Business books – these are some of best we have read over the last number of years.

The 4-hour work week – Tim Ferriss

The author is a charismatic independent-minded guy who has gone on to great success in publishing several other books, but this remains his ground-breaking first book. 

The important points from the book:

Focus on the 20% of tasks that bring 80% of your results to be more productive.  Doing something well does not make it important, and so busy-ness is not being productive.  Recently Tim Ferriss has produced hundreds of podcasts, and he reformulated this principle – eliminate the 20% of tasks/customers/products/whatever that brings you 80% of the hassle in your life.

Whatever ideas you have, test them first before spending any time on them.  You should create a premium product and charge more for it, because it is more profitable to do so, and the customers who will pay more are less demanding.

There are a plethora of other ideas in this book which make it worthwhile, because if even one of them helps you then it will be worth reading.  It was ahead of it’s time in encouraging the reader to work remotely, and leverage broadband, laptops, wi-fi and lots of other technologies that free people from a fixed workplace.

Lastly one nugget that was not in the book, but is from Tim Ferriss’s podcasts – don’t take advice from people unless they are successful at what they are advising you about.  That eliminates the majority of people in the ”self-improvement” market.

Here are a few more snippets:

1. Emphasise strengths don’t fix weaknesses

You have strengths and you should use them, and get great results from that.  If you focus on weaknesses you may get incrementally better results but you will miss out on the multiplication of results by focusing on your strengths.

2. Don’t be an optimistic denier

Most people get through life hoping that things will improve.  the say ”I’m an optimist”, and justify it.  But the thing is – if you are a pessimist you say ”It’s hopeless, there’s no point in doing anything about my situation”.  An optimist says ”It’ll all work out, no need to do anything.”  Result? In both cases no action.  Things will not improve themselves, and less than pure hell is bearable and inaction can be rationalised.  So – take action.

3. Ask the following questions and see if the answers are what Tim predicts:

What do you want?  Too vague?

What are your goals?  Also too vague.

 Suggestion – happiness is the goal.  But what is happiness?  It is lack of boredom, so live an exciting life and eliminate boredom.

4. What would you do in the next 3 months and then 12 months if there was no way you could fail.

Get specific and then backwards engineer your actions from today to achieve what you want in 12 months – travel, material goods, experiences can all be part of the list.

5. To get more productive:

Limit tasks to the important to shorten work time – an adaptation of the 80/20 rule.

Work expands ( or contracts ) to the time available so limit time in work to get the important stuff done ( Parkinson’s Law )

8.  In meetings don’t encourage chit chat, get to the point and finish the meeting

11. Tim recommends a book ”The cost of not paying attention”.  The cost of not paying attention takes up 28% of the normal office workers day.  Small things take up big time so concentrate on the big things.

12. Focus on immediate actions in interactions in work, and you will get more done.

18. You are now a successful entrepreneur – or have freed up your time by managing your spending to match your income.  Either way you now have time to consider the big questions – like what does it all mean?  Ferriss argues that these questions are too vague and hazy and so you should ask questions that are much more precise and where the answers can be acted on.

19.  Ferriss’s meaning of life for people with unlimited time and more or less enough money to do anything they want is to have continuous learning and live a life of service.  In other words acquire new skills constantly and be of service to others.  That’s it.

20.  Top mistakes people make when they reach the summit of free time and enough income – falling back in to working for works sake, micro-managing people and processes, doing jobs others could do, failing to systemise responses to crises / errors, chasing undesirable customers, answering email that could be handled automatically, looking for perfection when good enough would be, well, good enough, and generally failing to get a life outside of work.

21.  There is a section on how to delegate jobs either to a virtual assistant or a real-life in-person personal assistant.

Thinking, fast and slow – Daniel Kahneman

This book is a summary of the lifetime work of the author, and contains many nuggets of wisdom on human behavior. 

Kahneman won the Nobel Prize for his work on prospect theory. 

Much of human behaviour is nominally controlled by the conscious part of the brain but in fact there is an unconscious part of the brain which is making quick decisions without bothering the conscious part of the mind.  This is similar to the reflex reaction, where messages only travel as far as the spinal column before generating a quick reaction.  He calls them System 1 ( the unconscious mind at work which makes most of the decisions without bothering the conscious mind ) and System 2 which is the part of the brain that thinks it in control all the time, and is responsible for reasoning and logic.

Here are some interesting points he makes – for the purists, Kahneman’s theories are supported by research, not by his opinion:

1.Priming takes place when you hear one word and another is suggested to you.  For example if you hear the word EAT, you will more likely fill in the missing letter from SO_P as SOUP rather than SOAP. 

2. If people believe they are being watched they behave better.  An experiment was carried out in a kitchen where there was an honesty box to pay for tea and coffee.  Amounts paid in were three times higher in weeks where experimenters put pictures of a pair of eyes rather than a pictures of flowers which they had on every second week.

3. Experiments have shown that statements written in bold are more believable than statements written in plain text. 

4.  If what you say is more memorable, for example, because it rhymes, people will think it is more insightful.  So ”Woes unite foes” was gauged to be more insightful than ”Woes unite enemies”

5. If System 2 ( the conscious part of the brain ) is disrupted – for example by asking people to remember a series of numbers, then asking them to read ”true of false” statements where the answer is obviously false – people found it more difficult to detect false statements.  So System 2 can be disrupted.

6. People have an too much faith in small samples, even statisticians who should know better.

7. People in general are loss adverse.  In other words, losses loom larger than gains.  In experiments, people wanted a 1.5 to 2.5 times gain to offset a gain of 1.  So if you were asked to take a bet where you could lose €100, you would need on average to win between €150 to €250 before you will contemplate the potential loss of €100.

From a popular science point of view here are some of the interesting facts presented by Kahneman in the book:

8. You are told a bat and ball together cost €1.10.  The bat cost €1 more than the ball.  How much did the ball cost?  Answer this question before reading further, then go to the bottom of this book summary to read the answer.

If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets? 100 minutes or 5 minutes? Answers are further down in the summary.

10. Kahneman goes on to say that if people are presented with the above puzzles in normal print and font, 90% of people will make at least one mistake.  However if the font / printing is blurry, only 35% of people make a mistake , and the theory is that people have to engage the conscious mind and therefore take their time on the problems.

11. If you know next to nothing about trees in California and you are asked whether a redwood can be taller than 1,200 feet you might infer that 1,200 feet is a reasonable height for a redwood to be.  This effect is called anchoring, and whether the number is known to be relevant or not, it does have an effect on the answers people give.

13. Simple statistical rules are superior to intuitive judgements in almost every sphere of life.  People resist this conclusion because they think it is cold-blooded or mechanistic, but it combats the halo effect where first impressions cloud later judgements.

Answers – the bat cost €1.05 and the ball cost €0.05.  The machines will take 5 minutes to complete the task.  These answers are contrary to what the quick, intuitive answer would be.

14. The full text on prospect theory which was cited in the decision to award the 20022 Nobel Prize in Economics is at the back of the book.  Prospect theory proves that people are not rational beings who make every decision based on logic.  Instead prospect theory tries to predict the actual behaviour of people.

The 80/20 Principle – Richard Koch

People expect life to be simple, straight-forward, fair and linear.  So lots of effort brings great results, right?  Wrong.  Work on the important stuff to get great results.  80% of your results come from 20% of your work, and so one of the nuggets from this book is to work on the vital 20% and cut down on the other 80%.

Focus on the things that are producing great results and eliminate the rest.  That’s why Steve Jobs reduced Apple’s product range to less than 10 when he returned to take over the running of the company.  Before that Apple had 300 products.

You don’t have to know what the exact number is, and it may be that 90% of your happiness comes from 1% of the people in your life.  What Koch is saying is that there is an imbalance between effort and results – 80% and 20% just happen to add up to 100% but they are two different sets of data.  The point is to make the effort to find out what makes a positive difference and concentrate on that.

Richard Koch worked in 2 large management consultancy businesses before starting his own consultancy business with 2 others so much of what he talks about is from a very commercial mindset.

Here are my personal favourite sections:

1.  Effort and reward are only loosely linked.  It is better to be in the right place than to work hard.  It is better to be cunning and focus on results rather than inputs.

2.  Traditionally 80/20 analysis has required a study of all the data in an organisation to establish the relationship between inputs and outputs.  The practitioners or consultants come up with a hypothesis or a theory and then try to match the facts with that theory.  They try to establish that there is an imbalance between inputs and outputs.  If the study does indicate a marked imbalance between inputs and outputs then normally action is taken as a result. 

3.  80/20 examines the relationship between two sets of data.  Usually one set is a universe of data or at least a large set of data, more that one hundred at least.  The second set of data is an interesting characteristic of the data that can be turned in to a percentage.

4.  The 80/20 relationship comes from the fact that in the 1950s when this was being developed, the most frequent observation was that 80% of the quantity being measured came from 20% of the people or objects.It is the convention that the top 20% of causes that is cited not the bottom.

5.  A firm that finds that 20% of its customers produce 80% of its profits should concentrate on keeping those customers happy.  This is such a widely held view that I am not sure it has any relevance, except to say that although people know it and understand it they take no action because of that understanding and knowledge.

6.  A second use of 80/20 analysis is the improve the output from the worst performing parts of a business or organisation.  This has been used to great effect in under-performing factories or business units, but in most parts of a business it is not a great use of effort to improve profitability. 

7.  There is a danger that users of 80/20 will fall in to a false logic trap.  Taking book sales as an example, 20% of book titles account for 80% of sales.  Therefore reduce the lines of books to those 20% of titles and profits should improve, but in real life the opposite happens.  Customers go to a bookshop to browse a large range of books not to see the range that a kiosk or supermarket would stock.  Better to concentrate on the 20% of customers that account for 80 of their profits.

8.  Koch lists the main tenets of 80/20 – there are only a few things that produce important results, most efforts do not get the intended results, there are subterranean forces at work in most situations, its too complicated to figure out whats really happening – just fix things until they work then leave it alone, most good things that happen come from a handful of highly productive forces and most bad things come from a small number of highly destructive forces, most activity is a waste of time.

9.  Take time out from your business once a month to ask – what problems and opportunities are building up that I haven’t noticed?  what is working well even though I never noticed it before? ( for example what are we doing for customer that they love but we never noticed before ), is something going badly wrong, where we think we know why, but we might be wrong about?  is there anything happening beneath the surface that we haven’t noticed?

10.  Most leaders in business don’t have a proper job.  Rather they have a series of projects where they have to organise the problems, the team members and then make off-the-cuff arrangements to tackle and solve problems.

11.  On every project simplify the task first.  If you have a problem it is usually a series of projects to solve that problem.  If you have too many projects, the complexity of solving the problem does not increase in a linear fashion, instead it increases geometrically.  So 2 projects to solve a leads to a complexity level of 2 multiplied by 2 = 4.  Having a problem that requires 4 projects increases that complexity to 4 multiplied by 4 which is 16, 4 times the level of complexity of the first instance.  Therefore first simplify.

12.  When planning to tackle a problem, write down the issues you are facing.  If there are more than 7 then get rid of issues until you only have 7 issues.  Then write your hypotheses about the causes of the problem even of they are guesses.  Then you will know what data you need to collect to prove these hypotheses ( theories ) or disprove them.

13.  Few people add most of the value, and they usually don’t get what they bring or anything like it.  Look after them.  Success is unrecognised or under-recognised.  Spot it early and multiply it quickly if possible.  Do not dismiss it as luck.  Find that 20% and concentrate on it, everything has a top 20%, find it and emphasise it.

14.  We are continually surprised at how well the best activities are doing and how long it is taking to turn around the worst activities.  It takes a crisis , a new boss or a management consultant to make us do what we should have done a long time ago.

15.  Commonest wastes of time – things other people want you to do, things you are not unusually good at, things that are already over time budget, phone and video calls and meetings in general.

16.  Workers who are above average will be paid more than those below average but are never paid enough.  Conversely below average workers are paid more than they are worth and this will never change,  Best to have well-paid over-performers and let the under-performers work somewhere else.

17.  Koch recommends the use of the subconscious to solve problems – this section is a bit woo-woo for me and I haven’t figured out if it is useful, so I will end here.

Built to Sell – John Warrilow

The basic principle of this book is that you should build a business that is ”built to sell”.  There are many advantages to this, one being that the business owner frees up his or her time now, whether they ever sell the business or not.

The book is written as a story about a business owner on a journey.  If you like checklists you get one of these at the back of the book.

One mistake a lot of businesses make is that the operation is heavily reliant on the owner.  This is understandable in many businesses, but there are lots of operations that would benefit from the owner standing back, and this book gives a structure to carry that out as an exercise, and also gives the logic behind many of the tasks that should be carried out.

This is a summary of the principles:

Run the company as if it is going to last forever.

The attributes that make a business sellable are desirable – whether you want to sell or not. Positive cashflow, profitable, process-focussed.

Focus on doing one thing well, improve the quality of what you do and stand out from your competitors

Try not to be over-dependent on one customer

Say ”no” to sales that are outside the area of your specialisation

Get your whole marketing process into a system so that when you go to sell you can show how many prospects you need in your pipeline at any time

It is well worth your time to read this book to get some ideas on how you can systemise your business.

The author has a practical section at the end where he re-states many of the points in the main part of the book.  He also gives practical examples from his time running his own businesses before he became an adviser, author and broadcaster.

Here is the practical section:

1.  Don’t be a generalist be a specialist.  Good things will follow – the quality of your work will improve and you will find it easier to attract good employees and new clients.

2.  Try not to reply too much on one customer – less than 15% is ideal.  Same with suppliers, buyers can look at the business and think that there is a over-reliance on one part of the business, better to spread the risk.

3.  Be clear on what you are selling.

4.  Don’t be synonymous with your company because buyers will be wary that the company will not operate well without you.

5.  If you have to give credit, buyers will have that much less to pay you because they have to finance customer balances.  Try to reduce the credit that you give by billing and collecting upfront. 

6.  Say no to anything outside your area of specialisation.

7.  Work out your pipeline mathematics – conversion from the first contact with your business to making a sale.  When you have these figures then a potential buyer can estimate what your business is worth.

8.  Always have at least 2 salespeople, because they will compete with each other, and it will prove you have a scaleable repeatable model.  I’m not sure of the viability of this idea for small businesses.

9.  Hire people who are used to selling products.  These salespeople will sell what you have instead of customising for each customer.

10.  You will not be as profitable as normal in the first year that you change over to a standard service offering.  So don’t concentrate profitability in that changeover year, profits will come as the changes take place but it will take time.

11.  You need to run the company profitably for 2 years before thinking of selling.

12.  Build a management team and pay them in bonuses for their loyalty.

13.  Get a business adviser that knows your industry.

14.  Avoid advisers that are going to offer your business to one buyer – who is possibly their main client.  You want a broker who can get at least 2 competing bids for your business.

The 7 habits of highly effective people – Stephen Covey

This book is used widely by college and school students and unless you have been living on a remote island, you will have heard of the principles espoused by the author.

He starts by saying how he came up with the ideas – he studied ”success literature” from the very earliest times up to today and then set about coming up with his own principles, around which people could build their lives, not just in work but in general.

The 7 habits are:

Be proactive – take action, take the initiative

Begin with the end in mind – what do you want to achieve, set out your plan to get there based on where you are now

Put first things first – you need to distinguish between urgent and non-urgent, important and unimportant.  Non-urgent and important is the quadrant to focus on to be most effective

Think win-win, rather than ”I win, so you lose”

Seek first to understand, then to be understood – listen to others needs and wants, then express your own

Synergise – use teamwork to solve problems together

Sharpen the saw – seek continious improvement, keep your training and education up to date.

The book has spawned an industry with 7 habits for families, teenagers and so on. 

You can learn the 7 habits in workshops and there are franchised trainers throughout the world who will sell you the system. 

It is a very useful and positive system to use in everyday dealings, and at the heart of it is the principle to deal fairly with people you meet and you will get fair treatment back.

Managing time – loving every minute – Peter Greene

This book is published by the Chartered Institute of Marketing in the UK.  It is a collection of some ideas about managing time, rather than a big bang new idea.

Having said that, if you are a person that has never tried to use any system to manage time in the working day, then this is useful in that you will find some basic principles here which will give you back some control over your working day.

The claim is made that a person can save 20% of time in a day using the information in the book, and I’d say that’s the least amount you could save if you actually apply what is in the book. 

If you have studied and used time management before, then this book will have very little in the way of new information or tips, so it’s probably not going to make a huge difference to you.

The book is peppered with easy-to-remember stories – for example the author explains the ”chicken farmer syndrome” of someone that works hard at small problems and tasks throughout the day, but never gets the big and important tasks taken care of because he is busy with the distractions that crop up.  This and many methods to save time and be more effective are laid out for the reader.

Another method to save time is to list the most important tasks of the day and tackle them first.  Start on the most important problem or task, and don’t stop working on that until it is solved or that task is completed.  Start on the next most important task and so on.  If you don’t finish something, just transfer it on to tomorrow’s list.

How to win friends and influence people – Dale Carnegie

This is the daddy of all self-improvement books, written by Carnegie for a US audience in 1936 in a folksy style. 

Modern readers will not garner much in the line of new information, as most of the tips are pretty much mainstream. 

However if you do come across someone who needs help in improving their human relations skills, you could do worse than gift them a copy of this book.

There are tips on how to behave at what are now called networking events – listen to people and take a genuine interest in what they have to say, and they will find you interesting and genuine.  There are many tactical suggestions like this, and if you don’t already follow these principles, you can find that they make a massive difference to your business and personal life.

Carnegie says that the amount of money we earn doesn’t reflect what we can understand and what things we can do or our technical knowledge (how-to stuff), but is more dependent on our ability to deal with people and our ability to lead people.

If we want to earn more, get a promotion, or increase your business income, it pays to learn how to effectively deal with people. (This is a claim that is backed by science.)

The Hard Thing About Hard Things – Ben Horowitz

This is a book written by one of the team that headed Netscape, the browser that went head-to-head with Microsoft’s free browser Internet Explorer. 

The book is a journey through some of Horowitz’s adventures in what would now be called pivoting – that is re-focusing the business in a radically different direction many times. 

The companies he worked for did some of the most amazing work right at the start of the internet.

The main points gleaned from his analysis is that personnel are vital and that the business owner should very carefully pick the team that works with them.  This applies especially to managers in a business.

This may seem self-evident but if you apply ”Moneyball” type principles and focus on measurable outcomes produced by managers in the past instead of more vague notions, then you can have radically better outcomes. 

Just because a potential hire looks like Clark Ken / Superman or Princess Diana / Wonderwoman doesn’t mean they will perform well.

The Checklist Manifesto – Atul Gawande

The book has a few central points- using checklists will improve outcomes, from school runs to surgery. 

Checklists make us perform better overall and raise standards generally.  However if you try checklists and they don’t improve things – give it up.

When doctors and nurses in Intensive Care Units created their own checklists for what they think should be done each day, the consistency of care improves to the point where the average length of patient stay in intensive care dropped by half.  Nothing more can be said to state the obvious – checklists can and do make a massive difference.  They are a system versus no system so they help.

However – checklists must be kept simple, clear and ideally less than 9 items.

This book summary could be longer – but I’ll leave it at that.

Pre-suasion – Robert Cialdini

This book is a follow-up to Cialdini’s previous book, Influence.  In a nutshell, the author claims that we should focus on the moments before a buying decision is made to persuade your potential customer that they should deal with you.  The applications appear to be mainly business, however if you read the book as a non-business person you could see the potential to influence in all sorts of situations.

This is really preparing the ground before scattering your seeds – so fertilise the soil to get better results.  Cialdini goes through 30 principles to help in the process.

There are too many to list here but touching on some of them – establish trust, focus attention on what you want attention focused on, control everything about the message even seemingly insignificant elements, keep the focus on your own product or service and so on.

The major points though are

Unity – if you can call upon the unity of the group / family / club / team you have a much better chance of succeeding with what you are asking for from the person you are trying to persuade

Language – the way you ask a question can have a remarkable effect on the response you get.  So if you ask ”Are you happy with your current supplier” you will get a particular response, but the focus of that response is on reasons to be happy with the current position.  If you ask ”Are you unhappy with your current supplier” you will get a response that focuses on reasons that that person is unhappy with their current supplier, and that may be the response that you are looking for.

Visual prominence – if you are in the eye line of the person you are trying to influence then you are likelier to influence them.  For example, in a meeting, most people would choose to sit beside those that they seek to influence, whereas you will be seen as more influential if you sit opposite them.

It is a useful update to his previous book, and will give food for thought to anyone who wants to be effective with others.

Parkinsons Law – C Northcote Parkinson

This book, written in the 1950s is a collection of essays, and the title refers to the principle – work expands to fill the time available for it’s completion.  There are a number of topics considered, such as interview techniques, and also the expansion of the civil service as evidenced by the expansion of the Colonial Office in the UK, at a time when there were no colonies to administer and so it’s work should have decreased.

The relevance to 21st century audiences is that work also shrinks to fill the time available – the crucial difference being that you need to squash it in to that time so that this works in your favour.

All topics are treated with humour so it is a light read.

Buffett – the making of an American capitalist by Roger Lowenstein

This book was written in 2007 before the Lehman Brother collapse in September 2008 and all that has happened since, so it does not have any perspective that might come for the new information we have now since 2007. 

It does however set out Buffett’s investment philosophy and also underscores the mans shunning of most material wealth and the trappings he could well afford.

Warren Buffett had saved $9,800 before he went to do a post-graduate course in Columbia in the 1950s, and this money was the seed capital for all his later exploits. 

If you learnt nothing else from this book, it is that the savers of this world can amass fortunes, whilst the spenders go broke.

Buffett’s number one rule was ”Don’t make losses” and he studied in Columbia under Ben Graham who was renowned for his book ”The Intelligent Investor”, which advised investors to seek unloved and undervalued stocks to invest in.

The author had no access to Buffett but was not obstructed in his work either.  The result is educational and informative without being the hype of recent years that Buffett has inspired.

How to make millions without a degree and how to get by even if you have one – Simon Dolan

This is a book written by a man who founded an accounting firm from his house which went on to have sales of 12 million sterling before he sold it.  I thinks it’s safe to say that this book will not win any literature awards, but there is some sound practical advice on how to run businesses from someone who has done it – see Tim Ferriss on ”don’t take advice from people who haven’t done it already” above.

Simon gives us a potted history of his firm from the start and gives us some of the turning points.

Some highlights:

1.  The firm was organised at the start by giving staff descriptions of how to do their jobs.  Manager also got rough guides on how to do their jobs.

2.  Success in Simon’s case came to him after 14 years, which is how long it took him to get to 10,000 customers.  Most people overestimate what they can achieve in a year but underestimate what they can achieve in a decade.

3.  He outlines in a few massively simplified steps how he grew the business to the size it was – hire staff, sacrifice everything for growth, hire people to duplicate yourself ( managers ), set up new branches ( duplicate the business ) and don’t forget that if the new branch makes even €10,000 per year without you it is pure profit, and lastly adapt to changes.

4.  Read books about business.  There may be a lifetime of experience in a book, so why not spend a few hours and see if you can learn anything from someone else? 

5.  People don’t buy services or things – they buy feelings primarily.  If you are running an accounting service business like Simon Dolan you are selling the feeling that someone is looking after the tax returns while you do your main business.

6.  Choose your business well – have a narrow focus, cheap to get in to, unoriginal and early.

7.  Don’t take on your spouse or your best friend as a partner / shareholder / director in the business because friendship and business do not mix.

8.  If you set up a website, remember that 98% of people are looking, gathering information, getting ideas.  You should have useful content for them when they come across your website so that when they decide they need an accountant / kitchen / whatever you are selling they may become a customer.