“Entrepreneurship is the unseen factor of production. Land, labor, and capital produce nothing until they are actively put to work. They need to be directed and focused by some human mind—an entrepreneurial mind that realizes how they can be used to create value.”
“British philosopher and economist John Stuart Milll (1806-1873) identified entrepreneurs as people who assume both the risk and the management of a business. Today, economists focus on the role of entrepreneurs as innovators or in spotting opportunities or taking risks in a world of future uncertainty.”
Why Can’t You Just Give Me the Number? An Executive’s Guide to Using Probabilistic Thinking to Manage Risk and Make Better Decisions by Patrick Leach
Decisions can be based on a deterministic calculation only in conditions of certainty, that is to say the input parameters are known quantities. But strategic decisions are often made in a context of uncertainty and complexity, where a definite answer is unknowable, so we must turn to probabilistic thinking.
Uncertainty. “I make the case that all value generated by business executives comes—directly or indirectly—from how they manage uncertainty. Without uncertainty, a share of a company’s stock is effectively a bond, with guaranteed future cash flows. Guaranteed bonds don’t need management. But stocks (or rather, companies issuing stock) certainly do.”
How Finance Works: The HBR Guide to Thinking Smart About the Numbers by Mihir A. Desai
This is an outstanding book which presents some complicated topics in a clear, well-organized manner with real-world examples. The author, a professor of finance and taxation at Harvard Business School and Harvard Law School, includes some sidebar commentary from two CFOs, an investment banker, and a hedge fund manager.
Agility: How to Navigate the Unknown and Seize Opportunity in a World of Disruption by Leo M. Tilman and Gen. Charles Jacoby (Ret.)
“The need for agility in business, government and warfare arises precisely from the uncertainty and complexity of the competitive environment.”
I imagine both co-authors of Agility have some battle scars—Tilman from Bear Stearns during the 2008 financial industry crisis and Jacoby from his career in the U.S. Army where he achieved the rank of 4-star general. Kidding aside, this book goes beyond military metaphors and presents a fusion of military and business thinking about risk intelligence and uncertainty as well as a leadership approach that emphasizes truth (as opposed to assumptions), trust, clear communication, and executional dexterity throughout the organization.
Complex adaptive systems “are constantly changing and evolving. They lack centralized control. They are inhabited by a multitude of stakeholders driven by distinct objectives, risk tolerances and modes of operation. These players interact in dynamic tension with one another, alternating between the urge to recoil from and engage in risk-taking and aggression. Their actions and adaptations lead to entirely unpredictable patterns and outcomes.”
Rethinking Risk Management: Critically Examining Old Ideas and New Concepts by Rick Nason
Rick Nason challenges the status quo of risk management which mindlessly follows third-party frameworks and does too little independent thinking. He argues that risk management acts as “The Department of No” while ignoring upside risk. He envisions risk management as a strategic player in value creation rather than a cost center.
Organize for Complexity: How to get life back into work to build the high-performance organization by Niels Pflaeging
“As we have seen, the world has already changed—high complexity in value creation has become the norm.” This book proposes a cell-based organizational structure (Beta) better suited to a complex, unpredictable world than the traditional hierarchical system (Alpha).
Boards that Lead: When to Change, When to Partner, and When to Stay Out of the Way by Ram Charan, Dennis Carey, Michael Useem
“A board can be a destroyer or a creator of value.” This book presents an excellent analysis of how the inept boards of Hewlett-Packard, Motorola, and AIG destroyed shareholder value; interesting insights into the turnarounds of Apple and Tyco; CEO succession at Ford, 3M, and GlaxoSmithKline; and Procter & Gamble’s acquisition of Gillette.
The Dollarization Discipline: How Smart Companies Create Customer Value… and Profit from It by Jeffrey J. Fox and Richard C. Gregory
Dollarization “is figuring out what your offering is really worth—in dollars and cents—to your customer.” The book discusses the role of dollarization in sales, marketing, and product development.
What Management Is: How it works and why it’s everyone’s business by Joan Magretta
The author says this book is about the basics of management, but she adds, “the basics aren’t always obvious.” Topics include: value creation, business models, competitive strategy, organization, numbers, innovation, and managing people.
The Key Point 