Words to Live By - Overlooked Lessons from Great Business Thinkers

I think I have a below-average memory, yet I’ve always had a good mind for recalling quotes from books and movies. Countless times my wife has stared at me in weirded-out disbelief when I remembered word-for-word some line from a movie we saw together a single time years before. That part of my brain just seems to switch on when I hear a quote I like. It’s not the most marketable talent, but there it is.

Unlike my unintentional absorption of inane movie quotes, I make an effort to remember well-crafted turns of phrase when I read. Most of the books on our shelves at home look ruined to the untrained eye because of the beating they take from my underlining and writing notes in the margins to make me absorb the material. It takes me a while to finish books as I try to compensate for my so-so memory this way. On the plus though, it tends to discourage people from borrowing books of mine. (As we all know, books rarely complete the round-trip home once you loan them out.) I mean, would you want to borrow this?

I’ve probably singled out thousands of little concepts, quotes, and anecdotes over the years that have shaped how I think about things and surely shaped the way I write. Interestingly, the ones that have stuck with me the most are often tangential to the main thrust of the book. As I was reading Peter Thiel’s Zero to One (which earned its’ share of margin notes), I thought it might be interesting to share a few of the things I’ve come across in my reading which I suspect many overlooked in these books. And so, from my bookshelf to yours, here they are (with links to Amazon titles where applicable):

Friendships founded on business are superior to businesses founded on friendship. - Henry Flagler

I came across this dictum in Titan, Ron Chernow’s incredible book about the life of John. D. Rockefeller. Henry Flagler was a master businessman of the Gilded Age and one of the original founders of the Standard Oil Company, although his legacy tends to be overshadowed (perhaps not unjustly, but still) by John D. by Rockefeller’s. This is one of my favorite books and there is much anyone can learn from it, but only this quote stuck with me from the first read. To me, the statement is at once obvious and profound, but it’s a lesson that many people ignore. Mixing friendship (or family) and business is dangerous for most of us, because it is so easy to let those relationships skew business judgment and vice-versa.

How do you know where to draw the line? It’s different for everybody and depends on the circumstances. In his classic book High Output Management, Andy Grove asked the question of whether you should be friends with the people you manage – another question I’ve seen people deal with unsuccessfully. His rule of thumb is a good one: “A test might be to imagine yourself delivering a tough performance review to your friend. Do you cringe at the thought? If so, don’t make friends at work. If your stomach remains unaffected, you are likely to be someone whose personal relationships will strengthen work relationships.” I’d extend his reasoning to peers as well as direct-reports. If you don’t think you’re capable of telling someone that they need to pick up their performance or change their behavior when they need to hear it because they’re a friend as well as a colleague, you should disentangle your business and personal relationships before both suffer.

There is no single formula for success in anything. - Dr. Michael Burry

In The Big Short Michael Lewis introduced us to Dr. Michael Burry, the brilliant, Asperger’s Syndrome-suffering hedge fund manager who made a mint by betting that housing prices would collapse and take the market down along with them in 2008. Burry is a non-traditional money manager to say the least, and his knack for utterly logical formulations comes through here:

At one point I recognized that Warren Buffett, though he had every advantage in learning from [legendary investor] Ben Graham, did not copy Ben Graham, but rather set out on his own path, and ran money his way, by his own rules…I also immediately internalized the idea that no school could teach someone how to be a great investor. If it were true, it’d be the most popular school in the world with an impossibly high tuition. So it must not be true.

As I mentioned in my book, that idea is not just wonderful business thinking, it’s wonderful for business thinking. What’s he’s saying is not only true of investing; it applies to running a company, managing a team, designing a product, and pretty much any other high-value business activity you can name. We all have to play to our strengths and do things in our own peculiar ways and get better at doing them that way. Learn from others, yes, but you can’t be afraid to infuse your own personality, including your strengths and weaknesses, into how you make business decisions.

Customer feedback flattens corporate hierarchies. - Jeff Bezos

As I’ve written about before, there are lots of smart, hard-working people out there, which makes it very hard to differentiate yourself through smarts and effort alone. I looked like hell to find the original quote (please share if you know where it is), but Jeff Bezos’s observation that in companies like Amazon where you have lots of super-brains all jockeying for this or that idea to come to life, understanding of the customer matters more than the title of whoever who came up with the idea. It doesn’t matter if you’re a senior executive or a junior staffer; opinions that are not founded in deep understanding of what the customer needs won’t get far at Amazon.

You could spend a week reading what Amazon and others have said about its’ customer service obsession, but there’s a broader point to take away. Having the best information matters more than your rank in a company. It’s easy for people inside a business to fall prey to insular thinking, and it often gets worse the smarter the people are. If you want to stand out in a crowded field, find the information others have missed. Be the person who understands your market, the competitors, the customers, the investors better than anyone else. You want the best mental map of your environment that you possibly can.

Even in the tech field, most of us are in the human communication business. - Tom DeMarco and Timothy Lister

This applies primarily to “tech companies” (I’ll explain why that’s in quotes momentarily), but I found this an eye-opening point when I read it in Peopleware. DeMarco and Lister begin their classic book by pointing out that even though most managers admit they’ve got more people worries than technical ones, they tend not to manage that way. Instead, they focus their energy on solving technology problems and give low priority to people issues, even though their job is to manage the work rather than actually perform it. Why do so many managers at technology companies do this? Messrs. DeMarco and Lister pin part of the blame on what they call the high-tech illusion. I’ll quote directly from their book here:

Perhaps the answer is what we’ve come to think of as the High-Tech Illusion: the widely held conviction among people who deal with any new aspect of technology that they are in an intrinsically high-tech business…Just between us, they usually aren’t. The researchers who made fundamental breakthroughs in those areas are in a high-tech business. The rest of us are just applying their work. We use computers and other new technology to develop our products or organize our affairs. Because we go about this work in teams and projects and other tightly knit working groups, we are mostly in the human communication business. Our successes stem from good interactions by all participants…our failures stem from poor human interactions.

Those of you who have been reading my essays for a while probably see why I gravitated toward this. Aside from the welcome dab of humility in an industry not known for it, the passage is a great reminder of the importance of understanding the true value of your role. For most of us, the human aspect of accomplishing great work with a team is harder than the technical part.

What advice have you found that changed how you see the world?