Outsiders
/ Read “The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success” (here).
Background: The book is comprised of eight short stories on 8 CEOs and how all utilized similar strategies/themes in running their businesses.
Summary: The strategies highlighted in each short story were in noparticular order how each CEO tackled on highest level
- capital allocation
- decentralization
- contrarian thinking
- long-term focus
More in-depth, the book highlighted for each CEO’s the:
- use of dividends and share buybacks
- M&A strategy and respective timing of said M&A based on company multiple/valuation
- decentalized organizational structure and engagement level (or rather lack of) with Wall Street
- company-specific key metrics each CEO focused on to measure company finances and focus on taxes
The 8 CEO and Company Stories Covered:
Conclusion: This book is worth a skim (not a deep read, maybe (?) a re-read after a while). I like the concrete examples provided, as I find the detailed company history and examples more valuable than general advice.
However, these examples highlight strategies that now seem either obvious or well-known.
For example, a CEO joins a company with a depressed valuation, a potentially bloated structure, and a varied and diversified revenue base with moderate growth. The CEO then divests non-core businesses, cuts headcount, buys back shares at a low historical multiple, and focuses on key product lines with the most growth potential.
To me, the alpha lies in the person getting the opportunity to join the company and take advantage of that opportunity to grow the business. If they have a long-term focus and are capable of executing these improvements, the actual playbook itself isn’t much alpha.
Even more so, it’s much more difficult to integrate the qualitative and creative aspects of business improvement, like enhancing a company’s reputation with the market and customers, refreshing the board, and instituting well-incentivized compensation plans for mid-level managers.
Reading a short story of the nuances of the latter brings more value to me than the former, but both are generally interesting.
Published on April 17, 2024.
Tagged: Books