Business Books
A fellow Rice grad suggested I blog about the "Best Business Books". At about the same time a new blog appeared (hat tip to Business Pundit) that is all about business books and is even giving away free books if you come up with a cool name for the blog. So it seems time do an entry on this subject.

I don't read a lot of "business books". I find most of them are simply rehashing and repackaging concepts that have been discussed before, or are trying to sell books based on a new buzz phrase ("viral marketing", "guerilla marketing", "paradigm shift", the list is endless). For this reason you will find that my picks lean towards stories about business rather than theoretical or "how to" business books. And I don't include "self help" or motivational books in my picks (Think and Grow Rich, for example, is on a lot of lists).

So my list of "best" business books isn't drawing from a very deep pool and are skewed towards historical story telling, so feedback in the comments if I sorely missed something you like. Note that many of the books on my list were required reading in business school so they may seem a bit dated:

1. The Prize - An outstanding read on the history of the oil business, plus lots of geopolitical discussion (would Japan have won the War in the Pacific if they hadn't missed the oil depot during Pearl Harbor?). Anyone even remotely connected or interested in this industry, or is interested in how oil has shaped and is still shaping world affairs should read this book (there was a PBS series based on this book which was "okay")

2. Liar's Poker - See the dirty side of the bond industry from a jaded, cynical point of view that gives lots of laughs. This was probably one of the most interesting reads I have had in all the classes I have taken. Unfortunately Michael Lewis's later book The New New Thing - about Silicon Valley - was a bit dry.

3. Barbarians at the Gate - Dramatic story of the RJR Nabisco LBO (leveraged buyout for you non-business types). I picked this up again a few years ago and find that it is getting a little dated, but it is still an eye opener on corporate excess, greed and the art of the deal (I hated Ross Johnson after reading this book, although James Gardner made him sympathetic in the HBO movie).

4.Competitive Strategy - The top theoretical book on my list and the basis from which I draw for nearly all my marketing analyses. If you want to do strategic marketing, this is your Bible.

5. Something by Tom Peters - Yeah, I know there are a lot of Tom Peters fans out there, and reading him does pump you up, but if you read one of his books, you pretty much have read them all. I read In Search of Excellence, Thriving on Chaos, and a few others, so just go find the one with the most recent publication date and you'll be okay.

6. The Goal - This is one of those books you read, think "whatever", and move on, but then find yourself thinking about it as certain operational business situations come up.

7. Rites of Passage - Maybe shouldn't be classified as a "business book", but as a "career book". I referred to it before while discussing Headhunters. It has lots of good information for managing your career and dealing with recruiters.

8. Extraordinary Popular Delusions and the Madness of Crowds - You think the Internet Bubble was unique? There was Tulipmania nearly 200 years ago, the South Sea Bubble and dozens of previous instances where speculation drove up assets far beyond what they were worth before crashing down and reeking financial havoc on countries and people. I read this a good 6 years before the internet bubble, and while I was more cautious than many, I still managed to get somewhat singed at the end..

I notice that I don't have Drucker and a few others, so there is a lot "required" reading that I didn't put on this list. In addition I didn't include Wealth of Nations and a few other economic texts since I don't consider them "business" books, as well as a few books sitting on my shelf that are pretty helpful (books on negotiating, doing business in Japan, etc.).

Now for a few business books that will never make my "best" list:

1. Who Moved My Cheese - I spent 10 minutes reading this in a book store (yes, the entire thing) and thought "If this is the best selling business book in America, it's no wonder that over half of new businesses fail." At least I didn't pay anything to read it.

2. Seven Habits - This is a whole cottage industry: Seven Habit of Effective People, Seven Habits of Effective Families, Seven Habits for Teens, you name it. But let's face it, if you want to read this book and don't already have a work ethic in place, you need a lot more help than a book can provide.

3. Anything by Gates - Bold statements of the obvious told in a way that will induce slumber.

4. My Years with General Motors - This is supposed to be one of the business "classics", and even though I find the automotive industry interesting, and admire Sloan as a business person, I found this book unbelievably boring. It figures that it is one of Gate's favorites (it has five stars from eight reviewers at Amazon, so note that I am not in the majority on this one).

posted by Director_Mitch @ 1:44 PM (Permalink)
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GMail: 100 Times the Storage at Less Than Half the Privacy!
Got this message logging into Blogger today:

As an active Blogger user, we would like to invite you to be one of the first to try out Google's new email service, Gmail.

For those of you who aren't familiar with it, Gmail offers users 1 Gigabyte of storage and the service is absolutely free.
So what's the catch?

The catch is Google scans your email for key words and places "contextual ads" on your mail window. For example, your friend writes in an email "let's meet after work for beers", and when you open it, Google scans it, finds "beer" and places an add for Budweiser (shudder) or Sam Adams (mmm) on the right-hand side of your web window.



I really don't care about some computer scanning my emails for key words, but this has gotten a lot of people upset over "privacy issues". In fact, one of our wacko California state senators has gone so far as suggest legislation banning it. This is likely just a publicity play, but a bit ridiculous for a voluntary, free service.

In addition to the massive storage they provide, Google also provides full search capabilities to your email, so if you can't find that email from a few months ago about a certain topic, you just "Google" your email to dig it up.

I think Google entering the email space is great, and I signed up for the beta account (I don't think you can get an account yet if you aren't with Blogger or another Google service). In addition, if their entry into this space forces other free email providers to increase the amount of free storage they provide (listening, Yahoo?), that would be even better.

posted by Director_Mitch @ 5:27 PM (Permalink)
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Changing Brand Dynamics in the Cellphone Industry
What kind of cellphone do you have? A lot of people would say "Sprint" or "Verizon", but those two companies don't make cellphones, they sell cellphone service contracts.

This change in consumer awareness is sending tremors throughout the cellphone industry as noted by an article in Businessweek. Essentially, the power of the "brand" is changing from the cellphone Original Equipment Manufacturer (OEM) such as Nokia, Motorola and Samsung to the distributors (Sprint, Verizon, Singular, etc.). As the leverage of the big-name brands decline, smaller cellphone OEMs such as Lucky Goldstar (LG) and eventually Chinese manufacturers will make inroads into the market. The result will be similar to what happened in the PC market: commoditization of the hardware and manufacturing for basic cellphone units. The effects of these changes are starting to be felt. Just this week cellphone market leader Nokia announced disappointing quarterly results and they are expected to lose between three and five percentage points of market share in 2004.

The commoditization of consumer electronics has been witnessed in other segments: PCs, digital still cameras, MP3 players and scanners. In each of these instances value has to be captured through means such as distribution (Dell in PCs), driving up the technology curve (Canon in digital cameras), styling (Apple in MP3) or embracing commoditization (HP in scanners). The cellphone industry will have to follow suit:

1. Distribution - As the Businessweek article notes, the major cellphone OEMs have taken note of the looming changes in consumer awareness and are becoming more flexible and willing to work with the distributors, who will see their influence continue to increase.

2. Drive for New Features - Standard cellphone designs are available from the chip manufacturers, such as Qualcomm and TI, allowing manufacturing companies without R&D or design (i.e. Chinese companies) to enter the market and compete solely on cost. With all phones at the low end being based on the same design and being sold based only on cost, the OEMs will have to drive more features, many of which can be seen on the market already: built in cameras, Global Positioning Systems (GPS), PDA functionality, internet access, games, etc.

Over time, the "standard" low-end cellphone will keep adding features, meaning the bar will keep being raised on what a "low end" phone is. Qualcomm and TI are already working on base designs that include many of the functions listed above, so OEMs will be driven to keep adding more features and services.

3. Styling - Many observers have already noted that the cellphone has become a fashion accessory for many demographic segments, mainly younger people. Different colors, "swappable" face plates and other features can make a phone a better seller than one with the exact same technical features. Samsung in particular seems to have done a good job in the styling department and this is an area that many of the majors are trying to address.

4. Embrace Commoditization - In order to compete against the upstart Chinese manufacturers such as Ningbo Bird and TCL, the major OEMs already doing things to drive down manufacturing costs. All the top OEMs, including Nokia, Motorola and Samsung already have plants in China and will be increasing production there to service not only international markets, but the quickly growing domestic Chinese market. In addition, most of the top OEMs outsource manufacturing altogether, with Nokia outsourcing 20% of its production and Motorola relying on companies such as Pantech in South Korea for several of its product lines.

I am modeling a lot of this based on what has happened in other consumer electronic segments, but there are some major differences that the cellphone market has that the other segments don't: different standards (GSM, CDMA, etc.), regulatory issues, and even some political issues. Overall, however, I think as this market matures there will be more similarities than differences with the other consumer electronics segments.

Update: Motorola just announced great earnings.. This was a combination of Mot getting their supply chain in order after they publicly stated severe problems late last year, plus Mot getting closer to the carriers since they have recognized where brand loyalty seems to be heading (plus strength in their other divisions, including semiconductor, which they are spinning off later this year).

posted by Director_Mitch @ 10:38 AM (Permalink)
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Economics Versus Marketing at Netflix
My posting on the price increase at Neflix was picked up at Business Pundit, which generated some discussion at Brand Autopsy and Ensight.

Their points are that price increases are inevitable, especially since a business's costs go up each year even if they don't increase capital investment (payroll, insurance, etc.). So raising prices is inevitable.

I agree, but my point in was more a branding issue than an economic one: If Netflix needs to raise prices, they should have done it in a way that would have locked in customers in what is a very new business model.

The business of renting DVDs by mail for a flat fee is fairly new. There is no patent on this business model (a discussion in itself), so Walmart, Blockbuster and other large companies have announced plans to enter this space. There is a good chance that Netflix could be squeezed out (my bet, bought out), or that they will become the "Apple Computer" of this consumer segment: an early pioneer with a small, dedicated fan base, but with market share in the single digits and prices that are higher (I should blog about the same thing happening to Tivo).

I thought a "pay 12 months in advance at the old rate" was a nice way to raise prices while locking in the current customer base. Those who want the old price paid in advance for it - and cash up front to a company is better than a price increase - and those who didn't want the pre-paid service paid a higher monthly price.


posted by Director_Mitch @ 4:40 PM (Permalink)
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When 60 Seems Young
McDonald's chief executive died unexpectedly of heart failure at the age of 60 while at a franchise convention in Orlando. Among the various thoughts going through my head:

Wow, that's not that old!- This thought is probably the combination of my own aging, the fact that both my parents are very much alive at 66, and the American culture's continuing redefinition of "old" as the boomers age and as life expectancy increases. Already we are hearing that "40 is the new 30", and if this is true, 50 is the new 40 and 60 is the new 50. If you are curious, you can get your statistical life expectancy (scroll down to "Longevity Game") to see if you feel 60 is "old" or not . There is also a Death Clock, but I died earlier using this, so I recommend the other one.

This is just like Junkins - I experienced a similar situation on the inside while working at Texas Instruments. Jerry Junkins, our CEO, died at 58 of heart failure on a business trip in Germany. The "unofficial" story circulating in the ranks at the time is that he literally slumped over in the car while being driven to a customer. As the article notes, Jerry didn't have any history of heart problems, so this was a big surprise within the company.

How Will This Effect McDonalds? - Believe it or not, there are whole bodies of research on company performance after high-level executives die in office (PhD candidates in business have to research something). From what I remember, the results of these studies were pretty obvious: it depends if the company has a succession plan in place, which seems the case here. I will say, however, I think TI was an exception. I don't think Engibous, who succeeded Junkins, was the obvious successor (there was something of a power struggle among various factions after Junkins died), but once he was in place, he did a great job of leading TI to divest non-core business and take advantage of the ensuing tech boom in the late 90s.

posted by Director_Mitch @ 10:24 AM (Permalink)
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Well Gaaaauuuuley!
I actually think this was on a few blogs last week, but Rorschach (just back from Japan) forwarded it to me via email and it is pretty funny.




posted by Director_Mitch @ 8:42 PM (Permalink)
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