22nd Edition — July 7, 2019
Costs are always higher than expected, even when they are expected to fall. They require scrupulous scrutiny and constant containment.
Finally, I got around to finishing Freakonomics this past week. While the book is entertaining, I’m not even sure I can recommend it for CFOs.
Themes include cause and effect, incentives, conventional wisdom, and information suppression. I’ll forever be on yellow alert when I’m seeking that extra $5,000 from a buyer when working with my real estate agent.
I’ll also have my kids check out the chapter on what not to name their children. Sure, shuh-TEED sounds pretty, but not on paper–the spelling is Shithead (seriously, it’s in the book).
2. The Economics Book Every Financial Leader Should Consider
I’m a fan of Thomas Sowell, but his writing can be a bit formal and academic at times causing a reader to feel they are back in school. Economics in One Lesson is good, but not what I call practical for the job. But there is one book where you’ll pick up relevant, important tools and frameworks in the work setting. That book is Executive Economics by Maital.
Maital’s practical management book includes topics such as trade-offs, economics profits, sunk, hidden and opportunity costs, and risk assessment. If I were building a 100-books list for financial leaders, this title is included.
3. Like Book Summaries?
I was an early customer of Blinkist, but I keep forgetting to use it. If you are a fact-finding junkie like many readers are, you’ve probably found a home of business book summaries. If not, I’ve got you covered. Take a look at this list of book summary websites which is insane – many of these sites are free.
4. Growth is Hard, No Kidding
According to the authors of Profit from the Core, only 13% of some 1,800 companies in a test sample were able to grow consistently over a ten-year time period. In the book Creative Destruction, we further learn that only 16% of 1000-plus companies survived during a 36-year period. Many of the managers running these businesses were experienced, educated, and understood market dynamics. Does that mean luck is a good thing, perhaps a requirement for growth?
5. Homework Assignment
Do you run a department, a division, or a company? Or perhaps you run projects or are in charge of several key processes at work.
Calculate your company’s 5- and 10-year compounded growth rate using top-line sales. What’s the trend? What’s the truth behind that trend?
Will your company still be relevant 5 years from now? How about 10? Outline your theories and reasoning behind your ideas. Share them with your CEO or clients.
Thank You Very Much
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Take care and have a great week. Always be learning.