extremely helpful in explaining points.

Negatives:
Some people may feel this book is too ‘idealistic’ or may even think it is all ‘psycho-babble’. The detailed explanations and discussion may be too ‘thick’ for some people.

Recommended for: Everybody
The principles in this book deal with all aspects of life whether it is personal or business. Nobody is perfect and we can all improve ourselves if we choose to and this book can help. People wanting to improve relationships or find out how they can communicate more effectively will benefit from this book.

Genre: Self-help

Overall rating: 7 out of 10 stars

Australians can buy the book by clicking the picture below:

Where to from here:

I recommend the following book as it teaches sound principles in dealing with people:

How to win friends and influence people by Dale Carnegie

Book review: Principles of corporate finance by R. Brealey, S. Myers and F. Allen

Principles of corporate finance – R. Brealey, S. Myers and F. Allen

Synopsis:
This book discusses a wide range of topics relevant to corporations and financing. The book opens by explaining the concepts value and risk and other basic finance principles. From there the topics become progressively complex, from project analysis and net present value calculations, to debt policy and option valuation. Other topics include mergers, agency problems, credit risk, working capital management, etc. The book concludes with an important discussion on the limitations on finance and what we do and do not know.
This book uses a great number of examples and case studies to explain the concepts. Worked examples show step by step how outcomes are determined. Excel files are available on the internet that helps explain the examples. The examples are either real world companies or imaginary companies so the reader can learn how to analyse real life situations.

What I gained from reading this book:
This book really enhanced my understanding of finance within a corporate situation. This was a required textbook for a third year finance unit so I already had a good understanding of basic principles. What I learned was how to apply the basics of finance in complex situations and find optimal solutions.
This book enhanced my understanding of options and different methods to value them. Other benefits I gained included an increased understanding of tax shields to effectively reduce my tax liability and the ability to analyse the difference between leasing and buying to make the best possible decision.
I found this book was easier to understand than my lecturers and I still keep this book as reference for the future. The principles in this book won’t be obsolete in ten years (unlike other university books I have) so even if I forget how to apply a principle, I know I can easily re-learn it.

Positives:
The book starts off explaining simple finance principles before going into complex issues so those new to finance won’t struggle from the start. The examples and the excel files on the internet made the learning process so much easier. The principles in this book are useful in a wide range of situations, not just for corporations.

Negatives:
Some people may have difficulty with this book, especially if you don’t already have a good understanding of the basics of finance. Some topics are very complicated.

Recommended for: Business and finance students
If you are taking a course in business or finance, you will probably benefit from learning these advanced concepts. If on the other hand you are thinking of starting your own business, having a strong understanding of complex issues raised in this book will definitely put you at an advantage.

Genre: Finance

Overall rating: 7 out of 10 stars

Where to from here:
After reading this book you will probably want to learn specifics on other topics such as taxation or accounting. I haven’t reviewed any of those books so have a search for some on the topics your interested in.

Australians can buy the international edition by clicking the picture below: